There are four types of Analytics:
Prescriptive analytics: What should I do about it?
Prescriptive analytics is about using data and analytics to improve decisions and therefore the effectiveness of actions.Prescriptive analytics is related to both Descriptive and Predictive analytics. While Descriptive analytics aims to provide insight into what has happened and Predictive analytics helps model and forecast what might happen, Prescriptive analytics seeks to determine the best solution or outcome among various choices, given the known parameters.
“Any combination of analytics, math, experiments, simulation, and/or artificial intelligence used to improve the effectiveness of decisions made by humans or by decision logic embedded in applications.”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.
Prescriptive analytics can also suggest decision options for how to take advantage of a future opportunity or mitigate a future risk, and illustrate the implications of each decision option. In practice, prescriptive analytics can continually and automatically process new data to improve the accuracy of predictions and provide better decision options.
Prescriptive analytics can be used in two ways:
Inform decision logic with analytics: Decision logic needs data as an input to make the decision. The veracity and timeliness of data will insure that the decision logic will operate as expected. It doesn’t matter if the decision logic is that of a person or embedded in an application — in both cases, prescriptive analytics provides the input to the process. Prescriptive analytics can be as simple as aggregate analytics about how much a customer spent on products last month or as sophisticated as a predictive model that predicts the next best offer to a customer. The decision logic may even include an optimization model to determine how much, if any, discount to offer to the customer.
Evolve decision logic: Decision logic must evolve to improve or maintain its effectiveness. In some cases, decision logic itself may be flawed or degrade over time. Measuring and analyzing the effectiveness or ineffectiveness of enterprises decisions allows developers to refine or redo decision logic to make it even better. It can be as simple as marketing managers reviewing email conversion rates and adjusting the decision logic to target an additional audience. Alternatively, it can be as sophisticated as embedding a machine learning model in the decision logic for an email marketing campaign to automatically adjust what content is sent to target audiences.
Different technologies of Prescriptive analytics to create action:
- Search and knowledge discovery: Information leads to insights, and insights lead to knowledge. That knowledge enables employees to become smarter about the decisions they make for the benefit of the enterprise. But developers can embed search technology in decision logic to find knowledge used to make decisions in large pools of unstructured big data.
- Simulation: Simulation imitates a real-world process or system over time using a computer model. Because digital simulation relies on a model of the real world, the usefulness and accuracy of simulation to improve decisions depends a lot on the fidelity of the model. Simulation has long been used in multiple industries to test new ideas or how modifications will affect an existing process or system.
- Mathematical optimization: Mathematical optimization is the process of finding the optimal solution to a problem that has numerically expressed constraints.
- Machine learning: “Learning” means that the algorithms analyze sets of data to look for patterns and/or correlations that result in insights. Those insights can become deeper and more accurate as the algorithms analyze new data sets. The models created and continuously updated by machine learning can be used as input to decision logic or to improve the decision logic automatically.
- Paragmetic AI: Enterprises can use AI to program machines to continuously learn from new information, build knowledge, and then use that knowledge to make decisions and interact with people and/or other machines.
Use of Prescriptive Analytics in ThingWorx Analytics:
Thing Optimizer: Thing Optimizer functionality provides the prescriptive scoring and optimization capabilities of ThingWorx Analytics.
While predictive scoring allows you to make predictions about future outcomes, prescriptive scoring allows you to see how certain changes might affect future outcomes. After you have generated a prediction model (also called training a model), you can modify the prescriptive attributes in your data (those attributes marked as levers) to alter the predictions. The prescriptive scoring process evaluates each lever attribute, and returns an optimal value for that feature, depending on whether you want to minimize or maximize the goal variable.
Prescriptive scoring results include both an original score (the score before any lever attributes are changed) and an optimized score (the score after optimal values are applied to the lever attributes). In addition, for each attribute identified in your data as a lever, original and optimal values are included in the prescriptive scoring results.
How to Access Thing Optimizer Functionality:
ThingWorx Analytics prescriptive scoring can only be accessed via the REST API Service. Using a REST client, you can access the Scoring service which includes a series of API endpoints to submit scoring requests, retrieve results, list jobs, and more. Requires installation of the ThingWorx Analytics Server.
How to avoid mistakes - Below are some common mistakes while doing Prescriptive analytics:
- Starting digital analytics without a clear goal
- Ignoring core metrics
- Choosing overkill analytics tools
- Creating beautiful reports with little business value
- Failing to detect tracking errors
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