Analytics as the Distillation of Data.

I'm always in search of a better analogy for explaining what I do for a living. I work with data in business settings applying statistical tools to improve decision making. I've had titles ranging from data scientist to data analyst or decision scientist and operations researcher. My kids are always asking me what I do. Sometimes my bosses have as well but I think they like the output from my work so I'm good. In the end, I've wondered about how to sell my efforts to companies who need analytics. How to get to the meat of what analytics can and will do for an organization. To help myself sell analytics to others, I've come to think of analytics as the distillation of data. Yep very similar to crude oil distillation to gas, diesel, propane, fuel oil, etc. I started down this path because I work with data every data and yes, it's very crude and messy and takes effort to extract what's needed to help a business process.

Why distillation?Just like distillation business people don't care how they get their useful products (gas, fuel oil, etc.) but they know what to do with it when they get it. Distillation takes the raw crude oil and applies heat to break down the oil into useable outputs. Analytics is the same way, but the uses may not be so obvious and as analytic people, we (I) need to focus on the uses and not the fancy distillation process. (I use the model to remind myself of what's important)

The triggering for a new analogy emerged in a discussion of 'is data an asset' question that seems to be hot these days. I've seen articles on how companies need to add the value of data to their balance sheet. Interesting thought, but how? This question of 'is data an asset' somehow didn't sit well with me. I think it was an early analogy I came up with that data is like manure to the creation of milk. An interesting analogy that I'll save for another time. I think data is a byproduct of using computers. Computers are great at capturing, storing and, when given the right instructions, retrieving data. Data has existed for eons in business but computers make the capture, storage and processing of it cheap.

Data is only an asset if it's utilized and by utilized, I mean accumulated, data mined, extracted meaning from historical events. All things analytics. In the graphic above, I show analytics as a 'distillation tower' where higher up more and more effort is taken to create output from the analytics process. In thinking through what the tower represents I've wondered about increasing complexity of solutions, increasing use of statistical tools, requiring more and more unicorns (aka data scientists) and a few others that shall not be named here. The intermediate output of the tower starts with the minimal analytic effort is required to build dashboards and charts. In the middle of the analytic distillation tower it's the trending of data and forecasting that requires more analytic effort and yields value from trends and reporting of potential outcomes. Towards the top of the analytic distillation tower are predictive, prescriptive and simulation analytic work that require significant analytic effort to build and deploy but also have big (and measurable) impact on business processes. The intermediary outputs from basic statistics up through simulations still require a little more processing (just as gasoline requires a little more processing before use in an auto).

What I've learned to talk about is not the analytics distillation but the outputs and what can be done with them, what the impact is on a business and how to maintain the backroom analytics distillation tower. From the graphic, the Final Products are answering questions of what happened up through what might happen and what to do about potential scenarios. The specifics of answering these questions will be different across organization. The benefits to answering these questions will be and continue to be valuable to organization to that use and apply analytic pressure to the byproduct of business; data. Data, the crude oil of today's business. (tag line?)