IBM purchase predictive analytics software provider SPSS

Updated: July 29, 2009


IBM opens the coffers and drops $1.2b on SPSS, the maker of predictive analytics software.

But what is predictive analytics and how do firms use it?
 

Quotes the Financial Times:

The technology, which analyses past patterns of behaviour to try to forecast future trends, is used in things such as online marketing campaigns, where prices and other factors can be adjusted in real time to improve effectiveness.

So data obtained from internal systems (ERP, CRM, etc.) or third party systems (magazine registrations, online trade publications, etc.) can be entered into mathematical models which optimize ways of obtaining new clients, retaining old clients, cross-selling products, optimize collections or detect fraudulent activity.

inputs:
purchases made, services requests, inquiries, etc.
position, company size, industry, location, position, etc.

outputs:
suggestions on who, how, when and with what to contact potential buyers

A common form is utilized by banks to determine the credit worthiness of loan applicants, or determine their "credit score". In the same way, firms can determine which prospects will be good candidates for a marketing campaign by analyzing their demographic information, transaction history, and prior interactions with the firm.

As for IBM's press release:


The acquisition of SPSS will add a wide array of advanced analytic capabilities to IBM's IOD software portfolio enabling many new industry-focused solutions including: customer acquisition and retention for financial services, patient care improvement for the healthcare industry, crime prevention for public sector and ideal store location for retailers and manufacturers. In addition, software capabilities that address all industries will include demand forecasting, employee hiring and retention, customer profitability, credit scoring and fraud detection. All of these new offerings will help clients drive better business outcomes within their specific industries.

IBM is displaying a shift to smarter technology, as recessionary pressure is to force firms to cut back on technology expenses, and optimize business practices.

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