Thomas J. R. Emmerich, VP of Sales Operations, SAS Institute You Asked How can a company practically benefit from predictive analytics?

In challenging economy times, executives and managers are asking, “How can we better predict the future, so we can operate proactively instead of in reacting to unforeseen circumstances? How can we assess the future impacts of ‘what-if’ scenarios, when our decision support systems are focused more on hindsight than foresight?”

Many companies have made huge investments in terabyte-size data stores but are not using them effectively to forecast the future – to predict, which customers are likely to leave, which ones will probably respond to the next promotion, which ones are ripe for cross-selling and what will happen to sales if prices are increased by 5%, for example.

Today’s competitive landscape has forced companies to operate more efficiently, not just on a day-to-day basis but also more strategically which in planning ahead.

Decision makers need an accurate picture of the future with the ability to reliably measure the impact of economic and marketplace factors. For example;

• Retailers can reduce the risk that they will run out of products during periods of high demand, which can result in customer loss or overstocks that lead to cut prices and lost revenue.
• Manufacturing of consumer packaged goods and other types of manufactures can predict product demand far in advance so that they can plan more effectively – avoiding the costly scenario of warehouses full of excess goods that must eventually be discarded.
• Banks can accurately plan and predict daily demands for multiple ATMs located throughout a specific location.

No company can afford to lose its best customers, to spend more on logistics and inventory, to miss out on opportunities for products and services and to hire less capable employees than its more analytically astute competitors.

Predictive analytics allows companies to answer critical business questions and use insight to create more effective strategies for the future. The resulting benefit is competitive advantage.

SAS Institute