In a recent article, the Harvard Business reviewed the differences between forecasting and predictive analytics and, how a company’s analytics are related to its profitability. http://bit.ly/2dJ7wzb
So, in answer to the first question, predictive analytics goes way beyond forecasting because the process produces predictive scores for every customer. On the other hand, forecasting delivers an overall big picture like that of the next quarter’s total aggregate estimates. To make it simpler, forecasting could provide an estimate of the total number of widgets that will be bought in a specific region. Predictive analytics, however, will provide a prediction of which customers will be the most likely to purchase the same product.
Unfortunately, many companies who are only using forecasting are not all that proficient at it and that can cost them. According to a recent survey of more than 500 senior executives, by KPMG, just one percent of these companies met financial forecasts during a three-year period. In addition, most were missing the mark by 13 percent and that had a 6 percent impact on their shareholder value.
Some forecasts focus excessively on microdata, but those tend to be too narrow. This is where predictive analytics could help the company’s bottom line and that goes double for new product launches, which present even more difficulties when trying to forecast the results. To be truly innovative in this area of business, companies need to combine structured and unstructured data via predictive analytics through the use of middle data, which falls somewhere in-between micro and macro data. Macro is widespread data on the level of the entire country for example, and micro is category-specific data like marriage, moving, or a new job. But, middle data is right in the middle between GDP and individual consumer data.
One of the optimum methods of implementing good predictive analytics is through the use of several business components like Accounts Payable Automation, and Dynamic Discounting. They can lay the groundwork for having everything at your fingertips for implementing predictive analytics that can help with keeping your company in the green and out of the red. AP Automation and E-invoicing could be the answer to what your company has needed for predicting the future even of new product rollouts and that could very well mean the difference between the success or failure of a new product.
With all of this in mind it’s no wonder that organizations are improving their predictive analytics by implementing AP Automation. They are finding out that KPIs(Key performance indicators), items like number of invoices processed per clerk, cost per invoice and number of days to process an invoice, are helping AP Departments become profit centers. By making Electronic Invoicing a priority, enterprise is improving data analysis forecasting with stellar and unprecedented results.