In today’s digital age, where 2.5 quintillion bytes of data are created every day, the role of data analytic companies has only grown. Companies around the globe, in all industries, of all sizes, are employing data analytics firms to help them make sense of the growing amount of data companies are required to handle and make sense of every day.
If you’re a business owner, you’re probably thinking: “Wait a minute, do I need to hire a data analytics company?” And then you’re probably wondering: “What do data analytics companies even do?”
It’s a great question. “Data analytics” is so vague – so with that in mind, let’s find out what data analytics actually is, and what data analytics does.
Data Analytics: What Is It, Really?
You probably have an idea of what data analytics is already – a bunch of bespectacled computer geeks peering over spreadsheets of numbers in search of patterns, perhaps – and the reality is you’re probably not far off.
As is the case with so many IT-related monikers, data analytics sounds more complicated than it actually is. It’s really exactly what it sounds like – the analysis of data by people who know how to drill into the data and create meaningful insights for your business.
In short, data analytics is the simple practice of gaining a competitive advantage by using the robust data available to businesses in 2023. It can be anything from using customer data from sales to more effectively target customers geographically to pouring over US census data from the last century to identify future trends. It’s really anything to do with accumulating and analyzing data.
What Data Analytics Companies Do
At their core, data analytics companies transform raw, often unstructured data into actionable insights. While theoretically, anyone can produce the same insights as data analytics companies, the reality is data analytics firms do it better, faster and more efficiently than anyone else. That’s why they exist – to take the burden of data analysis off business owner’s plates.
They begin by collecting vast amounts of data from various sources, be it from social media, IoT devices, customer databases, or transaction records. Data analytics firms might pull significant data from Google Ads and the like.
The form and source of the data is dictated by the business – whether they’re D2C or B2B; whether they sell in stores or are fully eComm; whether they are new or decades old – all characteristics of a business matter when pulling data.
Once collected, the data analysis firm puts the data through rigorous cleaning and preprocessing to remove any inconsistencies, errors, or redundancies that could affect the quality of the data (and the insights gleaned from it). The cleaned data is then subjected to statistical analysis, machine learning algorithms, and other advanced analytical processes to derive meaningful patterns, trends, and correlations that can then be presented to the client (you!).
The final step of the journey for data analytics firms is to present their findings and suggest actions that can take advantage of their findings. Whether you take their advice is your call – data analytics companies are only there to make the suggestion. You have to make the moves.
In terms of the day-to-day operations of a data analytics company, the process often begins with a consultation phase, where the company assesses the business’s goals, challenges, and available data sources.
Once a clear roadmap is established, data engineers start the collection and cleaning process. Business owners can expect regular updates in the form of reports or dashboards, which provide a snapshot of the findings. These reports are not just filled with numbers and jargon, as data companies know that they need to be accessible. The reports are almost always accompanied by explanations and recommendations, ensuring that even those without a technical background can understand and act on them.
As insights are derived, there are frequent strategy sessions where the business owner and the analytics team collaborate, discussing findings, implications, and potential actions. It’s a dynamic relationship, with the analytics company acting as both a guide and a collaborator, ensuring that the business is always at the forefront of data-driven decision-making.
The Big Dogs of Data
When looking for a data analytics firm to partner with, there are dozens of companies in the space who can probably handle your needs, but like any space, they’re dominated by the big companies with a proven track record.
Here are the 5 biggest data analytics firms:
- IBM: With its big data AI, Watson Analytics, IBM offers AI-driven data analysis and visualization, making it easier for businesses to discover patterns and insights in their data.
- SAS: A global leader in analytics, SAS provides software solutions for advanced analytics, multivariate analysis, business intelligence, and data management.
- Tableau: Known for its interactive data visualization products, Tableau helps individuals and companies visualize and understand their data in a way others don’t.
- Oracle: Their suite of data analytics tools and solutions cater to businesses of all sizes, offering cloud solutions, applications for data visualization, and advanced analytics.
- Palantir: Focusing on big data analytics, Palantir’s platforms are designed for tasks ranging from cybersecurity to crisis response to procurement analysis.
Collection, Cleaning, Analysis – the Three Pillars of Data Analytics
Now that you know exactly what it is that data companies do, let’s dig a little deeper. What are the core services data analytics firms offer? How does data analytics affect your business decisions? And how is data analytics shaping the future of business?
