This very good Article by Anand S. Rao discusses the growing use of predictive analytics in the Insurance Industry. I believe Mr. Rao is right on the mark – although I continue to emphasize the expanding role of Text Analytics in the analytic value equation. In this article, he identifies some of the drivers of predictive analytics adoption.
Understanding the customer in the world before Web 2.0 was a relatively straightforward task – but the emergence of Web 2.0 has brought an explosion of social channels including blogs, wikis, forums, social networks and an array of social media. Today, customers have a loud and clear voice where they openly share ideas, perceptions, and problems about products and companies. They create trusted communities and powerful, influential constituencies. The voice of the customer (VOC) is therefore expressed in different forms through different channels. These channels are insight rich, with a wealth of untapped customer intelligence. Traditional technologies are unable to access or decipher the unstructured content upon which today’s customer conversations and insights are built.
In this Recent Article, Collective Intellect CEO Don Springer talks about social media and text analytics. Mr. Springer provides some industry research:
- 127 million people, or 57.5% of Internet users, visited a social networking site at least once a month in 2010. Not only is the number of users growing quickly, but also the audience demographics continue to widen.
- The growth of unstructured data is expected to grow at a compound annual growth rate of 62% through 2012.
After defeating the two biggest Jeopardy champions of all time, people are buzzing about IBM Watson. Reactions range from excitement over the possibility it represents, to fear over the potential impact on society. Count me among those who believe that this technology will have a positive impact on business, Government and humankind. With every new game changing innovation, there is always fear over the potential impact on humanity. However, a machine will never have wisdom. It will never have the ability to invent, have empathy, or match the knowledge and ability to reason of a smart, experienced human being. But this form of advanced analytics will help us perform better.
In a recent Blog Post titled Where is Business Analytics Going? I describe the compelling reasons for the growing use of advanced analytics – and the challenges that organizations face in realizing value from their efforts. The Retail Industry may be the poster child for business analytics, as they face some very compelling reasons to expand their analytic footprint. Ventana Research believes that the retail industry is going through a transformation, as volumes and sources of data continue to expand. They state that “Retailers are just starting to realize that understanding and influencing customer conversations on the Internet in social media channels is a necessity and that it requires a new type of analytics that can process text and phrases that reveal consumer sentiment and opinions of their brands”.
Business Analytics will continue to gain traction in every industry, and several key factors make this a foregone conclusion:
- The expanding universe of data and the opportunity and risk that it represents
- The growth of social channels
- The growth in mobile interaction and resulting need for analytics
- The critical need for customer intimacy
- The growing need for differentiation through innovation
- The rapid escalation of complexity that surrounds business today
- An increasing focus on value creation, growth and revenue generation
- The critical need for smarter decision making
- A continued increase in computing power that makes real time analytics viable
- The continued delivery of new and improved advanced analytic capabilities
- The movement to make advanced analytics software business user friendly
After some very bad and well-publicized business decisions drove a subprime mortgage meltdown and the near collapse of the auto industry, many would agree that methods for enhancing decision making are greatly needed. Findings in a recent MIT Sloan special report support this notion. Senior executives want their businesses run by data-driven decisions. They want to understand optimal solutions and take action quickly; but as the authors point out, this is no small task. They suggest that in order for insight to drive action, the insight must be closely linked to business strategy, easy for end users to understand, and embedded into organizational processes.
Are you listening? All of the communication occurring in social channels can challenge our listening skills. How are we sure that we are listening in the right places? What should we be listening for? How can listening translate to tangible benefits for my business or organization? Those are only some of the pressing questions that companies are attempting to answer. As companies move down the inevitable path of co-creating products and services with customers, social channels will become an increasing source of ideas and innovation. The business imperative for customer intimacy will drive many company strategies over the next decade.
As 2010 winds down, it is time to look ahead to 2011. I have high expectations as the calendar turns, and I believe 2011 will be the year of adoption. I believe we’ve reached a point where cash will come off the sidelines and I expect to see technology investments focused on revenue generation and value creation. With that as a backdrop, I’ll Label 2011 as the year of collaboration and intelligence – the two areas that I believe align very well with pressing business priorities. So here are my thoughts on 2011.
According to Pike Research, the smart grid data analytics market will reach $4.2 billion by 2015. Software and service providers of smart grid analytics for the utility sector will ride a large growth opportunity over the next several years. According to Pike Research, the relatively small market will increase from $356 million in 2010 to nearly $4.2 billion in annual revenue by 2015.
This Press Release from Verint continues the Social Media and customer service drum beat. The recurring themes are:
- A growing challenge to identify, collect and act upon data delivered through an expanding number of customer communications channels
- The need for an aggregated and unified view of customer data across all channels
- Analysis that delivers insight drives rapid and informed action
- Companies are not equipped to analyze the interactions that occur via email, chat, social media, forums, etc.
- There is a heightened need for text analytics. Solutions that mine interactions and feedback across multichannel customer communications – including email, chat, blogs, review sites, social media and other text-based channels – continue to emerge
- Workflow delivers insight to the people that are best equipped to manage issues, address specific customer service concerns, or get ahead of negative sentiments in social media
Customer support is evolving to handle an ever-growing number of channels. Social media interaction is playing an expanding role in how companies provide support to their customers. I believe this Press Release from Attensity gives us a view into the future call center. As the press release points out, social media is quickly becoming a key component of customer care strategies.
CEOs believe that the time has come to reinvent customer relationships. That’s one of the key findings in IBM’s 2010 CEO Study titled “Capitalizing on Complexity”. This belief is based on the following observations:
- The world is massively interconnected, thereby making customer intimacy a priority
- Customers have more options due to globalization and dramatic increases in available information
- Differentiation will come from innovation and co-creation with customers
- The information explosion presents a great opportunity to develop deep customer insights
A Special Report titled “Analytics: The new path to value” was released this week by the MIT Sloan Management Review. They conducted a global survey of nearly 3,000 executives, as well as in-depth interviews with leading researchers, in collaboration with the IBM Institute for Business Value.
So predictive analytics has entered the world of politics?
In his Blog post titled Rock the Vote with Predictive Analytics, Timothy Powers explains how predictive analytics supports a political campaign. Well that makes great sense – advanced analytics has supported marketing efforts for years, and isn’t a political campaign all about marketing to voters?
Widely recognized CRM visionary Paul Greenberg just published a report titled Contact Center 2011 – Back to the Future. Mr. Greenberg has talked about Social CRM or CRM 2.0 for quite some time. In this report, he discusses the impact of the social customer on the contact center. Here is a summary along with my perspective.
Earlier this week at the Gartner Symposium / ITxpo, Gartner presented their list of strategic technologies for 2011. Four of the ten technologies fit squarely in the social technologies and business analytics space covered by this Blog.
In the recent Gartner Hype Cycle Report issued in August, Gartner had the following to say about predictive analytics:
“The quantity and variety of digital data continue to explode, along with the opportunities to analyze and gain insight from new sources such as location information and social media. The techniques themselves, such as predictive analytics, are relatively well established in many cases; the value resides in applying them in new applications such as social analytics and sentiment analysis”
This recent Attensity Announcement describes what I believe to be the next wave in the use of semantic technologies. We will see the rise of applications that leverage these technologies to deliver business outcomes. The discussion will shift from the semantic technologies themselves, to the application.