Analytics: From Predictions to Prescriptions

October 19, 2018

I read an interesting essay originating at SAP. The article’s title: “The Path from Predictive to Prescriptive Analytics.” The idea is that outputs from a system can be used to understand data. Outputs can also be used to make “predictions”; that is, guesses or bets on likely outcomes in the future. Prescriptive analytics means that the systems tell or wire actions into an output. Now the output can be read by a human, but I think the key use case will be taking the prescriptive outputs and feeding them into other software systems. In short, the system decides and does. No humans really need be involved.

The write up states:

There is a natural progression towards advanced analytics – it is a journey that does not have to be on separate deployments. In fact, it is enhanced by having it on the same deployment, and embedding it in a platform that brings together data visualization, planning, insight, and steering/oversight functions.

What is the optimal way to manage systems which are dictating actions or just automatically taking actions?

The answer is, quite surprisingly, a bit of MBA consultantese: Governance.

The most obvious challenge with regards to prescriptive analytics is governance.

Several observations:

  • Governance is unlikely to provide the controls which prescriptive systems warrant. Evidence is that “governance” in some high technology outfits is in short supply.
  • Enhanced automation will pull prescriptive analytics into wide use. The reasons are one you have heard before: Better, faster, cheaper.
  • Outfits like the Google and In-Q-Tel funded Recorded Future and DarkTrace may have to prepare for new competition; for example, firms which specialize in prescription, not prediction.

To sum up, interesting write up. perhaps SAP will be the go to player in plugging prescriptive functions into their software systems?

Stephen E Arnold, October 19, 2018


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