Companies continue to invest heavily in Big Data and analytics. Following security (82%) and cloud investments (62%), CIOs cite Big Data analytics as the top driver for IT spending in 2016, according to Nomura Holdings’ CIO Survey.
As senior executives become better acquainted with the potential that Big Data analytics offer, they’re increasingly looking to drive higher ROI from these investments. One way that CIOs can help in this regard is by helping business leaders to develop predictive models that can be used to determine future customer behaviors and to identify factors that can cause markets to shift. With their helicopter view of the enterprise, CIOs can help business leaders to identify the right data sets to use and how to apply it at the right time.
Companies are increasingly using predictive modeling to forecast profitability. For instance, in a recent survey conducted by Willis Towers Watson, 54% of property and casualty insurance executives say they’re using predictive modeling to assess profitability and other aspects of underwriting and risk selection and that usage is expected to grow by 40% over the next two years.
The CIO can work with line of business (LOB) leaders to understand their primary business objectives and what they’re hoping to discover through the development and use of predictive models. The CIO can work with LOB leaders and data scientists to ensure that data scientists have a firm grasp of the business challenges LOB leaders are looking to address through the development and use of predictive models.
CIOs can also play an integral role in helping to build predictive models that can be used by LOB leaders to identify and correlate costs associated with specific customer segments and product categories. This includes the use of predictive tools to identify the most profitable customers with the greatest profit potential as well as those customers that are placing the greatest drag on a company’s profitability.
These models can help business leaders for a healthcare insurance company to identify the common traits of the most attractive customers they want to cater to, including those who are the lowest risk of unplanned hospitalization as well as those prospective members who seem most amenable to preventive care. These insights can help marketing leaders to target specific prospects with the most effective messaging.
One of the greatest benefits from the development and use of predictive models is how they can help senior business leaders to discover hidden patterns and trends in data that can enable them to respond to customer and market opportunities ahead of competitors. Such insights can help executives from a pharmaceutical company to avoid potential product recalls by discovering problems earlier in the development cycle.
CIOs who play a leadership role in the development and use of predictive models can position themselves as trusted advisors with senior business executives.
“Big Data is creating new opportunities for innovation, in the same way that BI did in the previous decade,” says Doug Harr, former CIO at Splunk who is now a Partner at The StrataFusion Group in an HMG Strategy Transformational CIO Blog post. “IT will play a prominent role as we move into this new transformational era of operational intelligence.”
- As senior executives become more familiar with the potential that data analytics offer, they’re increasingly looking to drive higher ROI from these investments.
- One of the ways that CIOs can drive value from data analytics investments is by helping business leaders to develop predictive models that can be used to determine future customer behaviors and to identify factors that can cause markets to shift.
- CIOs who play a leadership role in the development and use of predictive models can position themselves as trusted advisors with senior business executives.