Today’s topic is How to Apply Predictive Analytics in Business. These economic times require changes in how businesses manage, in particular, the use of critical information to optimize decision making and other business processes. But getting this information is not simple. It can’t be found in historical reports but instead requires a forward looking analytics that can help gain insight on potential outcomes from existing operations.
Then how do you build predictive analytics into your management efforts and what are the issues you need to be aware of this? This podcast is designed to provide prospective on you use predictive analytics actively and as an ingredient to your success. We’re talking today about analytics, but we’re talking in the context of an entire new environment of competitive and global business pressures. How do those two relate?
Well the current economic environment is not a pretty one and second of all, the pace of business is increasing quite dramatically. So as we look at those two facts, one of the things that is pretty obvious is that if we’re going to make improvements in this type of economic environment we’re going to have to have information, and we’re going to have to make decisions on a very timely basis. Both of these realizations correlate together and make it a pretty complex environment for organizations.
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Improve the Effectiveness of Decision Making
One of the challenges that I see for corporate management is to improve the effectiveness of their decision making. The effectiveness of decision making will require organizations to examine the kinds of analytics that they’re using for making decisions at both a strategic and operational levels. So this means improving the kinds of analytics and improving the information as well.
Analytics on bad information can naturally help send organizations down the wrong path. Typically organizations rely on key performance indicators, KPIs, but those are largely backward looking, aren’t they? You have to use them to help you make changes that affect your organization going forward. Key performance indicators have historically been used as indicators to goals of organizations. So the goals and objectives of what KPIs can do are to better gain a knowledge on things and how they’re performing. Now KPIs can also be used for the goalpost for future outcomes of what organizations may do or may not do. So there is a correlation between KPIs and analytics and the impact of where companies can perform.
One of the key steps is improving business analytics. Improving analytics requires couple different things. One is having the right kind of people and competencies in organizations. The second is around the right kind of processes, the analytic processes that we go through to find out things that may be happening in our organization. And then, of course, analytics includes the information being calculated, our data assets. So making improvements to analytics requires a look at the details that comprises them.
Making improvements to analytics also requires the right technology at least as an enabler if not as the appropriate tools. Technology actually for analytics has been evolving over the last couple decades and maybe a little bit longer. Technology is required to generate analytics. We use mathematical calculations and computations to generate results from information, or the data itself, the data of what’s existing and happening in organizations and also then using models and variables to determine the future outcomes as well.
Time for a Qualitative Change
With organizations that are growing, at some point the scale, the volume of the data collected in that organization can mean that it’s time for a qualitative change. This can be determined by the level of analytics that a company is using. What I mean by that is many organization requires specialized trained individuals to do the analytics and don’t actually leverage the business analyst and the individuals that can use analytics at their daily and hourly task. So as we look at what’s required to make analytics maybe more pervasive, we’ve got to look at how to make them part of our day to day business processes and also our management review and oversight.
Let’s focus in a little bit more, what’s the state of predictive analytics? Predictive analytics while having been applied in organizations for quite a period of time has become now an ability to use tools that can be driven by even directors, business analysts, individuals that can provide the inputs on what is sometimes called variables and provide their knowledge of their task and activities to determine the potential outcome. What I mean by that is that we found ways to make predictive analytics much more approachable and useable by many individuals in organizations.