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Since joining SPSS Inc, the company’s President and CEO, Jack Noonan, has built the company from a small, start-up, entrepreneurial organisation, with a single product offering, to an intelligent, business-minded public company with over 40 product offerings. Noonan’s strategy of combining internal development with acquisitions has been instrumental in the company’s growth, which today is a leading provider of analytical software and services. CXO caught up with Noonan to find out more about some of the trends and drivers in the market.

CXO. How have you seen the domain of analytics change over the years?

JN. Originally, analytics was the domain of the propeller-heads. Analysts would spend hours poring over data, looking for trends in a market. As the speed of doing business has ramped up, companies no longer have the time to do this. Now they need powerful – yet quick and easy to use – analytical tools that deliver results based not on the past, but on foresight.

CXO. And have you seen a shift in who is making the purchasing decisions for analytics?

JN. Yes, the drive towards increased business effectiveness has placed purchasing decisions for analytics in the hands of sales and marketing executives.

CXO. Which area of analytics appears to be the fastest growing and why do you think this is the case?
JN. Many would argue that the fastest growing and most powerful area of analytics is predictive analytics. Businesses are focused on practice rather than on theory, and it is all about ‘how do you put the results of analytics to use’. This is where integration with call centres and outbound marketing systems comes in. The key to success is to put the results wherever decisions need to be made. That is usually at the point of contact with the customer. You need to be able to predict customer behaviour and needs on the spot, in order to take the appropriate action or decision for that customer then.

CXO. Traditional analysis such as BI, reporting and statistics have been around for years, surely they can give the insight you talk about?
JN. Traditional analysis as you mention only gives what is termed ‘rear view mirror’ insight… letting you see or analyse results of actions that have gone before. However, the past is no prediction of the future. What is required is analysis of business as it happens, and this is where predictive analytics fits in. It gives you foresight to see what is happening now and uses that as a guide to the future.

CXO. Can you give me any figures that substantiate this?
JN. IDC reports the predictive analytics market was worth US$2 billion in 2003 and is expected to grow at eight percent per annum until 2008. Further research from IDC, examining analytics projects at 40 sites across North America and Europe, found an ROI of 145 percent for companies using predictive analytics.

Also, an independent assessment of SPSS customers conducted by Nucleus Research in 2005 found that 94 percent achieved a positive return on investment within an average payback period of 10.7 months. Returns were achieved through reduced costs, increased productivity, increased employee and customer satisfaction and greater visibility. Flexibility, performance and price were all key factors in purchase decisions

CXO. Do you have any examples of where this kind of substantial ROI has been experienced by your customers?

JN. Take Spaarbeleg, for example. It took two months for the Dutch personal investment firm to integrate predictive analytics within their homegrown call centre. The application generates real-time recommendations for each customer. This lets agents best match products to customers. It not only resulted in happier customers, but also generated an additional US$30 million in sales from its call centre.

Another customer is Saga in the UK, who have realised the benefits of integrating predictive analytics into their daily operations to make decisions based on foresight rather than previous history. Saga’s use of predictive analytics has enabled them to cut costs and increase revenue to the tune of one million pounds.

CXO. Can you elaborate on how Saga achieved this?

JN. Predictive analytics helped Saga Holidays’ marketing department reduce mail costs by identifying the best customers for specific campaigns. They also generated additional revenue by identifying new customers not previously targeted.

Furthermore, the company uses predictive analytics for optimising across multiple marketing campaigns. This will ensure the best offer reaches each customer, rather than mailing them every available offer which can have a negative impact on a company’s image and the effectiveness of campaigns. As a result of better targeting of customers across different offers, Saga can generate up to a third more profit at the same cost of previous campaigns.

This approach enables the company to optimise the ROI of their marketing campaigns, whilst at the same time maximising customer satisfaction. The application will allow Saga to predict overall campaign effectiveness and profitability upfront, and adjust the parameters during campaign planning to fully achieve their business goals.

CXO Finally, do you think your own company is evolving and addressing what is required to support a ‘predictive enterprise?’

JN. Certainly, SPSS provides a complete and integrated enterprise platform for predictive analytics, that offers organisations the tools and applications they need to support decision-making in their daily operations – so they can become a true predictive enterprise.

Speaking with Jack Noonan
Jack Noonan became President and Chief Executive Officer of SPSS Inc. in January 1992. He has more than 30 years of experience in several key areas of the computer industry, most recently as President and CEO of Microrim Corp., a privately held developer of database software products in Bellevue, Wash.

His career in the computer industry began in 1967, working in field engineering and systems development for IBM Corp, where he remained for a decade before moving to Amdahl Corp. of Santa Clara, Calif..