• August 4, 2016

Business Rx: Prescriptive Analytics’ New Role

From medicines to machinery, decision-making might never be the same again. 

While analytics of all types have proven invaluable in all levels of business decision-making, it is prescriptive analytics—a form of advanced analytics that examines data or content to answer the question, “What should be done?” or “What can we do to make XYZ happen?”—that is taking charge this year.

Prescriptive analytics are advanced analytics that combine descriptive and predictive analytics to determine and recommend specific actions to be taken. Examples are common and yet nearly invisible. Even so, they are growing in popularity and taking on bigger roles.

In Your Everyday Life

Bet you’ve experienced the Netflix use of prescriptive analytics to recommend movies and TV shows based upon both a historical read on the films you’ve watched and a prediction on what other shows you’re likely to enjoy. The action taken on that analysis—the prescriptive part—is the lineup of suggested shows you see when you engage with Netflix.

Another common example is found in grocery stores. Prescriptive analytics determine from your past purchases what items you like to buy (descriptive analytics) and then predict when you’re likely to run out of those items (predictive analytics) in order to print coupons for those specific items along with a sales receipt at checkout. The prescriptive action in this scenario is the automated selection of coupons to be printed for you.

In both of these cases, prescriptive analytics are personalizing marketing and customer servicethe two most common uses of prescriptive analytics.

But prescriptive analytics are coming into their own as success makes them increasingly popular choices for a plethora of uses. Here are some of the places you can expect prescriptive analytics to become more predominant.

In HR and Employee Productivity Management

Predictive analytics are increasingly being used by HR departments. Chief among the applications is predicting which employees are likely to quit. Behavioral analytics are also used in these calculations. Prescriptive analytics then suggest a number of actions to take to retain key employees or plan in anticipation of departure.

In Healthcare

In patient care, prescriptive analytics will be more widely used in a variety of scenarios, such as to suggest appropriate treatments and medicines specific to the patient, and to predict and prevent fraud or to identify patients seeking drugs due to addiction.

There will be numerous other use cases, too—almost in any situation where an outcome can be predicted and an algorithm can suggest a course of action.

In his blog for Healthcare IT News, writer Chris Clayton says: “Investing in prescriptive analytics will enable healthcare to better understand their patients, their programs and their providers and provide a means for each of them to take action and improve outcomes.”

In Physical Operations

Prescriptive analytics are proving to be very useful in physical operations ranging from IT infrastructures and commercial airlines to complex systems such as automated utility and water systems. In many cases, they are used to predict a system or part failure before it occurs and prescribe an action that both prevents the failure and elongates part life so that replacement costs are kept to a minimum.

Prescriptive analytics are poised to explode in nearly every industry and in many different roles. In fact, analytics provide the ideal assistants for humans at work, whatever that work may be.

Like this story? Find out if you’re getting the full benefit of your analytics with our self-assessment.