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Prescriptive Analytics and How Prescriptive Analytics Works: An Overview

Mithun Kumar

How Prescriptive Analytics Works
Image Source: HBS

Prescriptive analytics helps the enterprise leaders to build powerful strategy to get more profits and save cost providing best services with customer satisfaction.

Just think how much data are being generated every day in today’s digital age! The raw data does not provide value without it being processed in a way to get insight. Pattern recognition and knowledge discovery from large-scale data set or big data make data-driven solutions for your business enterprise. To get valuable insight from big data we need to analyze data with the help of several methods and techniques using several data analytics and business intelligence platforms and tools. Data Analytics is a process of analyzing row data to build models for prediction and prescription of a scenario. If we categorize data analytics in three major categories then we can get them as bellow-

1)      Descriptive Analytics

2)      Predictive Analytics

3)      Prescriptive Analytics

While descriptive analytics provides the scenario that has occurred, predictive analytics forecasts possible outcomes by analyzing historical and present data. On the other hand, prescriptive analytics finds the best possible solutions from a variety of options. Prescriptive analytics works by optimizing data from descriptive and predictive analytics. It creates advanced algorithms or models that help to find best solutions for decision-making. IBM stated three major benefits of prescriptive analytics as below-

1)      Improve Operations

2)      Manage Resources more Efficiently

3)      Mitigate Risks

 

How Prescriptive Analytics Works
Source: IBM

How Prescriptive Analytics Work

Prescriptive analytics works with predictive analytics which works based on statistics and modeling to predict the future scenario based on historical and current data. Generally, prescriptive analytics mostly depends on artificial intelligence more specifically machine learning. Scientific disciplines that include prescriptive analytics are as below:

-          Machine Learning

-          Operations Research

-          Computer Vision

-          Natural Language Processing

-          Applied Statistics

-          Mathematics

-          Signal Processing

-          Image Processing

 

Machine learning is an ability of a computer program that works automatically without additional human input.  It has the ability to analyze a large amount of data called big data and get insight very faster, comprehensive and error free than a human could manage.  Prescriptive analytics works to identify best actions to be taken based on the every single outcomes getting from predictive analytics.

Prescriptive Analytics Applications

Prescriptive analytics helps so many data-intensive business and government organizations. Where cost of human error is very high prescriptive analytics is the main weapon there.  

IBM reported that prescriptive analytics improve operations, manage resource efficiently, and mitigate risk. 

-          Customer satisfaction, profits and cost savings

-          Use cases spanning strategic planning

-          Operational and tactical activities

 

The use and value of prescriptive analytics are increasing day by day. Sometimes business models of startups at the beginning are not well fitted for profit. Consequently, the entrepreneurs fall into financial losses. Prescriptive analytics help to think about new business moves for generating new business model. No one wants financial losses so business leaders avoid the risky business moves and reduce the financial losses. Prescriptive analytics help the enterprise leaders to build powerful strategy to get more profits and save cost providing best services with customer satisfaction. Several financial sectors, medical and healthcare, airlines, oil and gas companies, transportation, electronics companies, tech companies and so many business enterprises are using prescriptive analytics to accelerate their activities faster and make high profits with customer satisfaction.

Author


Founder, Analytic
Remote Sensing Specialist & GIS Developer
Scientific Officer & Head, Aeronautics & Space Applications division


SEE ALSO: 4 Key Topics you should know to Prepare for Data Analytics Jobs in 2021

DON'T MISS: The 5 Best Data Analytics and Business Intelligence Platforms and Tools

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