What is Data Analysis?

By | September 28, 2021
What is Data Analysis?

Before I get into what is data analysis? I would think that you already know some basics about mathematics, statistics, and programming. Without these, grasping the technical details of data analysis might be a bit tough.

What is Data Analysis?

Let us take a simple example. You got to the nearby bank around 1-2 pm to deposit some money. But, as you go out, you notice that it is quite hot outside and you could have carried an umbrella. Nevertheless, you reach the bank, only to find that the staff had gone out for lunch. Since it was simple deposit work, you had thought of having lunch after coming back from the bank. But, by the time you came back, you were quite hungry and tired!

Vamware

The next time you want to deposit an amount in the bank, you will think of the following:

  • Taking an umbrella
  • Going pre or post lunchtime
  • Having lunch before going

So, based on your past experience and recollection of facts (data), you make a quick analysis of what would be the best time to visit the bank to deposit money!

This is the essence of data analysis – only that you feed the data to a computer, and it does the analysis for you using tools and techniques (more on that later).

Data analysis is one of the critical phases of data science where data scientists and data analysts try to make sense out of the data that was collected to solve a particular problem.

Data analysis itself is a series of steps that include (but are not limited to) one or more of data collection, organization, transformation, visualization, and analysis.

Difference between Data Science vs Data Analysis

Data analysis falls under the data science umbrella. Data science involves both technical and business skills, whereas data analysis requires mostly technical and programming skills. When a data analyst receives the dataset, it is usually from one source, i.e., the data from various sources is integrated, and some preprocessing done before the data analyst receives it for further processing.

Check out the more detailed differences through our article data scientist vs. data analyst.

Why Data Analysis?

Like our example above, there are many situations where we need to make ‘data-driven decisions’, i.e., decisions based on past experiences, facts, information, etc. For example, to decide in which city you want to do college, you might want to consider where most of your friends are going, food, location, climate, reviews about the college infrastructure, staff, accessibility to market, and so on. All this information is based on data collected from various sources like senior students, local people, social media platforms, etc., over a period of time.

Some decisions are complex and involve many factors, whereas some decisions are simple.

However, the human brain can analyze only a part of what computers can do. Computers can collate huge amounts of data (big data), process and analyze the data with high accuracy.

Accurate data analysis helps grow your business in the right direction by identifying potential issues ahead of time, ways to solve them and formulate better strategies.

Data Analysis Phases and process

The data analysis process includes the following steps:

  • Defining the business problem – Identify the business problem to be solved by asking questions. Questions should be specific and clear. Through the questions, we should be able to determine potential solutions/if there are any possible solutions.
  • Data extraction – Collect the data around the questions asked. Data should be collected, integrated, organized, and structured in a proper storage system.
  • Data cleaning – The integrated data may have some incomplete values, duplicate values, irrelevant content, null values, etc. All this has to be removed, and only the relevant data needs to be kept for the next stage.
  • Data mining – Here is where data converts to knowledge and discovery. We mine and analyze data to find important trends and patterns by applying rules & algorithms to the dataset.
  • Data Visualization – The insights and trends are better seen visually to be seen from various perspectives. By viewing various relationships and comparing the visualizations, we can quickly discover the desired useful information.

Data Analysis Phases

How to perform Data analysis – Tools & Techniques for Data analysis

There are plenty of tools and techniques that help data analysts perform an accurate analysis. From data cleaning, exploration, transformation, visualization, and analysis, there are many tools for each stage. Some tools are UI-based, and some have the capability to do a complete analysis; some are great for big projects, etc.

Some popular tools are R, Python, MATLAB, SAS, Spark, Tableau, etc. Check out our article on data analysis tools for details and features of the top 10 data analysis tools.

There are many techniques to analyze data, and most of the tools have rich libraries and interfaces to apply these techniques. Data analysis techniques can be classified into four categories: Initial and main data analysis, quantitative and qualitative analysis, mathematical and statistical analysis, AI and ML techniques, visualization, and graphs. Learn more about data analysis techniques.

Types of Data Analysis

Data analysis is of 4 main types:

Types of Data Analysis

  1. Descriptive Analysis: In this type of analysis, we analyze the past data and draw some insights. The most common analysis type is used to determine ‘what happened’. For example, what can we do to attract more target audiences, what did we do better/bad this year, what was our revenue for the quarter?
  2. Diagnostic Analysis: The next type of diagnosis determines ‘why’ something happened. For example, why were we not able to gain new clients, why couldn’t we retain our customers, or even why did the sales of a particular product go up in a particular month, say February. Diagnosing the root cause gives a reason why something happened.
  3. Predictive Analysis: We make predictions based on the information collected and the root-cause analysis. For example, sales of clothes shoot up during festival seasons and down afterward. This happens almost every year – so we know that there are specific periods when the sales of clothes are at a peak.
  4. Prescriptive Analysis: We know what happened, why it happened and predicted the general trend based on previous data and insights. The next step is to act and make decisions. What can we do to drive sales higher even during the off-season? Let’s say give an after-festival discount (think of a clearance sale!) so that people would still come and buy clothes. Will this work out in favor of the company – this is where accurate decision-making is required!

