“Predict or Perish”
Achieving a competitive advantage
through Predictive Analytics
Martin Young
IBM Forum 2012 – Estonia
Tallinn, October 9, 2012
Agenda
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Introduction to Predictive Analytics
Predictive Customer Analytics
Predictive Operational Analytics
Predictive Threat & Risk Analytics
Case studies
Q&A
A New Era of Computing
12
5 million
terabytes
of Tweets
create daily
100’s
Of video feeds from
surveillance cameras
trade events
per second
Volume
Velocity
Variety
Veracity
Only
1 in 3
Decision makers
trust their
information
“We have for the first time
an economy based on a
key resource [Information]
that is not only renewable,
but self-generating.
Running out of it is not a
problem, but drowning in it
is.”
– John Naisbitt
Big Data is a hot topic
“Big Data has arrived at Seton
“At the World Economic Forum
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…”
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.
“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 IBM’s predictive
analytics group.”
“Companies are being
inundated with data—from
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
“…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.”
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
Outcomes
Know Everything
about your
Customers
By Analyzing Any
Big Data Type
Transactional /
Application
Data
Run Zero-latency
Operations
Machine Data
Innovate new
products at Speed
and Scale
Instant Awareness
of Fraud and Risk
Exploit
Instrumented
Assets
Social Media
Data
Content
IBM Big Data Analytics Capabilities
Know
Everything
about your
Customers
Run Zerolatency
Operations
Innovate new
products at
Speed and
Scale
Instant
Awareness
of Fraud and
Risk
Exploit
Instrumented
Assets
IBM Smarter Analytics for Big Data
Infrastructure
Software
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Big Data Platform
Predictive and Advanced Analytics
Content Analytics
Decision Management
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Expert Integrated Systems
Defensible Disposal
Smarter Storage
Cloud
Expertise
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IBM Research
First-of-a-kind Solutions
Solution Accelerators
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 predict…and 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
Advocate
Product
Purchase
More
Get Customer
Service
The Broad Brush
Use
Product
Predictive Customer Analytics
Predictive Analytics can help you act
smarter by helping you:
• Acquire the ideal customers
• Grow your customer relationships
• Retain your most valuable customers
Operational
Analytics
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
Development
Agile
Procurement
Distribution
Long term planning
Availability
Predictive Operational Analytics
Predictive Analytics can help you act
smarter by helping you:
• Manage your operations
• Maintain your infrastructure
• Maximize capital efficiency
Operational
Analytics
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
Define
Proactive
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
Predict
Capture
Text
Mining
21
Act
…
Statistics
Data
Platform
Mining
The “Predictive Payback”
Telecom
• Reduction in customer
“churn” rate from 18% to
2%, increase in sales
(Cablecom)
• 26% reduction in customer
“churn” rate, annual net
benefit of $3.8m, payback
within 5 months
(XO Communications)
Retail
• 25% increase in campaign
response rate, 15% increase
in sales, pay back after first
campaign
(Neck & Neck )
• 30% reduction in supply
chain costs, increase in sales
(Elie Tahari)
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
Customer Analytics
Acquire
Grow
Retain
• Up-sell/cross-sell
• Market basket analysis
• Churn prevention
• Customer segmentation
• Brand Monitoring
Predictive
Operational Analytics
Manage
Maintain
Maximize
• Predictive maintenance
• Assortment planning
• Reverse logistics
• Resource management
• Quality assurance
Predictive
Threat & Risk
Analytics
Monitor
Detect
Control
• Claims fraud
• Credit-card fraud
• Insider threat
• Signals analysis
• Cyber security
The Smarter Planet
Predictive Analytics: Summary
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Predictive Analytics capitalizes on all available data
Provides unique insights
Adds smarter decisions to existing systems
Drives better outcomes
Delivers greater value