What is Data Analytics?

Data analytics is the process and practice of analyzing data to answer questions, extract insights, and identify trends. Across industries and around the world, data analysts use different tools, techniques, and frameworks to derive actionable business insights from raw data.  

The four major types of analytics include:

  • Descriptive analytics, which looks at data to examine, understand, and describe something that’s already happened. When working with descriptive analytics, you might ask: Are sales stronger this month than last?
  • Diagnostic analytics, which goes deeper than descriptive analytics by seeking to understand the why behind an occurrence. When working with diagnostic analytics, you might ask: Did the weather affect sales?
  • Predictive analytics, which relies on historical data, past trends, and assumptions to answer questions about what will happen in the future. When working with predictive analytics, you might ask: What happened to sales the last time we had a cold winter?
  • Prescriptive analytics, which aims to identify specific actions that an individual or organization should take to reach future targets or goals. When working with prescriptive analytics, you might ask: If the likelihood of a hot summer measured from weather models is above a certain percentage, should we add more shifts to increase output? 

By analyzing raw data, businesses can optimize their performance, enhance customer satisfaction, and potentially improve profits. Since they’re critical to operational success, data analysts (also called operations research analysts) exist in numerous professional settings, including working at investment banks, hedge funds, private equity firms, insurance companies, credit bureaus, technology firms, and more.  

What Does a Data Analyst Do?

Companies in various industries can benefit from the work of data analysts. Of course, the answer to “What do data analysts do?” will vary depending on the type of organization in question and the extent to which a business has adopted data-driven decision-making practices. 

Generally speaking, data analysts gather data, organize it, and use it to reach meaningful conclusions. Their work varies depending on the type of data they’re working with (sales, social media, inventory, etc.), but they can expect to spend their time developing systems for collecting data and compiling findings into reports that can help improve company-wide goals. Analysts may be involved in multiple parts of the analysis process, from setting up an analytics system to providing insights based on collected data. 

Employers seek data analysts who have an undergraduate or master’s degree in analytics, computer modeling, engineering, science, math, and other related fields. Mathematical and statistical skills as well as strategic thinking can be valuable for gathering, measuring, organizing, analyzing, and presenting data, as is proficiency in specific software and technical tools. 

Data Analyst Careers

The concept of big data analytics has been around for years and continues to grow in popularity. As such, analytics offers a wide variety of opportunities across industries and corporate levels, with data analyst careers including: 

  • Financial analyst. A financial analyst pores over data to identify business opportunities or make investment recommendations. This type of role can include business analysts, management analysts, and a wide variety of investment analysts. Financial analysts spend their time on data gathering, financial modeling, and spreadsheet maintenance. Some of them may focus on developing investment theses, speaking with company management teams and other investors, and marketing ideas. 
  • Market research analyst. Market research analysts monitor and predict sales trends, measure campaign results, and brainstorm new ways to gather data and find meaningful information. They decipher what consumers are seeking, and make inferences and draw conclusions based on consumer data. 
  • Big data and machine learning. Big-data analysts are responsible for realizing real-time solutions with a focus on affordability, speed, and quality, and providing business intelligence to clients or employers. Demand for big data technology, big data analysis, and machine learning has only grown as the business world and uses of data evolve. Big data analytics can make sense of data by uncovering trends and patterns, while machine learning accelerates the process with the help of decision-making algorithms
  • Budget analyst. This type of analyst focuses on the analysis and reporting of a specified budget. Budget analysts prepare budget reports and monitor organizational spending, helping both public and private organizations plan their finances. 
  • Corporate strategy analyst. This role will focus on analyzing company-wide data and advising management on strategic direction. Responsibilities include performing quantitative analysis and working with executives on a plan to move a business forward. 
  • Social media analyst. Occupying an important role in our digitally connected world, professionals working in social media data analysis assess a brand’s owned data, campaign/content performance, and social listening data, translating it all into actionable business recommendations. 

How Much Do Data Analysts Make?

Skilled data analysts are some of the most sought-after professionals in the workforce since they use data to spot trends, make forecasts, and extract information that helps businesses make well-informed decisions. According to the U.S. Bureau of Labor Statistics (BLS), operations research analyst jobs will see 25 percent growth from 2020 to 2030, which is much faster than average for all occupations. This is due to the increasing need for better market research across a range of different industries.

Data analyst salaries vary depending on education level, years of experience, industry, location, and skills. So, how much do data analysts make? While salary averages are constantly fluctuating, the median annual salary for operations research analysts in the United States was $86,200 in 2020, according to the BLS.

Last updated November 2021.