Predictive Analytics

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Predictive Analytics

When managers make important decisions today, they are no longer limited by a lack of data.  Instead, the real challenge is that it’s difficult to understand what that data might tell them about the future. 

Today, virtually every established business has a storehouse of data about customers and their activities.  Yet they are frustrated when they consider what the data could predict about future behavior, if only it could be coaxed to do so.  Unfortunately, that insight has remained just beyond the reach of decision makers. 

But finally, thanks to “predictive analytics,” that is all beginning to change.

Predictive analytics is a set of methods and tools for unlocking the relationships between variables found in historical and transactional data to predict future trends and behavior patterns.1 

By relying on this kind of insight rather than on “gut feelings,” managers are now able to improve efficiency, reduce risk, and increase profits by making more targeted decisions in areas such as product pricing, inventory levels, marketing campaigns, and hiring.

By using predictive analytics, executives can answer questions such as “What’s next?” and “What should we do about it?” rather than just looking backward and asking, “What happened?”

Needless to say, by providing effective answers to these long-sought-after questions, predictive analytics is becoming a “game changer.”

Why is predictive analytics only now becoming a widely accepted business practice?

  • First, it is based on proven analytical technology that has taken decades to advance to a commercially viable point.
  • Second, its business value has been established only recently as we’ve started to see overwhelmingly positive ROI from successful deployments.
  • Third, the predictive analytics industry itself has started to deliver commercial solutions that are workable for a wide range of industries; one recent study indicated that 85 percent of businesses surveyed plan to incorporate predictive analytics within five years.

With so many companies looking at adopting this powerful decision-making approach, those who don’t will likely be left in the dust.  But making predictive analytics work is not simply a matter of incorporating a technique or buying some technology.

According to Dave Rich at Accenture Analytics and Jeanne Harris at the Accenture Institute for High Performance, companies that succeed with predictive analytics make it integral to their business and the way their employees think, work, and make decisions...

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