Predictions for 2016: The Year of the Algorithm

Dear Blog Reader,

In the coming year the amount of data will continue to grow exponentially. The imperative to leverage this data assets – and do so before the competition – is increasingly top of mind for business people in nearly every sector.

Algorithms and applications create value from big data

Increasingly evident is also that extrapolating business decisions from the huge and growing volumes of data is a task that humans alone can no longer manage. Peter Sondergaard, Senior Vice President at Gartner Research and a leading analyst, quickly and very rightly shifted the use of algorithms to the forefront, stating: “Algorithms are where the real value lies.” In his opinion, algorithm-based automated decisions are absolutely critical for success: “Companies will be valued not just on their big data, but on the algorithms that turn that data into actions and their impact on customers.”

Automated decisions, however, are just an intermediary step for the Gartner analysts: According to Sondergaard, in a completely digital world, agents and robots will act independently of human intervention – on the basis of algorithms in the Cloud. By 2020 we will no longer just be using technology to support our decision-making, instead we will cede our decisions to intelligent and self-learning technology. We are already seeing this, particularly in the retail sector, where Amazon, and more recently, Walmart, are leading the way with their digital labs.

There’s still a long way to go, but the first steps have already been taken. Until then, it’s a great leap, but we are already on that path. And for this reason, we need algorithms that can reliably predict the future.

Data analyses are not crystal balls

Blue Yonder’s Predictive Applications do not rely on a crystal ball, but on complex mathematics and learning algorithms: they use the data which companies have already collected as well as external data that might impact their business, for example, weather forecasts, holidays, and special promotions. Algorithms evaluate the many complex influences and their connections to the historical data given and use this to learn. They generate “experience” that is more informative and more useful for decision making than human experience. This is the basis for better and more efficient decisions.

Courage in the face of change

The most important factor in profitably using your own business data in predictive applications is the will to change. “Beyond traditional thinking,” as Peter Sondergaard calls it: companies must summon the courage to transform their business and try new things. In my opinion, that will be one of the most important tasks for 2016. Because businesses can still bring data much more to the fore, the potential for predictive applications is only in its early stages and first-movers will have tremendous advantages in the marketplace.

Not much is needed to get started because Blue Yonder’s predictive applications are available as a Software-as-a-Service (SaaS) Solution in the Cloud. They require only limited technical expertise and investment. Businesses only need their own data.

Get the strategy right!

Much more important than the technical prerequisites are the strategic ones: clients must know what they want to optimize and if necessary how to adjust or tailor the analysis being used. For this we offer “Blue Vantage,” a consulting package that demonstrates to our customers the tangible uses of predictive applications. This includes a quantitative evaluation of the added value and a recommendation for the next implementation step. In addition, together with the customer, we identify target usage areas and define possible solution scenarios with the help of explorative as well as prognostic data analysis. Our clients gain insights into their data and see how predictive applications can support them in making operative decisions with measurable benefits to their bottom line.

Big data is here; it is a business imperative to explore and exploit it potential. Perhaps together we can make 2016 the year of the applied algorithm and help to turn your business into a predictive enterprise.

Uwe Weiss Uwe Weiss

CEO , is the visionary at Blue Yonder . His aim is to bring together the top class in Data Science and Enterprise software in an international market leader .