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The Official Blog of Forecast5 Analytics

Mike English
WRITTEN BY
Mike English

Analytics, Best Practices, Data Visualization, Technology

How to Analyze Large Data Sets Like a Machine

Posted on Jan 2, 2014 12:00:00 AM

How do you find patterns and relevant business insights in large data sets…specifically, if you are a human? There are a growing number of technology solutions and algorithms that are automating the approach to data mining. But, there is always going to be value when an individual can analyze a large data set and bring experiential perspective and business expertise to the process. Whether you are analyzing a large data set in a spreadsheet, a pivot table, or a data visualization – a set of simple benchmarking questions can help glean valuable insights.

When I started my career with PMA Financial Network, my first role was as an analyst performing the “Prudent Man Analysis” on the banks in our investment program. The analysis utilizes five years of historical data – focusing on 50 key performance metrics. The analysis process (which is still used today) includes numerous reports with one document that we refer to as “the ratio page”. It is essentially a big spreadsheet view of the 50 ratios broken down by quarter and year…it looks like an overwhelming amount of data.

Learn more, read "Data Discovery: Because We Don't Know What We Don't Know"

At first glance of the spreadsheet, your eyes and mind attempt to find a pattern. But, with a mechanical approach and three fairly simple questions, we break down the data and turn it into credit decisions:

  1. How did the bank do in the most recent quarter on the key performance ratios?
  2. What was the trend in those ratios for the last 20 quarters?
  3. How did the most recent numbers (#1) and the trend (#2) compare to relevant peers?

Similar to the machine process used in a database engine, the three questions provide a model for your brain to attack the data, helping focus your eyes to sweep across the data vertically and horizontally to extract the insights. By using these three questions as the starting point for a bank analysis, it becomes very easy to figure out if there are additional questions that need to be asked or answered. And, it takes a significant amount of data and turns it into a digestible and repeatable process.

The questions provide a great framework for analyzing the performance of your organization. Whether you are a private sector or public sector entity, the value of benchmarking performance in this manner, is that it can help you quickly focus on the areas that need attention…or help you protect the areas where you are doing well. You can use this fundamental technique when analyzing numbers in a spreadsheet or a graphic in a data visualization.

How are you using data and analytics in your organization? Do you have key questions that help you break down large sets of data? How have you used benchmark analyses to guide your strategic plans? Share your thoughts and insights!

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Mike English is a founder and the CEO/President of Forecast5 Analytics, Inc. – a technology company focused on software development and data analytics for the public sector. Mike has spent his entire career concentrating on the development of financial and strategic solutions for schools and municipalities. Forecast5 is headquartered in Naperville, Illinois – a suburb 30 miles west of Chicago.

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