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  1. 1. WHITE PAPER ATi – Adaptive Technologies, Inc. ATi creates Intelligent InformationSM from YOUR data to solve your complex and dynamic business problems. This paper reviews how ATi’s unique approach to blending service and software, combined with a unique, proprietary analytics environment, delivers real world business solutions. ATi specializes in business solutions offering the following benefits: • Maximize your ROI and target your promotions appropriately • Improve your customer retention Thomas A “Tony” Rathburn • Define portfolio of customers to achieve your goals Senior Consultant • Predict your high risk situations The Modeling Agency www.the-modeling-agency.com • Increase your up-sells and cross-sells by targeting the right customer
  2. 2. Executive Summary Overview As a business manager, you are involved in making decisions on an ongo- ing basis in a highly complex operating environment. ATi is helping clients reach higher levels of confidence in decision-making by harnessing advanced technol- ogy and science in a way that specifically meets their client’s business objectives. The result is improved business performance. Clients are no longer left with the often overwhelming task of mastering a range of technologies in an attempt to determine the right blend of software, data and techniques that will encapsulate the best approach to achieving their business goals. ATi’s software-as-a-service (SaaS) approach to delivering predictive ana- lytic solutions is business oriented versus technically oriented. By taking the time “The application of advanced to understand their clients’ business objectives prior to initiating a project, they technologies and science to improve business decision- can focus on utilizing all available data and deliver custom solutions in a format making has been encumbered tailored to the needs of their users. by an overemphasis on technology, rather than focusing on specific business ATi’s areas of predictive analytics and business intelligence expertise in- goals and objectives. ATi clude: brings the focus back to the needs of their clients.” • Segmentation and Profiling • Customer Retention • New Customer Acquisition • Targeted Marketing • Risk Management 2
  3. 3. Business Challenge The application of advanced technologies and science to improve business decision-making has been encumbered by an overemphasis on technology, rather than focusing on specific business goals and objectives. ATi brings the focus back to the needs of their clients. Their project management approach is developed in four major areas: • Defining business objectives • Identifying, evaluating and accessing all relevant data • Advanced modelling to provide enhanced decision solutions • Maintaining solutions Unlike most intelligent decision support environments in analytics and business intelligence tools, ATi develops custom web-based user interfaces to de- liver specific recommendations to the business manager. These real-time indica- tors take the form of a dashboard applet to give concise feedback to the user with supporting customized screens and data access. ATi’s customized solution offers unique benefits to their clients: • Flags and alerts to customer metrics with specific recommendations for decision changes. • Dashboard view of actual activities vs. recommended, with comparative impact on performance metrics. • Incorporation of changes in priorities to assist in “what’s best now” adap- tation. • Decision impact implications in real-time. • Incorporation of confidence levels into recommendations. • Incremental enhancement opportunities within complex decision environ- ments. 3
  4. 4. Technical Challenge The technical staffs of organizations developing predictive analytics and business decision models have traditionally been faced with three purchase op- tions: acquire a set of technical tools, build solutions internally or a combination buying tools and retaining an external consulting firm to build a solution. Buy Option Build Option Consistent approach that has been validated Development based on custom set of for a particular problem. However, specific performance metrics and business functionalities may not match organizational objectives needs Design of operational flexibility to Cost savings to vendor that may be adapt to changing needs passed on to clients Requires investment in additional Functional area projects may not training and software incorporate enterprise level objectives Early adoption efforts are often wrongly Purchasing tools that are not used or needed; targeted at technical staff rather than to the “ATi’s SaaS model provides however, represented in cost due to the functional areas software/product packaging. the expertise that cannot be hired, yet provides Requires accurate representation of solution flexibility that is business objectives adopted by the not dependent on any one enterprise and the functional units involved given technology or piece of software. You get the best of Developers often focus on technical technology and highest level proficiency rather than advancing business expertise in one place.” objectives Most consulting firms deliver a solution approach that has been general- ized to the needs of the client base they serve. By offering a set of semi-custom, or off-the-shelf solutions, they achieve a level of consistency and cost savings in the operation of their consultancy. Unfortunately, this approach is more consis- tent with commodity items and typically results in requiring the client to adapt to the developed solution. A more desirable approach would involve the develop- ment of a solution that enhances performance based on the particular business objectives of the firm, while simultaneously being able to adapt to the opera- tional flexibility required in managing a sophisticated business in today’s environ- ment. 4