Data Collection
- Diverse Sources: By 2025, a staggering 463 exabytes of data will be created each day globally. Data analytic companies are able to harness this data from various avenues, including social media, IoT devices, and financial transactions. This diverse collection ensures a holistic view of patterns and trends in a way that would take an individual business weeks, months, or years.
- Real-time Data Streams: With an estimated 30 billion IoT devices expected to be in use by 2025, real-time data collection and analysis are becoming increasingly vital. This real-time data helps businesses react promptly to changing scenarios, ensuring they stay ahead of the curve. Hiring a data analytics firm means this deluge of data is handled by someone else.
Data Cleaning
- Removing Noise: Approximately 60% of data scientists spend most of their time cleaning and organizing data. This process is essential as irrelevant or noisy data can lead to misleading insights. Ensuring only the most pertinent data is analyzed is crucial for accurate results. Data analytics firms make this whole process so much more efficient.
- Handling Missing Values: Inconsistent data can lead to a 15-25% reduction in revenues. Data analytic companies use advanced techniques to handle and impute missing values, ensuring data integrity and accuracy in their analyses. Again, this is where data analytics firms show their value as their tools allow them to do this much more easily, in a much shorter amount of time.
Data Analysis
- Statistical Analysis: Tools like R and Python have become staples in data analytics, enabling companies to identify trends, correlations, and anomalies in vast datasets. Advanced analytics platforms, often proprietary, allow for this advanced, deep analysis.
- Machine Learning: Data analytics companies often deploy machine learning to make their analysis even more effective. As an example, Netflix saved $1 billion in 2017, thanks to machine learning for personalized recommendations!
The Business Impact: From Strategy to Execution
So once the data analytics firm has executed its three pillars of data analysis, what happens then? Well, there are basically two different ways for companies to deploy these findings.
Predictive Analysis
- Market Forecasting: It’s essential to consistently forecast the market, and data analytics allows you to do that accurately. This forecasting can have tremendous impacts on your bottom line – Amazon, for example, harnesses predictive analytics to the tune of a 30% increase in sales!
- Customer Behavior Prediction: Along the lines of forecasting, understanding and predicting how your customers behave is a massive boon to any business. The statistics show that companies deploying behavior-focused data analytics achieve a 20% increase in sales – while also enhancing customer loyalty and engagement.
Personalization
- Tailored Marketing Campaigns: By understanding your customer thanks to deep, rich data, you can better activate potential and returning customers with highly specialized, highly personalized marketing campaigns that speak to what your customer likes and engages with. Personalized email campaigns, for example, boast an average 50% higher open rate – which means more money in your pocket.
- Product Recommendations: If you’re not recommending products that your audience would love, then you’re missing out on loads of potential revenue. Using data-driven insights can help you understand what else your customer wants – and allows you to target them with the right marketing. Again, we’ll use Amazon as an example: their recommendation engine is responsible for 35% of its total sales, which really showcases the power of data-driven personalization.
- Brand Loyalty: By not only understanding but acting on your customer’s preferences, needs, and wants, you’re better able to build long-lasting relationships with your customer. You know what they want and don’t want; what they like and don’t like; what they’ll respond to and what they’ll ignore. Use this data to speak their language and get them to take the action you want them to take.
Do You Need A Data Analytics Company To Analyze Your Data?
The question that’s on everyone’s lips is – do you need a data analytics company?
The answer – as always – is: it depends. In many cases, you may be able to handle your own data, to sift through a simple spreadsheet containing Google Ad metrics, or simply look at your business dashboard on Meta.
If you’re a bigger business, however, it might make a ton of sense to hire a data analytics company to help you make sense of the mountains of data available to you. These experts can uncover insights previously inaccessible to you – and at a cost that isn’t overly prohibitive.
Only you can answer the question as to whether a data analytics firm is necessary – but it’s important to note that you should be taking full advantage of all the data available to you. If you need someone else to make that possible, then it is totally worth it.
Additional Reading
DOMO
Statista
Forbes
Harvard Business Review
KDnuggets
Business Insider
McKinsey & Company
Accenture
Campaign Monitor
McKinsey & Company
Data-Smart City Solutions
Los Angeles Times
CDC
BIS Research
Equifax
MIT Technology Review
PwC