Already you are probably asking yourself, “What the heck is predictive analytics?”
It encompasses a variety of disciplines and technologies, typically using software that applies advanced mathematics or statistics to analyze pools of data and make forecasts about current or future events.
Who would have predicted that San Diego would emerge as one of the global capitals in such technology?
The forecasts that predictive analytics offer are usually expressed in terms of the percentage or odds for or against a particular outcome—such as the likelihood that a particular credit card transaction is fraudulent. The technology also can be used to analyze data, such as traffic through a freeway interchange or visitors to a website, and identify key “predictors”—the factors that would help improve traffic flow or eliminate recurring accidents.
Predictive analytics are increasingly all around us, says Bob Slapin of the San Diego Software Industry Council. “Every transaction, every phone call, every mouse click is now a data point,” Slapin says. “We’re gathering information faster than we can process it, and that requires sophisticated technology. It requires analytics.”
Today, Slapin says, “If you’re in software or software as a service, you need analytics because you’re gathering all this online data about your customers.”
Qualcomm, Websense and Intuit’s San Diego-based consumer tax group are among those that specialize in such Web analytics, Slapin says.
Local defense contractors such as SAIC and L3 Communications are using analytical software to help identify terrorists. San Diego-based Kuity Corp. searches Medicare records for telltale signs of Medicare fraud and Detectent mines electric utility records in search of customers with illegal hookups to the power grid.
Slapin says his group has organized a forum on analytics, which is being held today at the Del Mar Marriott, to highlight the importance of analytics and to showcase San Diego’s leadership in the field.
Slapin attributes San Diego’s prominence in software analytics to UC San Diego’s Robert Hecht-Nielsen, who specializes in neural networks and pattern recognition software. Hecht-Nielsen founded HNC Software in 1986, initially to work on enhancing military target identification for the Department of Defense, but the company later adapted the basic technology to analyze credit card transactions. After the San Diego company was acquired by Minneapolis, MN-based predictive analytics giant Fair Isaac and Co. in 2002 for about $810 million, several key HNC employees launched their own analytics startups.
San Diego software developer William J. Proffer created a customized Google map listing almost 80 predictive analytics companies in and around San Diego, and has generously given Xconomy permission to republish it here. (You can see the names and addresses of each company by clicking on the green pushpins; be sure to scroll the map north and south to see additional companies. Click on the “View Larger Map” link for the full version, including a complete list of all the companies, at Google Maps.) Proffer says the origins of San Diego’s analytics cluster are even deeper. [Continued below map]
Proffer cites Integrated Software Systems Corp., founded in San Diego by Peter Preuss in 1970, as one of the “world’s leading independent developers of visual information systems software.” It was acquired by Computer Associates in 1986.
Proffer also points to British economist Clive Granger, who joined UCSD’s faculty in 1974, for using similar techniques to develop revolutionary economic forecasting methods. Granger and collaborator Robert Engle were awarded the 2003 Nobel Prize in Economics for their work in the area.
“In my mind,” Proffer says, “Those two things are basically the genesis of predictive analytics in San Diego.”
