Gartner Researchers: Predictive Analytics to Gain Traction in Business

by   |   March 19, 2013 11:42 am   |   0 Comments

GRAPEVINE, Texas – Sorry business intelligence gurus, but BI is no longer good enough.

That was the first message that Gartner’s analysts delivered March 18 at the market research company’s BI and Analytics Summit.

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The reason why it’s not good enough, according to analyst Ian Bertram, is because business intelligence reports and dashboards describe what has already happened. They are reactive, not proactive. “They don’t help us take action,” Bertram said.

Where the market is moving, Bertram said, is towards predictive analytics. Predictive uses the same data as BI reports, but it delivers insight faster through the use of advanced statistical models. Predictive analytics requires new IT infrastructure that allows rapid access to the data and quick calculation, but it’s born from data that most companies already have.

Fortunately it’s not too late to be a market leader, Bertram said, because only 13 percent of companies surveyed by Gartner last year have a predictive analytics system in place. That will change: 73 percent of companies intend to increase spending on predictive analytics, although 60 percent feel they don’t have the skills to make the best use of their data.

But that will change. Gartner analyst Bill Hostmann estimated predictive analytics on massive datasets will be “business as usual” in two years. Right now companies need to assess where their information infrastructure stands and what they will need to do the big data projects that will increase productivity and efficiency.

Increasing efficiency can sound trite. But Bill Ruh, the vice president of GE’s Global Software Center, said he can attest that even a 1 percent gain in efficiency can be a huge boost to profits. GE is investing $1 billion in software over the next four years to read and analyze machine data produced by the heavy machinery it sells.

That’s because a 1 percent gain in efficiency for its airplane engines could result in $30 billion in savings in fuel costs for commercial airlines. And a 1 percent gain in efficiency for natural gas firing generators could see savings of $66 billion, Ruh said.

So GE is in the process of changing its business. It has some of the top mechanical engineers in the world, but now the company is hiring software engineers to work alongside them. GE believes there will be 50 billion machines connected to the Internet by 2020, and everything GE makes will be among them.

Ruh said the result will be that GE can help its clients do three things:

  • Build systems where there is zero unplanned down time for maintenance;
  • Monitor all machines from afar in real time;
  • Find new efficiencies through interconnected machine networks, where the systems learn on their own by talking to each other.

 

Those systems will still require skilled workers to run them; it’s not a plan for workforce reduction, Ruh said. “You’re never going to get rid of people,” Ruh said. “The idea is to give those people better insight.”

What will happen, however, is a complete shift in how industries do business. Companies will have to change who they are hiring, how they think about cost and profit centers, and the way they work.

“There has to be process change with these kinds of tools,” Ruh said. “It’s really important to get the most out of [predictive analytics]. It’s not just about the technology. There is a great opportunity for new solutions that will change the directions of whole industries.”

Email Staff Writer Ian B. Murphy at ian.murphy@wispubs.com. Follow him on Twitter @IBMurphyatDI.





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