IBM Analytics Predictive analytics

White Paper

Predictive analytics in the cloud

Expanding the possibilities with IBM SPSS software
2 Predictive analytics in the cloud
Contents
2 The need for insight in the current marketplace
The case for analytics
The case for cloud
Analytics in the cloud
7 Finding the right cloud analytics solution
IBM offerings for predictive analytics on cloud
Cloud and analytics in action
9 Conclusion
10 About IBM Analytics
10 Request a call
10 Next steps
Executive summary
Predictive analytics technology has evolved from a niche business
luxury to a business necessity. At the same time, cloud technology
offers benefits that are very relevant to analytics solutions,
including the ability to offload expensive, rigid requirements such
as IT infrastructure and dedicated support personnel. Hybrid
cloud models in particular offer a valuable blend of flexibility,
capability and cost-efficiency; they can provide an advantageous
environment for predictive analytics.
If youre interested in predictive analytics on cloud, you need to
consider not only the desired use case for the analytics, but also
your personnel capabilities, any particular security concerns and,
of course, budget. Even if you have an army of in-house data
scientists, your service provider will likely be responsible for not
only keeping the service running, but also for ensuring that your
analytics environment is tuned to deliver the business results you
need. Thats why its essential to select the right partner to
implement your solution. If possible, you should select a partner
with expertise in both analytics and cloud, as well as the ability
to integrate analytics and cloud solutions.
IBM offers industry-leading analytics and cloud solutions that
are designed to work together, including IBM SPSS Modeler
Gold, SoftLayer, Bluemix and IBM Watson Analytics.
IBM also has deep expertise and experience in implementing
predictive analytics solutions on cloud for clients in diverse
industries and regions around the world.
The need for insight in the current marketplace
Market shifts. Inventory under-runs. Once-happy customers
becoming ex-customers. The unexpected is a threat to every
business. Therefore, a business that could reliably predict future
eventsand anticipate the unexpectedwould have a distinct
advantage in the marketplace. In recent years, predictive analytics
systems have enabled many companies to come closer than
ever to that goal. At the same time, the rise of cloud technology
has led more businesses to move their crucial IT processes to
the cloudboth to benefit from the technical and operational
capabilities of cloud, and to gain advantages over their
competitors. Predictive analytics on cloud is still a relatively
new use case, but it is an increasingly compelling one.
This white paper will review the benefits of predictive analytics,
the characteristics of cloud deployments, and how the two
technologiesanalytics and cloudcan integrate to address the
pressing business concerns that arise in software implementations:
Managing the solution and scaling it to fit changing needs
Building the most secure system possible
Controlling management and IT staff time
Optimizing expenditures and getting the most benefit from
each IT dollar

