What can predictive analysis do for you?By Les Smith on
Essentially, predictive analysis applies statistical algorithms to business data in order to discover trends and patterns that can then be used to calculate, forecast and influence future behaviour or performance.
Depending on what industry your organisation is in, predictive analytics software can help you better understand your customers, provide targeted products and services, and help reduce exposure to risk. It helps organisations turn dormant data into business opportunities and can act as an early warning system – highlighting problems before they impact the business.
Predictive analytics software comes with some common statistical algorithms and can be enhanced further by leveraging a technology called ‘R’ via the native integration kit. ‘R’ is an open source product that has over 3000 algorithms and can be set to work on a wide variety of industry needs.
Let’s take an example. A freight transportation company could put predictive analysis to work in order to track and predict fuel costs, leading to improved fuel purchasing economy. To do this it would isolate key historical data sets for fuel purchasing and then apply algorithms to find trends in the data that could be used to guide when, where and who it purchases fuel from.
The same transport company could also use predictive analysis to try and discover which routes were most profitable and then optimise its services around those higher margin trips. Taking into account such variables as distance travelled, number of stops, freight and weather conditions, the company would uncover valuable patterns that could provide insights into more effective trip planning.
Predictive analytics is also being used productively by large retail organisations, which deploy it to better understand customer purchasing habits. Armed with these insights they can improve ordering and stock control processes, or, use buying habits data to drive new selling strategies.
The key aspect to predictive analysis is that, as its names suggests, it is forward looking. Unlike business intelligence – another data driven software tool – which analyses what has taken place, predictive analysis uses historical data to plot future probabilities.
Predictive analysis is also proving a valuable tool for asset intensive companies, which put the software to work to improve maintenance processes. Traditionally, companies such as water and power utilities have spent considerable sums on developing sophisticated preventative maintenance strategies to maximise asset use throughout their lifecycle. The availability of predictive analysis software has given rise to ‘predictive maintenance’, a monitoring technique that complements traditional sensory inspections to help build up a statistical picture of equipment performance which can then be analysed using predictive analytics software to anticipate future defects or failures. Armed with these insights utilities can mitigate unplanned downtime and unnecessary expenditure.
To find out more information about predictive analysis and what it could do for your business, please email firstname.lastname@example.org