Consumer websites and applications make recommendations based on user data—such as Amazon suggesting a book we might like based on our purchase history, or Netflix recommending a film based on what we’ve viewed in the past.
While these smart analytics live behind many of our interactions as consumers, it is not typical to have specific recommendations about business decisions delivered to us—as business leaders—from our enterprise applications. This may not be altogether surprising when considering that business challenges are much more complex than knowing which film you might want to watch next. The stakes are much higher for analytics that answer questions that impact business survival: How can we improve staff retention? How do we increase revenue?
But now, we are entering an era where the same approaches and ease-of-use can be applied to decision-making in the enterprise. Where once these important decisions would have been based on limited information and even gut feel, we will now get recommendations based on accurate and current data that help us make confident and informed decisions about how to grow our businesses.
The end of instinct-only decision-making
Over the past decade, new enterprise applications have emerged that keep all HR and financial data in memory, allowing users to perform analytics in real-time. This has broadened the horizons of what analytics can deliver.
Today, there are three broad subsections of analytics: descriptive (provides insights into what happened), predictive (predicts what might happen in the future), and prescriptive (delivers a recommended course of action to deliver optimal results). Modern business solutions combine all three analytics approaches, using advanced data science and machine learning algorithms to provide leaders with insights, predictions, and recommendations, leading to smarter financial and workforce decisions.
The latter category of prescriptive analytics—in which recommendations are provided as to what steps to take next—is the newest and most advanced and also the most interesting for business users.
What kind of decisions could benefit from prescriptive analytics? Consider retention risk. Knowing when an employee might be thinking to leave is often based solely on the instincts of his or her manager. Considring the significant cost to the bottom line as well as a business risk, since productivity, work quality, and customer satisfaction could be impacted negatively by attrition, it needs more than instinct.
All companies need to find new approaches to increase retention, and the most innovative ones are looking at prescriptive analytics to revolutionise their strategies.
The future is prescriptive
The most innovative solutions deliver interactive dashboards that enable businesses to quickly identify and understand retention risk for the organisation as a whole, through to specific lines of business or departments. Available metrics include the number of top performers at high risk of leaving in the next twelve months, as well as the projected cost of replacing them.
Data can also be used to define the top risk factors driving staff turnover, such as time spent in current role, number of job functions held, or time between promotions, as well as highlighting which departments, job types, or teams are at the highest risk of turnover.
This insight is already here, but the next step is even more exciting: solutions will also offer actual recommendations based on data to ensure good business decisions that will help organisations to reach their goals. And like Amazon or Netflix recommendations, all of these recommendations will be easily delivered to managers in a simple interface – without the assistance of IT or data analysts.
Companies will increasingly rely on analytics to drive their businesses, because most decisions are too important to be made on instinct. With prescriptive analytics forming the next chapter, managers can act on recommendations based on real data to achieve the desired results. Modern analytics solutions are proving that smarter doesn’t have to mean more complicated. And perhaps this simplicity and accessibility is the most exciting thing of all.
Rob Wells is Managing Director, Workday Australia and New Zealand. Workday is a leading provider of enterprise cloud applications for human resources and finance.