Analytics has gained a huge importance in past few years and has turned out to be very useful in gaining the insights of data and helping many
companies to improve their business performance.It mainly helps the companies to get the answer of three important questions:”what has happened?”,
“what is happening?” and “what will happen?”. Analytics not only helps in deriving the insights from historical data but also helps in predicting the future by optimizing business.
Analytics is of three main types and they are as follows:
1. Descriptive analytics.
2. Predictive analytics.
3. Prescriptive analytics.
The main role of Descriptive analytics is to analyze and gain the insights of historical data depending on the behavior of data. It helps in finding
out the answer to question “what has happened?”. It is used by most of the organisations to for their functioning.
It is the technique of gaining insights and patterns from historical data and using these insights and patterns to predict the future to help the organisations to take important decisions to improve the business of organisation.
Imagine how helpful it would be when you receive advertisements of only products you are interested in.How helpful it would be when you can
predict the disease of a person by just checking his historical medical background and current symptoms? All of this can be done using predictive analytics.
Many organisations have started using predictive analytics to improve their business.Companies are able to target the needs of customer and
communicate with relevant product information only.For example, if a customer buys a laptop from eCommerce website than it is most likely he might
be interested in accessories of laptop immediately.Currently,chances of him buying accessories of competitor laptop are less.
- Firstly the data is collected from various data sources and it can be of any type.
- The next step is to clean the data and transform it into a structured data depending upon the business hypothesis.
- once the data sets become ready for use, predictive modeling techniques and algorithms can be applied on them to gain the important
insights of data that can be used to predict the future and thus improving the business of organisation.
predictive model builds on descriptive model to build the future.
Prescriptive analytics uses optimization to find a set of possible options and give a better solution or action for a given situation. It helps in
finding answers to “what should be done?”. It gives optimal action to what should be done in future depending upon the results of descriptive
and predictive models.It uses complex algorithms to compare the outcome of different actions and chooses the best out of all.
prescriptive models are the most complex models and hence used by less organisations.