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Predictive Analytics: The Next Wave in Business Intelligence

We discuss how Predictive Analytics enables decision makers to predict future events and proactively act on that insight to drive better business outcomes and deliver the insight needed to answer key business questions:

- How to reduce churn and retain the most loyal customers to maximize profitability (predict which customers are most likely to leave and which are most loyal)
- How to detect and ultimately prevent fraudulent activity
- Which factors are most likely to drive customers to choose my product over the competitor’s?
- How to integrate Predictive Analytics with an existing Business Intelligence platform

Presenter Tom Lennon is Director of Perficient's National Business Intelligence Competency Center.

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Predictive Analytics: The Next Wave in Business Intelligence

  1. 1. Predictive Analytics : Next Wave in Business Intelligence
  2. 2. About Perficient Perficient is a leading information technology consulting firm serving clients throughout North America. We help clients implement business-driven technology solutions that integrate business processes, improve worker productivity, increase customer loyalty and create a more agile enterprise to better respond to new business opportunities.
  3. 3. PRFT Profile  Founded in 1997  Public, NASDAQ: PRFT  2009 Revenue of $188 million  16 major market locations throughout North America — Chicago, Cincinnati, Cleveland, Columbus, Dallas, Denver, Detroit, Fairfax, Houston, Indianapolis, Minneapolis, New Orleans, Philadelphia, San Jose, St. Louis and Toronto  1,300+ colleagues  Dedicated solution practices  ~450 enterprise clients (2009) and 85% repeat business rate  Alliance partnerships with major technology vendors  Multiple vendor/industry technology and growth awards
  4. 4. Our Solutions Expertise & Services Business-Driven Solutions Perficient Services • Enterprise Portals  End-to-End Solution Delivery • SOA and Business Process  IT Strategic Consulting Management  IT Architecture Planning • Business Intelligence  Business Process & Workflow • User-Centered Custom Applications Consulting • CRM Solutions  Usability and UI Consulting • Enterprise Performance Management  Custom Application Development • Customer Self-Service  Offshore Development • eCommerce & Product Information  Package Selection, Implementation Management and Integration • Enterprise Content Management  Architecture & Application Migrations • Industry-Specific Solutions  Education • Mobile Technology • Security Assessments Perficient brings deep solutions expertise and offers a complete set of flexible services to help clients implement business-driven IT solutions 4
  5. 5. Our Speaker Mohit Sauhta • Sr. Technical Architect, Information Management and Business Analytics practice • More than 10 years of experience in delivering Information management, Business Intelligence solutions. • Proven enterprise architect in building Large Enterprise applications such as Investment Performance Reporting and Enterprise Performance Management. • Exploring next generation technological solutions, such as Predictive Analytics. • Pursuing MBA with emphasis in Analytical Finance at the Booth School of Business. 5
  6. 6. Agenda • Motivation • Demand for Predictive Analytics • Surveys and Findings • Design • Overview of Predictive Analytics • Components of Predictive Analytics • Implementation • Perficient Offerings • Footprint with existing BI Infrastructure • Success Stories • Q&A 6
  7. 7. An Information Explosion … and Faster Decisions Required Volume of Digital Data  57% CAGR for enterprise data through 2010  Machine generated data : Sensors, RFID, GPS.. Variety of Information  80% of new data growth is unstructured content  Emails, images, audio, video.. Velocity of Decision Making  Rapidly changing business climate  Need to get ahead of the curve : predict issues and fix them Business Imperative: Accelerate innovation, business optimization, and sustained competitive differentiation 7
  8. 8. Challenges facing Decision Makers Today 1 in 3 business leaders frequently make critical decisions without the information they need 1 in 2 don’t have access to the information across their organization needed to do their jobs 19+ hours Spent by knowledge workers each week just searching for and understanding information 8
