Briefs

It's still costly and complicated, but recent software vendor partnerships aim to make it less so.

By Mary Hayes Weier InformationWeek December 8, 2007 12:00 AM (From the December 10, 2007 issue)

Bon-Ton stores recently mined 10 million customer records from its clothing stores nationwide and pulled a sample set of 100 million transactions. From that, it analyzed 200 separate factors, including what types of products customers bought, the associations between products in their shopping carts, and how many discounted products they purchased. The reason for all this data crunching: to create a model for direct-mail campaigns that could better predict which customers are likely to shop at a Bon-Ton store in the next 30 days.

For retailers like Bon-Ton, predictive analytics software is increasingly viewed as an edge. "It's a long and difficult process, and therein lies the competitive advantage," say Mike Hayes, Bon-Ton's senior VP of marketing. "A lot of companies don't want to hire the skills to do that or take the time to do it." Bon-Ton saw "marked improvement" in sales from such campaigns, using the predictive model based on software purchased from SPSS earlier this year.

Advanced analytics--of which predictive analytics is a subset--has long been a separate, pricier tier from the business intelligence reporting and query tools provided by the likes of Business Objects, Cognos, and Hyperion (which were or are being acquired by SAP, IBM, and Oracle, respectively). Last year, the advanced analytics market grew 11.3% to $1.24 billion, according to IDC analyst Dan Vesset, who predicts it will grow 10% a year through 2011.

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Costs and talent remain a barrier. Even with new vendor partnerships, there's a lot of work to cleanse and format data for such analysis, and the talent is on the top of IT pay scales. In InformationWeek's 2007 Salary Survey, data mining pros ranked as the second-highest-paid staff job, averaging $93,000 in total pay, and data mining managers earned $125,000 in total pay.

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