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Why predictive analytics will be big in 2015
As the big data analytics sector rapidly matures, companies will be increasingly asking what they can get out of the technology this year. And one of the big trends for 2015 will be companies aiming to move beyond a reactive approach to data to a more proactive strategy.
At the heart of this will be predictive analytics, which has been tipped by several commentators as one of the key developments in the industry for this year. This will be in response to increased demands to tackle the issue of problems and opportunities being spotted too late.
For instance, it was noted by Tech Vibes writer Christopher Surdak that often, by the time businesses have extracted, transformed and loaded the relevant data using traditional technologies, the chance has passed – and this can defeat the purposes of many investments. He said: "There's no value in identifying what customers are doing every minute of the day if you can't respond predictively and proactively."
He therefore stated that a top priority for organisations in 2015 will be to re-engineer their big data environments to enable information streams to be accessed, analysed and shared in real time. Benefits of this will include increased revenue, better productivity for knowledge workers, and lower costs.
A report by TDWI Research, cited by Forbes, identified five key reasons why companies are looking to invest in predictive analytics. These are to predict trends, understand customers, improve business performance, drive strategic decision-making, and predict behaviour.
Forbes highlights the telco sector as one that particularly stands to benefit from what predictive and real-time analytics can provide. Firms in this sector are looking for new ways to stand out from the crowd in order to retain customers, and these tools can help them better understand customers, and therefore serve them more effectively.
One example the publication cited was Cox Communications, which turned to predictive analytics to identify business drivers for growth and then pinpoint existing and prospective customers to cultivate new offerings. The firm also wanted to answer tough questions about why customers would choose them over a competitor – or vice versa – as well as what type of customer is likely to buy a specific product
With predictive analytics, the company was able to put more campaigns into the field, as well as measure the effectiveness of different offers and marketing techniques to different customer segments, Forbes said. As a result, recent campaigns have generated an 18 per cent increase in customer responses.
The fact predictive analytics can be engaged to tackle a wide range of issues and challenges will be a key factor in the growth of the sector in 2015 – with every department from sales and marketing to human resources being able to derive benefits from the technology.
For instance, predictive tools can be very useful to HR professionals by enabling them to spot employees who are at risk of leaving a company, as well as better identifying prospective hires who will be a good fit for an organisation.
Speaking to Tech Target, vice-president and principal analyst at Constellation Research Holger Mueller said: "One of the first areas that vendors have tackled [with predictive analytics] was around 'flight risk', or determining if a valued employee could leave a company. These days we see them used more for recruiting and selecting highly-skilled candidates for the right position."