  9. 9. What Keeps You Awake at Night? Life Before Predictive Analytics • Its costs me a small fortune to get new customers; there must Focus Acquire be a better way! • We want to increase purchase size… but we don’t know which products to keep in stock! Focus Grow • By the time customer complaints work through the system – it’s too late, they’re gone! Focus Retain • We thought this campaign was a success… until the checks bounced! • We want to reduce fraud, but we don’t want to burden our low Focus Fraud risk customers! Focus Risk Where We Focus 9
  10. 10. Next Generation Efficiencies come from Optimizing Every Decision, Transaction or Process at the Point of Impact… Foundational Breakaway Sense and respond Predict and act Back office Point of impact Skilled analytics experts Everyone Instinct and intuition Real-time, fact-driven Automated Optimized 10
  11. 11. Analytics Critical for Driving Competitive Advantage “At a time when companies in many industries offer similar products and use comparable technology, high-performance business processes are among the last remaining points of differentiation.” Tom Davenport, “Competing on Analytics” Ten Most Important Visionary Plan Elements Interviewed CIOs could select as many as they wanted 86% Business Intelligence and Analytics BI/Analytics #1 77% 80% Virtualization investment to 73% 76% Risk Management and Compliance improve 70% 71% Mobility Solutions competitiveness 66% 73% Customer and Partner Collaboration 64% 71% Self-Service Portals IBM Global CIO Study 2009 63% Low 67% Application Harmonization 62% growth 70% Business Process Management 61% High 68% growth SOA/Web Services 55% 63% Unified Communication 57% Source: IBM Global CIO Study 2009; n = 2345 11
  12. 12. Imagine If Your Decision Makers Could… …predict and treat …adjust credit lines …determine who is …apply inferred social infection in as transactions are most likely to buy if relationships of premature newborns occurring to account offered discounts at customers to prevent 24 hours earlier? for risk fluctuations? time of sale? churn? Retail Sales Telco Call Physician Loan Officer Associate Center Rep …optimize every transaction, process and decision at the point of impact, based on the current situation, without requiring that everyone be an analytical expert 12
  13. 13. How can I capture and analyze information about how my customers, prospects or employees are feeling? How can I predict behaviors and preferences so I can reduce churn, prevent fraud, maximize campaign results and more? How can I make decisions in real-time or ahead of a potential issue, instead of making decisions when it is too late? 13
  14. 14. Predictive Analytics offers Unique Insights to Answer those Tough Business Questions  Predictive Analytics is a transformational technology that enables more proactive decision making, driving new forms of competitive advantage  Analyzes patterns found in historical and current transaction data as well as attitudinal survey data to predict potential future outcomes 14
  15. 15. TDWI Predictive Analytics Findings 15
  16. 16. The Predictive Analytics Process: Iteration for Success and Innovation Predict Recommend Analyze data to the most provide insight and appropriate predict the future action to take Predictive Analytics Capture Act Improve customer retention Customers Constituents Grow share of wallet Dashboards Prospects Employees Read new data on customers, Minimize risk Kiosks / Mobile Students Patients events, etc. for Increase customer satisfaction CRM / ERP continuous  Enhance market share Sterling Apps improvement Enterprise Decision Data Sources Optimization 16
  17. 17. Enabling the Predictive Analytics Process Capture Predict Act Data Collection delivers an Predictive capabilities bring repeatability Unique deployment technologies accurate view of customer to ongoing decision making, and drive and methodologies maximize the attitudes and opinions confidence in your results and decisions impact of analytics in your operation Text Mining Data Mining Statistics … Data Deployment Collection Platform Technologies Pre-built Content Attract Up-sell Retain … 17
  18. 18. Predictive Analytics Software 4 Key Categories Data Collection Delivers accurate view of customer attitudes & opinions Statistics Drives confidence in your results & decisions Modeling Brings repeatability to ongoing decision making Deployment Maximizes the impact of analytics in your operation 18
  19. 19. Capture: Data Collection • Data collection capabilities to capture attributes, interactions, behaviors, and attitudes for customers, employees or constituents • Augments internally captured data with sentiment and opinion data and use this combination as part of the analytic process Delivers an accurate view of customer attitudes and opinions 19
