Why are people using predictive analytics? Why has its use become so important? There are a number of ways predictive analytics can be used. Some industries have benefited from early adoption where it has become increasing important to their decision making process and an integral part of their business intelligence solutions and overall business strategy.
Vignesh Subramanyan has explored why predictive analytics is important in his recent article for the site Business2Community. You can check it out below.
Predictive analytics uses technology to predict the future and influence it. Organizations can use historical performance data to extrapolate and make predictions about the future and take actions that would affect those results.
A great explanation and discussion of predictive analytics can be found in the video below:
As Dr. Siegel states, predictive analytics is unique in that it predicts a predefined behavior at an individual level. Organizations can set in place specific conditions, which when met would allow an analyst to identify an individual’s behavior such as a customer’s willingness to return to a store, or a voter’s flexibility to be persuaded into voting for a particular candidate, etc. Dr. Siegel explains that each individual person can be assigned a predictive score as to the behavior that might be valuable for that organization to predict. This behavior may help drive operations for a business or simply offer insights on future events.
Predictive analytics differs from traditional business intelligence initiatives in that it adopts a proactive approach to data. Traditional B.I. initiatives use data to learn about a customer or to identify trends in a business. Predictive analytics identifies how that customer will behave in a future situation and how they may react to the various “touchpoints” a business has with them. The distinction lies in the ability to almost automatically discover patterns in data that show problems and identify opportunities. Predictive analytics empowers organizations to plan for the future, which can transform an uncertainty into a usable action with high probability.
The ability to predict the future and influence it is a lucrative opportunity and companies such as IBM and SAP are great examples of organizations that adopt this initiative. IBM uses predictive analytics software to increase profitability, prevent fraud, and even measure the social media impact of marketing campaigns. SAP allows customers to act on big data and offers insights on new opportunities and any hidden risks. Predictive analytics also extends beyond these two companies to various industries some of which are listed below.
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