Reporting vs Analytics: Understanding the Difference

Reporting and analytics are two separate business intelligence functions providing very different benefits to a business. These words are often used interchangeably when you first start delving into data and that's understandable: both rely on your company's data, both focus on translating data into human-readable visuals, and both help the business understand its performance. Reporting and analytics answer different questions, though. "What happened" is answered by reporting, while "Why?" and "How do we change?" are answered by analytics. For example, the first slide of a quarterly review may display a chart with low numbers for March: that is reporting. The second slide attempting to identify the reasons behind this lull (perhaps breaking these numbers down into products, regions, customer tenure, and salesmen) is an output of analytics. It seems obvious that analytics add greater value but each of these processes has its place in a data-driven company.

Benefits of Reporting

The primary goals of a reporting organization are to gather data and present it to the business factually. This focus on accurate and objective data-delivery requires prioritizing accurate collection and storing of information. A solid reporting practice is therefore important to any business. It both ensures all departments are operating off of the same knowledge base and acts as a steward for the quality of data. In addition to cultivating and protecting your data, the output of a reporting organization is an important building block to becoming a data-driven organization. The reports, though simpler, are an excellent way to get people accustomed to seeing data representing their performance. Simplicity and accuracy of reporting is important to build trust in business intelligence before diving into the more advanced outputs possible via analytics.

Benefits of Analytics

An analytics team builds on the data collected by the reporting organization and provides the business with actionable insights. The focus of work in analytics is explaining data and outlining a path forward for the business. Unlike reporting groups, analytics teams combine a variety of skills together to lend greater context to reports. An analyst generally has a diverse background and strong skills in mathematics, finance, technology, and business; they combine this with larger business knowledge to help businesses interpret their data. Bringing in analysts to review your company's data and reporting is both a big step and an opportunity for any business. It's the next move toward being a data-driven company and the returns an analyst can bring always more than compensate for the expense.

To Recap

A business needs both reporting and analytics to understand their position and chart a future course. Each offers the business tangible benefits and using both together is a powerful combination.