  20. 20. Predict: Statistics • Advanced statistics and data management for analysts researching business problems • Collection, preparation, analysis, interpretation, explanation and presentation of data • Provides insight into a sample of data and tools for prediction and forecasting based on the data Drives confidence in your results and decisions 20
  21. 21. Predict: Modeler • Workbench with data preparation functions to build analytic streams or jobs and a run time environment for job execution • Set of mining algorithms that provide insight and prediction • Enables the discovery of key insights, patterns and trends in data that can be used to optimize business decisions Brings repeatability to ongoing decision making 21
  22. 22. Predict: Text Analytics • Uses natural language processing heuristic rules and statistical techniques to reveal conceptual meaning in text • Extracts concepts from text and categorizes them • Makes unstructured qualitative data more quantifiable, enabling the discovery of key insights from sources such as survey responses, documents, emails, call center notes, web pages, blogs, forums and more Brings repeatability to ongoing decision making 22
  23. 23. Act: Decision Management • Set of tools to automate high-volume decision making enterprise-wide • Injects powerful predictive analytics into core business processes • Extends predictive insights to the business user at the point of decision – E.g. Should a claim be ‘fast tracked’ or evaluated more closely based on a calculated risk score? Maximizes the impact of analytics in your operation 23
  24. 24. Act: Collaboration and Deployment Services • Flexible enterprise foundation for managing and deploying analytics throughout the organization • Automates analytical processes • Enables collaboration by securely sharing and reusing analytic assets • Streamlines deployment of analytical information on a scheduled or real-time basis Maximizes the impact of analytics in your operation 24
  25. 25. Our Strategic Partnerships 25
  26. 26. Introducing Perficient’s Business Intelligence Practice • A leading provider of BI and Information Management Solutions, along with the predictive analytics services and solutions – Software – data collection, text and data mining, advanced statistical analysis and deployment technologies – Services – implementation, training, consulting, and customization – Solutions – combine software and services to deliver high-value line-of- business solutions; used for optimizing marketing campaigns, call center effectiveness, identification of fraudulent activity and more • Perficient is world-class talent delivering world-class technology, on time and on budget to a broad customer base. Enables decision makers to predict future events and proactively act upon that insight to drive better business outcomes 26
  27. 27. Offerings and Expertise 27
  28. 28. Perficient’s Predictive Analytics Solutions Uniquely Offers You…  Value of analytics across your organization – Highly productive, business-friendly predictive modeling, collaboration and deployment services – Based on the convergence of analytics, architecture and business processes  Open Architecture that seamlessly fits your existing environment – Componentized, enabling it to easily fit within your existing environment, immediately adding value without the need for a “rip and replace” of information infrastructure – Natural part of a user’s normal activity versus a separate, disconnected application  Deep domain expertise in analyzing data – Ability to dynamically capture attitudes, attributes and behaviors and improve people interactions 28
  29. 29. BI and Performance Management Capabilities Help Decision Makers Find the Answers How are we Why are we What should doing? on/off track? we do next? 29
  30. 30. New Value for Perficient BI Customers How are we Why are we What should doing? on/off track? we do next? Addition of KPPs Broad distribution Time series (Key Performance of statistical results forecasting Predictors) New customer Predictive analytics for insight through deeper understanding of Data Collection the data 30
  31. 31. Predictive Analytics –Modeler 1) Leveraging BI, identify problem or situation 2) Use predictive needing attention analytics & feed Common results back into Business Model the BI layer BI Application 3) Results widely distributed via BI for consumption by Business Users 31
  32. 32. Workflow Today Meta data modeler creates data model Analyst creates predictive insight Analytical Modeler Requires:  Data Requires: Modeling skills  Data Mining skills  Knowledge  Modeler skills about Mining Metadata Modeler Table layout Final Report Report Designer Business Users Report Designer with Mining skills Consume creates & deploys Requires: Analytics  Report Development Skills reports …  Mining visualization skills  Knowledge about Mining content 32
