Predict or Perish

Achieving a competitive advantage

through Predictive Analytics

Martin Young
IBM Forum 2012 Estonia
Tallinn, October 9, 2012
 Agenda

Introduction to Predictive Analytics

Predictive Customer Analytics
Predictive Operational Analytics
Predictive Threat & Risk Analytics
Case studies
Q&A
 A New Era of Computing
12 terabytes 5 million
of Tweets trade events
create daily per second
We have for the first time
an economy based on a
Volume Velocity
key resource [Information]
that is not only renewable,
but self-generating.

Variety Veracity Running out of it is not a

problem, but drowning in it
100s Only 1 in 3 is.
Of video feeds from Decision makers
surveillance cameras trust their
John Naisbitt
information
 Big Data is a hot topic
Big Data has arrived at Seton
Health Care Family, fortunately
accompanied by an analytics
tool that will help deal with
the complexity of more than
two million patient contacts a
year
Companies are being
inundated with datafrom
information on customer-buying
habits to supply-chain efficiency.
But many managers struggle to
make sense of the numbers.
Data is the new oil.
Clive Humby
At the World Economic Forum
last month in Davos,
Switzerland, Big Data was a
marquee topic. A report by the
forum, Big Data, Big Impact,
declared data a new class of
economic asset, like
currency or gold.
now Watson is being put to
work digesting millions of pages
of research, incorporating the best
clinical practices and monitoring the
outcomes to assist physicians in
treating cancer patients.
Increasingly, businesses are
applying analytics to social media
such as Facebook and Twitter, as
well as to product review websites, to
try to understand where customers
are, what makes them tick and what
they want, says Deepak Advani, who
heads IBMs predictive analytics
group.
The Oscar Senti-meter a tool
developed by the L.A. Times, IBM
and the USC Annenberg Innovation
Lab analyzes opinions about
the Academy Awards race shared
in millions of public messages on
Twitter.
 Big Data Explained
Achieve Breakthrough By Analyzing Any
Outcomes Big Data Type

Know Everything
about your Transactional /
Customers Application
Data
Run Zero-latency
Operations
Machine Data
Innovate new
products at Speed
and Scale
Social Media
Data
Instant Awareness
of Fraud and Risk

Exploit Content
Instrumented
Assets
 IBM Big Data Analytics Capabilities

Know Run Zero- Innovate new Instant Exploit

Everything latency products at Awareness Instrumented
about your Operations Speed and of Fraud and Assets
Customers Scale Risk

IBM Smarter Analytics for Big Data

Software Infrastructure Expertise

Big Data Platform Expert Integrated Systems IBM Research
Predictive and Advanced Analytics Defensible Disposal First-of-a-kind Solutions
Content Analytics Smarter Storage Solution Accelerators
Decision Management Cloud Ready for Watson
Domain expertise
 Predictive Analytics helps your organization anticipate change so
that you can plan and carry out strategies that improve outcomes.

By applying Predictive Analytics solutions to data you already have,

your organization can uncover unexpected patterns and associations
and develop models to guide front-line interactions.

With these unique insights you can prevent high-value customers

from leaving, develop successful products and product offers,
identify and minimize fraud and risk, fight crime, etc. Predictive
Analytics gives you the knowledge to predictand the power to act.

Predictive analytics solutions analyze patterns found

in big data to predict potential future outcomes
The Smarter Planet
 The Smarter Planet:
Customer Intimacy
Smarter Marketing: Seeing customers as individuals
http://www.youtube.com/watch?v=_SbVnMMozY4
The Smarter Planet:
Customer Intimacy

Examples
 Customer Value Cycle
One to One
Research & Purchase
Product

Purchase
Advocate More
Product

Get Customer Use

Service Product
The Broad Brush
 Predictive Customer Analytics
Operational
Predictive Analytics can help you act smarter by
helping you: Analytics

Acquire the ideal customers

Grow your customer relationships
Retain your most valuable customers
 The Smarter Planet:
Operational Excellence

Smarter Analytics: Businesses Use Analytics to Find Hidden

Opportunities
http://www.youtube.com/watch?v=FpWoFMSf73g

Predictive Maintenance: Car

http://www.youtube.com/watch?v=1xFpX9dI_2I
 The Smarter Planet:
Operational Excellence

Examples
 Operational Life Cycle
Agile Development

Procurement

Availability
Distribution

Long term planning

 Predictive Operational Analytics
Operational
Predictive Analytics can help you act Analytics
smarter by helping you:

Manage your operations

Maintain your infrastructure
Maximize capital efficiency
 The Smarter Planet:
Threat & Risk
Predictive Analytics - Police Use Analytics to Reduce Crime
http://www.youtube.com/watch?v=_ZyU6po_E74
The Smarter Planet:
Threat & Risk

Examples
The Threat and Risk Cycle
Proactive Define

Allow

Monitor
Prevent

Corrective Detect
 Predictive Threat & Risk Analytics

Predictive Analytics can help you act

smarter by helping you:

Monitor your environment

Detect suspicious activity
Control outcomes
Driving Smarter Business Outcomes
Capture Predict Act

Text
Mining Statistics
Data
Platform
Mining

21
 The Predictive Payback
Telecom Retail
Reduction in customer 25% increase in campaign
churn rate from 18% to response rate, 15% increase
2%, increase in sales in sales, pay back after first
(Cablecom) campaign
26% reduction in customer (Neck & Neck )
churn rate, annual net 30% reduction in supply
benefit of $3.8m, payback chain costs, increase in sales
within 5 months (Elie Tahari)
(XO Communications)
 The Predictive Payback
Insurance
Doubled accuracy of fraud
identification, reduced time
to refer suspicious claims
from 14 days to 24 hours,
payback in 3 months
(Infinity)
Manufacturing
Saved $1 million in repair
costs in less than 2 weeks,
decreased overall machine
downtime by 20% (US
construction equipment
manufacturer)
 Smarter Solutions

Predictive Predictive Predictive

Customer Analytics Operational Analytics Threat & Risk
Analytics
Acquire Manage Monitor
Grow Maintain Detect
Retain Maximize Control

Up-sell/cross-sell Predictive maintenance Claims fraud

Market basket analysis Assortment planning Credit-card fraud
Churn prevention Reverse logistics Insider threat
Customer segmentation Resource management Signals analysis
Brand Monitoring Quality assurance Cyber security
The Smarter Planet
 Predictive Analytics: Summary

Predictive Analytics capitalizes on all available data

Provides unique insights
Adds smarter decisions to existing systems
Drives better outcomes
Delivers greater value