Predictive Analytics and Business: A Winning Combination (article)
By Scott Moody
Predictive analytics, or the process of determining patterns from existing data sets to predict future outcomes, is an effective way to create a competitive advantage. From the "shift" in major league baseball where a team bases the location of their fielders on the hitter's tendencies to NFL stadiums mining data to sell more concessions, merchandise and tickets, the professional sports industry has become an early adopter of analytics. Business professionals should consider taking a page out of this playbook to help achieve their own strategic success. As technology continues to advance, organizations that learn to harness their data into effective predictive analytics programs will have a leg up on those that do not.
Begin with the End in Mind
Rolling out any new initiative involves many moving pieces and parts, and predictive analytics is no exception. Don't be afraid to focus your attention on one or two areas that your stakeholders have expressed an interest in and keep your initial investment small. Are they focused on increasing sales, detecting fraudulent activity, or identifying areas of risk? Keeping the end in mind when you are developing your strategy will keep your efforts focused around what your stakeholders would like to see accomplished. Demonstrating a return on investment can help you win over key stakeholders to become advocates as you seek to expand the program over time.
Set Realistic Goals
Once you've determined your areas of focus, it will be important to set goals and objectives around them. You need to consider the data that is available for use so that the goals and objectives you set are realistic. What data is your organization currently collecting? Where is it located? Who has access to it? Understanding your data inventory can assist you in making sure the right data is used to execute predictive analytics. Considering what is possible for your organization specifically can help you create objectives that you are able to achieve and manage expectations for the program along the way.
Manage Your Investment
Once you have defined your program and confirmed its alignment with your organization's strategy, you will need to establish a method for managing your investment. Assigning a specific cost center to the program will assist in bringing visibility to the cost associated with it. Establish a frequency for your designated analytics team to meet to evaluate the way the program operates and ensure your results match your expectations. Are your designated resources being used effectively? Do you have the appropriate tools in place or do you need to procure other tools? What type of feedback are you hearing from stakeholders? These discussions could occur as often as weekly for some organizations, especially those who are newer to analytics. Even with tenure, your program should be re-evaluated as part of your annual planning at a minimum.
Plan for Potential Roadblocks
With any analytics program, inevitable risks are created from access to data. For example, inappropriately accessing a particular set of data can open your organization up to a potential security incident or breach. To reduce this risk, organizations should employ stronger security controls around the accounts with access to critical or confidential data. All organizations which hold non-public information should have an effective information security program in place to protect the data in their possession, and your organization's information security professionals should be included in your analytics program from day one. Determining data validity will also be important to ensure that the information you report to your stakeholders is complete and accurate. Periodically review your documented queries and utilize a change control process for your queries. If your organization is pulling from a data warehouse, conduct an audit to make sure that the data wasn't altered when it was offloaded to the warehouse from production.
Analytics for the Future
As we continue to place technology at the center of our processes, operations, intellectual property, and customer interaction, it is safe to assume that our need to collect and understand data will not go away any time soon. Organizations who play a little moneyball can beat out their competition. By implementing a predictive analytics program, you have the opportunity to utilize the data you are already accumulating to provide insights into trends that help get you to market first or quickly act on potential threats before they wreak havoc to your business. Whatever your strategic vision, capitalizing on predictive analytics is a win.