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What are descriptive, diagnostic, predictive and prescriptive analytics?
They are four levels of analytics. Descriptive shows what happened, diagnostic explains why, predictive estimates what will likely happen, and prescriptive recommends what action to take. Most businesses should master descriptive and diagnostic work before investing in predictive or prescriptive approaches.
Think of them as a ladder of difficulty and value:
- Descriptive: sales fell 8 percent last month
- Diagnostic: the fall came from one region after a stock-out
- Predictive: that region will likely miss target next month without restocking
- Prescriptive: reorder these items by this date
Each level depends on the one beneath it. Predictions built on inconsistent historical numbers rarely survive contact with reality.
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