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Home / IT Blog / Descriptive vs Predictive vs Prescriptive Analytics
February 27, 2020 - by Synoptek
In today’s highly competitive business landscape, the promises of analytics are many: into insight from historical data, better understanding of the current business environment, and a way to accurately predict future business outcomes. Organizations big and small are all making headways into the world of analytics – namely descriptive and predictive analytics – but many still don’t recognize the significance (and impact) of prescriptive analytics. So, what is prescriptive analytics? And how can you drive better value from it? Let’s find out!
With new information generated per second for every human being amounting to by 2020, the need to unearth insights from data has become crucial. Thankfully, over the years, analytics has moved from being a siloed, departmental venture to a more holistic, organization-wide approach with an increased focus on advanced analytics. Today, a variety of different analytics is being adopted by organizations to unearth value from different types of data. Listed below are some of the most popular approaches:
Descriptive Analytics: Get Insight Into Past Outcomes
Descriptive analysis or statistics does exactly what the name suggests; it “describes” or summarizes historical data and transforms it to a format that is interpretable by humans. It enables organizations to learn from past behaviors and understand how they might influence future outcomes.
Predictive Analytics: Get Insight Into Future Outcomes
Predictive analytics has its roots in the ability to “predict” what might happen in the future – based on probability. It provides estimates about the likelihood of a future outcome along with actionable insights. Although no statistical algorithm can predict the future with 100% certainty, companies can leverage these statistics to forecast what might happen in the future.
Prescriptive Analytics: Get Insight Into the Best Possible Outcome
In addition to descriptive and prescriptive analytics, the relatively new field of analytics allows organizations to “prescribe” several different possible actions while guiding them toward the most ideal solution. Prescriptive analytics attempts to quantify the effect of future decisions in order to advise on possible outcomes – much before the decisions are made. It predicts not only what will happen, but also why it will happen while providing recommendations on actions that will take advantage of the predictions.
Although organizations have long been using statistical models and algorithms to enhance their decision-making ability, prescriptive analytics looks at the bigger picture and opens up new doors for organizations. Prescriptive models aim to find the best outcome or course of action for any given situation; in contrast to descriptive analytics that provides insight into what has happened in the past and predictive analytics that forecasts what might happen in the future.
Because prescriptive models suggest options to companies on how best to take advantage of a future opportunity (or mitigate a future risk), it can be used as a great tool to illustrate the implications of every decision.
By factoring information about possible situations or scenarios, available resources, past as well as current performance, prescriptive analytics suggests the best course of action or strategy – for immediate, short, or long term. Because it cuts through the uncertainty of business and market dynamics, it’s a great asset for organizations looking to prevent frauds, limit risks, and more easily meet business goals.
When used correctly, it can help organizations make decisions based on precisely analyzed facts rather than through under-informed conclusions based on instinct. It enables them to get a better understanding of worst-case scenarios and plan their next steps accordingly.
Prescriptive analytics model businesses while considering all inputs, processes, and outputs – to support informed decision-making. The models are calibrated and validated to ensure they accurately reflect business processes. They recommend the best way forward with actionable information to maximize overall returns and profitability. Here are some advantages of prescriptive analytics:
With businesses getting submerged under the sea of data, many have turned to analytics solutions to extract meaning from ever-growing volumes of data. They analyze not just historical data, but also predict future outcomes based on statistics. And now, with the new wave of prescriptive analytics offering great promises, organizations have finally arrived at the crossroad of holistic market view, lowered operating costs, increased revenues, and improved customer service.
Looking to improve your business outcomes with prescriptive analytics? Contact a Synoptek AI expert today.
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