Bruce KolodziejAnalytics Sales Manager

May 15, 2012

Predictive Analytics and WebFOCUS RStat Overview

Montreal User Group Meeting

What is Predictive Analytics?

Predictive Analytics (PA) helps one to… Discover/understand what’s going on Predict what’s going to happen Improve overall decision making Improve business processes Create a competitive edge!

Predictive Analytics IS a key business process… “Learning from experience” Not new User-centric, interactive Leverages analysis technologies and computing power Keeps the focus on the business issue An information-based approach to decision making Results are mainly used in a forward-looking style “Next Generation BI”

Extending Business Intelligence with Predictive Analytics

Degree of Intelligence

Standard Reports

Ad Hoc Reports

Query/Drill Down

KPIs/Alerts

What happened?

How many, how often, where?

Where exactly is the problem?

What actions are needed?

Rear

Vie

w

Statistical Analysis

Forecasting/Extrapolation

Predictive Modeling

Optimization

Why is this happening?

What if these trends continue?

What will happen next?

What is the best that can happen?

Forw

ard

View

Note: Adapted from “Competing on Analytics”

Business Intelligence with Predictive Analytics

Copyright 2007, Information Builders. Slide 4

Business Intelligence + Predictive Modeling = 145% ROI

Business Intelligence = 89% ROI

Median ROI

Source: “Predictive Analytics and ROI: Lessons from IDC’s Financial Impact Study”

Companies That Use Predictive Analytics Compete Better in the Marketplace

* IBM Survey was conducted on 3,000 executives, managers and analysts working across more than 30 industries and 100 countries where respondents were asked to assess their organization’s competitive position^ IDC white paper “The Financial Impact of Business Analytics”

Study 1*: Predictive Analytics = better performance

45%

20%

53%

27%

Top Performers

Use analytics to guide future strategies

Use analytics for day to day operations

BottomPerformers

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InformationWeek BI Survey ResultsPredictive Analytics is the top response

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6 Major Tech Innovations for 2012 Predictive Technology is the top response

1. Predictive Technologya. Several companies have started talking about their research into predictive

tech. The idea is that, as computers become smarter, they can analyze historical data to make predictions.

2. HTML53. High resolution displays4. Social analytics5. Speech for business6. Business-ready storage

http://www.inc.com/john-brandon/6-major-tech-innovations-for-2012.html

Copyright 2007, Information Builders. Slide 8

Predictive Analytics 101

I have a variety of data (transactions, demographics, offers, responses, accounts, purchases, geography, from a variety of sources)

I’d like to predict the likely future behavior of a customer I use historic data that has examples of that behavior Age Education Marital Gender Occupation Historic Response to Offer 21 College Single Male Engineer Yes 23 HSgrad Single Male Administrator No 29 HSgrad Married Female Bus. Owner Yes

Build a model (find the patterns) then use the model to predict that behavior for new records

Age Education Marital Gender Occupation Predicted Response to Offer 24 HSGrad Married Male Engineer No 27 College Single Female Bus. Owner Yes 31 PhD Married Male Bus. Owner Yes

Sales, Marketing and CRM It’s very expensive to acquire new customers, there must be a

better way If I understood who my best customers are, I could target more

like that I wish I knew which of my customers were interested in offers,

instead of offering all products to all customers Response rates to our campaigns are low and declining, how can

we better target our customers? I wish I knew which customers were most likely to churn so I could

retain them How can I provide better service to my customers by

understanding their needs and guide my interactions?

Business Initiatives That Predictive Analytics Can Address

Fraud How can I predict fraudulent activity and at the same time avoid

investigating 100% of my data?

Risk I want to approve and price my prospects for insurance coverage

appropriately I want to approve my prospects for loans or credit to maximize

profit and minimize my risk

Process Improvement How can I use my process data to uncover the root cause of

defects? How can I better predict the time until some event (failure,

attrition, churn) occurs?

Business Initiatives That Predictive Analytics Can Address

WebFOCUS RStat Solutions and Applications

Consumer Packaged Goods

WebFOCUS RStat Solutions and Applications

Financial Services

WebFOCUS RStat Solutions and Applications

Insurance

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Leverages widely available statistical models to improve decision making

Decisions based on high probability – NOT “gut-feel”

Makes building “scoring” systems easy

Enables predictive applications at a fraction of the cost of other solutions

Based on “R” open source system

Business Value:By binding predictive analytics with WebFOCUS you can embed high probability directions, scores and expected outcomes into frontline operational processes, improving returns.

WebFOCUS RStatPredictive Analytics

WebFOCUS RStat 1.3.1 New Features Overview

Improved performance on large data set scoring Traditional predictive model deployment is to deploy the model to the WF server,

but now we have the option of scoring in-database Can export the scoring model C files that are Teradata UDF (user defined

function) compliant for in-database processing When scoring large amounts of data, executing the predictive model using in-

database processing results in significant performance gains and reduces data movement

Integration of R scripts into the RStat GUI R code can now be brought into RStat

Can re-use the code, no need to re-build in RStat R code can be executed in RStat and files or plots are outputted for results

analysis Also, for models that are currently deployable via RStat, these R script models

are deployable

WebFOCUS RStat Success Story

Grand Sierra Resort & CasinoReno, Nevada

GSR’s Goals Link hotel, gaming, entertainment and food/beverage data for a complete

customer view Wanted the ability to do better target marketing and customer retention

programs Marketing was based on “gut-feel” and much $$ was not well spent

Wanted to take a data-driven approach and improve ROI

Information Builder’s Solution Predictive analytics will allow them to do things not available today

Targeted promotions and campaigns to maximize response Predict which customers will churn and when, in order to prevent churn

Data Integration, Predictive Analytics and BI Reporting together positioned IBI as a full service technology provider

WebFOCUS RStat Demonstration

Walk through the RStat interface Demo scenario of targeting customers with an offer

Using attributes of age, gender, marital status, occupation, income and education

We’ll build a model to uncover the patterns related to responders and non-responders historically

Then apply the model to a new data set to predict future responders and non-responders

Assists an organization with targeting their offers efficiently and cost-effectively

Focus on ease of use, broad range of capabilities and easy deployment of predictive results to end-users

This approach is the same for offer targeting, churn or fraud or risk predictions, part failure predictions, etc The data differs, but not the approach

Active PDFs Displaying Predictive Output

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Predictive Analytics Summary

Organizations use predictive analytics to: Reduce marketing/operational costs Increase sales Reduce defects Improve site location Increase web site profitability Improve cross-sell/up-sell campaigns Increase retention/loyalty Detect and prevent fraud Identify credit risks Acquire new customers Improve assortment planning

ROI is realized when: Decision-making is improved with forward-looking views of likely behavior Results are widely-distributed to end users where decisions are made

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Why WebFOCUS RStat? Summary of Differentiators

Integrated Solution Data access and preparation, business intelligence, predictive model building

and deployment of results all in one integrated platform Historical, present and future views

Cost Effective Based on open-source R, RStat is the best value on the market Contains the most commonly used techniques

Why pay for techniques that will rarely, if ever, be used? If another technique is needed, the R language is equipped

Predictive Analytics and Statistical Analysis Together Covers a wide variety of business objectives and data sources

RStat is a General Purpose Analytic Solution Not a niche product for risk or fraud or churn or quality or cross-selling

analysis. RStat is all of these = maximum value and ROI

Wrap-up

Thank you for your time today! For additional information or if you have any questions, please contact

Bruce Kolodziej, Analytics Manager Bruce_Kolodziej@ibi.com 917.968.6035 Or contact your local Information Builders Account Executive