Seminar on Computational Learning and Adaptation

  Business Impact of Predictive Analytics

Dr. Tilmann Bruckhaus
Chief Architect, Data Mining and Analytics
Sun Microsystems
Tilmann.Bruckhaus@Sun.Com
 

In commercial applications of predictive modeling, the ultimate objective is typically to maximize Return On Investment (ROI). However, literature, conferences, and training often stops short of providing techniques for ROI maximization. With an apparent lack of know-how for maximizing ROI, analysts often have to rely on technical metrics, such as ROC, accuracy, precision, or similar metrics to optimize predictive models. In this presentation, I will explore the problem of assessing the ROI for predictive analytics applications, break down the drivers of ROI, and show how to compute ROI. I will also present an example ROI analysis to demonstrate that one predictive model can have negative or positive ROI based on the business context in which it is used, even though technical quality metrics of the predictive model do not change.

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