Expanding BIs Role by Including Predictive Analytics

Expanding BI's role
by including Predictive Analytics
In today's economic downturn, organizations are looking for Comparably, BI tools help users know what has happened ways to improve the way they do business to keep ahead of and what is happening, while predictive analytics tools the competition and grow revenue. help to elicit more from this information by providing an understanding of why these things happened and in In a 2009 CIO Insight survey of senior managers and predicting what will happen.IT executives, respondents listed their top priorities as improving business processes, delivering better customer For example, BI tools can report which sales region had service, generating more business from new and current the highest sales, how many widgets were sold in stores customers, and differentiating the company from in different ZIP codes, the average spending per online competitors via IT. But faced with the challenging economic customer vs. in-store customer, and how many customers environment and reduced funding for new initiatives, how do stopped doing business with your company last year. All organizations focus on meeting these prioritized objectives? of this information is essential for developing new product and services, allocating resources, investing in marketing The path to success in all of these areas, traditionally, has campaigns, and so on. been to use business intelligence (BI) information to make decisions. Increasingly, organizations are finding that the Predictive analytics tools, though, can give deeper insight benefits of BI can be enhanced when complemented by into why these things happened. For example, knowing predictive analysis. Specifically, more insight can be gained, the average customer spends $100 per visit to a store and even better decisions made, by coupling business- is one thing. Knowing that a certain 20 percent of the relevant information with an easy-to-use predictive analytics customers are responsible for 80 percent of all revenues solution. and that they are more likely to buy particular products bundled together is much more valuable. Also, identifying A Natural Extension to BI which products influenced the purchase of others or the strength of the relationship between products purchased Business intelligence provides valuable insight into the together would give more insight into specific buying state of affairs within an organization. The information patterns. This added level of analysis can yield valuable is critical to decision-making. But when combined with results. It helps you understand how that prized segment predictive analysis, synergies can be leveraged to improve of your customer base would respond to very targeted business and operations. promotions.
Many industry analysts like to make an analogy between BI Similarly, knowing that the average response rate to a and predictive analytics by citing a quote from the famous direct-mail marketing campaign is, say, 4 percent, an hockey player Wayne Gretzky, who said: "A good hockey organization can decide how often to run these campaigns player plays where the puck is. A great hockey player plays factoring in mailing costs and the revenue generated by where the puck is going to be." a campaign's sales. Knowing the types of customers and
Sponsored bybeing able to correlate that with what they purchased and In another area, an organization might use predictive when they are likely to purchase again would allow an analytics to cross-analyze sales data and marketing organization to target those customers at the right time spending, perhaps finding that 80 percent of the sales in with the right offerings. This would allow the company to response to direct mail or e-mail campaign come from only increase the effectiveness of their marketing promotions 20 percent of its customer base. By selectively targeting this while ensuring customers are offered a product or service group of 20 percent in future campaigns, the organization they would actually be interested in. can significantly increase the ROI of these campaigns.
That's the difference between BI and the power of BI Additionally, an organization might use purchasing combined with predictive analytics. information tied to a customer loyalty program to understand which products are purchased together, by MANy ApplicAtioNs whom, and when. Having this information, the organization can try to inc... [download for more]