People look to business analytics to understand the state of their business. A lot of times, understanding the future becomes as crucial as figuring out ways to improve a business in the short term. Business analytics helps companies understand their future prospects on a more factual and data-driven basis.
Forecasting is more commonly used to understand the trajectory of a business. Predictive analysis is another method used to analyze future setting. The key difference between predictive analysis and forecasting is that while the latter focuses on the larger state of a business based on historical data, the former predicts more specific areas of a business. To know the revenue growth of a company in Q4, forecasting is a reliable technique. However, to know demand numbers for a specific product in a particular week of December, predictive analysis is the better choice.
In this article, we cover the basics of predictive analysis.
Predictive Analysis
By definition, prediction analysis allows companies to create prediction models based on historical data. A lot of different metrics can be predicted using the models developed in predictive analysis.
Look at something like customer churn. Predicitive analysis is best-placed to predict customer churn based on data like customer age, income, response to company discount programs and offers, and so on. Another example is predicting something like when manufacturing equipment could fail in the future based on the number of times machinery used over a period of time.
While running a business, these specific predictions can help executives be prepared for challenges which can sometimes be overlooked in the larger scheme of things. This is why business analysts are expected to cover predictive analysis.
In Conclusion
A lot of different parts of business analytics can be better understood by their name itself. Predictive analysis fall under a similar category. A lot of business analytics is based upon understanding and predicting what the future holds for any given business. Predictive analysis helps in the same direction as it allows business execs to understand what the future might present for a company.
In this article, we covered the basics of predictive analysis. If you feel this is a topic you can understand and make your own, start by joining the best business analytics institute in Delhi, Kapil Heera Academy.
About the Author – Raghav Arora is well-known blogging personality and business writer. His blog posts on business analytics make regular news due to their contrarian perspective which interests the general audiences a lot.