Have you heard of prescriptive analytics?
Every business makes decisions regularly. The decisions that you make are so important that they can either make or mar your business. As a business owner, you need to constantly answer the question, “What do we need to do to achieve this?” This is where data analytics come in.
Data analytics is one of the most useful tools that has been borne out of technology. A study was done by The Global State of Enterprise Analytics, and the results of this study showed that 56% of respondents think that data analytics lead to faster, more efficient decision-making in an organization.
Working without analytics is like moving blindly. You are not sure of the effects of what you are doing, but you just keep doing it.
By studying historical data, you can predict future outcomes and decide what should be done and what should be averted.
According to Havard Business School, there are four types of Data analytics;
- Descriptive analytics
- Diagnostic analytics
- Predictive analytics
- Prescriptive analytics
In this article, we are focusing on Prescriptive analysis. What exactly is prescriptive analysis? Who needs to use it? Is it a worthy investment? How can your business use it?
Read on to get all this information.
What Is Prescriptive Analytics?
This is the process of using data to determine an optimal course of action. With this kind of analysis, you can get proper recommendations for the next line of action to take in your business. Prescriptive analytics works by factoring in information about available resources, past performances, and current performances, and from the result, it suggests a course of action or strategy.
With prescriptive analytics, you can make any type of a decision, from immediate to long-term. This is the opposite of descriptive analytics, which answers the question, “what happened?”
How Does Prescriptive Analytics Work?
Prescriptive analytics uses machine-language algorithms to parse through large amounts of data faster and more efficiently than normal human strength can perform. It works hand in hand with predictive analytics to determine near-term outcomes.
It uses artificial intelligence (AI) techniques to understand and advance from the data it acquires. With the help of machines, which have super efficiency, they can process a large amount of data within a small period. When new data is added to the system, computer programs automatically adjust to use the data in a manner that is more efficient or more comprehensive than human energy is capable of managing.
Why Is Prescriptive Analytics Important?
In addition to reflecting on past steps taken and charting future pathways, with prescriptive analytics, a company can create an estimate of the timeframe within which a person can achieve specific goals.
Who needs prescriptive analytics? Business experts, analysts, and managers can use prescriptive analysis. Struggling businesses looking for a turnaround, businesses with low-performance metrics, and young businesses that have experience can all use prescriptive analytics.
With a combination of artificial intelligence and machine learning, there is scarcely a need for excessive human involvement. Using the data it gathers, it prescribes the suitable target audience at the most advantageous time, using the right content. It boosts the sales of a business, maximizing overall profitability.
Pros and Cons of Prescriptive Analytics
Prescriptive analytics comes with amazing pros. Some include:
- It prevents fraud.
- It helps organizations to make the best decisions based on analyzed facts instead of jumping to conclusions based on instincts.
- It limits the risks an organization can get into.
- Organizations can foresee the likelihood of worst-case scenarios and plan accordingly.
Some of the cons include:
- It is not very suitable for long-term situations because if more time is required, it becomes more unreliable.
- Results will only be effective when the inputs are valid.
- Not all big data providers provide valid results.
Use Cases and Applications of Prescriptive Analytics
A lot of businesses can find a use for prescriptive analytics. Businesses and agencies in different sectors, including financial sectors, health care sectors, sales, and fraud detection, will find prescriptive analytics very useful.
Here is a simple example; As a blogger looking to write an article with the potential to go viral, you can use prescriptive analytics to research the tendency of the topic to go viral based on data about the search and demand for related topics.
Here are some other brief instances where prescriptive analytics can be used in different industries;
- Hospitals and clinics: Evaluate the cost-effectiveness of certain procedures, analyze health risks, and improve outcomes.
- Airlines: Analyze certain factors like customer demand, weather, and the price of gasoline, and adjust the availability of tickets to suit this data.
- Banking and finance: Influence investment decisions by checking algorithms that weigh risks and deciding accordingly.
- Detection of fraud: An algorithm can scan daily transactions using data from customers’ historical transactions.
- Product management: By running surveys on customers and conducting market research, product managers can gather user data, analyze the data, and use them to inform product developments and improvements.
- Marketing: Email automation is a clear example of prescriptive analysis. With this, a list can be categorized, and emails sent orderly to the right group at the right time.
How Can Prescriptive Analytics Help Your Business?
Prescriptive analytics can help your business by;
- Evaluating past activities and ensuring that mistakes are not repeated.
- Predicting possible failures and worst-case scenarios and facilitating timely interventions.
- Reducing costs that would otherwise be spent on baseless transactions.
- Understanding customer behavior and providing enough data to better serve customers.
- Increasing sales.
Prescriptive analytics is the future of businesses in every industry. It is a differentiating factor that will distinguish businesses in a few years.
Prescriptive analytics does not have to be daunting. With the right knowledge, it can be properly implemented and serve as a powerful tool to help your organization reach its goals.
It is important to understand that there is a place for critical thinking that only the human brain can do. Machines cannot replace humans, so despite the effectiveness of this AI-powered technology, your business still requires a team with a functional thinking system.
Remember that if invalid input is put in the prescriptive analytics system, the result will also be invalid. There must be team members ensuring that the inputs are valid.
DashboardFox and Prescriptive Analytics
Prescriptive analytics has proven itself to be quite useful for so many businesses in various industries imaginable. Indeed, without this, daily operations would be a struggle for many of the companies relying heavily on them.
DashboardFox currently focuses on the descriptive and diagnostic areas of analytics, but there is value in including DashboardFox as part of your business intelligence toolbox when deploying prescriptive analysis.
Specifically, DashboardFox can act as a data broker to quickly pull together the data and export (or via our API proactively import) data into the prescriptive tool of your choice. And when you’re ready to communicate the results to your stakeholders, DashboardFox provides the secure and affordable way to share your outputs, both to internal and external users.
That’s why DashboardFox has made it a commitment to provide the best quality of services to small and medium-sized enterprises without ripping their bankbooks apart.
With DashoardFox, using data analytics is now more possible than ever, thanks to its wide range of functions and tools that you can use, regardless of your computer background. From modern business intelligence to data visualization, the ‘Fox has got you covered.
DashboardFox also offers a no-subscription policy which is great for small business owners. Imagine only paying once and using all of DashboardFox’s offerings until the end of time. Amazing, right?