Enterprises can gain significant long-term benefits by applying predictive analytics to their operational and historical data, analysts and IT managers said at Computerworld's BI & Analytics Perspectives conference being held in Phoenix this week.
Unlike traditional business intelligence practices, which are more backward looking in nature, predictive analytic approaches are focused on helping companies glean actionable intelligence based on historical data.
If applied correctly, predictive analytics can enable companies to identify and respond to new opportunities more quickly, they said.
In a keynote address, James Taylor, CEO of Decision Management Solutions, said predictive analytics are especially useful in situations where companies need to make quick decisions with large volumes of data.
Predictive analytics practices can help companies in three key areas: minimizing risk, identifying fraud and pursuing new revenue opportunities, Taylor said.
For instance, predictive analytics can help companies fine tune their ability to identify risk in areas such as loan and credit originations, or fraud in areas such as insurance claims, he said.
Importantly, by embedding predictive analytics into operational data, companies can put themselves in a better position to identify new revenue opportunities, Taylor said. For example, by looking at a customer's historical purchase patterns, companies can make reasonable predictions on the kind of promotional offers and coupons that are likely to resonate with that customer.
Blue Cross and Blue Shield System (BCBS) is one organization that is already deriving considerable benefits from predictive analytics. As an organization that provides healthcare insurance to nearly one in three Americans, Blue Cross Blue Shield System has amassed a huge amount of claims-related data over the years.
A few years ago, the BCBS Association, the entity that holds the Blue brands, created a single database called Blue Health Intelligence (BHI) to consolidate all the claims information maintained by each of the 39 companies that are part of BCBS. The database is one of the largest repositories of de-identified healthcare data anywhere and contains claims-related information on more than 100 million people.
BHI operates as an independent unit and provides a range of business intelligence services that is enabling better health care services for members while also transforming the manner in which BCBS manages it costs.
The impetus for the effort came from the need for BCBS, like other health insurers, to control spiraling costs, said Swati Abbot, president and CEO of BHI, during a presentation.
A disproportionate share of healthcare costs goes toward the care of people with chronic illnesses, Abbot said. In fact, the top 5% of healthcare users account for more than 55% of healthcare costs, she said.
By applying predictive analytic technologies to its vast trove of claims data, BCBS has been getting better at not only identifying the risk factors that lead to several chronic diseases but also in identifying individuals who are at heightened risk of getting such diseases, she said.