Predictive business analytics: Forward looking capabilities to

improve business performance

Analytics is becoming a competitive edge for organizations
Introduction:The book talks about the importance of predictive business analytics (PBA) and the guiding
principles for developing the same within an organization. It begins by looking at Why analytics
will become exceedingly important along with the development and deployment of predictive
analytics functions. Then, further in the book, few case studies have been discussed to give a
real industry perspective and how it has changed the organizational business model to improve
the way businesses function. Towards the end of the book, the author delves into the integration
of business methods and techniques, which begins with the integration of business intelligence
(BI), analytics and enterprise performance management (EPM), and then discussing accounting
analysis and driver based budgets. The book concludes by looking at organizational trends and
challenges and measures taken by them to introduce PBA to overcome these organizational
hurdles. Predictive Business Analytics opens the door to a world of Big Data and techniques
that will enable any organization to gain a competitive advantage, as long as they can translate
this data into actionable outcomes
The problem the book talks about is taking the data being generated every moment across
business and turning it into relevant information that can be used to gain a competitive
advantage. The PBA model takes business intelligence to the next level by generating more
interesting and complex questions rather than just providing basic answers, and does so not just
at the executive level but at all levels of the organization. Standard business intelligence data is
not often actionable but PBA is extension of existing tools that can help companies understand
how functions interrelate to help predict patterns and behaviors.
The middle section of the book is all about the design of a performance management system,
including KPIs and drivers, as well as a management review process. It starts with establishing
guiding principles of which a large part of the effort involved will be dependent on the
organizations current capabilities and to what extent there exist barriers to change. This trend to
use Big Data in a more predictive manner is the path to new value. The challenges involved
here will not be lack of data or technology but will likely be lack of understanding of how
analytics work, as well as management and cultural hurdles. It is the openness of
managements vision, adaptability and capability, which leads to either success, or failure of the
organizational goals. For example, if they can overcome these challenges, finance departments
would get an opportunity to transform themselves from back-office bookkeepers to business
partners, utilizing PBA to become a powerful agent of change.

Predictive Business Analytics defines ways in which specific industries have applied these
techniques and tools. It also mentions how predictive business analytics can complement other
financial applications such as budgeting, forecasting, and performance reporting. Everyone is
looking for ways to make decisions better and faster. If business leaders can better predict the
future, they can maximize the outcome to their organizations, thereby giving them an advantage
over their competitors.
Concepts as discussed in the book:Why predictive business analytics?
1) Predictive business analytics Confirming hypothesis, better insights and better decisions.
This allows business analytics to be prescriptive rather than descriptive.
Benefits:1) Increased employee retention
2) Increased customer profitability
3) Increased product shelf opportunity
Operational decisions are most important for embracing analytics
2) Automated decision based management
As organizations achieve competency and mastery with analytics, then the next step will be
automated rules based on the outcomes from applying analytics. The islands of analytics
emerging in an organizations various departments and processes will be unified in closed-loop
ways. Communications will be in real time.
3) Uncertainty avoidance index (Hofstede)
4) Guiding Principles: Principle based or rule based (Seven principles)

Principle 1: Demonstrate a strong cause and effect relationship

Principle 2: Incorporate a balanced set of financial and non-financial, internal and
external measures
Principle 3: Be relevant, reliable and timely for decision makers
Principle 4: Ensure data integrity
Principle 5: Be accessible, understandable and well organized
Principle 6: Integrate into the management process
Principle 7: Drive behaviors and results

Eight step process of making a major change:-

Performance management framework:-

Benefits of a good performance management include1) Communication of strategy

2) Alignment
3) Focus
4) Efficiency
5) Empowerment
6) Execution
Performance scorecard serves as hub:-

Implementation in India:Current scenario The current Indian business intelligence software industry generates
revenues of $122 billion spread across 3 major sub-segments BI Platforms, Analytics
applications and performance management systems.
Challenges in implementation:1) Data collection and availability
2) Lack of people

3) Domain specific education

4) Lack of solution verticals
5) Highly fragmented market
Growth drivers and opportunities:1) Growth of IT industry and E-commerce
2) Availability of advanced analytical tools
3) Decreasing cost of data storage
4) Increasing awareness about advantages of business analytics
5) Availability of Software-as-a-service