Are you using Predictive Analytics?
Although I was aware that the idea and use of predictive analytics has been around for a while, I never really thought much about it. I guess I simply thought of it as something analysts used to calculate risk at a very high level within an organization.
Boy, was I sheltered! A really good friend of mine and thought leader in industry today, Judy Mod, who is president of the Social Executive Council, has been working with a couple of organizations that specialize in this area and I was very impressed with what these organizations are doing. First of all, predictive analytics isn’t just something that insurance companies use to determine whether or not you are a good insurance risk. It is being used in all kinds of industries to predict important outcomes so those organizations, using that knowledge, can take appropriate action before those events occur.
One of the local Atlanta companies Judy mentioned is called Illuminate360 (www.illuminate360.com). They are working with a very large healthcare organization to help them get a more accurate handle on patient readmissions. In light of some new healthcare regulations, the federal government is penalizing those hospitals that discharge a patient, only to have them readmitted again for the same problem. So, Illuminate360 is helping that healthcare organization reduce those penalties through some sophisticated predictive analytics software they provide.
According to the Centers for Medicare and Medicaid Services, “CMS”, a federal agency within the Department of Health and Human Resources, they estimated that the total readmissions penalties for FY2015 will be approximately $428M, up from $227M in FY2014. CMS estimates that over 2600 providers will lose significant revenue from these readmission penalties. It is estimated that the average cost of readmission is close to $10,000. Providers striving to minimize these readmissions, by using the type of predictive analytics that companies like Illuminate360 provide, can experience a 10x ROI.
In speaking with Judy, she indicated that this is just one of many applications companies like Illuminate360 address. According to her, there are some really impressive benefits for the transportation, security, petrochemical, manufacturing, etc., industries as well.
I had just finished speaking with Judy when I got a hit on my Compendian® website from a company that was interested in what I could do to help them with a sales enablement initiative. As I always do, I went to their website to see what they do. The company is called SmarterHQ (www.smarterhq.com), located in Indiana. Talk about coincidence, they also provide a very sophisticated predictive analytics solution. However, they are targeted at helping marketing organizations analyze the data they get from their website traffic, so they can create more targeted marketing campaigns to their customers. This is very sophisticated stuff. No wonder companies like Amazon are tracking what I have bought in the past and then put together items that they think I might want to purchase in the future.
Again, forgive poor, old naive me for not knowing and recognizing the need for predictive analytics in so many areas. Think about it, there is no end to the type of applications and opportunities that can take advantage of this type of technology. It makes me wonder with all of the benefits that can be gained by using this type of technology, why in the world aren’t more organizations using it? Maybe I have just been too unaware of the value that predictive analytics provided in the past that make me so naive. However, now that I am aware of the benefits and value this type of technology provides, I think that every company can benefit from utilizing some form of predictive analytics within their organization. At least that’s the way I see it, what say you?