Nonetheless, interest is high in organizations that are still focused on historical, "descriptive analytics," and in businesses with established predictive analytics practices that are now moving outside of traditional niches such as marketing and risk management. They're predicting website click-through rates and overall behavior, and helping HR anticipate which employees are likely to churn. Another area is help desk call routing, where models can be used to determine which agent is likely to do the best job of answering a given customer question.
"There's more interest because there's more data," says Dean Abbott, president of consultancy Abbott Analytics. "The buzz is about momentum. People are saying this is something I need to do."
But you have to walk before you can run, and with its data-heavy demands, predictive analytics isn't something to take up lightly, or haphazardly. We asked businesses that are new to the game as well as seasoned professionals to share their experiences. Start small, they say, partner closely with the business to define the problem, continuously test and refine the model, put results in terms business decision makers can understand and, above all, make sure the business is willing and able to act based on those predictions.
Making the business case
Consumer products company Procter & Gamble Co. makes extensive use of analytics to project future trends, but it wasn't always that way, says Guy Peri, director of business intelligence for P&G's Global Business Services organization. "This used to be a rear-view mirror-looking company, but what happened six months ago isn't actionable. Now we're using advanced analytics to be more forward looking and to manage by exception," he says, which means separating out the anomalies to identify and project genuine trends.
P&G uses predictive analytics for everything from projecting the growth of markets and market shares to predicting when manufacturing equipment will fail, and it uses visualization to help executives see which events are normal business variations and which require intervention. "We focus the business on what really matters," Peri says.
"We're using advanced analytics to be more forward looking and to manage by exception," says Guy Peri, director of business intelligence for one of Procter & Gamble's business units.
The place to start is with a clear understanding of the business proposition, and that's a collaborative process. "Be clear on what the question is, and what action should be taken" when the results come back, he says.