  5. 5. Technical Challenge The alternative to retaining a consultancy requires that the technical staff of an organization acquire a set of technologies or tools that are significantly different in their purpose and operation than those currently utilized for general business intelligence. The technical staff in most organizations are tasked with the capture, storage and dissemination of data required to support the daily op- erations of a firm. Their focus, appropriately, has been based on the data man- agement requirements and implementing information technologies to meet these needs. Developing quantitative models of an organization’s business decision processes involves the utilization of data for the specific purpose of enhancing the performance of an organization. This goal-oriented utilization of data requires an accurate representation of the business objectives adopted by the enterprise, and by the various functional units. Few firms possess well documented, standardized metrics to measure performance at all levels of the organization. Instead, perfor- mance metrics are often implied and the understanding of performance is typi- cally subjective and inconsistent across the organization. Additionally, individual functional areas often focus only on the performance of their understanding of their primary responsibilities without taking larger enterprise level metrics or con- sidering the impact of their decisions on other areas of the organization. The adoption of quantitative techniques often inappropriately elevates the mastery and utilization of advanced model development technologies in an at- tempt to force performance enhancement through purely technological solutions. This approach generally fails, not because the technology is lacking, but due to poor project understanding and design. There is limited expertise of professional, skilled scientific modellers. 5
  6. 6. Technical Summary: ATi SaaS Advantage ATi addresses the limitations associated with both build and buy ap- proaches by: developing an understanding of the various overlapping sets of goals recognized within the organization; understanding the requirements of the indi- vidual decision makers within the organization; analyzing the cross-area impact of various scenarios in an if-then environment; and delivering solutions that adapt to “what’s best now”. ATi delivers SaaS solution with a view of customer-centric decision models. User Benefits Design Benefits Zero footprint implementation Focus on utilization of technology rather than raw technology Flags and alerts to customer metrics with specific recommendations for decision changes Recognizes the unique requirements of each client, their existing environment, and what they are trying to achieve Dashboard view of actual activities vs. recommended with comparative impact on performance metrics Custom performance metrics matching business objectives Incorporation of changes in priorities to assist in “what’s best now” adaptation Incorporation of confidence levels into recommendations Decision impact implications in real time Incremental enhancement opportunities within complex decision environments ATi supports organizations’ development of quantitative, data-driven deci- sion models shifting their orientation to the utilization of technology. The meth- odology begins with a focus on planning to predict. This approach emphasizes the unique requirements of each client, their existing environment, and what they are trying to achieve. ATi encourages a building block approach that implements an effective so- lution development platform to support incremental enhancement development. The systems are built and maintained by ATi’s science and technology experts. This platform has its own data structures, which allows for multiple perspectives 6
  7. 7. Technical Summary: ATi SaaS Advantage on the data and delivery of robust output in either real-time or batch operations. The decision models developed from this environment give the decision- maker a set of custom dashboard indicators based on the unique objectives and metrics of the decision process at hand. Development of these dashboards is performance driven with the design based on how they are to be used, where they are used and why. An additional enhancement that ATi has incorporated into their develop- ment SaaS methodology is the ability of the user to consider adopting various sce- narios and the impact of each on performance. This provides the user with the unique ability to perform if-then predictive analysis and consider the impact of a given prospective solution on other systems, prior to implementing a particular decision. Under each of these scenarios, the user maintains ultimate control of the individual solution to be implemented, the level of confidence to be expected in the outcome, and a dashboard view of “I did” vs. “recommended”. ATi’s solu- tions then adapt to user imposed course changes recommending a “what’s best now” next step. ATi’s solutions within an organization are based on the development of an agent factory of specific decision support modules. These agents, who adopt the role of human experts in this scenario, reinforce or refute decisions based on cur- rent and past experiences captured in the data stored in the development plat- form. Unlike most other approaches, ATi’s agents allow for higher resolution in the decision process. This approach supports decisions at the individual level, not just decisions where individuals are a member of a group. ATi’s development of agents also allows for the support of multiple sets of goals throughout the organi- zation with pre-determined levels of effectiveness. ATi provides a zero-footprint development SaaS solution to its clients. It requires neither new software nor additional staff. When maintenance is re- quired, ATi provides the expertise to quickly make adaptations. 7
