As the world of business speeds up, executives need more insightful analyses to guide their decisions and they need them quickly. With that sense of urgency comes a greater interest in predictive analytics, software that sorts through a range of information to come up with future probabilities. Robert Kugel, a senior vice president at Ventana Research, distinguishes predictive analytics from traditional forecasting. "The real value of predictive analytics is comparing actuals to predicted results, disaggregating why things are different sooner, and then being able—once you've spotted the discrepancy—to more accurately forecast how things will turn out next," Kugel says. "It isn't so much creating a forecast, which is almost certainly going to be wrong, but using why it's wrong and how wrong it is to make better decisions on what to do next."

He cites the example of a retailer finding a certain product isn't moving as fast as expected and using that information to promote the product more aggressively or mark it down.

Although Ventana's research shows just one in seven companies now use predictive analytics, Kugel says that adopting the software has become more "feasible" for companies.

Continue Reading for Free

Register and gain access to:

  • Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
  • Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Susan Kelly

Susan Kelly is a business journalist who has written for Treasury & Risk, FierceCFO, Global Finance, Financial Week, Bridge News and The Bond Buyer.