Sunday, March 30, 2008

Predictive Analytics - There is a time and a place

Predictive analytics have been touted as the holy grail of Business Intelligence for quite some time now. However, how many organizations are actually using predictive analytics? In a recent survey conducted by TDWI only 21% of organizations have a full or partial predictive analytics deployment, while another 19% are in the process of developing it.

What does this mean to the majority of organizations? In my opinion it means that we need to apply the techniques of predictive analytics as the business case warrants. For example, if we can understand customer behaviours and predict what actions will appeal to each type of customer, we will be able to produce significant ROI for the organization. In order to increase the adoption of predictive analytic deployments, we need to take this out of the back room analyts hands and into the hands of the employees working directly with the customer. The trend towards operational business intelligence is a great way to inject targeted intelligence directly into the work processes of these individuals.

To think about it another way, does this intelligence absolutely require human interaction at all? If you have a rules based engine in place, you can directly take action by plugging in the different variables to the model, retrieve the scenario with the highest score and take the next logical step of implemention directly. If you don't require a decision from the knowledge worker (and we are nearly all knowledge workers), why add another piece of information to their already overwhelmed senses?

Predictive Analytics have a time and a place but the organization and technology need to be ready for it. If you don't have ready access to data, business stakeholders, and modelling expertise take 1 step back. If you don't have a way to take direct action from your predictive analytics solutions take 2 steps back!


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