Order Out of Chaos

If you enjoyed data mining, you might also like predictive analytics, the next generation of tools to make sense of the data deluge.

By Bill Virgin | March 2010 | FROM THE PRINT EDITION

Credit: Photos and graphics provided by Inrix

Inrix's iPhone App uses predictive analytics software to
forecast traffic information to help commuters better plan their trips.

Predictive analytics: You might not know the term but it's a
good bet you've run across or been subjected to it.

The recommendations for other books, CDs or movies you might
like when you place an order with Amazon.com? Those are predictive analytics at
work. The teller who suggests an investment product the bank is pushing, while
you're making a deposit? Predictive analytics again. The approval on your
mortgage or credit card application, and the interest rate you got? That's
credit scoring with predictive analytics behind it.

A growing number of Seattle-area companies not only know
what predictive analytics are, but they're also using these data analysis tools
at the core of their business propositions or writing the software used by
others.

Examples abound. Kirkland-based Inrix Inc. employs
predictive analytics to provide traffic information in 130 American and
Canadian markets, as well as 14 countries in Europe. Says company spokesman Jim
Bak: "We can tell people with a high degree of certainty not only what traffic
looks like now, but what it looks like in the next hour, in 15-minute
increments." For iPhone applications, Inrix offers those 15-minute predictions
for up to six hours in advance, and can do more general forecasts for the
coming year.

Farecast, now owned by Microsoft, applies predictive
analytics to tell travelers the optimum time to buy an airline ticket. Varolii
Corp. in 2008 unveiled a predictive analytics tool to help customers
"understand, analyze and strategically target more effective customer outreach
for collections, customer service and loyalty programs." Bellevue's DS-IQ Inc.
runs predictive analytics to help retailers design in-store digital marketing
campaigns.

ValueAppeal uses predictive analytics tools to tell
customers whether their property assessment is too high. Insightful Corp., a
Seattle-based developer of data analytic tools, was a publicly traded company
until being acquired by Tibco Software Inc. in 2008.

The Department of Energy's Pacific Northwest National
Laboratory at Richland has a "technosocial predictive analytics initiative" to
study whether such an analysis can be applied to the effects of global climate
change on homeland security and defense, or guiding counter-terrorism efforts.

If all this activity sounds like data mining, it is-but it's
also much more. "The difference is data mining is about taking mass volumes of
data and looking for trends," says Craig Chapman, Inrix's chief technology
officer. "Predictive analytics is taking that data and creating models from it
so we can predict" what will happen with a borrower's likelihood to repay, what
a retail customer might