{"id":21452,"date":"2023-08-22T12:28:00","date_gmt":"2023-08-22T12:28:00","guid":{"rendered":"https:\/\/businessyield.com\/?p=21452"},"modified":"2023-09-30T22:10:07","modified_gmt":"2023-09-30T22:10:07","slug":"predictive-vs-prescriptive-analytics","status":"publish","type":"post","link":"https:\/\/businessyield.com\/business-planning\/predictive-vs-prescriptive-analytics\/","title":{"rendered":"Predictive vs Prescriptive Analytics, Explained!!! (+ Detailed Guide)","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"
Making the appropriate judgments is tough in business, especially when there are insufficient pieces of data to assist decision-making. Analyzing history isn\u2019t always a trustworthy predictor of what will happen in the future. Hence, making decisions just on the basis of historical facts is often incorrect. Predictive and prescriptive analytics are two forward-thinking technologies that company leaders utilize to get beyond these restrictions. They more correctly forecast the future and, in the case of prescriptive analytics, direct executives to the best overall decisions by combining historical data (descriptive analytics), rules, and a knowledge of the business. But then you should first know the difference between the two (predictive vs prescriptive analytics) before taking a step in this direction\u2014considering that they both sound alike.<\/p>\n
The growing importance of these analytical techniques is reflected in a forecast that the global market for predictive and prescriptive analytics would expand at a CAGR of 19.6% to $28.7 billion by 2026.<\/a><\/p>\n So the big question is, are there any distinctions between predictive and prescriptive analytics, or are they interchangeable?<\/p>\n Well on the contrary, despite the fact that both strategies are forward-thinking, may sound alike, there is a significant difference between them. According to Gartner\u2019s Analytic Ascendency Model<\/a>, the following is the hierarchy of analytical techniques:<\/p>\n So, while predictive analytics foretells what might happen, prescriptive analytics reveals how to make it happen. Predictive analytics is subservient to prescriptive analytics in this scenario. This isn\u2019t to say that predictive analytics isn\u2019t useful; it\u2019s just that the information they provide isn\u2019t the same.<\/p>\n The use of statistical and modeling approaches to predict what will happen in the future is known as predictive analytics. It calculates the likelihood of a given event or events using historical data and modeling approaches. Predictive maintenance is a fantastic example of predictive analytics since it tries to figure out when a machine needs service by using various algorithms and machine data to estimate the life cycle of important components. Although this data is informative and actionable, it does not define the specific action that should follow. Rather, it tells the user that maintenance is required.<\/p>\n Prescriptive analytics varies from predictive analytics in that it not only predicts what will happen but also gives the user with specific options and prescribes which business solutions are the best based on specified criteria. This type of analytics helps a business or organization build a model. And to ensure that it accurately represents all aspects of the business, this model is evaluated against current and historical data.<\/p>\n Furthermore, users can examine the model to determine the best decision based on established criteria such as profitability, SLAs, and throughput, rather than merely forecasting what will happen.<\/p>\n Prescriptive analytics, in the context of the predictive maintenance example above, not only decides that maintenance is imminent, but also determines the best options for maintenance, replacement, or outsourcing in order to maximize total profitability and turnover.<\/p>\n Both predictive and prescriptive analytics are crucial business tools, and each serves a different purpose. But then, predictive analytics is inferior to prescriptive analytics, according to Gartner\u2019s analytics hierarchy.<\/a> This is because predictive analytics predicts what will happen but does not provide direction on how to make the necessary decisions. Prescriptive analytics, on the other hand, not only predicts what will happen but also identifies the most optimum business decision.<\/p>\n Yes, the distinction between predictive and prescriptive analytics is significant.<\/p>\n Some often wonder whether the distinction between these two analytics is really significant in practice. This results from how more economical it is to operate predictive analytics against prescriptive analytics. In other words, they try to point out that optimizing a prescriptive analytics solution requires far more effort than optimizing a smaller-scale predictive analytics solution. It\u2019s critical to evaluate the business maturity of potential clients when answering that question.<\/p>\n\n
Predictive Analytics <\/span><\/h3>\n
Prescriptive Analytics <\/span><\/h3>\n
Predictive vs Prescriptive Analytics: What\u2019s the Difference?<\/span><\/h2>\n
Attributes of Predictive Analytics <\/span><\/h3>\n
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Attributes of Prescriptive Analytics <\/span><\/h3>\n
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Is Analyzing Predictive vs Prescriptive Analytics Important?<\/span><\/h2>\n