Syndicated from b-eye network
Last week I was at Predictive Analytics World, a brand new show on the business value of predictive analytics. The show was a great success, I think, as it attracted a decent audience in very tough times and succeeded in bringing together not just those building predictive analytic models, but also those on the business side trying to learn how to use those models more effectively. All sorts of companies were represented with people using predictive analytics for marketing, retention, workforce management, risk management and much more.
I thought I would share a few thoughts based on the event as a whole:
- Clearly the ROI of successful predictive analytics projects is good. All the case studies were positive (obviously) but many of them had dramatically improved outcomes.
- In the current economic climate companies are very focused on reducing costs and one of the great things about the use of predictive analytics is its ability to reduce costs while reducing value by much less. For instance, a marketing campaign that uses predictive analytics to target the best prospects saves money by sending out less mail and yet still targets most of the people who would have responded.
- Risk management relies on predictive analytics and, particularly, on embedding predictive analytics in operational systems to measure the risk of each customer, each transaction. After all most organizations don’t acquire risk in big chunks but one customer at a time. The Federal government, of course, does acquire risk in big chunks as it bails out banks but that’s a different story…
- Organizational issues like a business sponsor and a willingness to effect some organizational change are critical to success with predictive analytics. Most of the negative stories – where something failed – were due to changes in business sponsorship or a lack of ability/will power when it came to making a necessary organizational change.
- Predictive analytics can give you the power to focus on a niche and so compete with companies who could overpower you if you took them on across the board.
- Open source products and standards (like R and PMML) are making good progress and support from the commercial vendors for these is likewise growing helping to reduce lock-in and improve interoperability.
- The technology for developing and managing models continues to improve, not only adding new and better algorithms but more importantly increasing the degree of automated support for development and deployment. Modelers and even business users can do more modeling, more effectively.
- More and more of the success stories are doing decision management – embedding the predictive analytic models into operational decisions to maximize the reach of the models.
I understand that they plan to run the show in the fall on the East Coast and, if they do, I highly recommend it.
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It was a pleasure meeting you there James – I’m so glad I was able to get to Day Two. I was deeply impressed by the caliber of people there. Industry leaders and people with a great deal of experience. This is clearly an industry that has been around long enough to get it right, yet is still a serious competitive edge because most firms simply are not taking advantage – yet. I’m guessing this is a practice (and a conference) that will continue to grow and not jump the shark or flash over. It’s just good business for smart companies.