It’s not uncommon to talk to potential clients who consider themselves to already be very much data-driven in the way that they operate. However it’s very rare to find a potential client that truly is exploiting the full potential of the data that they hold. That’s because companies often confuse business intelligence with predictive analytics, or think that once they’re using their data for business intelligence that they’re doing all they can to get value from it. Neither of these things is true. Predictive analytics is not the same thing as business intelligence, and if you’re just using your data for business intelligence applications then you’re almost certainly not getting as much value from it as you could be. But how exactly does predictive analysis differ from business intelligence? What should companies with established BI practices be doing next? In this blog post I’ll explore these questions and make some practical suggestions regarding next steps for those who want to move beyond simple BI applications for their data.
What is the difference between business intelligence and predictive analytics?
Business intelligence is about using the data you hold within your company to report on historical trends and current business performance. The best BI applications enable business users to get easy access to their data in order to quickly gain insights about the current performance of the business or to identify trends and patterns in past performance. Business intelligence is a backward glance over the shoulder to see what happened yesterday, last week, last month, last year. Good business intelligence applications give you this kind of information at your fingertips, making them very useful and popular with business leaders. Business intelligence is vital and good use of the insights gained from BI is a great starting point if you want to be data driven. However the one key limitation of BI is that it’s backwards looking. It can give you a huge amount of information about what’s already happened, but what it can’t do is tell you anything about what’s going to happen next. This is where predictive analytics comes in.
Why is now the time for predictive analytics?
Predictive analytics goes beyond these backward-facing views and uses the data you already hold in your business to look forwards and tell you what’s going to happen in the future. Not only that. Predictive models and algorithms allow you to not only predict the next most likely outcome but can also tell you what’s the next best thing that could happen. And good predictive analytics tools will automate this process for you, so that your business decision making becomes fact-based and truly data-driven rather than based on subjective judgements and hunches.
Your business intelligence tool can tell you which of your products is currently selling best, and show you trends in your product sales over time up to this point.
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