Predictive Analytics - where the real money is

Analyzing Analytics must be a Disneyland in itself, specially for someone who is always ready for a roller-coaster of unexpected dips and highs. Reetika Joshi, Senior Research Analyst at ValueNotes and Contributing Analyst and co-author of  HfS Research report, has just trekked over the wild terrains of this industry, talking to a lot of buyers, vendors and influencers through the course. Here’s how, in her estimate, the topography will shape up to be and why consolidation, captives, intuitive and predictive analytics would be the hotspots.

What direction would Analytics take ahead in terms of growth and sectors?

Analytics is coming up strongly as a horizontal service but the interesting bit is that it has also become more and more vertical-cut. Industries like insurance, media, pharma and banking are apt examples where we see surge of services like claims analysis, clinical workflow reporting, media optimization etc.  This is happening while vanilla areas like sales and marketing or supply chain which apply across the industry, stay on tracks also. Overall after recession, companies are in robust competition phase and analytics as a whole will grow very fast, thanks to that. A lot of buyers and providers tell us that.

Are there any trends in terms of platform also?

One upcoming trend is Web-analytics. In the last three to four years, we have seen E-CRM, sentiment analytics etc in a major way. Mobile analytics too, will be a wave to watch out for.

Are developments on the data or storage side of technology a key part of the game?

Yes, there is a lot of movement there. For example- virtual dashboards or reporting standards, or benchmarking, data mining etc. But the human element is still critical. Whether it is decision-making or modeling. Subjectivity is still a major factor in the game.

Is that why intuitive or predictive analytics attracts so much attention?

It is a high-end segment. There might be limited scalability here, but in terms of business value, there is tremendous potential here. This is where money really is. This space has limited talent available. Because any provider’s bulk of talent is for data-deduplication or reporting. This is where providers would take a consultant’s approach. They will ask the client — so how can we impact revenues? It will be a different orbit of growth.

So that's why automation would always be limited? If so, which flavour will overtake the other — Analytics in boxes which the big shots of software world offer or analytics as services?

Every client comes with a different business problem. BPO players may start their conversation with analytics and then give it a BPO twist. So, it would be an integrated approach. Having said that, niche analytics companies will always continue their large clients and niches, given the state of barriers that space has. And they might be extremely attractive acquisition targets too.

What will happen to captives all this while?

Few players like GE money or Target are expanding. What the captives may do, is give out the low-bracket data cleaning kind of work to someone else, but keep a tight hold on predictive analytics type of work. They too can be targets for acquisitions.

So, lot of consolidation imminent? Like the way IBM is stepping up action with Netezza or Coremetrics?

There would definitely be a lot of consolidation due to the factor of specialized skill-sets. It is not a typical BPO or IT talent but the likes of MBA grads, and that’s why the cost arbitrage is not the only high point. Yet, there is still a significant difference that companies have to pay to similar talent abroad. KPO services like these will take off fast and high. Some large companies like Infosys are actually bringing together a different kind of focus to this area.