What is a variance analysis?
A variance analysis is a process used to determine whether a particular value or component deviates within a larger whole. The analysis can be carried out in various ways, but is usually performed as a statistical analysis. This means that a statistician or data analyst examines the data and looks for ways to determine if there are any anomalies. If so, an attempt is made to determine why these deviations exist and what they could mean.
A variance analysis can also be used to determine whether a particular value or component deviates significantly from others. In this case, the analysis can also be referred to as a test. For example, a company could have certain criteria for the composition of its employees. However, if it notices that employees with different criteria are more successful, it could revise its guidelines.
In many cases it is possible that there are deviations without there being a problem. In other cases, however, deviations can be a sign of a problem. For example, a decrease in sales in a company could indicate that something is wrong. In this case, a deviation analysis would be carried out to find out what the cause of the decrease is. If no obvious cause can be found, this could be a cause for concern and may require further investigation.
