Descriptive Analytics: A set of technologies and processes that use data to understand and analyze business performance.While descriptive analytics provide a starting point for understanding problems and performance, the more significant purpose and objective of analytics is to achieve predictive and prescriptive findings via higher levels of technique. Make certain that your business analytics strategy is not short-changing decision makers by concluding with descriptive findings alone. Said another way, insist that your business analytics leaders and teams have the training and discipline to go the distance into all forms of advanced analytical methods and techniques as required. The questions posed above under each level of inquiry can provide the interrogative tools for evaluating your firm's current capabilities.
Predictive Analytics: The extensive use of data and mathematical techniques to uncover explanatory and predictive models of business performance representing the inherit relationship between data inputs and outputs/outcomes.
- Standard reporting and dashboards: What happened? How does it compare to our plan? What is happening now?
- Ad-hoc reporting: How many? How often? Where?
- Analysis/query/drill-down: What exactly is the problem?
Prescriptive Analytics: A set of mathematical techniques that computationally determine a set of high-value alternative actions or decisions given a complex set of objectives, requirements, and constraints, with the goal of improving business performance.
- Data mining: What data is correlated with other data?
- Pattern recognition and alerts: When should I take action to correct or adjust a process or piece of equipment?
- Monte-Carlo simulation: What could happen?
- Forecasting: What if these trends continue?
- Root cause analysis: Why did something happen?
- Predictive modeling: What will happen next if?
- Optimization: How can we achieve the best outcome?
- Stochastic optimization: How can we achieve the best outcome and address uncertainty in the data to make better decisions?
Source: Lustig, I, Dietrich, B, Johnson, C, and Dziekan, C (2010, November-December), The Analytics Journey, Analytics Magazine, 11-18.