Predictive analytics is the practice of extracting information from existing data sets in order to determine patterns and predict future outcomes and trends. Predictive analytics does not tell you what will happen in the future. It forecasts what might happen in the future with an acceptable level of reliability, and includes what-if scenarios and risk assessment.
Predictive Models and Analysis Applied to Business
Predictive models and analysis are typically used to forecast future probabilities. Applied to business, predictive models are used to analyze current data and historical facts in order to better understand customers, products and partners and to identify potential risks and opportunities for a company. It uses a number of techniques, including data mining, statistical modeling and machine learning to help analysts make future business forecasts.
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Predictive Analytics and Big Data
Predictive analytics is an enabler of big data: Businesses collect vast amounts of real-time customer data and predictive analytics uses this historical data, combined with customer insight, to predict future events. Predictive analytics enable organizations to use big data (both stored and real-time) to move from a historical view to a forward-looking perspective of the customer.
For example, stores that use data from loyalty programs can analyze past buying behavior to predict the coupons or promotions a customer is most to participate in or buy in the future. Predictive analytics could also be applied to customer website browsing behaviors to deliver a personalized website experience for the customer.
Predictive Analytics Software Vendors for the Enterprise
Predictive analytics and data mining solutions for the enterprise are currently available from a number of companies, including SAS (Predictive Analytics Suite), IBM (IBM SPSS Statistics), and Microsoft (Microsoft Dynamics CRM Analytics Foundation).
Vendors may offer proprietary solutions or solutions based on open source technologies. Predictive analytics software can be deployed on-premises for enterprise users or in the cloud for small businesses or for project or team based initiatives.
Based in Nova Scotia, Canada, Vangie Beal has been covering small business, electronic commerce and Internet technology for more than a decade. You can tweet with her online @AuroraGG.
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