Simple Data analysis using Excel

Excel is one of the most widely used and powerful tools used for the analysis of small to medium datasets. For enormous datasets, there are many other advanced tools, but Excel is an excellent way to start learning data analysis and doing hands-on projects. In this section, we will analyze a small set of data using Excel features.

1. Data Collection

Excel has a tab, ‘Data’, where there are provisions to get the data from various sources.

Data Tab

Note that you can get the data from Text/CSV files, Web, database, files, etc.

Text:CSV Files

If you choose to get data from the web, you should give the appropriate URL to import data. If you choose a database, you should select the correct server and port and connect to the database.

For learning purpose, I am creating a short sheet with few lines of data so that we can focus on understanding the excel features for data analysis:

Excel Cells

Note that this data has a lot of inconsistencies. Imagine having millions of records with so many inconsistencies like missing values, incorrect values, inconsistent values, extra white spaces, duplicate values, etc.

2. Data cleaning

Cleaning requires effort and time, thanks to some in-built features of Excel, our task is easier. In our data, row 13 and row 4 are the same (duplicates). Go to the Data Tab, and select the Remove duplicates icon:

Select the Remove duplicates icon

Click on the remove duplicates icon to do the needful:

Remove Duplicate Popup

The last row (duplicate) has been removed. Excel also shows the count of unique and duplicate records.

Excel also has a trim() function to trim any extra spaces. Simply give TRIM(A2) in the next free column, say column E. Drag the mouse to apply the same formulae to all the rows:

trim() function

We can also split/merge columns using a delimiter. Suppose we want to take only the numeric part of the Income and not the ‘$’ symbol, we can create a new column with only the values using the delimiter as $. Use the Text to Column icon for this:

Text to Column Icon

After splitting, we get something like this:

Graph Example

This is because some of the values did not have the ‘$’ symbol. So now, we need to merge these columns into one! We can do this using the CONCAT function by giving the columns to concatenate. This is also useful in joining two or more columns.

CONCAT function

There are some inconsistencies in the data. See that the Gender has M and Male, F and Female, which mean the same. We need to create a single code. For this, we can sort and filter the data and then replace all the inconsistent values:

Graph 2

Graph 3

Same way for Male.

Assume that we want to delete the rows where salary is less than 5000. We can sort and filter data accordingly.

Example 4Graph 5Graph 6

Select any row, right-click on it, and select the option ‘delete row’:

Graph 7

Excel will prompt you if you want to delete the entire row:

Graph 8

Click OK to delete the row, similarly, for others.

Once we clear the filter, we can see all the rows except the deleted ones.

Graph 9

There is one last thing pending – a row with no age value. That’s missing data. We can either predict the value based on other similar data or remove this row altogether. We need to know if this data will contribute to our further analysis. Let us say it does. The closest salary to 45000 is 50000, which is of a person whose age is mentioned as 24.5. So, we can assume that Mike’s age could be the same – 24-25. Also, from the general trends of the column, the dataset contains all ages that are between 20-30. So, we can safely fill the value as 25.

There are many other features in Excel for cleaning and transforming complex datasets, which are beyond the scope of this article.

3. Data exploration using Pivot table

Once we have a clean dataset, we can explore it to get some initial insights. The most common data exploration tool in Excel is the pivot table.

To create a Pivot table, go to the Insert tab, click on the Pivot table and select the range. I have selected all the columns except Name. Choose ‘New worksheet’ to generate the pivot table. You will get a sheet like this:

Graph 10

Select all the relevant fields, and you will be able to see all the basic statistics about your data:

Graph 11

4. Data visualization using charts

Visualization will help us see what exactly we need to see in the data. Suppose we want to know the salary trend for male and females. Both Pivot tables and charts can be used for data visualization.

To create charts, go to insert, and you will see a list of charts. Select any (let’s start with a box and whisker):

Grapher 12

We can clearly see the outlier here: 6700.

We can also create a Pivot Chart with data from the Pivot table:

Graph 13

To create this, go to the insert tab and then click on the Pivot chart:

Graph 15

There are many other features like forecast sheets, data analysis, etc., for which we need a lot of data. You can try downloading sample datasets from the web and play around with them using Excel and try to find some insights about data.

Data analysis using Python/R

Python and R are both equally effective for performing data analysis. Each language has its own set of features and rich libraries to perform data analysis. While Python has a readable and easy-to-understand syntax, R has RStudio that enables you to view graphics powerfully.

Our article Python for data science helps you understand how to perform data analysis using Python.

We also have R for data science to illustrate how R libraries perform complex data analysis operations for us!

Summary

We learned how data analysis helps in solving various business problems and makes organizations boost their productivity. Data analysis is a phase of data science in which data is cleaned, organized, analyzed, and visualized to get insights, trends, and patterns. Once these insights are consumed by the stakeholders, data scientists, and business analysts, they can make informed business decisions and improve their products and services.

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