Businesses of all sizes, for decades, have been seeking answers as to how they would have the ability to improve negative business functions vastly before disaster strikes. With this knowledge, companies just may see enhanced operations and profitability.
Predictive Analytics, in layperson’s understanding; is the use of various types of data, machine learning techniques and multiple forms of statistical algorithms to assist in the identification of the future outcome likelihoods. These possible outcomes would be based on your historically provided data.
The point of these procedures is to change your company’s understanding of past adverse outcomes to seeing over and above what had actually taken place in any specific event to acquiring the best assessment, with the data provided for likely future scenarios. This will allow companies to learn from what their computers learn according to their historical input, therefore making it possible to improve decision making processes by seeing how the company has historically functioned in various aspects of the business and making appropriate changes with predicted information.
Whereas predictive analytics has been in existence for decades, these functions were best left to statisticians and math geniuses; only large corporations could afford the luxury of having these minds on staff, therefore, moving large conglomerates always significantly ahead of the game. Today, even small businesses are finding that with the continuous improvement within the realm of cloud solutions, they too are now fortunate to have the ability to benefit from big data usage.
It’s quite important to note that prior to implementation of predictive analytics software and learning the required procedures; the results would be highly dependent upon the types and amounts of data that is made available to the system. If correctly implemented, however, the return on investment can be quite impressive.
What Kind of Information is Gleaned by Use of Predictive Analytics?
Although the use of predictive analytics isn’t necessarily something that everyone would benefit from (just yet), as time moves forward, it’s expected to become a useful tool to more companies of all sizes. Currently, predictive modeling takes many forms beneficial to small and medium businesses and if the results are appropriately used, could profoundly affect profitability with:
- Advertising searches, sales, and up-selling, potentials.
- Highly improved marketing campaigns.
- Forecasting potential results regarding increased revenue with various business types.
- Forecasting how to optimize both mechanics and possible added revenue in manufacturing. (2016 Honeywell Study)
- Forecasting and understanding new product development. (R&D Mgmt. Case Study – Electronics)
- Forecasting possible outcomes with construction revenue. (2017 Initiafy)
- Forecasting potential supply chain issues. (Supply Chain Brief – study)
- Risk management
- Cyber security
- Fraud detection and much more
These are just a few examples. Once implemented, the level of clarification made available to decision-makers will make it possible to create far more superior operations across all aspects of the company/business. Not all decisions are equal or even have common threads in many cases. Decisions made operationally generally have right and wrong answers. That stated, while seeking answers from a strategic standpoint the findings will often be ambiguous. Although predictive analytics open discussion for both types of decision-making processes; in order to make this possible, the business would have to adapt their own modeling for both situations. Regardless, the analytics selected would need to be most suited to the needs of the company and of course, with a competent analytics team.
How to Know When Predictive Analytics Should Be Considered?
Before the implementation of predictive analytics, it’s essential for small business owners and managers to make specific identifications:
- What would be the value of the solutions your business is seeking?
- What are the current problems you would like to forecast?
- What are your current internal data sets?
- What are the outcomes your company would like to see?
Should Your Company Opt to Implement Predictive Analytics?
Discussing the implementation of predictive analytics is easier said than done. If a company would like to consider implementing this form of analytics, they must take the time to determine the following:
- Consider the nature of the decisions your company would need to make.
- What are the liabilities your business may face in the event the leadership team were to make inferior or questionable choices?
- Decide the company’s best resources that would enhance the use of a predictive analytics strategy once it’s in place.
Keep in mind that the use of predictive analytics would be an extreme asset especially if the cost and the risk of a series of bad decisions would be exceptionally high. Would this be the case, it would be in the company’s best interest to explore these options. It’s entirely possible that predictive analytics could be a valuable resource to your small business if for no other reason than to improve the likelihood of efficient decision-making processes, and keep risks low in other business aspects. It’s definitely worth the exploration.
Today, however, the use of predictive analytics is used in so many ways. Overall it’s used to empower businesses of all sizes to experience a far greater degree of efficiency by having the ability to forecast inventory, how it will be used, manage various resources and of course, increase revenue, not to mention avoid the loss of revenue to the inability to see the possibilities in advance of potential disaster.
This analytics may be used to:
- Determine client/customer purchases or responses to advertising.
- Create risk reduction in many areas of your business.
- Detect encryption abnormalities to eliminate cyber security
The term itself isn’t an easy description. However, the fact that it’s rapidly becoming critical for businesses of all sizes to utilize it, we would like to help educate small business owners and managers with regard to its importance to small business success.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: