For most companies, shareholders, and employees, 2018 was an outstanding year. The oil and gas industry achieved net exporter status not held in 60 years. Economic growth was up. Employment was up, marking the lowest unemployment in decades, and corporate stimulus packages shaved taxes from 35% to 21%.
So, what’s the challenge? Despite all of this good news, challenges persist as less than 20% of companies are using advanced analytics platforms in 2018 according to Gartner Research.
Prescriptive analytics — a form of advanced analytics — models big data sets, optimizes these models, and finished by prescribing the best courses of action based on hundreds, if not thousands, of scenarios with outcomes that can be financially validated. (Want to learn more about prescriptive analytics? Visit our comprehensive, interactive guide here.)
A few of the critical topics that headlined in 2018:
- Workforce Management
- Capacity Planning, Product Mix, and Growth Management
- Citizen Data Scientists
Workforce Management In 2019
IMF forecasts global growth for 2019 at 3.7% (same as 2018),
which means workforce management will remain at the forefront of concerns.
From fulfilling labor shortages in industries like fast food, trucking, and the oilfield, 2018 marked a positive year for the personnel supply side.
Even Flippy — the robot who flipped burgers for a fast-food chain that couldn’t retain employees — got his job back after some engineering tweaks. This use of robotics signals how companies may use advanced analytics and robotics in the future to balance workforce gaps, which exist in numerous vertical industries and functions.
From a human perspective, take, for example, an oil company that had several refineries within an hour radius. Prescriptive analytics recommended reallocating resources from one plant nearby to another to fill shift changes to meet labor demands. Even with overtime, prescriptive analytics can prescribe a plan that benefits all parties involved.
So, what’s the bottom line on labor? With an estimated one million jobs unfilled in the U.S., labor will continue to be a hot issue in 2019.
Capacity Planning/Product Mix/Growing Management
“Global economic growth is lifting more people into the middle class… higher incomes mean sharply rising demand for consumer goods and services.”
As growth accelerated in 2018, so did the need for many corporate planners to reassess capacity planning and product mix scenarios. It is why companies are utilizing prescriptive analytics and taking counter intuitive actions to meet these demands.
- A snack foods company consolidates production for select products to see a monthly gain of hundreds of thousands of dollars.
- A manufacturer centralizes production to meet demand on both coasts while increasing profits in the process.
An energy commodities and logistics gains insight into how best to utilize transportation of promised demand while optimizing portfolio performance of new, daily opportunities based on remaining available assets.
When it came to product mix, progressive companies tossed traditional planning for prescriptive analytics to improve higher margins and profits. In some scenarios, this meant higher-priced product substitutions to meet demand yet maintaining overall profits.
As for growth, Energy investors spoke up on keeping spending costs down and directing the excess cash back to shareholders; taking a cue from France and Norway oil super majors that beat earnings expectations, only to fall short with reduced margins in refinery operations and profit misses.
Citizen Data Scientists to Surpass Data Scientists in 2019
Global businesses will spend more than $200 billion by 2020 for big data and analytics (up from $130 billion in 2016). But who will interpret the insights?
With interest in advanced analytics and digitization of industries comes a need for skilled employees. In 2018 and especially for 2019, the emphasis on democratizing analytics to all corporate business stakeholders is found in technologies like River Logic that can be used by citizen data scientists. A few statistics to support this need include:
- More than 40% of data science tasks will be automated by 2020, resulting in increased productivity and broader usage of data and analytics by citizen data scientists. (Gartner Research)
- By 2020, the number of data science and analytics job listings is projected to grow to approximately 7 million positions.
The River Logic prescriptive analytics platform supports citizen data scientists with its visual-based, non-programming modeling solution, and appealing user interface. The minimal training in days versus years makes it a solution where more employees without IT skills can participate.
In 2019, the ability for more people to understand, interpret, and act upon insights generated by prescriptive analytics will be essential.
“A dedicated planning application that uses prescriptive analytics can give managers and executives the ability to assess trade-offs with greater insight and precision, especially if the analysis incorporates financial data.”
In the statement above, Ventana Research sums up prescriptive analytics best for its ability to guide executives into seeing and believing the difficult trade-offs, especially those that appear counterintuitive to traditional processes.
In many ways, 2019 looks similar to 2018 with economic growth predicted to plateau at 3.7%. Labor will continue to trouble businesses, although corporations are already looking at alternatives to offset these issues with automation or robots which perform routine tasks, such as an HR assistant pre-screening job candidates.
Even the threat of recession has been tempered by the midterm elections and sliding oil prices. Experts predict these events may stop another federal interest rate hike going into effect before the end of 2018.
The levers of a future economy are ever-shifting, making prescriptive analytics a sought-after solution for its ability to accurately prescribe actions with the consideration of fast-changing dynamics like the deployment of 20 billion Internet of Things (IoT) units by 2020 that will provide real-time monitoring and data feed transmissions continuously to business analytics.
Advanced analytics platforms, however, will need the ability and input to address softer social responsibility issues which will become more complex. Questions like reallocation of resources with robotics or replacing raw materials like polypropylene that threaten ocean life with bio-fabricated fungi.
All of these considerations show why in 2019, use of prescriptive analytics is expected to double to about 40% of companies who will depend upon this technology platform to prescribe and drive immediate and future company best courses of action.
1”Supply Chain Planning with Prescriptive Analytics,” Ventana Research, 2018.