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Data Analysis Explained: Usage, Methods, Tools

Data analysis is the process of cleaning, transforming, and modeling data to extract useful information from data to use it in making informed decisions. The process of data analysis uses analytical and logical reasoning to gather information from the data.

Usage of data analysis in business

Data analysis is used widely by businesses to make complex business decisions. Moreover, through data analysis, businesses can identify and rectify their previous mistakes. Additionally, they can perform various types of research and analyze the data collected to provide them with insights required to make the correct decisions. Today’s world is data-driven, and by analyzing them well, the decisions made can be backed with confidence.

Tools used for data analysis

There are various tools available to perform data analysis. Some of them are:

  • R Programming
  • Tableau
  • SAS
  • Python
  • SQL

Types and methods of data analysis

Some of the data analysis techniques are:

  • Text analysis - may also be referred to as data mining. It is a method to identify patterns in data by using data mining tools.
  • Statistical analysis - is of two types - Descriptive and Inferential. This method shows the data in the form of dashboards by gathering past data.
  • Diagnostic analysis - aims to discover why something happened. It can use results from descriptive analysis and further provide as to what made that rise or fall happen.
  • Predictive analysis - shows what might happen. It predicts future outcomes by analyzing the past or current data and forecasting an estimate.
  • Prescriptive analysis - combines the insight from all previous analyses to determine the best possible action to take in the current problem or decision. It is the step-in which data-driven choices are made.

Data analysis process

The data analysis process uses the tools to explore the data and analyze it. Data analysis has the following: phases:

  • Data requirement gathering
  • Data collection
  • Data cleaning
  • Data analysis
  • Data interpretation
  • Data visualization


To sum up, data analysis is widely adopted by businesses or companies to perform various analyses that aid them in decisions. For instance, predicting next year's revenues or using text mining to identify expletive words used in tweets. Data analysis if used efficiently can be a very powerful tool.

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