The definition of prescriptive analytics is the practice of using analytics to recommend specific actions that businesses or individuals can take to improve their outcomes. Prescriptive analytics applications can identify what steps to take, how to take them, and when to take them to achieve the desired goal. Prescriptive analytics is built on the foundation of descriptive and predictive analytics. Descriptive analytics uses data to create a picture of what has happened, while predictive analytics uses data to identify patterns and trends that may occur in the future.
Prescriptive analytics takes things one step further by using this information to recommend specific actions that can improve future outcomes.
What are the benefits of prescriptive analytics?
There are several benefits to using prescriptive analytics. Perhaps the most obvious benefit is that it can help businesses achieve their desired outcomes more quickly and efficiently. In many cases, prescriptive analytics can identify actions that would otherwise be missed or would take a long time to discover through traditional methods. For example, prescriptive analytics can help identify opportunities for cost savings or ways to increase revenue. Another benefit is that prescriptive analytics can help businesses make better decisions.
By identifying the relationships between different factors, prescriptive analytics applications can help business leaders make informed decisions based on data rather than intuition. For example, if a company wants to increase its profits, it can use prescriptive analytics to determine which products to manufacture and sell, where to open new stores, and how to price its products. This can lead to improved performance and reduced risk. Finally, prescriptive analytics can help businesses better understand and respond to changes in the market.
By constantly analyzing data and looking for patterns, prescriptive analytics applications can help businesses stay ahead of the competition and anticipate changes in customer behavior.
How do you implement prescriptive analytics?
There are a few different ways to implement prescriptive analytics. One way is through a rules engine. A rules engine is a piece of software that can look at data and determine what actions should be taken based on certain conditions. It can also predict the outcomes of those actions. Another way to implement prescriptive analytics is through machine learning algorithms. These algorithms can be trained to recognize patterns in data and then make recommendations for action.
The advantage of using machine learning is that it can adapt to changes in the data, so the recommendations it makes will be more accurate over time. A third method for implementing prescriptive analytics is artificial intelligence. This approach uses artificial intelligence algorithms to mimic the way humans make decisions. This can be done by either training the algorithm on data or providing it with a set of rules. All of these methods have their advantages and disadvantages.
A rules engine is good at considering all the possible permutations when deciding on an action, but it can be challenging to set up and maintain. Machine learning algorithms are good at recognizing patterns, but they can be challenging to understand and interpret. Artificial intelligence can be very accurate in its decisions, but it can also be expensive to implement and maintain. Once you have a method for implementing prescriptive analytics, you need to gather data to train the algorithm data source.
Once you train your algorithm, it is ready for predictions and recommendations.
