Predictive Analytics- Where Insight Meets Action
Finance professionals are constantly looking for ways to track performance and interpret results that ultimately provides the insight needed to make better business decisions. Since it is impossible to see into the future, organizations must try to predict the probability future events using historical data trends and assumptions of future market conditions. Using advanced analytics can pin-point hidden patters in large sets of unstructured data and model hundreds of possible scenarios, and optimize the best action plan based on future results.
A recent article in PC Magazine, Predictive Analytics, Big Data, and How to Make Them Work for You, poses the question, “What do you do when your business collects staggering volumes of new data?” The answer for finance professionals is predictive analytics. These days, companies using analytics to forecast and plan for future events that could affect corporate profits have a competitive advantage that allows them to react faster and smarter. It is important to remember that predictive analytics is not a black and white practice. Analytics is about probabilities – not absolutes – so be sure you know what data is important to test the most relevant outcomes.
For example, a sales person rediscovers an old contact that has made a past purchase. The assumption is that they will buy again. But once you consider the customers need for the product, the price of the product and their role in the organization, the assumption may change. What if the price went up? What if their role changed? This is a simple example. Predictive models for complex business processes can have countless variables and assumptions, so companies need the ability to connect, calculate and trace results is critical to provide meaningful insights.
An article in the Harvard Business Review, A Predictive Analytics Primer, outlines the basics of predictive analytics that are necessary to know to interpret your results and make better decisions for your company. The basics are explained in the chart below:
A key component to establishing a strong predictive analytics program is having access to the right data. Our solution, ImpactECS, enables companies to connect granular, transactional ERP and operations data with advanced modeling tools and a powerful calculation engine to provide a platform for advanced scenario analysis and planning activities. ImpactECS gives companies a tightly integrated, forward-looking planning and analysis platform to predict costs, budgets and rates, and profitability.
Understanding what happened in the past is important, but gaining visibility it what could happen tomorrow is crucial to a companies’ success. To find out how you can unlock the full potential of your data and make better business decisions with ImpactECS, Start Here!