Has Predictive Analytics Crossed The Chasm?
Recent study highlights the increasing market perception that Predictive Analytics leads to competitive advantage. The report also outlines current trends and challenges for Predictive Analytics.
A recent IBM-sponsored study by Ventana Research (a company focused on big data analytics in marketing) has claimed that Predictive Analytics has entered the mainstream business decision-making. Building upon the market perception, the study highlights the current status and future expectations from Predictive Analytics. Applying predictive analytics has emerged as the highest priority from the response of all participants regarding the top capabilities of Big Data Analytics. Although it has been around for decades, predictive analytics is a technology whose time has finally come. A variety of market forces have joined to make this possible, including an increase in computing power, a better understanding of the value of the technology, the rise of certain economic forces, and the advent of big data. Companies are looking to use the technology to predict trends and understand behavior for better business performance. Predictive analytics uses a variety of statistics and modeling techniques, and utilizes data mining, business intelligence tools, and machine information, to make predictions. The emergence of enormous amount of structured and unstructured data and ground-breaking technology deployments are the major drivers for the predictive analytics market.
The global predictive analytics market, valued at USD 2.08 billion in 2012, is expected to see strong growth at 17.8% CAGR during 2013 to 2019. Organizations are collecting increasing amount of data, and predictive analytics software is one of the crucial tools that companies can use to achieve actionable information from this data. Data, and the utilization and management of the same, are increasingly becoming areas of competitive advantage. Hence, predictive analytics is one of the core technologies that enterprises are adopting to be able to compete in the market. Predictive analytics is used across different industry verticals such as banking and financial services, insurance, government, pharmaceutical, telecom and IT, retail, transportation and logistics, healthcare, and energy, among others. Global predictive analytics market in 2012 was dominated by the banking and financial services segment, which accounted for 16.8% revenue share.
For a long time, Predictive Analytics has been primarily the responsibility of the Data Science and Analytics team, but this outlook is changing fast. While Data Science team still remains the primary contributor, the responsibility is increasingly being shared with database management, BI, LOB (Line of Business) analysts and others. This clearly demonstrates the need for better training and support for the non-technical users of Predictive Analytics.
Predictive Analytics is fueled by data, most prominently customer (69%), marketing (67%), product (55%), sales (54%), financial (51%) and employee (34%) data. Needless to say, data sources for predictive analytics are multiplying rapidly, as are their formats. The biggest challenge with predictive analytics (cited by 55% of research participants) is to integrate tools with their organization’s information architecture. Other major challenges include the lack of resources and the lack of awareness.
More than two-thirds (68%) of organizations that have implemented predictive analytics said they have gained a competitive advantage from it. Other significant advantages include finding new revenue opportunities and increasing profitability. The unprecedented shift of business intelligence to predictive analytics offers new opportunities to the major players and new startups in this market. Some of the major players in this market include International Business Machines Corporation (IBM), SAS Institute Inc, Microsoft Corporation, SAP AG, Tableau Software Inc., Information Builders, Fair Isaac Corporation (FICO), Teradata Corporation, Acxiom Corporation, and TIBCO Software Inc., among others.
The complete version of the Predictive Analytics study is available at: Predictive Analytics Enters the Mainstream: Taking Advantage of Trends to Gain Competitive Advantage
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