The case for analytics
Predictive analytics is a powerful technology that can help
businesses anticipate what will happen in the future, and act
accordingly. The technology is constantly adapting to new
market demands and technology evolutions. Together these
have transformed the business case for predictive analytics,
broadening its appeal and making it more of a necessity
than a luxury.
Early analytics tools were customized models implemented
by dedicated staffthey were experimental in nature and
required enormous up-front advances in personnel, processing
power, storage and coding. In addition, their uses were narrow.
Recent advances have led to analytics tools that are more
general-use: able to accept a wide range of data and use prebuilt
algorithms to draw out insights. Modern analytics solutions
allow relatively easy customization and ongoing refinement of
their predictive algorithms. These more general-use analytics
solutions have led to much wider adoption, simplifying the
process of building models and allowing line-of-business leaders
to benefit from advanced analytics, even if they dont have degrees
in data science.
From credit card companies forecasting delinquent accounts
to retailers predicting what products will sell best during a heat
wave, predictive analytics solutions are helping companies in a
range of industries leverage the power of data in ways never
before possible. The benefits are enormous, and also very
diverse: reduced customer or employee churn, more targeted
marketing of offers, and reduced fraud are all possible benefits.
IBM Analytics 3
predictive analytics solutions are helping
companies leverage the power of data in ways
never before possible.
As a result, predictive analytics is filtering into more and more
business operations. A recent Ventana Research report found
that predictive analytics is being used in areas critical to
revenue and profitability. More than seven out of 10 participating
organizations already use predictive analytics, and the remaining
28 percent plan to.1
The use cases for predictive analytics are all compelling, and run
the gamut from straightforward to truly novel and innovative.
For instance, its very beneficial to predict which current
customers might be about to leave, so that they can be enticed to
stay, but this is essentially an automated extension of time-
honored techniques for customer service. Predicting what
products customers will want to buy in future seasonal conditions
is more sophisticated, but still fairly conventional. However,
analytics solutions can go beyond this. For instance, predicting
how your salespeople will likely perform in given circumstances,
and adjusting incentives accordingly to increase sales while
ultimately saving workforce coststhat is a level of forecasting
and business benefit that seems almost magical. The power of
predictive analytics will only continue to grow, and with it will
grow the number of ways that engaged organizations can benefit
from the insight and efficiencies it makes possible.
4 Predictive analytics in the cloud
Business Data
understanding understanding
Data
preparation
Deployment
Data Modeling
Evaluation
Figure 1: Predictive analytics is an ongoing process of assimilating data,
analyzing it, verifying how the predictions align with real-world experience,
and modifying the analysis if necessary.
Research already confirms that analytics is playing a large and
growing role in business success. For example, Nucleus Research
found that for every dollar invested in analytics, companies reap
a 13-fold return.2 The precise ROI depends on what the particular
analytics solution is able to accomplish and this, in turn, depends
on what challenge the solution is applied to. What is clear,
however, is that this positive picture is widespread. In another
study by Forbes Research, 86 percent of executives with
experience in predictive analytics indicated that technology has
delivered a positive return on investment for their business.3
Now that organizations realize the business case for predictive
analytics, they are looking for ways to derive even greater
benefits from it. One way to do this is to address some of the
historical obstacles to implementing predictive analytics systems,
such as the need for specialized skills, large IT budgets and
dedicated IT resources. Cloud computing is one partner
technology that can combine with predictive analytics to
produce a more capable, more economical and more flexible
solutionultimately delivering better value.
The case for cloud
When getting a predictive analytics system up and running,
many companies turn to cloud computingremote computing
resources delivered as a service over the Internet. Cloud offers
many advantages that match up well with the particular demands
of analytics. By offloading the processing, storage, programming
and maintenance requirements to a cloud provider, businesses
can deploy a sophisticated general-use analytics solution quickly,
with low capital investment, and start generating value almost
immediately. Cloud computing enables organizations to enjoy the
benefits of an enterprise-scale predictive analytics environment
without having to invest heavily in hardware or wait years to
realize the technologys true potential.
Cloud offers benefits to both the organization and to individual
employees. The organization avoids up-front capital costs,
reduces the need for in-house IT expertise, and leverages a
flexible cost structure that is based on use. Meanwhile, employees
can more easily access their data and applications from nearly
anywhere, supporting increased productivity and collaboration.
 IBM Analytics 5

But not all clouds are created equal. There are three main The flexibility of hybrid cloud architecture provides several
varieties, each with its own characteristics: beneficial characteristics:

Responsiveness, because in-house resources are always

Public cloud, which is essentially service delivered over the
available and can be re-tasked as necessary
Internet: cheap and abundant, but with serious security and
Full control over security measures and the ability to
regulatory concerns as well as configuration constraints.
sequester sensitive data
Private cloud, which is a cloud-type implementation where the
Easier compliance with local laws, because particular data can
business owns and controls both the underlying hardware
be kept in a particular geographic location. This can ease
and the means of distributing data over a network. This type
the regulatory compliance burden on large, multinational
of cloud offers the benefits of cloud architecture but does
organizations.
not require the organization to relinquish control over
infrastructure or data.
However, every IT configuration has some risks and drawbacks,
Hybrid cloud, which is the connection of one or more clouds
and hybrid cloud is no exception:
to on-premises systems, the connection of one or more clouds
to other clouds, or both. Hybrid cloud can take different forms,
Management. The hybrid model typically consists of multiple
but it essentially uses a mix of on-premises private cloud and
cloud environments or applications that run across multiple
public cloud services so that workloads can shift back and
cloud systems. As a result, managing and integrating the data
forth depending on computing needs. Hybrid cloud systems
that traverses these environments can be challenging. This is
allow businesses to maintain existing IT infrastructure and
why its important to have a trusted and capable cloud provider.
keep legacy applications intact while leveraging the cloud for
Security. No security system is perfect. In fact, in-house IT
newer applications.
systems, often considered the epitome of security, are regularly
found to be flawed, vulnerable and inadequate to the task
of keeping company data secure. On the other hand, cloud
providers are specialized in data security and have the resources
Private to devote far more time and expertise to the task than many
companies can on their own. Hybrid cloud does involve more
locations where sensitive data can be stored, so it is important
Public that the security procedures and data management expertise
Traditional
are able to cope with these challenges.

