Data Analyst vs Business Analyst—What's the Difference?

Data analysts and business analysts are two of the careers with the best outlook for the next 10 years.

Analyst jobs are hot right now. According to this report by Microsoft, data analysts are projected to be one of the most in-demand jobs after COVID. 

And according to the Bureau of Labor Statistics, business analysts jobs are projected to grow 14% in the next 10 years, much faster than most other occupations.

The names sound similar, but the jobs aren’t. Here’s what each one does, and the most important differences.

What’s a data analyst? 

A data analyst’s main job is to tell stories with data that help organization leaders make decisions. 

They spend the majority of their time looking at data, and perform a variety of tasks, such as:

• Building and maintaining databases
• Cleaning and organization data
• Creating and updating data visualizations like charts, graphs, and dashboards
• Building reports
• Researching answers to specific questions decision-makers have

Data analysts are technical specialists with the skills to turn abstract data sets into easily digestible insights that the rest of the business can understand and use. 

For example, if you’re a data analyst for a transportation company, you might set up a database to capture information on load sizes and routes.

You might then analyze that information to suggest improvements to how your trucks are allocated. 

If you’re a data analyst for an e-commerce company, you might analyze data on the demographics of your shoppers.

You could then turn that into a report that the marketing team uses to decide where to spend most of their ad budget. 

What’s a business analyst?

A business analyst’s main job is to use data to find strategic ways the company can increase revenue, reduce costs, or otherwise improve business processes. 

To do this, business analysts do things like:

• Evaluate business processes for efficiency, cost, and revenue generation
• Build business cases for proposed changes
• Communicate insights to key stakeholders

Business analysts are business generalists with strong analytical skills. Because of how varied a particular company’s processes can be, they may be called upon to work on a lot of different types of projects. 

In many cases, you’ll be working closely with data analysts, and using the data that they have prepared to build business cases.

For example, if you’re a business analyst for that same transportation company we mentioned earlier, you might analyze the profit margins of all of your clients to decide what industries the sales team should target for future contracts. 

If you’re a business analyst for that ecommerce company, you might be asked to build a business case for which products the store should continue to carry, and which ones they should drop.

Key differences

Data analysts and business analysts both work with data, the most important difference is what they do with it. 

Data analysts gather, analyze, and present data in a way that makes it accessible to the rest of the business.

Business analysts use that data to help companies make better business decisions.

Martin Schedlbauer, director of Northeastern University’s information and data sciences programs, puts it this way:

Practically, here’s what some of those differences mean: 

1. Data analysts are more technical

Because they are dealing directly with raw data, data analysts need strong technical skills. 

Data analysts have advanced Excel skills, and are highly proficient with Structured Query Language (SQL). T

hey can perform statistical analysis with the programming languages R and Python. They are also comfortable with different data visualization tools like Tableau.

Data analysts often come from a STEM background, with degrees in mathematics or computer science.

While this doesn’t mean you can’t become a data analyst without these, these technical degrees provide a much better basis for the work you’ll need to do. 

2. Business analysts are more strategic

Business analysts are more focused on the big picture than they are specific details. They have strong critical thinking and problem solving skills, and great communication and presentation skills.

They know how to plan strategically.

While they don’t need to be as technical as data analysts, they do need to have a good understanding of the technology involved in analytics.

They need to speak the same language as data analysts, even if they can’t write with it.

Business analysts tend to come from a more business-focused background, with majors like business administration, finance, or economics.

Many business analysts get their start working in consulting, which can be a great way to quickly develop skills and get exposure to lots of different types of businesses before moving to work within a specific industry. 

3. Business analysts and data analysts have different career paths

According to Payscale, both business analysts and data analysts average around $60,000 per year.

Where business analysts and data analysts diverge is career paths. 

Once you reach a senior business analyst position, there are two main paths. If you’d like to continue in an analytics-focused career, you’ll likely have to get a masters degree and beef up your technical skills.

The more technical your skills, the more you’ll earn. For example, senior business analysts specializing in computer systems average $94,000 per year, almost $10,000 more than their more generalist counterparts.

Alternatively, you might leverage your experience to get into management, either with or without an MBA (many ex-consultants go this route).

For data analysts, their more technical skills give them easier access to other options. One path is to dive deeper into the data side by becoming a data scientist.

Data scientists do a lot of the same things data analysts do, but on a larger scale that requires deeper technical skills and mathematical understanding.

This is reflected in their salary, which averages $96,000 per year.

Another path is to dive deeper into the analytics side, by becoming an analytics manager. They average around $95,000 per year.

Still another option is moving into software development. Data analysts can build on their knowledge of programming languages like SQL and Python to become software engineers. 

Conclusion

Both data analysts and business analysts are analytics-focused careers, but they require different backgrounds and skill sets. Both have great job outlooks and career progression opportunities.

What’s right for your will depend on your strengths, technical ability, and where you’d like to end up career-wise.