Top 5 Reasons to Invest in Predictive Analytics

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Predictive analytics can give your business an edge in a competitive marketplace

Predictive analytics is the new buzzword in CIO circles right now and for good reason. It offers significant advantages that can give your business an edge in a competitive marketplace. Predictive analytics can be used in any industry, from life sciences to consumer goods services.

To derive accurate results from predictive analytics, you need:

  • A comprehensive set of data. Having data from a wide variety of sources will improve the accuracy of the results.
  • Good problem definition. Predictive analytics can do a lot, but you need to define your goals first before it works.

There are many analytics services that can create algorithms to derive relevant results from your database. From that point, you can make decisions that will improve the overall profitability of a company.

It is easy to see why businesses have invested heavily in predictive analytics. Here are the top five reasons why you should too:

  1. Marketing optimization. Traditionally, analytics have been used to measure the success of a marketing campaign. Customer segmentation, pricing analysis, and marketing mix modelling have all been derived from studying data. Predictive analytics takes this to a whole new level. It works by using algorithms that can take data sets from different sources, identifying trends, and then creating a forecast you can use to identify where your marketing spend can have the greatest impact.
  2. Demand planning. Overcapacity and wastage are the results of poor planning. These can drain the profitability of a company. Predictive analytics can be used to optimize your resources so your company can meet customer demand without sacrificing quality. You can increase profits using the same resources as before through improved planning.
  3. Financial analysis. Financial markets have seen extensive usage of predictive analytics. From determining the credit risk of an individual to identifying investment opportunities in the stock market, predictive analytics can be used to evaluate current trends and create forecasts about the future behaviors of individuals, companies, or markets.
  4. Talent sourcing. One of the newer developments in predictive analytics is finding the best people for particular jobs. The US Special Forces has started using data models to assess new candidates. It can identify acceptable trade-offs such as trainability vs. experience. Given the amount of resources companies invest to find the right people, there will certainly be exciting developments in this field. Stay tuned.
  5. Location analysis. Social media companies such as Facebook and Foursquare have created algorithms that assess the location data of their users. This can reveal opportunities for businesses. By identifying where people are in real time (their routes, where they stay, etc.), it is possible to know which areas are up-and-coming and predict future developments in that area.

Predictive analytics holds massive promise. Business owners and executives can gain significant insights about their customers, trends, and the future. They can make better decisions that will help their business achieve optimal profitability.

What other important reasons or opportunities do you believe will drive the rise of predictive analytics?

 

The Elephant in the Room About Cloud

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How do you control SaaS and Cloud solutions when you don’t own them?

The first law of being a CIO might well be “You don’t get to talk about strategy if your IT is broken”. Moving your enterprise applications to the cloud doesn’t change this.

Once an application has been transitioned to the cloud you will no longer be responsible for the day-to-day management of a solution. You are, however, still accountable when these solutions fail. If CRM is broken then the CEO will be calling you, their CIO, and not someone at the Software as a Service (SaaS) CRM provider.

Moving applications from your own data centre to the cloud can provide tangible benefits. But you need to be prepared.

You need to do your due diligence so that you’re fully aware of the benefits and limitations. You need to integrate the solutions into enterprise wide support and business continuity processes. And you need to manage cloud providers like any other vendor: monitoring their performance and weeding the under-performers from your vendor portfolio.

It’s important that you know what you’re buying

All cloud solutions come with some sort of service level commitments. It’s important to understand what these commitments mean.

SaaS solutions will provide some commitment on availability and data durability (i.e. how much data might be lost during a failure). Often the level of these commitment will depend on the package that you purchase. Getting by on a cheap-and-cheery freemium package might seem like a smart move at the time. That is until the service fails, taking all your data with it, and you realize that the freemium service levels provide poor availability and put you at the back of the queue for data recovery.

Service levels provided by Infrastructure as a Service (IaaS) platform vendors – such as Amazon Web Services (AWS) – are more nuanced. They will provide service levels for each of the distinct platform services they offer: virtual machines, data storage, and so on. It’s up to you to weave these services together in a way that provides the end-to-end service level you require.

You’ll notice that whenever there is a highly publicized AWS outage that the Amazon.com store is rarely affected. The failure of third-party applications hosted by AWS is not Amazon’s fault. These applications either deemed the failure an acceptable risk or didn’t design for Amazon’s cloud computing model.

IaaS provides you with a toolbox. It’s up to you to use the toolbox effectively.

You can’t avoid integration

No application is an island, and it must be integrated into your IT estate if you want to realize it’s full potential. This might be as simple as plugging it into your identity management solution so that employees can use their usual username and password. It might be more complicated, integrating it into end-to-end business processes.

Cloud solutions also need to be integrated into your business continuity plans and processes. What will you do if the solution should be unavailable for some reason? How will you manage to keep the business running without it? How long can you keep the business running without it? What will you do if the cloud solution becomes permanently unavailable?

In many cases including a cloud solution in business continuity is as simple as periodically extracting a spreadsheet containing all the data the application contains.

Your support desk also needs to be aware of the cloud solution, and ready to support users who have problems. Users will call the same number regardless of who the solution is provided by (just as the CEO will always call you, the CIO, when a solution fails).

Finally, you need to plug the cloud solution into your operational monitoring. You want to be the first of the management team to know that the solution is down. That call from the CEO should be along the lines of “We already know about it, and this is what we’re doing to solve the problem…”

Prepare for life as a small fish in a big pond

Many of the benefits of the cloud – scaleability, low cost, etc. – come from the huge scale that cloud and SaaS providers can achieve. The downside of this huge scale is that you’ll most likely find that you’re a small fish in a very big pond.

Operating your own data centre allows you to be your own lord and master, controlling every aspect of the data centre’s operation. With the cloud solution, however, you’re just one voice among many. Your requirements will often become just one of the thousand conflicting demands that the cloud provider is attempting to balance.

You need to consider cloud and SaaS solutions as tools that your business simply uses as is, rather than solutions that you try and adapt to your unique needs. Typically it’s the commodity business activities that you want to throw out to the cloud or SaaS. There’s no benefit from foisting you peculiar approach to order management onto the SaaS solution. You might have pages of requirements, but a smarter approach is to find a solution that you consider capable and cost effective and them simply adopt whatever standard business processes it provides.

This is somewhere the CIO can help the business

Moving applications to the cloud can deliver tangible business benefits. There are, however, pitfalls that need to be avoided.

As IT spend migrates out of the IT department and into the lines of business more and more CxOs will find themselves in the unenviable position of being the proud user an IT solution that isn’t currently working. The first person they’ll turn to will be the CIO.

This is something that an astute CIO can help with.

  • Work with the other departments to ensure that the right options are purchased, covering both functional and non-functional requirements.
  • Deal with the integration challenges so that the cloud solution does not become an isolated island.
  • Weave the cloud solution into enterprise-wise business continuity and support processes.
  • Ensure that you have monitoring in place so that you get the bad news first

Cloud solution work, but you need to be smart about how you use them if you don’t want to be caught out.

Have you moved applications from the data centre to the cloud? What problems did you encounter? And how did you overcome them?