Data Collection in Business Analytics
In today’s digital age, vast amounts of data are being generated and captured by various sources, which include customer interactions, online activities, transactions, and operational processes as seen in Fig. 1. The IDC (International Data Corporation) reports that data is growing at a rate of 50% per year, which should emphasize the vital need for companies to adapt innovative and efficient ways to capture and process this surplus of data. Ultimately, big data can change how we make decisions and how we see the world. For businesses, big data enables them to improve their business outcomes by drawing connections between customer behavior patterns through the use of predictive algorithms.
Data collection represents the second step of the data life cycle, as demonstrated in Fig. 2. Data collection is commonly defined as “the methodological process of gathering massive amounts of information from a variety of sources.” Different methods of data collection lead to differing data accuracy, completeness, and relevance. Harvard Business School identifies a few core factors that, if identified, will allow you to select a data collection method that is well-suited to your needs. These factors include the question you wish to answer/research, the subjects you plan on collecting data from, the type of data you need, the collection timeframe, and your company’s budget.
Business Analyst Learnings describes the importance of data collection with the following quote: “Companies who can capture this data, process it as quickly as possible, and make meaning of it will certainly gain unique insights that will ultimately become a source of competitive advantage for them.”
In business analytics, consumer data is categorized into first-party, second-party, and third-party data. First-party data is information that a company collects directly from their users/consumers which could be through various channels such as apps, social media, websites, and more. Second-party data is shared or derived by another company’s first-party data.
This would entail two organizations or companies engaging in a partnership where data is being shared. Take for example a travel booking website exchanging data with an airline company.
Third-party data is aggregated, rented, or sold by external organizations that are not directly affiliated with the company using the data. While third-party data provides a much greater scale and variety of data, as seen in Fig. 3, it is less specific and reliable compared to first and second data. As a result, third-party data is typically often used for enriching and broadening existing datasets. Popular third-data brokers include Acxiom, Experian, Yodlee, Fiserv, and more.
Business analysts and companies use various unique data collection methods to gather information and insights. Here are some of the major methods, starting with more common ones, followed by more unique options.
Surveys:
Involves gathering data by asking a series of questions to a targeted group of individuals. Surveys can be conducted through various mediums such as online forms, email, telephone, or in-person interviews. Surveys allow for the gathering of vast amounts of information from a large number of respondents, however, they are also more prone to response bias and the responses often lack depth.
Interviews:
Involves talking to subjects in a one-on-one, face-to-face format about a specific topic or issue. An interview with several people is a focus group, which is more centered on discussion and observing group behavior. Both interviews and focus groups allow you to assess consumer opinions, motivations, and feelings regarding your product or brand. While data obtained from interviews can be highly specific, since the data produced is primarily qualitative, it is also significantly more subjective.
Website Analytics:
Involves the tracking and analysis of user interactions on a company’s website. Amazon, the popular e-commerce giant, extensively uses website analytics to gather data on visitor behavior, product performance, and conversion rates. They track metrics such as page views, click-through rates, add-to-cart rates, and purchase history to optimize their website, personalize recommendations, and improve the overall shopping experience.
A simplified diagram of Amazon’s real-time web analytics platform processes is shown in Fig. 4. The AWS provides the following description, “This Guidance uses beacon web servers to log requests from a user’s web browser, Amazon Kinesis Data Firehose to capture website clickstream data, Amazon Kinesis Data Analytics to compute metrics in real-time, and Amazon Simple Storage Service (Amazon S3) and Amazon DynamoDB to durably store metric data. It also features a dashboard that visualizes your account activity in real time. The diagram below presents the architecture you can build using the example code on GitHub.”
Sensor Data Collection:
Business analytics working in/with industries such as manufacturing, logistics, or healthcare, can utilize sensor data collection, where data is gathered from various sensors deployed, measuring various parameters such as temperature, pressure, location, or movement. This real-time data is valuable for monitoring operations, optimizing processes, and detecting anomalies or inefficiencies. By providing insights into operational efficiency, sensor data effectively enables predictive analysis, IoT(internet of Things) integration, and supply chain optimization, all three of which benefit a company by either reducing costs, improving management and logistics, increasing automation, or advancing analytics and innovation.
References:
“7 Data Collection Methods in Business Analytics.” Business Insights Blog, 2 Dec. 2021, online.hbs.edu/blog/post/data-collection-methods.
Business Analysis Blog | How Business Analysts Handle Big Data | IIBA. 5 Nov. 2019, www.iiba.org/business-analysis-blogs/how-business-analysts-handle-big-data.
Inspired Energy. “The Importance of Data Collection and Reporting.” Inspired Energy, 22 July 2022, inspiredenergy.co.uk/the-importance-of-data-collection-and-reporting.
Pieper, By Sebastian. “What Is the Difference Between First Party, Second Party and Third Party Data?” Artegic AG, 6 Mar. 2017, www.artegic.com/blog/difference-first-party-second-party-third-party-data.
Pratt, Mary K. “How Big Data Collection Works: Process, Challenges, Techniques.” Data Management, 7 Feb. 2022, www.techtarget.com/searchdatamanagement/feature/Big-data-collection-processes-challenges-and-best-practices.
“Real-Time Web Analytics With Kinesis | Implementations | AWS Solutions.” Amazon Web Services, Inc., aws.amazon.com/solutions/implementations/real-time-web-analytics-with-kinesis/#.
