What Is Prescriptive Analytics, and Why Is It Important?
There are four kinds of analytics with distinct purposes of their own:
Descriptive Analytics: Answer questions about what happened.
Diagnostic Analytics: Answer questions about why certain things happened.
Predictive Analytics: Answers questions about what will happen.
Prescriptive Analytics: Answer questions about what should be done.
Prescriptive Analytics is one of the most valuable and complex form of analytics. It inherits the output of other forms of analytics to transform and produce applicable insights and solutions. To understand its importance, let’s go through an example below:
Looking at the data for the housing market in Australia in 2021, we recognize a sudden price increase of 26.7% in Sydney. That is descriptive analytics.
Looking further into the relationship between interest rate and house price for the same year, we understand that the government lowering interest rates contributes to the house price increase. That is diagnostic analytics.
If we look at house price data for the last ten years, we can predict a high chance that it will continue to rise in the future. That is predictive analytics.
So, what is the next best course of action that a company or a person could? Should investors jump into the market right now to ride the increasing trend? Or should they wait for a short-term price correction? All that information above gave us an understanding of the situation, but it did not let us know how to navigate.
That is when prescriptive analysis comes into play. Prescriptive analysis can model and analyze all factors and scenarios to determine the best next move.
It is why prescriptive analysis is called the ‘future of data analytics’ by Forbes magazine.
So how can a company leverage prescriptive analytics?
Nowadays, companies have a lot more power in how they can gather and analyse data. Data is being collected in every system at every touch point. There are hundreds of tools and indicators to choose from, which can automatically yield thousands of results.
What to use and what not to use is a daunting and time-consuming process. Knowing how to use different tools is one thing. Interpreting the results of those tools is another thing. Compiling those results together to yield valuable insights and a realistic course of action is a whole different story.
It’s not an easy task because it requires experience and expertise. Many companies, especially non-data-focused ones, lack time, resources, and specialists to execute.
That is why many of them have come to Billigence for our service.
This is what we do.
We provide experience and expertise.
About Billigence and how we create value:
We have provided business intelligence for our clients for over twelve years. We have exposure in various industries, both public and private sectors, and this gives us a well-rounded yet extensive knowledge base in different business segments. Billigence has a deep understanding not only of our clients but also of the industry context that our clients are in.
We partner with leading data analytics platforms like Tableau, Alteryx, Matillion, Snowflake and more, which give us the technological edge in leveraging data to add value to our clients. Our team consists of experienced BI consultants, data engineers, and data scientists that can deliver valuable insights, customised data service, and practical solutions to your organisation’s needs.
No matter which analytics stage you’re in, we can take it to the next level.
Start your journey with us today.