In a previous post, we described the second stage of the Analytics Maturity Model, “Diagnose,” which enables business leaders to visually interact and drill into their data to discover additional answers to questions that arose in the “Measure” stage.
For example: Why did we have an increase or decrease in monthly revenue in a particular region?
The third stage of the Analytics Maturity Model, “Predict & Optimize,” focuses on the future. This is where business leaders are able to obtain answers to questions such as “Where are we headed?” and “What’s the best course of action?”
These answers allow decision makers to use advanced analytics to become more forward-looking to produce better business outcomes and reduce uncertainty.
This is the stage of the Analytics Maturity Model where decision makers can forecast and anticipate trends and conduct statistical modeling that allows them to optimize business outcomes and operational efficiency.
For instance, marketing leaders can use advanced analytics to determine the most effective channels (web, mobile, social) to reach particular sub-segments of customers for particular campaigns.
It’s the stage in the Analytics Maturity Curve where business leaders can forecast with greater certainty (e.g., “If I change the price of this product by 10 cents, how can I anticipate this might impact profits and revenues?”).
Analytics can be used at this stage to improve operations, such as refining a customer-facing process that led to a downturn in customer satisfaction or making an adjustment to manufacturing activities to increase output. This can be further strengthened by the use of location analytics to geo-enable such analyses.
Some analytics tools only offer “black box” statistical tools that program standard calculations for end users. For some use cases requiring simple decisions, these tools may be perfectly appropriate.
But in other situations where companies want to be more competitive, deploying a proprietary statistical model is often the preferred approach.
Ultimately, an analytics solution that offers both pre-programmed models and the ability to develop your own advanced statistical models will enable a company to apply its own secret sauce to its analytics.
“Predict & Optimize” is the proactive stage of Analytics Maturity where competitive differentiation truly comes to the fore.
In the next installment of this series, we’ll look at the next step of Analytics Maturity, “Operationalize,” which allows all business users to take immediate, data-driven actions by making analytics a natural part of their everyday workflows.