Prescriptive analytics: Difference between revisions

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'''Prescriptive analytics''' is the third and final phase of [[business analytics]], which also includes descriptive and [[Predictive analytics|predictive]] analytics.<ref>{{cite journal|author1=Evans, James R.|author2=Lindner, Carl H. |lastauthoramp=yes |title=Business Analytics: The Next Frontier for Decision Sciences|journal=Decision Line|date=March 2012|volume=43|issue=2}}</ref><ref name="LustigEtAl">http://www.analytics-magazine.org/november-december-2010/54-the-analytics-journey{{cite journal|last=Lustig,Irv, [[Brenda L. Dietrich|Dietrich, Brenda]], Johnson, Christer, and Dziekan, Christopher|title=The Analytics Journey|journal=Analytics|date=Nov–Dec 2010}}</ref>

Referred to as the "final frontier of analytic capabilities,"<ref>{{Cite web |url=https://www.globys.com/2013/06/gartner-terms-prescriptive-analytics-%E2%80%9Cfinal-frontier%E2%80%9D-analytic-capabilities |title=Archived copy |access-date=2014-10-29 |archive-url=https://web.archive.org/web/20160402140918/http://globys.com/2013/06/gartner-terms-prescriptive-analytics-%E2%80%9Cfinal-frontier%E2%80%9D-analytic-capabilities |archive-date=2016-04-02 |url-status=dead }}</ref> prescriptive analytics entails the application of [[mathematical sciences|mathematical]] and [[computational science]]s and suggests decision options to take advantage of the results of descriptive and predictive analytics. The first stage of business analytics is descriptive analytics, which still accounts for the majority of all business analytics today.<ref>{{cite journal|last=Davenport,Tom |title=The three '..tives' of business analytics; predictive, prescriptive and descriptive|journal=CIO Enterprise Forum|date=November 2012}}</ref> Descriptive analytics looks at past performance and understands that performance by mining historical data to look for the reasons behind past success or failure. Most management reporting – such as [[sales]], [[marketing]], [[Business operations|operations]], and [[finance]] – uses this type of post-mortem analysis.

[[File:Three Phases of Analytics.png|thumb|left|350px|Prescriptive Analytics extends beyond predictive analytics by specifying both the actions necessary to achieve predicted outcomes, and the interrelated effects of each decision]]The next phase is [[predictive analytics]]. Predictive analytics answers the question what is likely to happen. This is when historical data is combined with rules, [[algorithms]], and occasionally external data to determine the probable future outcome of an event or the likelihood of a situation occurring. The final phase is prescriptive analytics,<ref>{{cite journal|last=Haas, Peter J., Maglio, Paul P., Selinger, Patricia G., and Tan, Wang-Chie|title=Data is Dead…Without What-If Models|journal=Proceedings of the VLDB Endowment|year=2011|volume=4|number=12}}</ref> which goes beyond predicting future outcomes by also suggesting actions to benefit from the predictions and showing the implications of each decision option.<ref>{{cite journal|author1=Stewart, Thomas. R. |author2=McMillan, Claude, Jr. |lastauthoramp=yes |title=Descriptive and Prescriptive Models for Judgment and Decision Making: Implications for Knowledge Engineering|journal=NATO AS1 Senes, Expert Judgment and Expert Systems|year=1987|volume=F35|pages=314–318}}</ref>