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IBM Analytics Predictive analytics

White Paper

Predictive analytics in the cloud


Expanding the possibilities with IBM SPSS software
2 Predictive analytics in the cloud

Contents IBM offers industry-leading analytics and cloud solutions that


are designed to work together, including IBM SPSS Modeler
2 The need for insight in the current marketplace Gold, SoftLayer, Bluemix and IBM Watson Analytics.
The case for analytics IBM also has deep expertise and experience in implementing
The case for cloud predictive analytics solutions on cloud for clients in diverse
Analytics in the cloud industries and regions around the world.
7 Finding the right cloud analytics solution The need for insight in the current marketplace
IBM offerings for predictive analytics on cloud Market shifts. Inventory under-runs. Once-happy customers
Cloud and analytics in action becoming ex-customers. The unexpected is a threat to every
9 Conclusion business. Therefore, a business that could reliably predict future
eventsand anticipate the unexpectedwould have a distinct
10 About IBM Analytics advantage in the marketplace. In recent years, predictive analytics
systems have enabled many companies to come closer than
10 Request a call
ever to that goal. At the same time, the rise of cloud technology
10 Next steps has led more businesses to move their crucial IT processes to
the cloudboth to benefit from the technical and operational
Executive summary capabilities of cloud, and to gain advantages over their
Predictive analytics technology has evolved from a niche business competitors. Predictive analytics on cloud is still a relatively
luxury to a business necessity. At the same time, cloud technology new use case, but it is an increasingly compelling one.
offers benefits that are very relevant to analytics solutions,
including the ability to offload expensive, rigid requirements such This white paper will review the benefits of predictive analytics,
as IT infrastructure and dedicated support personnel. Hybrid the characteristics of cloud deployments, and how the two
cloud models in particular offer a valuable blend of flexibility, technologiesanalytics and cloudcan integrate to address the
capability and cost-efficiency; they can provide an advantageous pressing business concerns that arise in software implementations:
environment for predictive analytics.
Managing the solution and scaling it to fit changing needs
If youre interested in predictive analytics on cloud, you need to Building the most secure system possible
consider not only the desired use case for the analytics, but also Controlling management and IT staff time
your personnel capabilities, any particular security concerns and, Optimizing expenditures and getting the most benefit from
of course, budget. Even if you have an army of in-house data each IT dollar
scientists, your service provider will likely be responsible for not
only keeping the service running, but also for ensuring that your
analytics environment is tuned to deliver the business results you
need. Thats why its essential to select the right partner to
implement your solution. If possible, you should select a partner
with expertise in both analytics and cloud, as well as the ability
to integrate analytics and cloud solutions.
IBM Analytics 3

The case for analytics predictive analytics solutions are helping


Predictive analytics is a powerful technology that can help
businesses anticipate what will happen in the future, and act
companies leverage the power of data in ways
accordingly. The technology is constantly adapting to new never before possible.
market demands and technology evolutions. Together these
have transformed the business case for predictive analytics, As a result, predictive analytics is filtering into more and more
broadening its appeal and making it more of a necessity business operations. A recent Ventana Research report found
than a luxury. that predictive analytics is being used in areas critical to
revenue and profitability. More than seven out of 10 participating
Early analytics tools were customized models implemented organizations already use predictive analytics, and the remaining
by dedicated staffthey were experimental in nature and 28 percent plan to.1
required enormous up-front advances in personnel, processing
power, storage and coding. In addition, their uses were narrow. The use cases for predictive analytics are all compelling, and run
Recent advances have led to analytics tools that are more the gamut from straightforward to truly novel and innovative.
general-use: able to accept a wide range of data and use prebuilt For instance, its very beneficial to predict which current
algorithms to draw out insights. Modern analytics solutions customers might be about to leave, so that they can be enticed to
allow relatively easy customization and ongoing refinement of stay, but this is essentially an automated extension of time-
their predictive algorithms. These more general-use analytics honored techniques for customer service. Predicting what
solutions have led to much wider adoption, simplifying the products customers will want to buy in future seasonal conditions
process of building models and allowing line-of-business leaders is more sophisticated, but still fairly conventional. However,
to benefit from advanced analytics, even if they dont have degrees analytics solutions can go beyond this. For instance, predicting
in data science. how your salespeople will likely perform in given circumstances,
and adjusting incentives accordingly to increase sales while
From credit card companies forecasting delinquent accounts ultimately saving workforce coststhat is a level of forecasting
to retailers predicting what products will sell best during a heat and business benefit that seems almost magical. The power of
wave, predictive analytics solutions are helping companies in a predictive analytics will only continue to grow, and with it will
range of industries leverage the power of data in ways never grow the number of ways that engaged organizations can benefit
before possible. The benefits are enormous, and also very from the insight and efficiencies it makes possible.
diverse: reduced customer or employee churn, more targeted
marketing of offers, and reduced fraud are all possible benefits.
4 Predictive analytics in the cloud