  8. 8. What’s In It For You? ATi combines the advantages of a traditional software platform with those of a consulting engagement and overcomes the limitations of both. Their con- ceptual approach blends development expertise with advanced technologies in a seamless SaaS development and delivery predictive analytics solution. Traditional software platforms require the client to develop the skills to conceptualize a project appropriately, gather and analyze related data from a variety of sources, evaluate an array of potential quantitative techniques, validate potential candidate models, and maintain delivered solutions. Consulting firms possess development expertise but generally deliver “black box” solutions that may not be optimized to client metrics. ATi’s SaaS solutions eliminate costly hardware and software investments to offer substantial business justifications: • Lower risk than either a buy or a build approach “Clients are no longer left with the often overwhelming • More rapid implementation task of mastering a range of technologies in an attempt to • Higher ROI determine the right blend of software, data and techniques • No new tools to purchase that will encapsulate the best • Custom web-based solutions approach to achieving their business goals.” • Models and scientific expertise provided by ATi • ATi maintains platform application ATi offers a unique service to blend the build vs. buy technical decision faced by most firms. 8
  9. 9. Benefits Summary Development Cycles ATi Solution Benefits Project Definition Solutions optimized to client specific business objectives and performance metrics. Incorporation of goal sets, not limited to individual goals. Custom solution development, not productized general solutions. Implementation support - how, where and why to use developed solutions. Incremental enhancement planning and development environment. Data Leverage all relevant data. Development of solution-specific data structures to support the project. Analysis of all available data not restricted to data with assumed importance. Explainable relationships between variables and recommendations. Multi-perspective view of data generating robust output. Solutions updated as additional data becomes available. Modeling Consideration and evaluation of multiple advanced quantitative techniques appropriate to solution. Experimental design that ensures development and validation of solution models. Determined effectiveness. Incorporation of confidence levels into recommendations. Decisions at the individual level... not the individual as a member of a group. Allowance for “what-if” comparison of recommended course vs. actual activity and impact on performance metrics. Models learn and adapt. 9
  10. 10. Benefits Summary Development Cycles ATi Solution Benefits Solution Delivery Web-based delivery environment. Decisions in either real time or batch environments. Output available across the client organization. Custom dashboard applets supporting screens and data access support. Inclusion of confidence levels accompanying recommendations. Solutions adapt to “what’s best now”. Flags and alerts reflecting impact on client metrics adapting to recent modifications of decisions. Agent factory reinforces/refutes decisions based on current and prior experiences. Model Maintenance & Updates Adaptive incorporation of new experiences into models. Confidence reporting enhanced with on-going utilization of decision history. 10
  11. 11. Technical Comparisons Technical Solution Client Benefit Statistical Modeling Advantages: ATi Solution: • Expertise and software • Manages large, dynamic packages are readily data sets most commonly available associated with business • Often powerful in static data issues with ease sets with less variance • Uses multiple statistical • Most powerful in data sets modeling techniques with fewer variables • Compensates the weaknesses • Simplest techniques are easily of one model by combining it understood by most with another • Large number of possible • Able to identify outliers and models available absence of data without its affecting the accuracy of the Disadvantages: outputs. • Models are static • Outputs are transparent with • Often used outside its scope the key reasons “why” of effectiveness • Oversensitive to outliers in the data • Not ideal for larger data sets • No guidance on what model to choose • No magic bullet model, every one has weaknesses • Needs expert modeler to compare models and decide which are the most appropriate Artificial Intelligence Advantages: ATi Solution: • Able to learn from new data • Agent-based where an agent within the data set can represent a statistical • Handles large data sets with model or an artificial broad statistical distribution intelligence model well • Multiple types of models • Doesn’t require perfect data within the platform allow the weaknesses of one modeling Disadvantages: technique to be overcome by • Must be “trained” and the strengths of another maintained by an expert in • More accurate predictions order to keep it “tuned” through agent consensus • Results are very sensitive to • Outputs are transparent user experience and expertise (no black boxes)— include • Lack transparency and the key drivers and level of interpretability confidence associated with • Requires high performance predictions computing environment • Analyses are the functionality of the technology and hence the iterative processes are “automatic” • Maintained by ATi’s team of experts on a 24/7 basis 11
