With 2013 just around the corner, I’ve been thinking about what’s next in the rapidly evolving world of predictive analytics. Much to my own surprise, most of the significant trends I expect to see in 2013 don’t have much to do with technology. I think 2013 will be more about people, issues and regulators.
Here’s my quick list of 5 trends that will shape predictive analytics in the next year:
- Talent Shortage – With more organizations implementing more analytic projects, demand for analytic talent is growing by orders of magnitude. There simply aren’t enough mathematicians, analytic scientists and software engineers to meet that demand. We are rapidly reaching the point at which technological innovation in predictive analytics is outstripping the ability of many organizations to actually use the newest solutions. I’ve seen reports estimating the analytic talent shortage at 100,000-200,000 positions in the U.S. alone within five years. I think those numbers underestimate the problem and the time horizon.
- Realization that Humans Have a Big Role to Play – Data is simply a raw material. Analytic software is the tool that processes the raw material. Humans are still needed – and will always be needed – to make sense of the signals that the tools uncover in the data. The hype around Big Data seems to have led many people to the mistaken conclusion that large databases will somehow magically solve business problems. The reality is that without people to frame questions properly, identify the relevant data, and interpret the findings, all the data in the world is useless.
Look no further than the 2012 presidential election for proof of this. Many “math geeks” analyzed publicly available polls and other data. Some of these folks nailed the results with stunning precisions. Others were way off target despite having access to largely the same data. Why? Because people matter.
- Privacy and Discrimination Become Hot Button Issues – As more companies collect more data – such as shopping patterns, driving behavior, and medication adherence – consumer advocates and government regulators will take a more active interest in predictive analytics. Not only to protect consumer privacy (long a pet issue for many policymakers), but also to ensure that analytic-based offers for everything from Blu-ray players to health insurance don’t become so skewed in favor of certain groups of consumers that other groups effectively become victims of discrimination.
- Cloud, Cloud, Cloud – The power and agility of cloud computing are rapidly changing the nature of predictive analytics. I think 2013 is the year we begin to see more Analytics as a Service and Decisioning as a Service. The upshot of this will be that more small and midsize organizations will have access to analytics and the technology will begin moving towards true ubiquity in the business community. This will be true across geographic borders and across industry sectors as barriers such as cost and complexity come crashing down.
- Analytics Recognized as a Competitive Imperative – For years, analytics has been marching slowly towards the mainstream. We have finally reached a tipping point -- organizations of all stripes are recognizing the need for analytics to maintain their competitiveness. Government agencies, researchers, law enforcement, companies large and small, political organizations and even non-profits now recognize that analytics is essential for their long-term survival. What does this mean? See my first prediction – talent shortage!
For how my 2013 predictions apply to banking check out our Banking Analytics blog.