Now that organizations realize the business case for predictive


analytics, they are looking for ways to derive even greater
benefits from it. One way to do this is to address some of the
historical obstacles to implementing predictive analytics systems,
such as the need for specialized skills, large IT budgets and
Business Data
understanding understanding dedicated IT resources. Cloud computing is one partner
technology that can combine with predictive analytics to
produce a more capable, more economical and more flexible
Data solutionultimately delivering better value.
preparation
Deployment The case for cloud
When getting a predictive analytics system up and running,
Data Modeling
many companies turn to cloud computingremote computing
resources delivered as a service over the Internet. Cloud offers
many advantages that match up well with the particular demands
of analytics. By offloading the processing, storage, programming
and maintenance requirements to a cloud provider, businesses
Evaluation
can deploy a sophisticated general-use analytics solution quickly,
with low capital investment, and start generating value almost
immediately. Cloud computing enables organizations to enjoy the
benefits of an enterprise-scale predictive analytics environment
without having to invest heavily in hardware or wait years to
Figure 1: Predictive analytics is an ongoing process of assimilating data, realize the technologys true potential.
analyzing it, verifying how the predictions align with real-world experience,
and modifying the analysis if necessary.
Cloud offers benefits to both the organization and to individual
employees. The organization avoids up-front capital costs,
Research already confirms that analytics is playing a large and
reduces the need for in-house IT expertise, and leverages a
growing role in business success. For example, Nucleus Research
flexible cost structure that is based on use. Meanwhile, employees
found that for every dollar invested in analytics, companies reap
can more easily access their data and applications from nearly
a 13-fold return.2 The precise ROI depends on what the particular
anywhere, supporting increased productivity and collaboration.
analytics solution is able to accomplish and this, in turn, depends
on what challenge the solution is applied to. What is clear,
however, is that this positive picture is widespread. In another
study by Forbes Research, 86 percent of executives with
experience in predictive analytics indicated that technology has
delivered a positive return on investment for their business.3
IBM Analytics 5

But not all clouds are created equal. There are three main The flexibility of hybrid cloud architecture provides several
varieties, each with its own characteristics: beneficial characteristics:

Responsiveness, because in-house resources are always


Public cloud, which is essentially service delivered over the
available and can be re-tasked as necessary
Internet: cheap and abundant, but with serious security and
Full control over security measures and the ability to
regulatory concerns as well as configuration constraints.
sequester sensitive data
Private cloud, which is a cloud-type implementation where the
Easier compliance with local laws, because particular data can
business owns and controls both the underlying hardware
be kept in a particular geographic location. This can ease
and the means of distributing data over a network. This type
the regulatory compliance burden on large, multinational
of cloud offers the benefits of cloud architecture but does
organizations.
not require the organization to relinquish control over
infrastructure or data.
However, every IT configuration has some risks and drawbacks,
Hybrid cloud, which is the connection of one or more clouds
and hybrid cloud is no exception:
to on-premises systems, the connection of one or more clouds
to other clouds, or both. Hybrid cloud can take different forms,
Management. The hybrid model typically consists of multiple
but it essentially uses a mix of on-premises private cloud and
cloud environments or applications that run across multiple
public cloud services so that workloads can shift back and
cloud systems. As a result, managing and integrating the data
forth depending on computing needs. Hybrid cloud systems
that traverses these environments can be challenging. This is
allow businesses to maintain existing IT infrastructure and
why its important to have a trusted and capable cloud provider.
keep legacy applications intact while leveraging the cloud for
Security. No security system is perfect. In fact, in-house IT
newer applications.
systems, often considered the epitome of security, are regularly
found to be flawed, vulnerable and inadequate to the task
of keeping company data secure. On the other hand, cloud
providers are specialized in data security and have the resources
Private to devote far more time and expertise to the task than many
companies can on their own. Hybrid cloud does involve more
locations where sensitive data can be stored, so it is important
Public that the security procedures and data management expertise
Traditional
are able to cope with these challenges.