  12. 12. Target Market Solution Functional Area Prospect Ranking Sales, Marketing Customer Ranking Sales, Marketing Customer Valuation Sales, Marketing Non-Standard Transaction Compliance, Customer Service Identification Product Feature Enhancement Product Development, Custumer Support Customer Attrition Management Sales, Marketing Cross Sell/Up Sell Sales, Marketing Lead Scoring Sales, Marketing Risk Management All Areas of Business Event Based Marketing Sales, Marketing Customer Loyalty Sales, Marketing Customer Profitability All Areas of Business 12
  13. 13. Summary Predictive analytics is emerging into the mainstream business environment as the next wave of technologies tries to provide a true competitive advantage. Many new books on the subject targeted at the business user are being published while software developers in the area are rapidly gaining access to both tactical and strategic level managers in many organizations. However, for the business de- cision maker the initial entry into the work of advanced analytics can be daunting. The skill sets required to merge the business and technical issues are rarely found in one individual, or even in one company. In view of this, traditionally, users have faced a buy vs. build decision. Is it better to engage a consulting firm and potentially lose the customization desired? Or better to give up the technology capture to build future projects and become dependent on an outside resource for critical decision enhancements? “ATi combines the advantages of a traditional software Or, do we make the investment necessary to purchase the talent and skill platform with those of a sets necessary to explore a highly experimental set of technologies, uncertain of consulting engagement and overcomes the limitations the risks and with a high probability of unsuccessful results. of both. Their conceptual approach blends development At first glance, ATi’s solutions can be difficult to embrace because of the expertise with advanced technologies in a seamless applications of complex science and advanced technology to address real business SaaS development and delivery predictive analytics needs. Not because they lack merit. Rather, because they do not fit neatly into solution.” the traditional solution model. They are neither a software vendor, nor a consult- ing firm. But they do offer an exceptional opportunity to overcome many of the challenges facing even the experienced predictive analytics solution developer. ATi’s SaaS model provides the expertise that cannot be hired, yet provides solution flexibility that is not dependent on any one given technology or piece of software. You get the best of technology and highest level expertise in one place. 13
  14. 14. More Information About Adaptive Technologies, Inc. (ATi) Adaptive Technologies, Inc. (ATi) was founded in 2001 by two world re- nowned physicists with a passion to use the power of science, human insight and technology to solve real business challenges. From this vision ATi has evolved into an elite, research-driven enterprise combining the skill sets of business profes- sionals, scientists, software engineers and sophisticated data specialists. ATi’s team has created a proprietary predictive analytics platform so leading companies make better data-driven decisions. For details about ATi’s product and services, reference: www.adaptiveinc.com, e-mail info@adaptiveinc.com or call (602) 923-4200. About the Author Thomas A. “Tony” Rathburn is a senior consultant with The Modeling Agency (TMA) and the primary instructor of TMA’s “Data Mining: Level I” (http://www.the-modeling-agency.com/training) course. Tony has worked with commercial and government clients to develop data mining solutions to signifi- cant business applications since the mid 1980’s. Mr. Rathburn delivers custom workshops and consults on a wide range of commercial assignments -- many involving CRM applications. He holds extensive data mining experience in the banking, insurance, and financial industries. Mr. Rathburn’s Experience includes seven years teaching MIS and statistics at both the graduate and undergraduate level while an instructor in the College of Business at Kent State University. Tony’s consulting expertise has been concen- trated in the business utilization of advanced knowledge discovery techniques. He served as Vice President of Applied Technologies for NeuralWare, Inc., a neural network tools and consulting company. He was also the Research Coordinator for LakeShore Trading, Inc., a successful futures and options trading firm on the Chi- cago Board of Trade. Reference details about The Modeling Agency at: www.the-modeling-agency.com or call (281) 667-4200. 14