Page 9 - AeM_Aug_2018

RESEARCH, ANALYSIS & TRENDS

when someone will change the insurer. The supermarket However, to be able to make forecasts of future
chain Target allegedly analyzes the surfing behavior of developments in the company, reliable data on
female customers to find out if they are pregnant, so that probability of occurrence and risk distribution are
they might be able to supply things like diapers or baby required. Only then, reliable scenario calculations can
food. Life insurance companies supposedly found out get compiled and decisions made on the given, solid
that people who retire early usually die earlier, and database. Unfortunately, financial planning (profit and
airlines know that vegans miss their flights less often. In loss account, balance sheet, and cash flow) and
human resources, predictive analysis is often used to operational planning (sales, production, personnel) are
determine whether employees consider quitting their job. in most companies often kept separate, which can lead
So, the art of predicting the future isn’t really an art, but to different expectations and significant loss of time.
the result of careful evaluation and proper interpretation
of huge amounts of data. Clearly, it is faster and much more efficient to link the
business model directly with predictive analytics as it
Without asking any question results in better predictions and clarifies the impact on
business operations. Once that is done, the next logical
A typical online experience you are familiar with is when step is self-evident, namely the automation of business
you look at certain content and the site recommends decisions, which brings us to "prescriptive analytics"
more content that other people have viewed. In online that can provide answers for price optimization, but
commerce, these recommended products can even be also the fine-tuning of the marketing mix or fund
tracked on other sites, thanks to AdWords. In other management.
areas, these recommendations are highlighted even
more subtle and sometimes unnoticed by simply placing Wherever time-critical decisions have to be made,
these items further up the page. What happens here is analytics come in handy, since they manage to act in
that a website uses a so-called "recommendation fractions of a second. Analytics systems can provide
engine," a system that constantly learns from purchases timely recommendations for action, which are then
and page views of previous visitors. This knowledge will discussed in management - and ultimately decided by
be used in the next step to propose the next product that people - saving precious time that’s literally worth a
you are likely to be interested in, provided you follow the fortune of money. ◊
patterns of the other customers. The proposal is then
your "best next offer" and the technique, used to figure By Daniela La Marca
this out based on your transactions, is often called
"collaborative filtering".

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