We are hearing more and more about analytics these days. To be sure, the term is hardly new. Key performance indicators (KPIs) have been gathering momentum for fifteen years. As is often the case, though, terms get misused, if not bastardized. In this post, I’ll provide some clarity about a key distinction: reporting vs. analytics.
Let me be unequivocally clear: Reporting is not the same as analytics.
Am I the only one who feels this way? Hardly. For starters, in Taming The Big Data Tidal Wave: Finding Opportunities in Huge Data Streams with Advanced Analytics (affiliate link), Bill Franks differentiates between reporting and analytics. From the book:
|Provides data||Provides answers|
|Provides what is asked for||Provides what is needed|
|Is typically standardized||Is typically customized|
|Does not involve a person||Involves a person|
|Is fairly inflexible||Is extremely flexible|
In my consulting career, I spent a great deal of time on reporting. In my time, I created:
- Several thousand Crystal Reports
- More Microsoft Access databases, SQL statements, and ad hoc queries than I could count
- Many, many dashboards
Still, I rarely believed that even my most complicated reports (and trust me, some were doozies) really explained why something was happening—or had already happened. To me, that’s the very essence of analytics: they go beyond the mere “what” and “where”. Ideally, they explain why and suggest a potentially measurable course of action.
Reading a static a standard report is not the same as doing true data exploration.
For instance, how many customers visited our site and never made a purchase? Let’s say that that number is 60 percent. That’s great, but why did they not make a purchase? Potential answers include:
- the product’s price was too high
- the site’s navigation was confusing
- they became distracted
- their computers crashed
- a combination of a few different things
I could go on, but you get my drift. A simple standard report or statistic isn’t entirely unhelpful, but it begs the question, Why? This is critical point in The Visual Organization and something that I also address in the new book Analytics: The Agile Way.
Simon Says: The reporting vs. analytics distinction is critical.
In an era of Big Data, organizations of all sizes can theoretically explain more of the unknown and, dare I say, even potentially predict a few things. To truly realize the value of data—be it Big, Small, whatever—people need to rid themselves of the notion that a standard report is the same as meaningful analytics, let true alone data discovery.
I’ll have plenty more to say on this over the coming months.
What say you?