Private Private

Public
Traditional

Figure 2: Hybrid cloud can be thought of as traditional IT environments that

can be integrated with both external and internal clouds.4
6 Predictive analytics in the cloud
Cloud isnt a magic cure-all. But it has significant advantages
over in-house IT infrastructure, which is why it is gaining
traction in the marketplace. In particular, the hybrid model
is fast becoming the hallmark of a mature cloud strategy. IT
teams are using hybrid cloud to link public cloud services with
private infrastructure and are reaping the benefits, including
greater flexibility and cost savings. According to IDC, more
than 65 percent of enterprise IT organizations are already
committed to hybrid cloud technologies.5
Analytics in the cloud
Cloud-based delivery of analytics combines the strengths of both
technologies, and offers a compelling set of capabilities that can
help organizations in many industries.
The flexible capabilities of a hybrid cloud system can support the
highly variable computational needs of a predictive analytics
system, while also providing more granular control over
data location and security protocols. With a hybrid cloud
implementation:
In-house IT resources can be sized to average or even
minimum demand, not peak demand.
Computations can be done entirely in-house when capacity
is available, or when the data involved needs to be kept
in-house for regulatory purposes.
Extra capacity is available via the public cloud when needed.
Analytics insights can be distributed via the cloud, meaning
that employees can more easily access them anywhere, anytime.
In a representative model, cloud-based predictive analytics takes
place in a dedicated and security-rich environment (see Figure 3).
IBM offers SoftLayer, an industry-leading cloud infrastructure,6
and there are others available. This environment allows you to
upload your data in a variety of formats, use rich data preparation
and modeling algorithms to uncover patterns and trends, and then
use a collaborative deployment environment to optimize the
predictive models and rules to improve your business. The
resulting insights can be shared with other users and the entire
process can be automated.
Database
Business
rules
Fixed file
SAS file Gold
Excel
Optimization Predictive
analytics
XML
Figure 3: An example of cloud-based implementation of predictive analytics.
The user can integrate data from many sources and perform analytics in a
dedicated, security-rich environment.
Once youve decided that cloud-based analytics is a good fit for
your organization, the next step is to select and deploy the right
solution to meet your needs.

