Techniques

and Tools for

Predictive
Analytics
 1. Predictive Analytics
2. Steps in Predictive Analytics
3. Techniques for Predictive Analytics
Agenda 4. Tools for Predictive Analytics
5. Benefits of Predictive Analytics
6. Application of Predictive Analytics
Predictive • The use of statistics and modeling
techniques to make predictions about
Analytics future outcomes and performance.
• Looks at current and historical data
patterns to determine if those
patterns are likely to happen again.
• Goes beyond knowing what has
happened to provide the best
assessment of what will happen in
the future.
Steps in
Predictive 1. Identify a problem to solve
Analytics 2. Gather and prepare the needed
data
3. Build the predictive model
4. Work as a team
Techniques for Predictive Analytics

Decision Trees Regression Neural Networks

• Groups data into subsets • Determines patterns in large • Imitates the way human
based on the categories of data sets brains work
variables • Figures out a formula that • Deals with complex data
• Looks like a tree with represents the relationship relationships using artificial
individual branches and between the inputs intelligence (AI) and pattern
leaves recognition
• Branches indicate the • Confirms findings from
available choices decisions trees and
• Leaves represent a regression
particular decision
 Decision Tree Exercise

JPV Ltd. is considering moving into overseas markets. The company is

deciding between two locations: Japan and Singapore. Determine
which country would yield better returns.
Japan Probability Costs/Revenues ($)
Cost 500,000
High Return 0.60 800,000
Low Return 0.40 500,000

Singapore Probability Costs/Revenues ($)

Cost 350,000
High Return 0.75 600,000
Low Return 0.25 360,000
Tools for
Predictive • H2O Driverless AI

Analytics •
•
IBM SPSS Statistics
RapidMiner Studio
• SAP Predictive Analytics
• SAS Advanced Analytics
• TIBCO Statistica
Benefits of
Predictive • Helps businesses make predictions
Analytics about outcomes when there are no
other answers available
• Reduces risks for stakeholders
• Reduces costs significantly when
used
Application of • Finance: Forecasting Future Cash Flow
Predictive • Entertainment and Hospitality:
Analytics Determining Staffing Needs
• Marketing: Behavioral Targeting
• Manufacturing: Preventing
Malfunction
• Health Care: Early Detection of
Allergic Reactions
 • https://www.datamation.com/big-data/top-
8-predictive-analytics-tools/
• https://www.investopedia.com/terms/p/pre
dictive-analytics.asp
• https://online.hbs.edu/blog/post/predictive-
analytics
Sources • https://www.sas.com/en_ae/insights/analyti
cs/predictive-analytics.html
• https://www.springboard.com/blog/data-
analytics/predictive-analytics-techniques/
• https://www.techtarget.com/searchbusiness
analytics/tip/6-top-predictive-analytics-tools