29 January, 2020
Forecasting the future is of interest to probably every business, organisation and public sector service in the world.
But it's hard.
For many (most?) organisations, forecasting means asking their finance team to collate historical data in a spreadsheet and apply some sort of multiplier. This might then be refined using individuals' judgement and intuition, followed by a debate and/or argument with the finance team.
However well-intentioned, such output is very likely to reflect the unconscious biases of those who created the forecast - and perhaps the very conscious desire to underplay a forecast so that they subsequently look good... And it's neither a quick nor a simple process.
The alternative is predictive analytics: using data science to provide a rigorous, data-led forecast. It will never fully replace expertise and experience but is the necessary foundation for an accurate, trustworthy forecast.
Predictive analytics is the use of data, statistical algorithms and machine learning to forecast the future based on the past. The aim is to extract as much information from the historical data as possible, and to use that information to improve the accuracy of the forecast. You may also hear it referred to as sales forecasting, demand forecasting or algorithmic foreasting.
Clearly the uses for predictive analytics vary by organisation, but we've tried to categorise them so that it might prompt some ideas for you:
Well yes, no forecast is ever 100% accurate. And no matter how advanced your analysis there is always a role for expertise and experience to refine it - predictive analytics should act as a complement, not a replacement.
And as we said at the start, it's not easy. Algorithms need data to work on, and smart people to build and maintain them (and as soon as you put the words 'data science' in your job description, you've probably also added 50% onto the starting salary).
But the benefits of fast, trusted forecasts can be huge and have benefits right across your organisation.
If you'd like to find out, have a read of this: Predictive Analytics in (a Bit) More Detail.
Thanks for reading.
Skarp uses machine learning-powered predictive analytics to generate accurate, automated demand forecasts - and an explanation of what is actually driving performance.
By removing uncertainty and quantifying the impact of factors affecting performance, Skarp can reduce costs and improve customer satisfaction.
We offer a fully-managed service, designed for organisations with limited in-house data science resources.
There is no setup fee or minimum contract term with Skarp, and we offer all new clients a proof of concept free of charge. We believe the accuracy of our forecasts will speak for itself.