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Four Data Analytics Pitfalls and How to Avoid Them

by Pieter Van Ispelen
June 27, 2018
in BI & Analytics, Big Data, Technology & IT
Home Topics Data Science BI & Analytics
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Data science has gone through a rapid evolution, fueled by powerful open source software and more affordable and faster data storage solutions. Universities have adapted to the increasing demand as well and are graduating analytically trained students at an unprecedented pace. This evolution opens new and innovative pathways for many companies and individuals to make a difference to the bottom line. With this fast-paced evolution, however, a number of classic pitfalls are on the rise as well. By understanding those pitfalls and ways to avoid them, you can take advantage of innovations in data science and help your business perform to its maximum—data-proven—potential.

Pitfall 1: Deep Learning With Shallow Data

The use of deep learning models such as neural nets has grown exponentially with the increase in computing power, and we now have the ability to run very complex algorithms to analyze sets of data.

Applying an advanced deep learning model that is too sophisticated for the available data can easily lead to the classic problem of overfitting. While it may provide a strong result within an estimated sample, it can go haywire when you apply it outside your initial sample for real-world use. Simply put, when you use a methodology that’s too complex for the problem you’re trying to solve, you’ll get the wrong answer.

To prevent overfitting, your model must separate the signal from the noise so that it can disregard the randomness in your original sample and demonstrate that it will not be affected by randomness when used for real-world applications.


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Pitfall 2: Using Open-Source Advanced Algorithms Without Fully Understanding Them

The proliferation of open-source neural networks has helped advance the field of data science, giving many more people access to new and highly advanced tools. This becomes a problem when inexperienced data scientists have enough open-source knowledge to use the tools, but not enough knowledge to use them effectively.

Knowing how to call a neural net function using code without knowing how to prepare data and manipulate the inputs for the neural net won’t get you the right answers to the problem you’re trying to solve. While learning how to call functions for a neural net using code is relatively easy, understanding how to best use those functions for data analysis is both an art and a science that comes with experience.

When using these functions, you must properly manipulate the inputs, select the right method to your problem, carefully interpret outcomes by understanding how the methodology interprets the data, and subsequently iterate the training of the neural net in order to fit your data. The art of working with the data and business problem you’re trying to solve optimally mixes with the science of the estimation methodology. This will get you the results you need, rather than relying on a simple call of standardized open-source functions.

Pitfall 3: Not Properly Executing Out-of-Sample Testing

This is another classic pitfall that we see is on the rise in the industry. As most data scientists know, whether you’re using an open-source neural net or any other statistical model, it’s important to test the model on data that the model has never seen before. Many methods set aside a test data set by randomly selecting a portion from your available data. This might be good enough for many traditional statistical methods, but the power of deep learning methods in particular is such that this often results in incorrect outputs.

To avoid this pitfall, run a series of simulations on truly out of sample or holdout data sets, and use different mixes of test and training sets to make sure your model can generalize results properly.  

Pitfall 4: Not Understanding Data Before Technical Development

This is quite possibly the biggest pitfall of all. Data preparation work is often considered a boring task compared to running a complex algorithm and studying the output. Many available tools offer different feature engineering options and subsequent algorithms for data analysis and forecasting. With these advanced tools, you can take advantage of machine learning to describe what has happened in the past and what will happen in the future. The temptation is to just plug and play—run standard data feature engineering options, call a neural net to analyze your data, and go. The pitfall here is that you must understand your data before using these available tools. If you do not understand the data, you might choose the wrong tool or the wrong input and wind up with misleading, non-optimal outcomes.

Understand your data deeply before developing an algorithm, and you can find the right inputs and build the right algorithm to find the solution you’re looking for—one that will give you the output that answers the questions you want to ask. You can then better transform your data and fit the specific algorithm in order to achieve the desired results.

More Ways to Avoid Pitfalls and Get the Most from Your Data Analysis

The pitfalls outlined here are often due to lack of experience with the current methods and tools in a quickly evolving field. If you’re building a data science organization, you can mitigate this by pairing less-experienced data scientists with those who are more proficient. Hands-on work with an experienced mentor results in quick learning. This ensures that top academic talent can quickly adapt to your specific business data, needs, and application—and become laser focused on creating value through machine learning.  

When building a data science organization, you should also employ specialized functional team members rather than jacks-of-all-trades. Data cleansing, data visualization, and AI algorithm creation are in-depth fields, and it’s more effective to find people who are specialized in one specific field rather than someone with a basic knowledge of all aspects.

As you take advantage of new technology, data analysis and decision science open up new levels of knowledge for your business. It can increase productivity and profitability, allow you to make new discoveries, and back up old-school intuition with new-school evidence.

You already have the data—now put it to good use.

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