Predictive modeling starts with exploring and analyzing the data stored in the data warehouse.
Analysts and data scientists examine the historical data to identify patterns, trends, and relationships between different variables.
Predictive Modelling Process
Feature Engineering
In predictive modeling, selecting the right features (variables) is essential for accurate predictions.
Data engineers and scientists may perform feature engineering to create new features or transform existing ones to improve the predictive power of the model.
The predictive modelling process may involve to identify the most important variables for making predictions.
Model Building
Once the data is prepared and features are selected, predictive models are built using various algorithms such as regression, classification, time series analysis, or machine learning techniques like decision trees, random forests, support vector machines, or neural networks.
These models learn from historical data to make predictions about future events or outcomes.
In the predictive modelling process, the training data is used to the model.
Model Evaluation
After building the predictive models, they are evaluated using validation data to assess their performance.
Evaluation metrics such as accuracy, precision, recall, F1-score, or area under the ROC curve are commonly used to evaluate the model's predictive power.
One way to evaluate the performance of a predictive model is to calculate the of its predictions.
Integration with Business Processes
Predictive models are integrated into existing business processes within the data warehouse environment.
For example, they may be used to forecast sales, predict customer churn, optimize inventory levels, detect fraudulent activities, or personalize marketing campaigns.
Deployment
Automation and Scalability
Predictive modeling in data warehousing often involves automating the process of model training, evaluation, and deployment to scale across large volumes of data.
Automated pipelines are built to update models regularly and ensure they remain accurate over time.
Continuous Improvement
Predictive modeling is an iterative process. Data scientists and analysts continuously monitor the performance of the models and retrain them as new data becomes available or as business requirements change.
This iterative approach ensures that the models stay relevant and effective in making predictions.
Decision Support
Ultimately, predictive modeling in data warehousing provides decision support to stakeholders by generating insights and forecasts that help them make informed decisions.
These decisions can range from strategic planning and resource allocation to operational optimization and risk management.
Why is it important to split the data into training and testing sets in predictive modelling?