Finding the right cloud analytics solution
Developing a strategy for matching the right solution to your
organization generally involves three main activities:
1. Plan by identifying a trusted provider with experience in the
field and a portfolio of robust, easy-to-use offerings.
2. Select the solution that delivers the best value for your needs.
The cheapest solution is often not the best valuethe costs
of insufficient security or functionality can quickly reduce
your ROI.
3. Deploy the solution for maximum impact within your
organization.
Those three key activities require you to consider a number
of underlying factors:
Analytics level. Where are you in the analytics journey?
For example, are you just starting out, attempting to
broaden or deepen your analytics capabilities, or do you
have an established analytics practice?
Goals. What do you want to accomplish with analytics?
Stakeholders. Who will use the solution? How will they
use it and how often?
Skills. What type of internal skillsets do you have?
Security. What level of security do you need to safeguard
your data?
Although analytics solutions and cloud solutions are available
separately, and although many analytics solutions can be made
to run on cloud, a piecemeal approach can introduce as many
problems as it solves. Ideally, you will want cloud and analytics
solutions that are designed to work together.
IBM Analytics 7
a piecemeal approach can introduce as many
problems as it solves. Ideally, you will want
cloud and analytics solutions that are designed
to work together.
Integrated cloud and analytics solutions can give a broader range
of stakeholders the ability to use more advanced analytics to
achieve more ambitious goals, without requiring a highly
technical skillset.
In particular, integrated predictive analytics solutions and
experienced cloud providers can enormously increase the
flexibility, scope and precision of analytics solutions by helping
individual organizations tailor their analytics to match their
particular needs. The value of this capability is often overlooked.
Organizations that already have a large data scientist team
in-house will likely be able to build and maintain their own
analytics algorithms, but this type of capability is relatively
rare. For the majority of organizations that do not have this
capability in-house, an integrated cloud and analytics provider
can help with the initial setup and tuning, and even provide
ongoing support for revisiting and iterating the algorithms so that
they consistently produce accurate, relevant and up-to-date
results. As shown in Figure 1, predictive analytics is not a tool
you deploy once and then leave to run indefinitely; its an ongoing
process that involves constant analysis and feedback. Choosing
the right provider can make this process much easier and
more productive.
8 Predictive analytics in the cloud
IBM offerings for predictive analytics on cloud
IBM can help you take advantage of the cloud for analytics,
and leverage the IBM SPSS Predictive Analytics portfolio.
In addition to being the most established brand in the industry,
IBM has world-leading performance to match. In 2015, Forrester
Research again named IBM as a leader in the field of big data
predictive analytics7 and IBM SoftLayer technology has been
recognized as the highest-performing cloud solution among
major competitors.8 With tools that are designed to work
together, and support for both the individual tools and the
means of integrating them, IBM is well-positioned to facilitate
your move to predictive analytics on cloud. IBM products and
solutions on cloud include:
IBM SPSS Modeler Gold on Cloud
Provides a fully managed software-as-a-service (SaaS)
environment for IBMs leading predictive platform. Designed
to take full advantage of the security, scalability and resiliency
features of IBM cloud.
Hybrid deployment of IBM SPSS Predictive Analytics
Uses SoftLayer as a cloud infrastructure for some pieces of
the solution while keeping other pieces of the solution
in-house. Takes advantage of the flexibility of SPSS and
SoftLayer to create what works best for you.
IBM Predictive Analytics on Bluemix
Gives you the flexibility to leverage your IBM SPSS analytics
assets through the Bluemix environment. Uses SPSS in
combination with other components to create truly
unique applications.
IBM Watson Analytics
Was born on the cloud to use predictive capabilities to explore
data and help you discover insights into the future. Watson
Analytics can give business users predictive data discovery
and help jump-start more in-depth analytics initiatives in
an organization.
IBM solutions are designed to let clients choose their own
deployment strategy and take advantage of the power of
predictive analytics to address their most pressing business
needs in the way that works themwithout compromising on
depth of features, ease of use or deployment options.

