At Biin Solutions, we approach concepts such as Business Analytics (BA) to properly convey its concept, its objective and the types of analysis it involves. One of these very types is prescriptive analytics. BA can be categorized into descriptive, predictive and prescriptive analytics. The latter is possibly the most important of all three, as it integrates what descriptive techniques offer about the past and what predictive ones say about the future in order to answer the most frequent question in all companies: what should we do? As such, it seeks to clarify doubts about which is the best decision or how to make something happen. With prescriptive analysis, the future can be changed.  That is, Artificial Intelligence (AI) can be used to know the decisions and actions that will lead to desired results. Its objective is to optimize resources and increase the operational efficiency of the company. Predictive analysis provides reports and, based on these, prescriptive analysis questions the ways in which the obtained results could be used positively, for example: 
  • How do we benefit from these predictions?
  • How will these decisions impact others?
From this starting point, AI carries out the creation of different scenarios to better answer these questions.

Prescriptive analytics for your business

Prescriptive analytics not only takes into account historical data of the company, it also involves analyzing the effect that decisions will have on the costs and achievements that will be generated. At the same time, it contemplates possible limitations, along with other aspects that must be taken into account. By integrating all of this, realistic scenario simulations can be automatically generated, with the end goal of achieving a positive impact on the return on investment (ROI) of the business. Prescriptive analytics also:
  • Improves processes, campaigns and strategies
  • Minimizes costs and maintenance needs
  • Improves focus and planning of internal growth of your company
  • Reduces financial risks
  • Forecasts customer needs

Applications of prescriptive analytics in business

Not every industry uses the same analysis formulas, since each one has its own goals and objectives. Prescriptive analysis can be adapted to many industry sectors to provide greater optimization in their processes and generate results. Some examples are as following:

Cosmetics

Any company dedicated to selling products needs to keep up with the needs and purchasing habits of their consumers, as well as industry-wide trends. Cosmetics are no different. Enterprises in this sector use predictive analytics to perform behavioral simulations and discover possible preferences for increasing their sales.  For example, it may turn out that they should focus their strategies and efforts on specific products such as colored eyeliners instead of the traditional black due to shifting trends and consumer demand.

Health sector

Businesses operating in health use predictive analytics to record operational data and combine it with political, economic, social factors, as well as demographic data and health trends. In this way, they plan out with greater precision business decisions such as construction of new health centers or investment in new equipment.

Telecommunications

In the case of emergency calls during accidents or natural disasters, telecommunication companies immediately share information about the most affected locations. Once the information is collected, the fastest routes and the type of equipment needed are identified.

Prescriptive analytics vs. predictive vs. descriptive

Different types of business analytics approach data in distinct ways, like so:

Descriptive analytics

It answers the question "What happened?".  Descriptive analytics are concerned with historical performance. They extract company data to understand what it has experienced as situations of success or failure, what strategies were used, what was happening at that time and so on.

Predictive analytics

It answers the question "What will happen?".   Predictive analytics start from the report provided by descriptive analytics and turns the data into valuable information, using it to determine probable futures while identifying risks and opportunities for the company.

Prescriptive analytics 

It is the third type of analysis and answers the question “what should we do?” or “how can we make it happen?”.  It takes into account both previous analyzes to develop better results and find solutions through scenario simulation techniques. Its purpose is to select the best option for the company in order to optimize resources and increase operational efficiency. It is worth mentioning that no type of analysis is better than another, but there will be one that is the most appropriate depending on the case or purpose your company has for it. Now that you know the types of analysis better, which do you think is the best to implement in your company? Wait no more and venture into digitization by climbing to the next level with Biin.