August 2021CIOAPPLICATIONS.COM8IN MY ViewThree Types of AnalyticsThe ability to analyze data, draw business insights, predict future outcomes, and optimize decisionshas become a competitive business advantage. Analytics fieldssuch as Artificial Intelligence (AI), Machine Learning,Statistics, Data Science, Econometrics, and Operations Research are available to meet the challenges of delivering the value of Big Data to drive business successes, as introduced in Lo (2019).Analytics, also known as Data Analytics or Business Analytics, can be classified into the following three types (Figure 1): 1) Descriptive Analytics ­ reporting what happened, often including business reports, summary statistics, and data visualization (e.g., scatterplots, histograms, box plots, line charts). Multi-dimensional tables and statistical graphics are sometimes employed to provide deeper analysis of data. As an example, reporting therecent weather pattern is a form of descriptive analytics.2) Predictive Analytics ­ predicting what will happen such as future customer behavior or probabilities of some events happening in the future. For example, weather forecasting is a form of predictive analytics that can be based on Statistical Modeling or Machine Learning.3) Prescriptive Analytics ­ withsome knowledge of the future from predictive analytics, you canevaluate potential alternative actionsto guide your decision makingand determine the best action. For example, if you know there is a high chance of snow impacting your commute tomorrow (from weather forecastingviapredictive analytics), THREE TYPES OF ANALYTICS USED IN PRACTICE AND THEIR LINKSVICTOR S.Y. LO, PHD, A.I. AND DATA SCIENCE CENTER OF EXCELLENCE LEADER, WORKPLACE INVESTING, FIDELITY INVESTMENTSVictor S.Y. Lo
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