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What is Prescriptive Analytics?

Posted on: 11-10-2015 11:37:031071


The rate at which business analytics continues to evolve is comparable to the speed of Usain Bolt; rapid and very hard to keep up with. Like Bolt, business analytics is hot right now - as a quick search on Google will soon prove. Numerous software companies are vying for the public’s attention as a multitude of adverts associate themselves with endless streams of keywords and publications. For potential consumers this can make the world of business analytics a particularly tricky and confusing domain.

Gartner cleverly summarize the current state of business analytics via this one small diagram – something I will now try to briefly summarize. The first phase of analytics was categorized as descriptive; reports driven by hindsight that only included information on past data. Next consumers were introduced to diagnostic capability; analytics that reported on past performance but could also explain why these events actually occurred. Predictive analytics soon followed. Predictive analytics uses past performance indicators to suggest to users what might happen in the future. This analytics form is currently being pushed heavily by its vendors and makes up the majority of noise concerning analytics. The final and most advanced form of analytics is prescriptive. Although this capability is currently available through vendors such as Every Angle, it is yet to fully explode on to the scene. Only the early adopters and innovators are benefiting from the power of actionable insight, whilst descriptive analytics proves to still be the most popular.

Although the technology behind business analytics is rich in complexity, the naming conventions given to the tools sat within its umbrella are hardly ambiguous. Descriptive analytics describe, diagnostic analytics diagnose, predictive analytics predict, so it is therefore with no great assumption that prescriptive analytics must prescribe. But what does this really mean?

Users of prescriptive tools are able to access insights that can help them shape the future. They prescribe action. These type of tools don’t just alert users that something is/went wrong, but will instead detail how these issues can be resolved. There are actually two types of prescriptive analytics. The first lives in the world of big data; enormous volumes of consumer information captured from hundreds of thousands of data points. This type of prescriptive analytics is looking to use new levels of cognitive computing power to prescribe future strategic moves. However, in the more current and day-to-day world of small data, the core data that is the lifeblood of business, the front line is sparsely populated. Only specialist companies like Every Angle are able to move beyond transactional data reports to truly understanding it.

As described in our free prescriptive analytics eBook, this type of analytics presents business with the ability to move beyond just knowing what errors have occurred, to a place where you are able to understand their root cause and take action early enough to be able to stop them happening in the first place. It’s the difference between hindsight and foresight. To put it simply, would you rather be able to accurately explain to a customer why their order failed, or take steps to ensure you avoid the conversation altogether?

To quickly summarize, the difference between prescriptive tools and previous analytic capability is its ability to understand the relationships between actions and outcomes. It is moving beyond beautifully presented hindsight to a world driven by actionable insight. For more information on prescriptive analytics, and the benefits this technology can bring, download our free Control Your Supply Chain Using Prescriptive Analytics eBook.

Joe Edwards
UK Marketing Manager

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