BPM Viewpoint: Where There's Hype, There's Hope

In a market laden with buzzwords, one of the hottest trends for describing functionality within business intelligence and related software is the term "predictive analytics." The sound of these two words spoken in quick succession has to be alluring for business executives. It implies that a corporate decision-maker can not only delve into the secrets stored in the organization's databases, but also prepare intelligently for the future, courtesy of software that predicts --presumably accurately -- what's to come for the business. There's no question, either, that the term is alluring to vendors' marketing staffs. It seems that everywhere I turn lately, I see it.

Several business performance management (BPM) vendors have embraced the hype and begun touting their products' predictive analytics capabilities. Which raises the obvious question: What exactly do they mean? What's new other than the widespread use of this particular verbiage? "Predicting" (read: forecasting) the company's financial future has always been core to BPM systems, and the analysis of corporate data has become an increasingly important feature of management reporting systems over the past few years. The basic functionality underlying today's "predictive analytics" uses data from the past to generate expectations for the future. This concept isn't exactly groundbreaking. But BPM applications are now making it a more easily accessible reality for the average business user.

For one thing, the current crop of BPM systems makes predictive capabilities more feasible by consolidating a great deal of data about corporate performance in one place. If you want to know, for example, how your company's results will be affected by a change in fuel prices, a financial analyst with access to a comprehensive BPM system may be able to provide a fairly accurate forecast by analyzing the effects previous spikes have had. The vendors that profess to offer predictive solutions add to this fundamental BPM benefit the promise that people throughout the organization -- not just trained data analysts or math-savvy IT specialists -- can benefit from the extensive knowledge stored in their operational and financial systems.