The age of connectivity is at its outset. While today nearly 40% of the world’s population has an internet connection, that number will only continue to increase. The Internet of Things (IoT), where products communicate with their surroundings via connectivity, like a car receiving instructions to slow down from sensors on a bridge detecting ice, is imminent.
Businesses and enterprises that wish to keep pace with innovation must find a way to harness insights that are contained in massive data sets. These insights may range from information about how much to charge for a product or service at a particular time of day, to demographic trends that indicate how to deploy a new facility in a new location.
Businesses leaders who harness the power of prescriptive analytics will gain advantage in the increasingly connected business environment that calls for data-driven risk management and capital deployment simulations. Here’s how decision makers will prevent their organizations from losing cash while also driving higher profits with prescriptive analytics.
As enterprise networks grow to serve larger numbers of customers, and employ more workers, data will become the key to bypassing risk and ensuring cost savings are locked in. With prescriptive analytics, leaders will have the power to identify how a system would behave under different configurations. Simulations make sure that integral performance metrics are met such as wait times, queue length, etc.
When decision makers are faced with a variety of choices, they can implement prescriptive analytics simulations to identify how their organisation will function in the event of impending changes. For example, leaders can simulate the impact of regulatory changes, less employees working more hours, global price changes, fluctuations in the cost of their own products or services, an increase or decrease in emission, and the effects of various execution strategies to identify what situation might catalyse the highest cost savings.
When it comes to scope creep, prescriptive analytics will assist decision makers in simulating future project needs so that parameters can be more reasonably understood and defined from a project’s inception. For example, through a simulation, a leader would be able to establish procedure for a stage in the project that may be years down the line.
Prescriptive analytics do more than prevent risk; they will also automatically direct business leaders towards the most profitable business plans based on stochastic optimisation.
Stochastic optimisation leverages linear programming to measure the best action plan for a business given the desired outcome and functional constraints. Constraints can include:
While the error of human analysis will be removed, profits will also benefit from precise analysis of how a given business plan will affect an organisation and what the organisation should do.
Nearly all industries benefit from the cost savings and increased profitability made possible by prescriptive analytics, but the most notable benefits have been experienced by enterprises in fields that serve large populations including:
If your organisation is ready to utilise data-driven cost savings and experience stochastic simulations to gain insight as to how position yourself to drive profits, consider harnessing the power of prescriptive analytics.