  33. 33. Business User Focused Finance Sales/Marketing Human Resources  How accurate is your budgeting and  Are you using Analytics to drive cross-  Are you using any applications to better forecast process? How well do your sell/up-sell opportunities? predict time and attendance for your analysts understand data correlation? indirect labor costs?  What applications are you using to  How does the credit terms, discounts, prevent customer churn?  How are you preventing employee theft etc. drive your margins, DSO, and and fraud? working capital ratios?  Are you using any tools to predict customer behavior?  How are you monitoring employee  Is your organization using industry retention and satisfaction? benchmark data to determine product profitability and market share?  Are you using weather patterns to drive your sales forecasts? We offer analytical solutions that drive revenue, improve profitability and predict behavior Perficient helps you…….. Analyze the past, Monitor the present, Predict and Plan the future. 33
  34. 34. Applying Analytics to Accelerate Your Success Example: Customer Intimacy • Reduces customer defection, increases uplift from cross-sell/up- sell targeting, and improves acquisition of the “right” customers, by enabling decision makers to: • Understand unstructured data that is found in everything from e-mails, call center notes, blogs, and open ended survey questions • Identify drivers of customer behavior via survey analysis • Identify key performance predictors (KPPs) including customer defection and outcome of particular customer interactions • Prioritize customer programs as part of real-time decision processes • View customer insights alongside key performance information through standard IBM reports, analyses and dashboards 34
  35. 35. Sample Case Studies: Customer Intimacy Grow and Retain “The power and ease of use of Statistical analysis enables the AMR Consumer Research department to perform more research than ever before and deliver timely reports while maintaining a small, dedicated staff.” Grow “With BI Analytics, HSBC Bank USA effectively mines an ever-growing file of customer data, creating predictive models to uncover cross-selling and “roll over” sales opportunities.” Attract, Grow and Retain “Predictive Analytics solutions add intelligence to our business ensuring efficiencies in pricing, marketing and reporting – something no company can afford to ignore in today’s business environment” R&D Analyst Premierline Direct 35
  36. 36. Customers Experience a Measurable ROI • 94% of customers achieved a positive ROI, average payback in 10.7 months • Over 90% of users attributed an increase in productivity to Predictive Analytics. • 81% of projects were deployed on time, 75% on or under budget “This is one of the highest ROI scores Nucleus has ever seen in its Real ROI series of research reports” Rebecca Wettemann, VP of Research, Nucleus Research 36
  37. 37. Delivering Customer Value Center for Disease Control Improve Health Care and Patient Outcomes • Quickly capture and filter in real-time vast amounts of data on critical public health issues found through interviews, email and the Internet • Now able to better characterize diseases, identify risk factors and quickly assess medical needs of specific populations • Plot the expected course of outbreaks and plan responses for improved public safety 37
  38. 38. Delivering Customer Value Cablecom GmbH Reducing Customer Churn • Identify early indicators of customer churn using data collection surveys and data and text mining, tailoring direct marketing efforts as a result • 100% improvement in churn detection and an initial reduction in actual churn from 19% to 2% • 53% of its unsatisfied customers became company promoters 38
  39. 39. Delivering Customer Value Richmond Police Department Predict and Prevent Criminal Activity • Identify and predict crime patterns through timely analysis of incident reports, tips and service calls • Can now pinpoint “hot spots” and place tactical units where they are needed most • 20-30 % decrease in violent crime and homicides in a 12-month period 39
  40. 40. Predictive Analytics Enables Next-Generation Decision Making • A leading provider of predictive analytic services and solutions with a world-class talent and a broad customer base • Enables decision makers across the organization to predict future events and proactively act upon that insight to drive better business outcomes From sense and respond… …to predict and act! 40
  41. 41. Questions & Answers
  42. 42. Follow Perficient Online Daily unique content about content management, user experience, portals and other enterprise information technology solutions across a variety of industries. 42