Question

Give an example of how a business would use each of the following type of business analytics:        

a. Descriptive Analytics

b. Predictive Analytics

c. Prescriptive Analytics

Answer 1

Answer- These analytic options can be categorized at a high level into three distinct types. No one type of analytic is better than another.

The key to companies successfully using Big Data, is by gaining the right information which delivers knowledge, that gives businesses the power to gain a competitive edge.

The main goal of big data analytics is to help organizations make smarter decisions for better business outcomes.

A. Descriptive Analytics - Use data aggregation and data mining to provide insight into the past and answer: “What has happened?”

This analyses the data coming in real-time and historical data for insights on how to approach the future. The main objective of descriptive analytics is to find out the reasons behind precious success or failure in the past.

The ‘Past’ here, refers to any particular time in which an event had occurred and this could be a month ago or even just a minute ago. The vast majority of big data analytics used by organizations falls into the category of descriptive analytics.

A business learns from past to understand how they will impact the future outcomes. Descriptive analytics is leveraged when a business needs to understand the overall performance of the company at an aggregate level and describe the various aspects.

B. Predictive Analytics - Use statistical models and forecasting techniques to understand the future and answer: “What could happen?”

The predictive analytics will not tell you what will happen in the future. It cannot do that. In fact, no analytics can do that. Predictive analytics can only forecast what might happen in the future, because all predictive analytics are probabilistic in nature.

Organizations collect contextual data and relate it with other customer user behaviour datasets and web server data to get real insights through predictive analytics.

Companies can predict business growth in future if they keep things as they are. Predictive analytics provides better recommendations and more future looking answers to questions that cannot be answered by BI.

C. Prescriptive Analytics - Use optimization and simulation algorithms to advise on possible outcomes and answer: “What should we do?”

These analytics go beyond descriptive and predictive analytics by recommending one or more possible courses of action. Essentially they predict multiple futures and allow companies to assess a number of possible outcomes based upon their actions.

Prescriptive analytics use a combination of techniques and tools such as business rules, algorithms, machine learning and computational modelling procedures. These techniques are applied against input from many different data sets including historical and transactional data, real-time data feeds, and big data.

Larger companies are successfully using prescriptive analytics to optimize production, scheduling and inventory in the supply chain to make sure they are delivering the right products at the right time and optimizing the customer experience.

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