Analytics: Predictive, Descriptive & Prescriptive
Utilising big data can be a difficult process but with the right tools you can create powerful insights for your business. Capturing the information is just one of the challenges to businesses, they then need to interpret it but which analytical process offers the most advantages – descriptive, predictive or prescriptive?
All three analytic methods are useful and answer different questions and as a result the process that is best suited to you will depend entirely on what you want to achieve from the data. Most businesses will use a combination of these analytics processes throughout their management of data to gather different insights that can inform decisions and drive innovation.
Descriptive analytics looks at historical data and answers the questions ‘What happened?’
Analysing past information means that businesses can understand the relationship between a variety of areas, such as the link between customers and products. The objective of descriptive analytics is to gain insights into the past that can then be used to inform future decisions. Management reports are typically full of descriptive analytics providing insights into sales and finance, for instance.
Businesses should use descriptive analytics when they need to describe various aspects of what is happening within the company.
Predictive analytics uses historical data to assess the future and make predictions asking ‘What could happen?’
This analytics process means that businesses can accurately estimate future outcomes, helping them to identify risks and opportunities. It can be used in a variety of areas, such as predicting the likelihood of a credit card customer making repayments or highlighting how customers are likely to behave to marketing campaigns. The more data a business has the better the results and predictions of the analysis.
Predictive analytics can help businesses understand what is likely to happen in the future and plan accordingly, such as increasing stock during times where sales have typically been higher allowing businesses to increase sales.
Finally, prescriptive analytics uses a combination of data to assess what could potentially happen if certain parameters change, allowing businesses to answer ‘What should we do?’
Prescriptive analytics is the latest way businesses can use their raw data to gain a better understanding of their operations. It uses a combination of data to try and assess the impact decisions could have on a variety of business aspects. For example, businesses wanting to launch a new range of products can try different scenarios to see when the best time to release it should be. Using prescriptive analytics means that a business can be more effective and efficient.
Prescriptive analytics should be used by businesses when they are deciding between several courses of action.
To discover more about data analytics, register free for Big Data LDN at Olympia London on 3-4 November 2016. The event will host leading, global data and analytics experts, ready to arm you with the tools to deliver your most effective data-driven strategy.