The 18 Best Analytics Tools Every Business

Manager Should Know

The goal of any business analytic tool is to analyze data and extract actionable and commercially
relevant information that you can use to increase results or performance. But with so many tools
available it can be difficult to know what to use and when.

I thought it might be useful to look at some of the key analytics tools in use today and how they
can be used in your business.

1. Business experiments: Business experiments, experimental design and AB testing are all
techniques for testing the validity of something – be that a strategic hypothesis, new
product packaging or a marketing approach. It is basically about trying something in one
part of the organization and then comparing it with another where the changes were
not made (used as a control group). It’s useful if you have two or more options to decide
between.

2. Visual analytics: Data can be analyzed in different ways and the simplest way is to create a
visual or graph and look at it to spot patterns. This is an integrated approach that combines data analysis
with data visualization and human interaction. It is especially useful when you are trying to make sense
of a huge volume of data.

3. Correlation analysis: This is a statistical technique that allows you to determine whether there is
a relationship between two separate variables and how strong that relationship may be. It is most useful
when you ‘know’ or suspect that there is a relationship between two variables and you would like to test
your assumption.

4. Regression analysis: Regression analysis is a statistical tool for investigating the relationship
between variables; for example, is there a causal relationship between price and product demand? Use
it if you believe that one variable is affecting another and you want to establish whether your hypothesis
is true.

5. Scenario analysis: Scenario analysis, also known as horizon analysis or total return
analysis, is an analytic process that allows you to analyze a variety of possible future
events or scenarios by considering alternative possible outcomes. Use it when you are
unsure which decision to take or which course of action to pursue.

6. Forecasting/time series analysis: Time series data is data that is collected at uniformly
spaced intervals. Time series analysis explores this data to extract meaningful statistics
or data characteristics. Use it when you want to assess changes over time or predict
future events based on what has happened in the past.
7. Data mining: This is an analytic process designed to explore data, usually very large
business-related data sets – also known as ‘big data’ – looking for commercially relevant
insights, patterns or relationships between variables that can improve performance. It is
therefore useful when you have large data sets that you need to extract insights from.

8. Text analytics: Also known as text mining, text analytics is a process of extracting value
from large quantities of unstructured text data. You can use it in a number of ways,
including information retrieval, pattern recognition, tagging and annotation,
information extraction, sentiment assessment and predictive analytics.

9. Sentiment analysis: Sentiment analysis, also known as opinion mining, seeks to extract
subjective opinion or sentiment from text, video or audio data. The basic aim is to
determine the attitude of an individual or group regarding a particular topic or overall
context. Use it when you want to understand stakeholder opinion.

10. Image analytics: Image analytics is the process of extracting information, meaning and
insights from images such as photographs, medical images or graphics. As a process it
relies heavily on pattern recognition, digital geometry and signal processing. Image
analytics can be used in a number of ways, such as facial recognition for security
purposes.

11. Video analytics: Video analytics is the process of extracting information, meaning and
insights from video footage. It includes everything that image analytics can do plus it can
also measure and track behavior. You could use it if you wanted to know more about
who is visiting your store or premises and what they are doing when they get there.

12. Voice analytics: Voice analytics, also known as speech analytics, is the process of
extracting information from audio recordings of conversations. This form of analytics
can analyze the topics or actual words and phrases being used, as well as the emotional
content of the conversation. You could use voice analytics in a call center to help
identify recurring customer complaints or technical issues.

13. Monte Carlo Simulation: The Monte Carlo Simulation is a mathematical problem-solving
and risk-assessment technique that approximates the probability of certain outcomes,
and the risk of certain outcomes, using computerized simulations of random variables. It
is useful if you want to better understand the implications and ramifications of a
particular course of action or decision.

14. Linear programming: Also known as linear optimization, this is a method of identifying
the best outcome based on a set of constraints using a linear mathematical model. It
allows you to solve problems involving minimizing and maximizing conditions, such as
how to maximize profit while minimizing costs. It’s useful if you have a number of
constraints such as time, raw materials, etc. and you wanted to know the best
combination or where to direct your resources for maximum profit.
 15. Cohort analysis: This is a subset of behavioral analytics, which allows you to study the
behavior of a group over time. It is especially useful if you want to know more about the
behavior of a group of stakeholders, such as customers or employees.

16. Factor analysis: This is the collective name given to a group of statistical techniques that
are used primarily for data reduction and structure detection. It can reduce the number
of variables within data to help make it more useful. Use it if you need to analyze and
understand more about the interrelationships among a large number of variables.

17. Neural network analysis: A neural network is a computer program modeled on the
human brain, which can process a huge amount of information and identify patterns in a
similar way that we do. Neural network analysis is therefore the process of analyzing the
mathematical modeling that makes up a neural network. This technique is particularly
useful if you have a large amount of data.

18. Meta analytics/literature analysis: Meta analysis is the term that describes the
synthesis of previous studies in an area in the hope of identifying patterns, trends or
interesting relationships among the pre-existing literature and study results. Essentially,
it is the study of previous studies. It is useful whenever you want to obtain relevant
insights without conducting any studies yourself.

Over the coming weeks I will be looking at analytics techniques in more details and discuss their
application across key business functions such as marketing, HR, finance and operations.