Business analytics assist in making better business decisions. By analyzing data, you can identify trends and patterns you would not otherwise be aware of. There are many different types of business analytics, but they can be generally grouped into three categories: descriptive, predictive, and prescriptive. Take a look at this guide to learn more about descriptive predictive and prescriptive analytics and which form you should focus on for your business analytics process.
What Is Descriptive Analytics?
Descriptive analytics is the process of analyzing past performance to understand what has happened and to identify patterns and trends to anticipate future events. It involves examining data to create reports and visualizations that describe what has occurred and what is currently happening. Descriptive analytics can help organizations understand customer behavior, assess the effectiveness of marketing campaigns, and improve operations.
What Is Predictive Analytics?
Predictive analytics is the process of using data mining and modeling techniques to identify patterns in historical data to predict future events. It can be used to predict everything from consumer behavior to the likelihood of a particular disease outbreak. One of the key benefits of predictive analytics is that it can help businesses to make more informed decisions. For example, a business might use predictive analytics to determine which customers are most likely to churn so that they can take steps to retain those customers.
Similarly, a healthcare organization might use predictive analytics to predict which patients are most likely to develop a particular disease so that they can take steps to prevent it. There are several different techniques that can be used in predictive analytics, including machine learning, decision trees, and regression analysis. To be effective, the data that is used for predictive analytics must be clean and well-organized.
What Is Prescriptive Analytics?
Prescriptive analytics is the next step up from predictive analytics. Predictive analytics tells you what is likely to happen, while prescriptive analytics tells you what to do to achieve the desired outcome. Prescriptive analytics takes all the data that predictive analytics has identified and provides decision-makers with step-by-step guidance on achieving the best outcome.
Prescriptive analytics improves decision-making by providing decision-makers with the information they need to make the best choices. It can help to optimize business processes, maximize profits, and reduce costs. These analytics are powered by artificial intelligence, which allows it to analyze data and make recommendations in real time. One of the benefits of prescriptive analytics is that it can help to identify and correct problems before they cause any damage. It can also help to improve communication between departments and between businesses and their customers.
How Do These Analytics Compare To Each Other?
The three types of analytics can be compared in terms of their goals, methods, and outputs. The goal of descriptive analytics is to understand what has happened, while the goal of predictive analytics is to predict what is likely to happen. And the goal of prescriptive analytics is to prescribe actions that are likely to improve future performance.
The methods used in descriptive analytics are data mining, data profiling, and data visualization, whereas predictive analytics includes data forecasting, and prescriptive analytics includes data optimization. The outputs of descriptive analytics are reports and dashboards, and the outputs of predictive analytics are models and forecasts. Meanwhile, the outputs of prescriptive analytics are plans and recommendations.
When Should I Use Descriptive, Predictive, Or Prescriptive Analytics?
The three types of analytics can be used together or separately, depending on the needs of the business. Descriptive analytics is typically used at the beginning of a project to understand what has happened in the past and identify any patterns. Predictive analytics can then be used to build models to help predict future outcomes. Once these models have been created, prescriptive analytics can be used to determine the best course of action for achieving specific goals.
These three types of business analytics can be used to improve a wide variety of business functions, including marketing, sales, operations, and human resources. By following this guide, you’ll get to know the type of analytics that suits your business best.
