Scribd
Upload
5 views

Predictive Analytics (1)

Predictive analytics utilizes data and statistical algorithms to forecast future outcomes based on historical data, gaining traction due to advancements in technology and increasing data volumes. It is important for organizations to solve complex problems, optimize operations, and reduce risks across various industries such as banking, retail, and government. The methodology differs from traditional business intelligence by analyzing both structured and unstructured data in real-time and offline environments.

Uploaded by

nomulasaisusheel100
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
5 views

Predictive Analytics (1)

Predictive analytics utilizes data and statistical algorithms to forecast future outcomes based on historical data, gaining traction due to advancements in technology and increasing data volumes. It is important for organizations to solve complex problems, optimize operations, and reduce risks across various industries such as banking, retail, and government. The methodology differs from traditional business intelligence by analyzing both structured and unstructured data in real-time and offline environments.

Uploaded by

nomulasaisusheel100
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 10

Predictive Analytics

Predictive analytics is the use of data, statistical algorithms and machine


learning techniques to identify the likelihood of future outcomes based on
historical data. The goal is to go beyond knowing what has happened to providing
a best assessment of what will happen in the future.

Predictive Analytics History & Current Advances


Though predictive analytics has been around for decades, it's a technology whose
time has come. More and more organizations are turning to predictive analytics to
increase their bottom line and competitive advantage. Why now?

 Growing volumes and types of data, and more interest in using data to produce
valuable insights.

 Faster, cheaper computers.

 Easier-to-use software.

 Tougher economic conditions and a need for competitive differentiation.

With interactive and easy-to-use software becoming more prevalent, predictive


analytics is no longer just the domain of mathematicians and statisticians. Business
analysts and line-of-business experts are using these technologies as well.
Why is predictive analytics important?

Organizations are turning to predictive analytics to help solve difficult problems


and uncover new opportunities. Common uses include:

Detecting fraud

 Combining multiple analytics methods can improve pattern detection and


prevent criminal behavior.

 As cybersecurity becomes a growing concern, high-performance behavioral


analytics examines all actions on a network in real time to spot abnormalities
that may indicate fraud, zero-day vulnerabilities and advanced persistent
threats.

Optimizing marketing campaigns.

 Predictive analytics are used to determine customer responses or purchases,


as well as promote cross-sell opportunities.
 Predictive models help businesses attract, retain and grow their most
profitable customers.

Improving operations.

 Many companies use predictive models to forecast inventory and manage


resources.

 Airlines use predictive analytics to set ticket prices.

 Hotels try to predict the number of guests for any given day to maximize
occupancy and increase revenue. Predictive analytics enables organizations
to function more efficiently.

Reducing risk.

 Credit scores are used to assess a buyer’s likelihood of default for purchases
and are a well-known example of predictive analytics. A credit score is a
number generated by a predictive model that incorporates all data relevant to
a person’s creditworthiness.

 Other risk-related uses include insurance claims and collections.

Who's using it?


Banking & Financial Services

 The financial industry, with huge amounts of data and money at stake, has
long embraced predictive analytics to detect and reduce fraud, measure
credit risk, maximize cross-sell/up-sell opportunities and retain valuable
customers.
 Commonwealth Bank uses analytics to predict the likelihood of fraud
activity for any given transaction before it is authorized – within 40
milliseconds of the transaction initiation.

Retail

 Since the now famous study that showed customers who buy milk often buy
bread at the same time, retailers everywhere are using predictive analytics
for merchandise planning and price optimization,

 To analyze the effectiveness of promotional events and to determine which


offers are most appropriate for consumers.

Oil, Gas & Utilities

 Whether it is predicting equipment failures and future resource needs,


mitigating safety and reliability risks, or improving overall performance, the
energy industry has embraced predictive analytics with vigor.

 An analysis of machine sensor data predicts when power-generating turbines


need maintenance.

Governments & the Public Sector

 Governments have been key players in the advancement of computer


technologies.

 The US Census Bureau has been analyzing data to understand population


trends for decades.

 Governments now use predictive analytics like many other industries – to


improve service and performance; detect and prevent fraud; and better
understand consumer behavior.
 They also use predictive analytics to enhance cybersecurity.

How It Works
Predictive models use known results to develop (or train) a model that can be used
to predict values for different or new data. Modeling provides results in the form of
predictions that represent a probability of the target variable (for example, revenue)
based on estimated significance from a set of input variables.

TRADITIONAL BUSINESS INTELLIGENCE (BI) VERSUS BIG DATA

Following are the differences that one encounters dealing with traditional Bl and
big data.

 In traditional BI environment, all the enterprise's data is housed in a central


server whereas in a big data environment data resides in a distributed file
system.
 The distributed file system scales by scaling in(decrease) or out(increase)
horizontally as compared to typical database server that scales vertically.
 In traditional BI, data is generally analysed in an offline mode
 Whereas in big data, it is analysed in both real-time streaming as well as in
offline mode.
 Traditional Bl is about structured data and it is here that data is taken to
processing functions (move data to code)
 Whereas big data is about variety: Structured, semi- structured and
unstructured data and here the processing functions are taken to the data
(move code to data).

You might also like