Private Private

Public
Traditional

Figure 2: Hybrid cloud can be thought of as traditional IT environments that


can be integrated with both external and internal clouds.4
6 Predictive analytics in the cloud

Cloud isnt a magic cure-all. But it has significant advantages In a representative model, cloud-based predictive analytics takes
over in-house IT infrastructure, which is why it is gaining place in a dedicated and security-rich environment (see Figure 3).
traction in the marketplace. In particular, the hybrid model IBM offers SoftLayer, an industry-leading cloud infrastructure,6
is fast becoming the hallmark of a mature cloud strategy. IT and there are others available. This environment allows you to
teams are using hybrid cloud to link public cloud services with upload your data in a variety of formats, use rich data preparation
private infrastructure and are reaping the benefits, including and modeling algorithms to uncover patterns and trends, and then
greater flexibility and cost savings. According to IDC, more use a collaborative deployment environment to optimize the
than 65 percent of enterprise IT organizations are already predictive models and rules to improve your business. The
committed to hybrid cloud technologies.5 resulting insights can be shared with other users and the entire
process can be automated.
Analytics in the cloud
Cloud-based delivery of analytics combines the strengths of both
technologies, and offers a compelling set of capabilities that can
help organizations in many industries.
Database
The flexible capabilities of a hybrid cloud system can support the Business
highly variable computational needs of a predictive analytics rules
Fixed file
system, while also providing more granular control over
data location and security protocols. With a hybrid cloud
implementation: SAS file Gold

In-house IT resources can be sized to average or even Excel


minimum demand, not peak demand. Optimization Predictive
analytics
Computations can be done entirely in-house when capacity
XML
is available, or when the data involved needs to be kept
in-house for regulatory purposes.
Extra capacity is available via the public cloud when needed. Figure 3: An example of cloud-based implementation of predictive analytics.
Analytics insights can be distributed via the cloud, meaning The user can integrate data from many sources and perform analytics in a
dedicated, security-rich environment.
that employees can more easily access them anywhere, anytime.

Once youve decided that cloud-based analytics is a good fit for


your organization, the next step is to select and deploy the right
solution to meet your needs.
IBM Analytics 7

Finding the right cloud analytics solution a piecemeal approach can introduce as many
Developing a strategy for matching the right solution to your
organization generally involves three main activities:
problems as it solves. Ideally, you will want
cloud and analytics solutions that are designed
1. Plan by identifying a trusted provider with experience in the to work together.
field and a portfolio of robust, easy-to-use offerings.
2. Select the solution that delivers the best value for your needs. Integrated cloud and analytics solutions can give a broader range
The cheapest solution is often not the best valuethe costs of stakeholders the ability to use more advanced analytics to
of insufficient security or functionality can quickly reduce achieve more ambitious goals, without requiring a highly
your ROI. technical skillset.
3. Deploy the solution for maximum impact within your
organization. In particular, integrated predictive analytics solutions and
experienced cloud providers can enormously increase the
Those three key activities require you to consider a number flexibility, scope and precision of analytics solutions by helping
of underlying factors: individual organizations tailor their analytics to match their
particular needs. The value of this capability is often overlooked.
Analytics level. Where are you in the analytics journey? Organizations that already have a large data scientist team
For example, are you just starting out, attempting to in-house will likely be able to build and maintain their own
broaden or deepen your analytics capabilities, or do you analytics algorithms, but this type of capability is relatively
have an established analytics practice? rare. For the majority of organizations that do not have this
Goals. What do you want to accomplish with analytics? capability in-house, an integrated cloud and analytics provider
Stakeholders. Who will use the solution? How will they can help with the initial setup and tuning, and even provide
use it and how often? ongoing support for revisiting and iterating the algorithms so that
Skills. What type of internal skillsets do you have? they consistently produce accurate, relevant and up-to-date
Security. What level of security do you need to safeguard results. As shown in Figure 1, predictive analytics is not a tool
your data? you deploy once and then leave to run indefinitely; its an ongoing
process that involves constant analysis and feedback. Choosing
Although analytics solutions and cloud solutions are available the right provider can make this process much easier and
separately, and although many analytics solutions can be made more productive.
to run on cloud, a piecemeal approach can introduce as many
problems as it solves. Ideally, you will want cloud and analytics
solutions that are designed to work together.
8 Predictive analytics in the cloud

