PREDICTIVE ANALYTICS

© 2015 Software AG. All rights reserved.

OVERVIEW

© 2015 Software AG. All rights reserved.

THE ANALYTICS SPECTRUM
ALL ANALYTICS ADD VALUE BUT ANSWER DIFFERENT QUESTIONS

Value
Predictive
What will
Streaming happen?
What is
Diagnostic happening?

Why did it
Descriptive happen?
What
happened?

Difficulty

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STREAMING ANALYTICS AND PREDICTIVE ANALYTICS
BOTH TECHNIQUES COMPLEMENT THE OTHER

Predictive Analytics allows organizations to

build models that represent patterns of behavior

Streaming Analytics uses these models to

enable organizations to respond intelligently

…while they can still change the outcome

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PREDICTIVE ANALYTICS FOUNDATIONS
A FEW SIMPLE PRINCIPLES MAKE THIS POSSIBLE
All predictive analytic methods and models are based upon one common premise:

What has happened in the past will likely happen again

So once we learn from the past, we know what to look for in the future

And all of this is driven by the data itself, so:

The more data you have, the more you need Predictive Analytics

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BUILDING A PREDICTIVE MODEL
THE DATA DRIVES THE INSIGHTS
Primarily, we are looking for whether a relationship exists between two variables

EVEN UNEVEN
DISTRIBUTION DISTRIBUTION
% did it rain % did it rain

60 100
40 80
20 60
23 22 22 24 23 24 26
40 77
0
20
0
17
Dark Clouds Clear sky
No relationship between the day of the week and whether There is a likely relationship between dark clouds in the
it rained sky and whether it rained
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BUILDING A PREDICTIVE MODEL
THE LOGIC CAN BE SIMPLE OR COMPLEX

An example of a decision tree showing whether it is likely to rain

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TIME VALUE OF DATA
THE LONGER THE REACTION, THE LOWER THE VALUE

Business event

Forrester Research calls this

“perishable insight”
High value
response

Business
Value
Time to act

Low value
response

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Time
PREDICTIVE ANALYTICS IN USE TODAY
ALGORITHMS ARE ALL AROUND US
Entertainment: recommendations suggest new movies based upon your viewing
history
– Leverages your tastes and the tastes of others like you

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PREDICTIVE ANALYTICS IN USE TODAY
ALGORITHMS ARE ALL AROUND US
Finance: consumer credit scores model the likelihood of your paying the loan back
– Models your probable behavior based upon the defaults of many, many others

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PREDICTIVE ANALYTICS IN USE TODAY
ALGORITHMS ARE ALL AROUND US
Health: heart monitors warn of undiagnosed heart problems
– Watches for known pulse irregularity patterns

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THE BUSINESS VALUE OF
PREDICTIVE ANALYTICS

Fraud detection
Bank detects unusual spending
pattern on your card Retail
Making relevant offers at the right
time

Predictive Maintenance
Diagnosing a failing pump

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SMART LOGISTICS
SUPPLY CHAINS CAN RUN MORE EFFICIENTLY

Objective Always On Analytics Predictive Analytics Automated action

• Enable shippers to • Position, Status, ETA • Arrival time • Change Transport

plan activities Mode or lane
• Route failure
efficiently in the harbor
prediction

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SMART STORE MONITORING
MERCHANTS CAN MAXIMIZE REVENUE

Objective Always On Analytics Predictive Analytics Automated action

• Increased revenue • Traffic density • When offers adjusted • Proactive staff re-
deployment
• More effective • POS data • When queues appear
merchandising & • Offer updates
• Shelf sensors • When shelves need
service
replenishing

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PREDICTIVE MAINTENANCE
FIELD SERVICES CAN PREVENT OUTAGES

Objective Always On Analytics Predictive Analytics Automated action

• 99.999% uptime • Real-time conditions • Failure prediction • Technician Dispatch

• Increased 1st Call • Remaining useful life • Field Service
Repair Rates of components Automation

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 PREDICTIVE MAINTENANCE EXAMPLE
PREDICTIVE ALERTS ALLOW MORE TIME TO REACT
• Clear signal leading up to
failure…
– But reliant on human
intuition to interpret in real Predictive Condition Visual F
time? Alert Monitoring Alert Identification A
• Condition monitoring can alert I
on thresholds: L
– Tells you something might U
be wrong, but not what or R
how urgent E
– Ignores machine-specific
differences
TIME $
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OPERATIONALIZING PREDICTIVE ANALYTICS
REAL-TIME PREDICTIONS NEED TO BE EASY TO DEPLOY
Development

PMML
Predictive
Apama
Models
Applications

Event Feed Actions

Runtime

Event Feed Alerts

Event Feed Notifications

Data
Management Data-
Applications bases
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USE CASES AND
CUSTOMER EXAMPLES
 SOFTWARE AG USE CASES FOR PREDICTIVE ANALYTICS
Solution Industries Predictive Use Cases Enhancement Core
Enabler
Predictive • Failure Prediction
• Manufacturing x
Maintenance • Remaining Useful Life

• Next Best Offer

• Retail
• Churn Detection
• Hospitality
Connected Customer • Queue Prediction x
• Financial Services
• Path Analytics
• Telecom
• Facial Recognition

Smart Metering & • Utilities • Electricity Theft Detection

x
Manufacturing • Manufacturing • Quality Anomaly Detection

• Logistics • Route Failure Prediction

Smart Logistics x
• Manufacturing • Arrival Forecasting
• Financial Services
Fraud Detection • Probabilistic Models x x
• Retail

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PARTNERING
THE SOFTWARE AG STRATEGY

• Partnering with organizations with data science skills

– This stuff isn’t impossibly complex
– But it does need specialist modeling skills

• We are building on the Software AG platform

– Gives us a fantastic integration message
– Includes new OEM components such as Predictive Analytics for Apama
– Along with components we resell such as KNIME and Predixion

• Open approach means we can work with the customer’s preferred modeling tools

21 | © 2015 Software AG. All rights reserved. For internal use only
 GO-TO-MARKET OPTIONS BY CUSTOMER TYPE

Standardized on No preferred
SAS/SPSS/etc tools yet, R
Customer has Export models in Propose KNIME
in-house data science skills PMML and execute or Predixion as a
via Apama platform

Willing to build
DS skills Unwilling to
Customer does not have Offer KNIME’s or build DS skills
Predixion’s Introduce
in- house data science skills simple, graphical services partners
approach along like Mosaic
with trainings

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OPPORTUNITY BRAINSTORMING
MARKET OPPORTUNITY
PREDICTIVE ANALYTICS IS EVEN BIGGER THAN STREAMING
• Streaming Analytics worth $2 billion* by 2020 (Markets and Markets)
• Predictive Analytics worth $7 billion by 2019 (Transparency Market Research)

Market size by type of

application:

*Arguably, the value of streaming analytics has been underestimated as

predictive analytics drives growth of streaming analytics Transparency Market Research © 2012
24 | © 2015 Software AG. All rights reserved. For internal use only
HOW TO SPOT AN OPPORTUNITY

Anywhere where an organization could benefit from knowing an event is

likely to happen before it happens!

– Are they using SAS, SPSS, or R?

– Are they using Apama?
– Do they have a Big Data initiative?

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ACCOUNT DISCUSSION

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