AAFCPAs Explains Descriptive, Predictive, Prescriptive, and Compliance Data Analytics
Key Business Questions (KBQs) are questions that establish a framework for an organization looking to gain insights produced by analytics. They are central to understanding the past and overall strategy you are deploying or considering deploying in the future.
AAFCPAs assists clients in defining and prioritizing high-value KBQs in order to bridge the divide between insight and business value.
Analytics options may be categorized at a high-level into the following distinct types:
- Descriptive (Historical) analytics provide insight into the past and answer KBQs related to: “What happened?” Analysts interpret and parse historical data to better understand changes that have occurred in a business over a set period. Financial metrics, such as year-over-year pricing changes, month-over-month sales growth, the number of users/constituents served, or the total revenue per subscriber, are common examples of descriptive data.
- Predictive analytics provide insight into the future and answers KBQs related to: “What will happen?” Analysts utilize predictive analytics to forecast buying patterns, potential risks, and likely opportunities. Common uses of predictive analytics may include optimizing marketing campaigns, improving operations, and reducing risk.
- Prescriptive analytics provide insight into possible outcomes and answer KBQs related to: “What do we need to do to make things happen?” Analysts utilize data and hypothetical actions/situations to model a series of possible outcomes. They then illustrate actionable paths that could lead to these outcomes. This helps businesses identify the optimal path to a desired outcome.
- Compliance analytics provide insight on how well an organization conforms to relevant laws, policies, and regulations. Analysts utilize data to ensure organizations are within tolerance of applicable contracts or statues. In highly regulated, high-risk industries like healthcare and finance, compliance is especially important. However, all businesses can leverage compliance analytics to prevent noncompliance and fraud before damages occur.
Once KBQs are defined and prioritized, AAFCPAs provides guidance on defining the appropriate metrics, or key performance indicators (KPIs), that will inform your decision making. Then, we extract, inspect, cleanse, and model the data to assist clients in making more confident business decisions that drive operational efficiency.
Does your data provide actionable insights?
AAFCPAs designed a quick survey in collaboration with the Financial Executives International (FEI) Boston Chapter to capture how CFOs are leveraging data to answer key business questions (KBQs) and drive strategic business improvements. CFOs: Take the survey.>>
We encourage you to take this 4-5 minute survey for the following reasons:
- Enter to win a $250 donation to your nonprofit charity of choice.
- Consider your Key Business Questions and their potential to impact the business.
- Evaluate your data inventory and processes around data collection.
- Learn how other CFOs are leveraging data to provide actionable insights.