Advanced Analytics is the latest technological revolution that has pushed the business world towards a deeper and more real vision of their businesses and the behavior of their customers. But this technology can only make a difference in an increasingly competitive and globalized market if we use all its potential.
If we think of this field as categories, we can distinguish three types of Advanced Analytics, each of which incorporates intelligence to our business at different levels.
On one hand, Descriptive Analytics, the most basic component of Advanced Analytics, shows us what is happening in our business in a way that is easy to understand. Analyzing the historical information it provides allows us to determine what has happened and why.
Predictive and Prescriptive Analytics techniques are tools that help us turn descriptive metrics into knowledge and decisions. Predictive Analytics allows us to predict what will happen and Prescriptive Analytics helps us identify the most appropriate decisions for our business. This is why the greatest benefits are achieved when both types of Advanced Analytics are used together. In this case, we will be able to use the forecasts on important business indicators to identify the best decisions.
Over the last few years, the standardization of the Big Data concept has led to businesses collecting huge amounts of data in order to incorporate new business models and position themselves against their competitors. This has opened up a range of proposals and business solutions with high analytical value, mainly predictive solutions. Sales forecasting models, buyer propensity and the analysis of trends and consumption patterns have become essential in a company´s technological ecosystem. However, Predictive Analytics alone is not enough to position a company against its competitors.
The use of Prescriptive Analytics techniques allows us to automate complex decisions, where the situation involves taking into account a large volume of data, variables and multiple constraints. In these cases, it can seem difficult to identify the best decision, and even more so if we have a short time to decide. Prescriptive Analytics is capable of making proposals seeking the optimum result, incorporating intelligence and processing capacity to improve the efficiency of the process.
In addition, Prescriptive Analytics uses the results obtained from Predictive Analytics – forecasts and trends – to evaluate all possible options, taking into account all variables, such as costs, limits, constraints and capacities. This technique selects the most suitable proposal, always taking into account the objectives set out in the solution. Goals can include achieving the lowest cost, obtaining the highest profit or the best use of resources. It is therefore the next step to take if we want to maximize the profitability of our business.
Predictive Analytics can help us answer what will happen in the future, but Prescriptive Analytics can help us direct our future decisions in a way that makes them more profitable for our business.
We can use Prescriptive Analytics in various processes, from marketing campaign optimization to task scheduling in manufacturing. The benefits of its application are the same: better use of available resources, greater efficiency in the company’s business processes and, ultimately, greater business profitability.
For most companies nowadays, the provision of Prescriptive Analytics solutions is more of a desire than a reality. Something common in any company such as the planning of its workforce or the scheduling of tasks are poorly automated processes and are still done more or less in an artisan way through the use of spreadsheets. This reality, however, is changing.
It is therefore time to start thinking about how Prescriptive Analytics can help your business.