Take this prediction to the bank: The latest front in the war for business intelligence (BI) supremacy is predictive analytics. And the battle is just starting to heat up.
BI vendors and even some data warehouse companies are attempting to make predictive analytics -- long the purview of mathematicians and Ph.D.s -- more accessible to information workers and others without advanced degrees in statistics, according to the vendors themselves and industry analysts.
With varying degrees of success, BI and data warehouse vendors are increasingly developing or acquiring predictive analytics technology with the goal of incorporating it into their core platforms. They are also attempting to make it easier for business users to build predictive models and analyze the results.
Among the vendors making a play in the predictive analytics market are IBM, which acquired SPSS in October and is in the process of integrating the technology with its Cognos BI suite; Information Builders, which earlier this month released a new version of its core BI platform that includes predictive analytics capabilities built on the R language; and Netezza, which just this week announced it was working with partners to build predictive analytics capabilities directly in the data warehouse.
Then there's SAS Institute, which has been in the advanced analytics game since its inception in 1976. SAS has since developed its own more traditional BI suite – with reporting and ad hoc query capabilities – which it has tightly integrated with its advanced analytics software.
Predictive analytics a growing BI trend
The trend is partly the result of near parity among the top BI vendors in their core BI reporting and query capabilities, according to Boris Evelson, an analyst with Cambridge, Mass.-based Forrester Research.
"[Predictive analytics] is going to be the battle between the BI vendors for the next couple of years because core BI functionality is becoming more difficult to differentiate," Evelson said.
Indeed, the same handful of vendors – most notably IBM, SAP and Oracle, and their respective BI acquisitions – have been bunched in Gartner's leaders' quadrant for BI platforms for the past several years.
Customer demand is also driving the move toward predictive analytics, analysts agree. Companies don't want to understand only what happened in the past, and why, but what is going to happen in the future, the thinking goes.
"We need to get past the level of dashboards that show us how many things we sold yesterday … and move into the domain of what is happening in the business right now and what [we can] do to move it forward," said Phil Francisco, vice president of product management and marketing at Netezza.
Predictive analytics involves discerning the probability of future events based on data analysis via mathematical algorithms and predictive models. A retail company might use the technology to predict customer buying patterns, or a financial firm could try to identify potential risky stock trades.
Since its founding in 1998, the online dating service eHarmony has been using predictive analytics from SPSS. The company uses the technology to help match couples with the greatest chance of staying together for the long term, according to Dr. Gian Gonzaga, senior director of research and development at eHarmony.
"Predictive analytics is one of the really important components we have here," Gonzaga said.
First of a two-part series. Read part two here.