Predictive Analytics and its implementation

The evaluation process in companies often involves analysis for decision making that has already occurred. Through these steps, companies can change, replace, or continue an action plan based on existing data.

It doesn't stop at that stage, you also need to think about potential situations that will occur in the future. This is known as predictive analysis which can help you to anticipate risks and exploit opportunities for long-term business progress.

What is Predictive Analytics?

Predictive analytics is an advanced branch of analytics that makes predictions about future outcomes. Predictive analytics uses historical data combined with statistical modeling, data mining techniques and machine learning.

Companies use predictive analysis to find patterns in existing data. The goal of predictive analytics is to identify risks and opportunities. Predictive analysis is often associated with big data and data science.

Today, companies have vast amounts of data ranging from log files to images and videos residing in disparate data repositories across the organization. To gain insight from this data, data scientists use deep learning and machine learning algorithms to find patterns and make future predictions.

Some of these statistical techniques include logistic and linear regression models, neural networks, and decision trees. Some of these modeling techniques use initial predictive learning to create additional predictive insights.

Implementation of Predictive Analytics in Industry

Predictive analytics can be applied to a variety of industries for a variety of business problems. The following are examples of industries that utilize the implementation of predictive analytics to inform decision making in real-world situations.

1. Banking

Financial services use machine learning and quantitative tools to predict credit risk and detect fraud. For example, BondIT is a company that specializes in fixed income asset management services.

Predictive analytics allows them to support dynamic market changes in real-time in addition to static market constraints. The use of this technology allows it to customize personalized services for clients and minimize the occurrence of risks.

2. Health Services

Predictive analytics in healthcare is used to detect and manage the care of chronically ill patients. Under certain circumstances, predictive analytics can also be used to track certain infections such as sepsis.

Geisinger Health uses predictive analytics to collect health records to learn more about how to diagnose and treat sepsis. Geisinger created a predictive model based on the health records of more than 10,000 patients who had been diagnosed with sepsis in the past. This model provided impressive results, correctly predicting patients with high survival rates.

3. Human Resources (HR)

HR teams use predictive analytics and employee survey metrics to match potential job applicants, reduce employee turnover, and increase employee engagement.

Predictive analysis is utilized by the HR team in the form of a combination of quantitative and qualitative data. This allows companies to reduce recruiting costs and increase employee satisfaction. Later, the results of processing this data will be very useful when the labor market is volatile.

4. Marketing and sales

While marketing and sales teams are most familiar with business intelligence reports to understand historical sales performance, predictive analytics allows companies to be more proactive in the way they interact with clients.

For example, predicting churn can enable sales teams to identify dissatisfied clients more quickly. That way, they can start the conversation to encourage retention. Marketing teams can utilize predictive data analysis for cross-selling strategies which are usually realized through recommendations on brand websites.

5. Supply chain

Predictive analytics can also be used to manage product inventory and set pricing strategies. This type of predictive analysis helps companies meet customer demand without overstocking in warehouses.

This method also allows companies to assess product costs and profits over time. If one part of a product becomes more expensive to import, companies can project the long-term impact on revenue if they do or do not pass on the additional costs to their customer base.

Predictive analysis can be one of the best identification steps to recognize a business environment. This is also very relevant to the Strategic Business Analysis program which is aimed at company executives to understand strategic issues for the company's sustainability and innovation in the future.