IBM offerings for predictive analytics on cloud Hybrid deployment of IBM SPSS Predictive Analytics
IBM can help you take advantage of the cloud for analytics, Uses SoftLayer as a cloud infrastructure for some pieces of
and leverage the IBM SPSS Predictive Analytics portfolio. the solution while keeping other pieces of the solution
in-house. Takes advantage of the flexibility of SPSS and
In addition to being the most established brand in the industry, SoftLayer to create what works best for you.
IBM has world-leading performance to match. In 2015, Forrester IBM Predictive Analytics on Bluemix
Research again named IBM as a leader in the field of big data Gives you the flexibility to leverage your IBM SPSS analytics
predictive analytics7 and IBM SoftLayer technology has been assets through the Bluemix environment. Uses SPSS in
recognized as the highest-performing cloud solution among combination with other components to create truly
major competitors.8 With tools that are designed to work unique applications.
together, and support for both the individual tools and the IBM Watson Analytics
means of integrating them, IBM is well-positioned to facilitate Was born on the cloud to use predictive capabilities to explore
your move to predictive analytics on cloud. IBM products and data and help you discover insights into the future. Watson
solutions on cloud include: Analytics can give business users predictive data discovery
and help jump-start more in-depth analytics initiatives in
IBM SPSS Modeler Gold on Cloud an organization.
Provides a fully managed software-as-a-service (SaaS)
environment for IBMs leading predictive platform. Designed IBM solutions are designed to let clients choose their own
to take full advantage of the security, scalability and resiliency deployment strategy and take advantage of the power of
features of IBM cloud. predictive analytics to address their most pressing business
needs in the way that works themwithout compromising on
depth of features, ease of use or deployment options.
IBM Analytics 9

Conclusion
Cloud and analytics in action Predictive analytics solutions offer a powerful and versatile
approach to addressing many pressing business problems.
nViso SA, a Swiss start-up, offers rich, insightful analytics in
Cloud technology offers a capable and flexible environment
the form of emotion recognition solutions. They needed a
for deploying predictive analytics solutions, with hybrid
high-performance cloud hosting infrastructure to extend their
emotional analytics solutions to a global customer base. cloud architecture being particularly advantageous.

Using shared IBM SoftLayer server resources, nViso provides When considering a deployment of predictive analytics, its
emotion analytics service offerings to approximately important to consider your level of analytics expertise, your
30 companies worldwide. Additionally, the organization
organizations goals, the stakeholders who will be involved, the
provides dedicated SoftLayer infrastructure to support
technical skill level of those stakeholders, and any particular
customers who are integrating nViso capabilities into their
own products, services and marketing campaigns.
security or compliance concerns. These factors will all affect
the type of analytics solution you need, the level of outside
support your organization will need, and the type of cloud
architecture that best fits.

IBM has a strong case for being the right partner to help you
gain the maximum benefit from predictive analytics on cloud.
IBM predictive analytics on cloud solutions can offer:

A comprehensive, integrated analytics platform


Scalability
A security-rich data environment
Tools for collaboration and productivity
Cost-effectiveness and strong ROI
A range of deployment methods

No matter what your current situation, its likely that an


experienced, industry-leading provider like IBM can help
you make the transition to predictive analytics more easily,
efficiently and cost-effectively.
10 Predictive analytics in the cloud

About IBM Analytics Request a call


IBM Analytics software delivers data-driven insights that help To request a call or ask a question, go to ibm.com/analytics/
organizations work smarter and outperform their peers. contactus. An IBM representative will respond to your inquiry
This comprehensive portfolio includes solutions for business within two business days.
intelligence, predictive analytics and decision management,
performance management and risk management. Next steps
Explore these additional resources on IBM SPSS predictive
IBM Analytics solutions enable companies to identify and analytics and cloud options.
visualize trends and patterns in such areas as customer
analytics that can have a profound effect on business Explore the IBM SPSS Predictive Analytics Community:
performance. They can compare scenarios; anticipate developer.ibm.com/predictiveanalytics
potential threats and opportunities; better plan, budget and Try IBM Bluemix: ibm.com/bluemix
forecast resources; balance risks against expected returns and Enroll in the Big Data University Predictive Modeling
work to meet regulatory requirements. By making analytics Fundamentals course: bigdatauniversity.com/courses/
widely available, organizations can align tactical and strategic predictive-modeling
decision making to achieve business goals. For more information,
see ibm.com/analytics Follow us on Twitter: twitter.com/IBMSPSS

Like us on Facebook: facebook.com/ibmspss


IBM Analytics 11
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Analytics June 2015.
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an IBM Company. users-report-tangible-gains-to-their-bottom-line)
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