Cloud and analytics in action
nViso SA, a Swiss start-up, offers rich, insightful analytics in
the form of emotion recognition solutions. They needed a
high-performance cloud hosting infrastructure to extend their
emotional analytics solutions to a global customer base.
Using shared IBM SoftLayer server resources, nViso provides
emotion analytics service offerings to approximately
30 companies worldwide. Additionally, the organization
provides dedicated SoftLayer infrastructure to support
customers who are integrating nViso capabilities into their
own products, services and marketing campaigns.
IBM Analytics 9
Conclusion
Predictive analytics solutions offer a powerful and versatile
approach to addressing many pressing business problems.
Cloud technology offers a capable and flexible environment
for deploying predictive analytics solutions, with hybrid
cloud architecture being particularly advantageous.
When considering a deployment of predictive analytics, its
important to consider your level of analytics expertise, your
organizations goals, the stakeholders who will be involved, the
technical skill level of those stakeholders, and any particular
security or compliance concerns. These factors will all affect
the type of analytics solution you need, the level of outside
support your organization will need, and the type of cloud
architecture that best fits.
IBM has a strong case for being the right partner to help you
gain the maximum benefit from predictive analytics on cloud.
IBM predictive analytics on cloud solutions can offer:
A comprehensive, integrated analytics platform
Scalability
A security-rich data environment
Tools for collaboration and productivity
Cost-effectiveness and strong ROI
A range of deployment methods
No matter what your current situation, its likely that an
experienced, industry-leading provider like IBM can help
you make the transition to predictive analytics more easily,
efficiently and cost-effectively.
10 Predictive analytics in the cloud
About IBM Analytics
IBM Analytics software delivers data-driven insights that help
organizations work smarter and outperform their peers.
This comprehensive portfolio includes solutions for business
intelligence, predictive analytics and decision management,
performance management and risk management.
IBM Analytics solutions enable companies to identify and
visualize trends and patterns in such areas as customer
analytics that can have a profound effect on business
performance. They can compare scenarios; anticipate
potential threats and opportunities; better plan, budget and
forecast resources; balance risks against expected returns and
work to meet regulatory requirements. By making analytics
widely available, organizations can align tactical and strategic
decision making to achieve business goals. For more information,
see ibm.com/analytics
Request a call
To request a call or ask a question, go to ibm.com/analytics/
contactus. An IBM representative will respond to your inquiry
within two business days.
Next steps
Explore these additional resources on IBM SPSS predictive
analytics and cloud options.
Explore the IBM SPSS Predictive Analytics Community:
developer.ibm.com/predictiveanalytics
Try IBM Bluemix: ibm.com/bluemix
Enroll in the Big Data University Predictive Modeling
Fundamentals course: bigdatauniversity.com/courses/
predictive-modeling
Follow us on Twitter: twitter.com/IBMSPSS
Like us on Facebook: facebook.com/ibmspss
IBM Analytics 11
 Copyright IBM Corporation 2016
IBM Analytics
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Produced in the United States of America
February 2016
IBM, the IBM logo, ibm.com, SPSS, Bluemix, and IBM Watson are
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jurisdictions worldwide. Other product and service names might be
trademarks of IBM or other companies. A current list of IBM trademarks
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an IBM Company.
This document is current as of the initial date of publication and may be
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The performance data and client examples cited are presented for illustrative
purposes only. Actual performance results may vary depending on specific
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1 Ventana Research, Benchmark Research: Next-Generation Predictive
Analytics June 2015.
2 (nucleusresearch.com/research/single/analytics-pays-back-13-01-for-every-
dollar-spent)
3 The Predictive Journey: 2015 Survey on Predictive Marketing Strategies
(www.forbes.com/sites/forbespr/2015/10/27/86-percent-of-predictive-analytics-
users-report-tangible-gains-to-their-bottom-line)
4 David Weck, Thoughts on Cloud (www.thoughtsoncloud.com/2015/03/
4-reasons-why-hybrid-cloud-is-becoming-the-new-normal)
5 International Data Corporation, IDC FutureScape: Worldwide Cloud
2015 Predictions Web conference.
(www.idc.com/getdoc.jsp?containerId=prUS25350114)
6 Based on a March 2015 Principled Technologies report comparing IBM
SoftLayer with Amazon Web Services (AWS), Google Cloud Platform,
and Microsoft Azure.
(connect.softlayer.com/rs/220-ESA-932/images/cloud_performance_analysis.
pdf?mkt_tok=3RkMMJWWfF9wsRogvK3OZKXonjHpfsX66O4oWae1hIkz2EFye
%2BLIHETpodcMT8FiMK%2BTFAwTG5toziV8R7LHLM1lydQQUhLg)
7 The Forrester Wave: Big Data Predictive Analytics Solutions, Q2 2015
(www.forrester.com/pimages/rws/reprints/document/115697/oid/1-TIHIFY)
8 Based on a March 2015 Principled Technologies report comparing
IBM SoftLayer with Amazon Web Services (AWS), Google Cloud
Platform, and Microsoft Azure.
(connect.softlayer.com/rs/220-ESA-932/images/cloud_performance_analysis.
pdf?mkt_tok=3RkMMJWWfF9wsRogvK3OZKXonjHpfsX66O4oWae1hIkz2EFye
%2BLIHETpodcMT8FiMK%2BTFAwTG5toziV8R7LHLM1lydQQUhLg)
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