Models Collecting Dust? How to Transform Your Results from Interesting to Impactful

Models Collecting Dust?James Taylor CEO

Your presenter – James Taylor CEO of Decision Management Solutions Works with clients to improve their business by applying analytic technology to automate & improve decisions Spent the last 9 years championing Decision Management and developing Decision Management Systems ©2012 Decision Management Solutions 2

ChallengesOr why your models are gathering dust

Challenges with predictive analytics Actions are needed not just predictions Begin with the decision in mind The business does not understand analytics A business context for analytics Analytic models age quickly Cottage industries don’t scale Industrialize your analytic processes ©2012 Decision Management Solutions 8

Begin with thedecision in mind

Different kinds of decisions Strategic Decisions • Few in number, large impact • Should we acquire this company or exit this market? Tactical Decisions • Management and control, moderate impact • Should we re-organize this supply chain, change risk management approach? Operational Decisions • Day-to-day decisions that affect one transaction or customer • Best offer for this customer ?How risky is this loan? Is this claim fraudulent? ©2012 Decision Management Solutions 14

Analytics power operational decisions How do I… prevent this customer from churning? convert this visitor? acquire this prospect? make this offer compelling to this person? identify this claim as fraudulent? correctly estimate the risk of this loan? It’s not about “aha” moments It’s about making better operational decisions ©2012 Decision Management Solutions 18

Case: RetailerBusiness challenges Solution BenefitsGrocery chains are Tailored promotions Increased revenuebattling for market integrated with Deep knowledge ofshare loyalty program customers acrossCustomer loyalty is Integrated system formatsessential for growth from back office to More effectiveLoyalty to the brand, point of sale promotionalnot a single store Consistently campaignsformat compelling offers across channels ©2012 Decision Management Solutions 19

A business context for decision making

Candidate decisions Determine if a customer is eligible for a loan Calculate the discount for an order Assess the risk of a transaction Select the terms for a deal Choose which claims to Fast Track These are decision words The system must answer a question each time ©2012 Decision Management Solutions 22

Decision to KPI mapping KPIs impacted by improvement in decision Customer Customer Losses Retention KPI 5 Churn Service Budget Calls ↑ ↑ ↓What retention offer shouldbe made? ? ↑ ↑What initial price should beoffered? ↓ ↓Should an intervention callbe made?Decision 3 ?… ©2012 Decision Management Solutions 24

Decompose the decisioning What is required to make decision? Guidelines, policy documents Human expertise Regulations Existing system logic Data describing the case External reference data Predictive Analytic Models Data Mining Results The results of other decisions ©2012 Decision Management Solutions 25

Decisions provide context Processes Know which business Activities require decisions processes will be improved by your analytics Events Know when your analytics Trigger decisions might be calculated Systems Know how you will have to Implement decisions deploy your analytics Organizational Units Know who cares about Make decisions your analytics and who will Own decisions have to believe them Are impacted by decisions ©2012 Decision Management Solutions 26

Case study: InsurerBusiness challenges Solution BenefitsUse analytics to Model and Find the decisionsimprove underwriting decompose decisions that could be Map decisions to impacted andEmbed analytics in refocused analyticclaim processing systems and organizations effortapplication Constrained analytic effort to ensure successful implementation

Industrialize Analytics

Analytic Insight Management Data Management Data Preparation Data Visualization & Analysis Modeling In-database Modeling Model Validation Deployment and Scoring In-database Scoring Model Monitoring Model Tuning Model Tuning Repository ©2012 Decision Management Solutions 30

Case study: Cable TVBusiness challenges Solution Benefits1.2M households Predictive analytics to 13-18% cross-sell hitMany single-product predict churn, cross- rate on averagehouseholds sell Up to 40% cross-sellWhole industry Business rules use analytics and data to success rate for somesuffers from lowloyalty and 20%+ drive dynamic scripts Teams using thecustomer churn Embedded in call scripts have moreIncreasing center application to salescompetition and improve decision making Reduced churn by 20-changing regulations 30% ©2012 Decision Management Solutions 32

Some Pitfallsand how to avoid them.

Case: State dept of taxationBusiness challenges Solution BenefitsPaper tax returns Single central Recovered millionsincreased costs and taxpayer database of dollars fromslowed responses Integrated system dubious tax returnsInformation system Sophisticated real- Increased collectionsilos time predictive of unpaid taxesManual fraud analytics Decreased numberdetection and return of questionablereview returns Increased customer satisfaction ©2012 Decision Management Solutions 37

Questions?

Decision Management Systems What if you could make your systems active participants in optimizing your business? What if your systems could act intelligently on their own? Decision Management Systems can do all that and more. This book shows how to integrate operational and analytic technologies to create more agile, analytic, and adaptive systems. Discount Code: TAYLOR4389For more information about this new release, visitwww.decisionmanagementsolutions.com/book ©2012 Decision Management Solutions 39

In a Predictive Enterprise, analytics are… Used in every transactionPervasive At the point of contact/delivery In operational decision making From reporting to prediction and forecastingPredictive Data mining Predictive analytics and scoringActionable Decisions being made, actions being taken Decision Management Systems Decision Support Systems ©2012 Decision Management Solutions 40

Thank You James Taylor, CEOjames@decisionmanagementsolutions.com 43

Models Collecting Dust? How to Transform Your Results from Interesting to Impactful

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Models Collecting Dust? How to Transform Your Results from Interesting to Impactful Presentation Transcript