An Insight into the Predictive Analytics

Predictive analytics is a way of deriving information from existing datasets to determine patterns and foresee future results and trends. It doesn’t offer a clear vision of the future but its analysis consists of possibilities and probabilities that are highly reliable to strike out the possible risks involved. This software is used in businesses to study the current data and historical facts that helps build a better understanding with the customers, products and partners and tackle the oncoming problems and risks and take better decision to enhance the opportunity at hand.

Predictive analytics is the term which is being used for all those analytical disciplines that involve a precise analysis needed for decisions making.

Using predictive analytics helps in examining the customer information to predict the future events. For instance, in the functioning of the store, the management checks the buying pattern of their loyal customers to determine the amount of discount that should be offered to the customers.

Another field where this software is utilized is to understand the credit score of customer analyzing the credit history, loan application, etc., to rank the customer on the basis of the likelihood of making payments in time in the future.

The software’s significant feature is that it captures the relationship between explanatory variables and predicted variables from the past incidents.

SAS (Statistical Analysis System) IBM (International Business Machines) and Microsoft are some of the companies that offer this software.

Predictive analytics can be put to use on-premise or in the cloud. It uses applications of statistical techniques, analytical queries, and algorithms. All of these create a predictive model that places a numerical value, score on the probability of an event happening. It utilizes variables to study the trends and patterns of individuals, machinery, etc.

For the functioning of this software, it generally targets the online advertisements, flagging fraudulent transactions, identification of patients who are on the verge of developing a life-threatening illness or identifying impending unit failures in industrial machinery before occurring.

This software allows solving uncertain events that have taken place in the past like, the revealing of the name of the culprit who has committed a crime somewhere in the past.

How does the software work?

The process starts by stating the project’s outcomes, the scope of efforts, objectives and the data sets that would be used to complete the overview of the customer data from several sources for the required analysis.

With the objective to arrive at a conclusion that can be used on the collected data is thoroughly inspected, separated and modeled.

Standard statistical models are used to ascertain the hypothesis and assumptions.

With the use of the predictive modeling, the accurate predictive model is created about to the future.

This model deploys the analyzed results into the decision-making process that gives the desired results by acquiring results from the decision based on the model.

List of the predictive analytics models

Models are managed and supervised to keep a watch on the performance of the model.

Predictive model

These are models of the relation between the performance of one single unit from the sample to one or more attributes of the unit. The main objective of this unit is to access the possibility that a similar unit of a different sample that will exhibit a particular performance. The units of a sample with known attributes and performance from the sample is called training sample. The units of the sample whose attributes are known but the performance isn’t being called out of training sample units which don’t have a chronological relation to the training sample.

Descriptive models

for the purpose of grouping the prospects, the relationship data is quantified. It also is used to create models to reproduce a large number of agents and hence predict.

Decision models

this model specifies the relation among all the elements of a decision and predicts results including a number of variables. This allows maximizing specific results consequently minimize the others. It is commonly used to come up with a logical decision that eventually provides the desired action for every situation.

Fields engaged with predictive analytics

Marketing, financial and insurance firms have been the largest incorporators of this system along with big search engines and online service providers and industries involved in healthcare, retail, and manufacturing sectors.

Predictive analytics is the software that can be put to use in many aspects. Some of the few fields that have shown a great success in the last few years are

  • Underwriting
  • Project risk management
  • Portfolio, product or economy level prediction
  • Fraud detection
  • Direct Marketing
  • Customer Retention
  • Cross-sell
  • Collection analytics
  • Clinical decision support system
  • Child protection
  • Analytical customer relationship management

If the conclusion can be drawn from the success it has provided then it can safely be assumed that predictive analytics will predict the most likely goals to accomplish a near-to-zero breakdown point that would lead to optimum decision making in the coming future.

Subscribe for newsletters &
Get Latest Updates & Offers