Advent of Predictive Analytics in China
The CEO of AsiaAnalytics examines how China current economic development turns local corporations into the world largest data guzzlers.
Guest post by Olivier Maugain, AsiaAnalytics (formerly SPSS China), Oct 14, 2013
China's current economic development is not only creating great wealth for not its people, but has also turned local corporations into the world's largest data guzzlers. 1.86 billion railway trips, 750.4 million China Mobile subscribers, 300 million WeChat / Weixin users, 282 million individual customers served through 16,648 branches (Industrial and Commercial Bank of China), 1,668,072 employees (China National Petroleum Corporation) - those are just a few figures exposing the scale of Chinese companies. As IT departments got the instructions (and budgets) to track customers and transactions, huge data warehouses have been built over the years, which nowadays may reach into the petabytes.
But Chinese companies have not only been accumulated data, but also the analysis tools that go with it. For several years now, enterprise software vendors have been promoting notions like Customer Relationship Management (CRM), Business Intelligence, Performance Management, Sales Force Automation, etc. which functions and targets it is to support Chinese managers in their decision making. While tools are very effective in revealing and understanding accomplishments and evolutions in the business, they usually make use of predefined templates and only show what happened in the past.
However, they fall through when it comes to predicting future happenings or behaviours. Furthermore, no matter the level of granularity of the data, the bulk of records available in the repositories are never used. Consequently, the knowledge hidden in those giga-, tera or petabytes of data is never being discovered - knowledge that is begging to be discovered and that can, if used properly, provide competitive edge to its discoverer. This is where advanced analytics comes into play to complement existing Reporting, OLAP (online analytical processing) and dashboard systems to enable enterprises to finally take advantage of the masses of facts and figures on hand in those huge data warehouses.
It now seems that that the concept is gaining significance among local corporations and managers. More and more companies in China are now putting into practice this idea and ramping up their predictive analytics capabilities. The reasons for such a growing interest are rather obvious:
- The increased focus on competitiveness due increasing wages forces local companies to be more professional and to pay additional attention to efficiency;
- The awareness of Chinese managers that high-performing and profitable businesses will be successful on the international market place and will therefore contribute to China's economic prosperity;
- Companies in China aspire to international recognition and wish to be considered as well-managed businesses (as opposed to mere manufacturers), which compels them to follow Western management practices and tackle similar problems (such as churn reduction, cross-selling, up-selling, credit scoring, fraud detection, etc.);
- Chinese companies seek a listing on Western stock exchanges are evaluated according to Western standards, and therefore need to reach profitability levels that similar to their international counterparts and to comply with Western compliance rules (e.g. Basel II for Risk Management)
Thus, I expect analytics to have a more substantial impact in China than anywhere else. If applied systematically (e.g. for Customer Analytics, Marketing Analytics, Predictive Maintenance, Demand Forecasting, Fraud Detection) the techniques and tools could definitely provide them the means to increase their profitability and help them to surmount the challenges of increased competition and global expansion - thus paving the way to Chinese businesses' success on the global marketplace.
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