What is Prescriptive Analytics? Predictive vs. Prescriptive Analytics!
In today’s technological day and age, everything revolves around data. That said, the best of the businesses that survive the competition and stay ahead. They do so by utilizing their vast volumes of data to the best of their ability. Does data offer insights into your business? How is it now? And what to expect in the future? Companies are attempting to be data-driven and forecast any operational discrepancies, costs, changes in revenues, customer service, and feedback.
Data analytics is helping companies find the best possible outcome for a given situation with Prescriptive analytics. And that is the ultimate business analytics there is after leveraging descriptive and predictive analytics.
So, what is Prescriptive Analytics?
In business analytics, prescriptive analytics aims at leveraging descriptive analytics and predictive analytics, and it comes down to a single choice, solution, or outcome. While descriptive analytics provides historical insights and predictive analytics, it offers future insights and prescriptive analytics, as the name suggests the best way to consume your data.
Better decision making is the final output of prescriptive analytics. It lets you in on the future opportunities and risks, illustrates a range of choices from them, and further improves the accuracy of the prediction by continuously processing new data through automation.
Prescriptive Analytics Vs. Predictive Analytics
Prescriptive and predictive analytics are both advanced analytics, and each of them has a role to play in business analytics. These analytics tools, when combined, change the face of data analytics altogether and up the game for machine learning and artificial intelligence.
The two forward-looking analytics tools are showing us what may happen in the future or how to make something happen. For better decision making, predictive and prescriptive analytics integrate machine learning, data mining, and modeling to provide strategic tools and insights about the overall operations and customers.
Predictive analytics or prescriptive analytics alone are not enough for an effective business strategy. It is best to use these analytics in conjunction. As predictive analytics can’t keep up with the competition, it requires prescriptive analytics to make smart recommendations, and together they can attain optimal results. They are both equally and independently crucial for better business outcomes.
Within an organization, all forms of business analytics can solve different kinds of problems. For things like Sales trends, inventory control, demand planning, maintenance requirements, customer churn, profitability, short-term insurance risk analytics, predictive analytics plays a vital role.
On the other hand, prescriptive analytics is used for individual trends and for measuring discrete functions, plants, or divisions. For example, it enables us to determine the best operational strategy for a utility company, consumer goods companies, etc. It helps organizations to meet customer requirements, establish optimal strategies, maintain regulatory compliance, and increase overall profitability.
What is the value they bring to the table?
The analytics tools offer tangible results. However, prescriptive analytics provides more concrete results, and it outweighs the values of predictive analytics.
As predictive analytics is used within narrow parameters, it offers enormous rewards by maintaining compliance and limiting risks. On the other hand, prescriptive analytics can identify profitable markets and provide sustained growth by exploring multiple options. It is not limited to any predetermined scenarios.
The ROI of prescriptive analytics is vast when compared to predictive analytics. However, it is more expensive than the latter. The difference between prescriptive analytics and predictive analytics is that predictive analytics provides short term metrics and assists organizations in what’s happening and how things are going on. Prescriptive analytics provides insights on what things to do and how to do them.
– It measures the metrics individually, and it doesn’t evaluate the overall impact.
– It measures any metrics by considering all inputs, outputs, processes, etc. It ensures that these metrics are validated to reflect the best business outcome.
How are companies using Prescriptive Analytics Successfully?
Today, there is no rapid adoption of prescriptive analytics. Companies are adopting it to benefit from data-enabled decision making, better supply chains, better costs, more significant profits, and better customer service.
The analytics tools have distinct goals to fulfill. There are use cases to determine that prescriptive analytics is the ultimate in solving business problems.
- Prescriptive analytics is transforming the healthcare industry by offering medical practitioners’ data-backed decision making and recommendations as oppose to their reliance over intuitive insights.
- Prescriptive analytics is taking business activities a step higher within sales and marketing. It focuses on designing marketing mixes and product mixes, promoting products, optimizing trade campaigns, forecasting demands, etc.
- Prescriptive analytics’ ultimate goal is to lessen future risks and offer relevant opportunities in conjunction. The future of business analytics is in the mass adoption of prescriptive analytics in all Big data projects.
Future of Prescriptive Analytics
Modern analytics should be able to improve the speed and efficiency of decision making. Although Traditional and Predictive Analytics are potent technologies, they come with some limitations.
They can only portray a picture but cannot predict the future nor prescribe an action. Both types of analytics cannot control unstructured data, a significant limitation considering the fast growth of digital and social data.
On the other hand, prescriptive analytics goes beyond descriptive and predictive analytics by recommending data-driven courses of action. It gathers granular and actionable insights from data. It uses AI and machine learning to effectively harnesses unstructured data.
Adopting prescriptive analytics will enable businesses with much-needed speed and accuracy in decision-making.
