I just read a blog post entitled How do you feel when someone mentions predictive analytics? Well, I feel like it’s a good thing. How about you?
One commenter replied that predictive analytics = forecasting and that it’s just a different label for the same thing. Well, true enough, given that the verb predict is synonymous with the verb forecast.
I submit to you two other synonyms: examine and analyze. An analysis of your historical demand will lead to a better understanding of the numbers. When one understands the elements that drove demand in the past then one can review these elements and assess their validity going forward. The result is a forecast achieved using both quantitative and qualitative methods. This is a very good thing!
That said, it is important to measure forecast accuracy both before and after human intervention. Measuring the impact of revisions allows the forecaster to spot bias. Bias exists when forecast accuracy is repeatedly and negatively affected by one or more individuals.
In practice, predictive analytics and forecasting should have the same meaning. Professional forecasters don’t blindly predict the future. Beyond looking for trends, they seek to understand the numbers. Nothing new here! The big difference is that today’s forecaster is equipped with modern technology and fun stuff like graphical reporting. One thing I can tell you for sure is how forecasters feel about modern technology — pretty darn good thank you very much!