A recent InFocus blog post, “Business Analytics: Moving from Descriptive to Predictive Analytics”, by data analytics expert William Schmarzo intrigued me to take his analytics discussion one step further. BI provides descriptive insight into what happened in the past. Predictive analytics predicts trends and behaviors in the future. I would argue that in order to deliver true and immediate value to most businesses, analytics must be “prescriptive.” Prescriptive analytics involve delivering information to frontline business decision-makers in a way that is insightful and actionable and enables them to improve decisions being made, by making them more informed. While this may seem obvious, many analytics solutions today do not embrace this important capability. For example, they might present refined data reports, but still place a significant burden of analysis on the recipient.
Prescriptive analytics deliver digestible information in a timely manner, making it absolutely clear to the decision-maker that some particular action needs to be taken. An example would be the difference between delivering:
- A list of all purchases made over the corporate maximum (BI)
- A list of employees who are likely, based on past behavior, to exhibit out-of-policy purchase behavior (Predictive)
- Actionable information about a specific employee whose spending behavior the last two weeks of employment was out-of-character - though not out-of-policy – when compared with a history of spending (Prescriptive)
Each of these deliverables has value to the business, but for everyday business decision makers on the front lines, prescriptive analytics allows them to be smarter and drive immediate value from analytics on a day-to-day basis.