Analyzing the future of analytics

Experts predict the predictive analytics market is ready for big growth. Following it requires stricter definitions, according to one IDC analyst.

<p>If you're confused about business analytics software, you're not alone.</p>

<p>From text mining to querying to performance management, the breadth and complexity of analytical tools make it a difficult market to characterize. Bob Blumstein, research director for CRM analytics and marketing applications with Framingham, Mass.-based International Data Corp. is giving it a go nonetheless.</p>

<p>He suggests breaking analytics into two groups -- core analytics and predictive analytics. According to Blumstein, core analytics are used to define or analyze a current or past state, and include tools and packaged applications that compute frequencies, cross tabs and reporting cubes. By Blumstein's definition, predictive analytics, on the other hand, are more complex and are used to determine the probable future outcome of an event or the likelihood of a current state where it is unknown.</p>
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<p>Blumstein is predicting the predictive analytics market will surge. An IDC report projects that the sector will grow at a compound annual growth rate of 8% during the next five years.</p>

<p>"Analytics has grown tremendously in terms of applications whether through BPM &#91;business performance management&#93;, CRM or operations management," Blumstein said. "To call all analytics analytics is fine, but you need to start segmenting them out."</p>

<p>By offering a clearer definition of the market, it will be easier to track it as it evolves, Blumstein said.</p>

<p>However, adoption will provide the best picture of the evolution of the analytic market, he added. As companies attempt to standardize their decision-making processes, they will turn to analytical tools. Decisions will move down the business hierarchy, but companies will still be able to exert control over front-line employees.</p>

<p>As with CRM technology several years ago, there will probably be a number of companies that rush out and buy analytics and simply hope it works out for them.</p>

<p>"Folks need to understand what needs they're satisfying within the organization, how they're used, who will use it and better understand how analytics will impact their business first," Blumstein said. "Like any other software, you need to think about what problems you need to solve."</p>

<p>While regulatory compliance has driven investment in analytics and should contribute in the future, generally companies have invested in hopes of better tracking the money in their organization, Blumstein said. He also predicts that marketing, which for years has been shut off from other departments, will be required to provide more metrics and evidence of its value and will turn to predictive and core analytics to do that.</p>

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