Predictive analysis is an advanced analytical system which is used to make predictions for future events. A number of data analytical models are used to make such estimates. Techniques such as data mining, machine learning, statistics, data modeling etc. make use of current data to form predictions for future. It helps organizations better understand need of the hour and streamline their operations accordingly. Also, it helps them in improving their bottom line figures.
Predictive analysis is all about understanding the patterns found in historical as well as transactional data and then using it to identify opportunities and risks for future.
Why Is Predictive Analysis Important?
- Detecting Frauds – Cyber security is a growing concern these days. Techniques of predictive analysis can be used to detect any criminal behavior and fraud. Such an analysis assists in identifying any anomalies and taking an action, well in advance.
- Improving Operations – Predictive analysis can be used to optimize operations. It not only helps in forecasting inventory but also in managing other resources in a better way. This improves organizational functions and makes them more efficient. For e.g. Airlines can use predictive analytical techniques to set ticket prices.
- Boosting Marketing Campaigns – Techniques of predictive analysis can be used to determine needs and preferences of the potential customers. This helps in designing marketing strategies which help in attracting as well as retaining more people.
- Reducing Risks – It can be used by certain industries to appropriately depict and also form inferences from the data available to them. It helps them in forming an interpretation of a person, business entity or situation for effective decision making thus minimizing the risks.
Steps Followed For Conducting A Predictive Analysis
- Collect & understand the available data
- Prepare & organize data
- Choose an appropriate model
- Evaluate the model
- Deploy the model and use it in applications
- Monitor the effectiveness of the model in real time
How Does Predictive Analysis Work?
For carrying on predictive analysis successfully, three main things are required:
- Data – It is the basis of any analysis. There is no scope of making a prediction in the absence of reliable data from which inferences can be formed.
- Statistics – It is used to make mathematical calculations and also estimate relationship among different variables.
- Assumptions – Future is unpredictable, however certain assumptions are made to derive results. Predictive analysis rests on an assumption that future will continue to mimic the past.
Industries That Are Widely Using Predictive Analytical Tools
- Banking & Finance
- Hotels and travel agencies
Thus, businesses which are able to gather relevant data, use the right model and assumptions can more accurately predict the future trends and streamline their operations in the present accordingly which thus increases their success rate.
For more information, contact Centex Technologies at (972) 375 - 9654.