Data is literally everywhere nowadays. But what exactly is predictive data analysis and how can it help businesses?
Predictive Data Analysis
Whilst analysis of historical data is extremely useful, as it can pinpoint patterns, trends, profiles and averages, predictive data analysis takes things a step further by using data to answer the question of “What happens next?”.
It combines actual historic/current data with various assumptions for the future. As these assumptions can be tweaked/changed many times, there is potential for vast amounts of predictions to be generated based on a significant number of variables.
Applications
There are numerous applications where predictive analysis can be (and already is) used. These include fraud detection, risk analysis/reduction, inventory management, recruitment and consumer behaviour.
Expert Data Analysis Company
If you are in need of a data analysis company to help you get to grips with your data, there are a number of firms that specialise in this. Using a data analysis company can help you understand and utilise data in a way that benefits both you and your customers.
Predictive Data Analysis – Process
There are five basic steps in the predictive analysis workflow.
The initial step is to clearly define the question that you wish to answer. This will help determine which method of analysis will be most effective.
Stage two is to gather all of the relevant data together from all the identified sources.
Stage three is to collate and organise the data in a way that makes sense/is usable. Predictive analysis does, to some extent, rely on the quality and correct organisation of the data. The data should be ‘cleaned’ to remove anomalies and formatted in a consistent way.
Stage four is to develop the predictive models. Some of the most common types of models used are regression models, classification models, machine learning and decision trees.
The last step is to validate and then finalise the results. Results should be checked for accuracy and models adjusted as needed. Once the results are validated, they can be used to inform business/strategic decisions.