predictive analytics

This definition is part of our Essential Guide: Enterprise data analytics strategy: A guide for CIOs

Predictive analytics is the branch of data mining concerned with the prediction of future probabilities and trends. The central element of predictive analytics is the predictor, a variable that can be measured for an individual or other entity to predict future behavior. For example, an insurance company is likely to take into account potential driving safety predictors such as age, gender, and driving record when issuing car insurance policies.

Multiple predictors are combined into a predictive model, which, when subjected to analysis, can be used to forecast future probabilities with an acceptable level of reliability. In predictive modeling, data is collected, a statistical model is formulated, predictions are made and the model is validated (or revised) as additional data becomes available. Predictive analytics are applied to many research areas, including meteorology, security, genetics, economics, and marketing.

This was first published in March 2009

Next Steps

How to get to actionable data with predictive modeling

SAP Predictive Analytics software is comprised of Automated Analytics and Expert Analytics. Learn how these products could be essential for your enterprise.

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