This gap is relating to the obsession with analyzing historical data and gaining insights based on versus building an intelligent model that can help take decisions about the future. There was a small section in this article that I particularly wished was discussed in more detail:
“One of the things we’ve learned is when we start and focus on an outcome, it’s a great way to deliver value quickly and get people excited about the opportunity. And it’s taken us to places we haven’t expected to go before. So we may go after a particular outcome and try and organize a data set to accomplish that outcome. Once you do that, people start to bring other sources of data and other things that they want to connect. And it really takes you in a place where you go after a next outcome that you didn’t anticipate going after before. You have to be willing to be a little agile and fluid in how you think about things. But if you start with one outcome and deliver it, you’ll be surprised as to where it takes you next.”
-Vince Campisi, chief information officer, GE Software
Though I agree that we should start from an outcome and identify the data that accomplishes the outcome, it is hard to do that without an intelligent model of the business. The elements of an intelligent model are:
- Process Flow:Build the process flow model for the organization (resources, costs, capabilities)
- Decision Flow:Build the range of possibilities for decisions made by the organization
- Data:Adopt historical data to feed the model and validate the process flow
- Constraints:Identify the upper constraint and lower constraint limits for all decision possibilities. Identify the objective function for the organization
- Prescription: Identify the best way to utilize the resources, costs and capabilities of the organization
Analytics have advanced from providing rudimentary descriptions of what occurred, to insightful analysis of what is likely to occur in the future, to now recommending specific actions to create predictable outcomes.
Prescriptive analytics focuses on this last order of analytics, prescribing actions based on desired outcomes; given specific scenarios, past and current events. The ability to manage outcomes through prescribed actions increases the effectiveness of decision makers and manages risk in the decision making process.
Strategic decisions can now be based not only on what has or is likely to occur in the future, but also on why and how things occur to create desired outcomes. The intelligent model is the key underpinning to accomplish prescriptive analytics.
