What is prescriptive analytics?
Prescriptive analytics is arguably one of the most advanced forms of data analysis. It combines descriptive and predictive analytics and attempts to use data to determine the next best course of action for a business in a given situation. By analysing what has happened previously and by applying predictive analytics, you can begin to think with 'algorithms' to drive your internal business processes or identify the best new opportunities.
Guided by data, you’re faced with three options: increase staff numbers, increase wages, or increase marketing spend. Which should you choose? This is where prescriptive analytics comes into play.
What are the benefits?
Here are the top three benefits of prescriptive analytics:
- Prescriptive analytics considers the probable effects of a decision on all parts of your business.
- It gives a quantitative justification for a choosing one option over another.
- It deals with questions of ‘how much?’ By how much should you increase your workforce wages or marketing spend?
For organisations with well-established data infrastructure and data management processes, prescriptive analytics provides a low-risk opportunity to streamline your business processes and save on time and resources.
The first step for your business will be understanding how descriptive, predictive and prescriptive analytics can work together in a data analytics pipeline, depending on your business need. The process is a journey, and it will become better with experience and investment of time and expertise. Building algorithms off of prescriptive analytics is a fantastic way to transition from a data-driven business to an algorithm-driven business.
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