According to a recent study, the global predictive & prescriptive analytics market would reach a value of USD 16.84 billion by 2023.
Prescriptive Analytics is a comparatively new field of analytics. It is all about providing advice. It enables you to quantify the effect of future decisions and advise on possible outcomes before making a decision. It enables companies to evaluate several possible outcomes based on their actions.
With SplashBI, you can be exceptional. We use both predictive as well as prescriptive analytics to get the big picture of all your data across all the channels and technologies.
Prescriptive analytics is comparatively challenging to manage, and most companies do not use them in their daily business course. With SplashBI, we help you implement it accurately and make impactful business decisions. SplashBI streamlines your analytics with a feature-rich, innovative business intelligence platform.
Unlock the 7 Benefits of Data-Driven Business Strategy
Data is more of a compulsion than an option these days for any organization looking to leave a footprint in today’s competitive market. It is the oil that every business needs to unlock its full potential. It empowers businesses to make data-driven decisions and deliver personalized experiences to customers.
What do you mean by Data-Driven Organization?
Data-driven organizations depend on vast volumes of data and smart data analytics tools to quicken their business decision-making processes. They capture data and give context to it by describing who has the access, where it’s from, and how it is used. Data-Driven organizations use predictive analytics and smart data reporting tools to gain better insights.
What are the data-driven business strategies?
Data Analytics and Big Data are at the pinnacle of any corporate agenda. They have transformed the way performance is delivered, and the way organizations do business. When we combine data-driven business strategy with data analytics, together, they become an essential competitive difference.
The key to form a data-driven business strategy is the combination of four supporting capabilities:
- A data-driven business strategy should be driven by the business and not by technology. Understand what your business needs before defining the tactical elements.
- The organization must be able to identify, combine, and manage multiple sources of data. It is imperative to determine and ensure that the data is secure, timely, and accurate. Inaccurate data leads to wrong insights and ultimately, bad business decisions. Consider data from all the sources, when combined with your data.
- They need advanced data management and data reporting tools to predict and optimize outcomes. Until an organization is ready to leverage all the features of a sophisticated IT system, it should avoid using them. Attention should be paid to data reporting tools, communication tools, and visualization tools.
- A data-driven organization must possess the power to induce a data-driven culture. The culture should focus on educating the organization to acknowledge the insights generated by data. Such a culture then becomes a mindset of continuous improvement, testing, prioritizing, and sharing data with other employees. Data and analytics can then be used to inform and influence others in the market.
Let us now look at the benefits of data-driven business strategy:
1. Increase sales and loyalty
With each trace that a customer leaves behind, he also leaves a treasure of information which gives insights into his/her preferences, beliefs, etc. Using SplashBI, this data can then be used to tailor products and services, in the way the customer wants. With excellent customer experience come high sales and greater customer loyalty.
2. Cut Costs
With such a wealth of information at their fingertips, businesses can easily predict the future and reduce the potential financial impact. Using a data reporting tool like SplashBI can help companies to identify patterns in product and servicing pricing, which help them take appropriate steps and reduce costs.
3. Increase productivity and efficiency
Business Analytics Software like SplashBI help in identifying revenue-generating opportunities, boosting operational efficiencies, and increasing and optimizing production. Businesses can use this tool to forecast needs of the inventory and increase the efficiency of production.
4. Compete with big businesses
Today, most companies have access to an enormous amount of data, but only a few uses it effectively. Businesses which use SplashBI for their reporting needs gain a significant competitive advantage as they build better services and products using insights offered by SplashBI.
5. Process more data
With the rise of AI and IoT, businesses have started collecting more data, and this has made the processing of data difficult. However, companies which use SplashBI can process data faster as it uses AI and machine learning. Processing more data means getting more insights.
6. Understanding what customers want
Most businesses have a fair understanding of who their typical, and ideal customers are; however, SplashBI gives them a whole new level of customer insights. It offers businesses with an in-depth understanding of their potential customers and the kind of products they like. Knowing customers, and the variety of products they want, help enterprises in tailoring future offerings.
7. Reduce risk significantly
Data Analytics tool like SplashBI helps businesses in reducing potential risks. They help giving companies vital insights into the success of new products while keeping in mind their customer base. SplashBI allows businesses to predict early and reduce the risk of asset failure and downtime.
To Sum it up!
The increase in digitization has created patterns, which have pushed organizations to become data-driven. Although technology is essential to organizations, businesses should be driven by a data-driven strategy. To leverage data and analytics, it is imperative that companies have strong leadership, organizational transformation, effective data management, and continuous improvement. Evolving to become a data-driven organization promises competitive differentiation, but requires a disciplined approach.
Try SplashBI’s business analytics solution and explore how the power of reporting and analytics. We help you blend your data and reveal sophisticated insights across various data sources at half the price.