Yes, but not adding a prefix as you want. Update all will replace the current value in field(s) being updated.
There are some options.
1) Use a rule to copy the current value to another text field. then have the rule concatnenat the prefix value with the value copied to the text field. At this stage I would review to ensure that the results are what you want. Then use another rule to copy the values from the text field to the required field. For each rule youwull need to trigger the rules by using a checkbox and update all. This is a lot of work.
Another option is to export all the CI's you want to update. Edit the column and add the prefix and then import the data. Much quicker and cleaner.
Either way it is advisable to export the current CI's as a backup in case something does not go as planned.
export will not delete the data or the CI records. It just allows you to save the data in .xml or excel etc.
If you are just updating the data within the CI's you don't need to delete them. On importing the updated values the existing CI's will be updated with the new data.
If you no longer need the current CI values and you are talking about brand new CI's and CI records I would just block the CI's for now anyway but i don't think this si what you need to do based on your requirement.