Decision analytics: More than BI and Web Analytics

Decision Analytics More than BI and web analytics
James Taylor,
CEO

Your presenter
CEO of Decision Management Solutions
We work with clients to improve their business by applying analytics and analytictechnology to automate and improve decisions
Spent the last 8 years developing the concept of Decision Management
20 years experience in all aspects of software including time in FICO, PeopleSoft R&D, Ernst & Young
2
©2010 Decision Management Solutions

The world of analytics
Challenges in Business Intelligence
Limitations of Web Analytics
Problems with Advanced
Analytics
The Decision Management Solution
Wrap Up

4
The one slide you need
Analytics is an overused term
More than just reports, dashboards, web analytics
Data mining, predictive analytics have potential
All these kinds of analytics have challenges
Analytics must focus on decisions, especially operational decisions to add value
Decision Management is a framework to put analytics to work
That let's you “begin with the decision in mind”

The world of analytics

The term analytics is overused
Reports of all kinds
Dashboards
Online Analytical Processing or OLAP
Data Visualization
Web analytics
Data mining and predictive analytics
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Reports
Repeatable set of data as information.
Delivered on a schedule or on-demand
Fixed or interactive
7

Dashboards
Collection of elements in a portal or page
Designed for rapid information access
Often compared to a car or plane dashboard
Really just an instrument cluster
KPIs are common topics
Increasingly real-time
8

Online Analytical Processing (OLAP)
Designed to rapidly answer complex queries
A multi-dimensional data model is specified
Dimensions can be used in the analysis
“De-normalizes” data
Results and aggregations are often pre-calculated for speed
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Visualizations
Help you see hidden information patterns
Use graphic design, visual clues to show meaning
Rely on human ability to understand patterns
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Web analytics
Collect, analyze and report on internet data
Understand and optimize websites
Understand impact of offline activities
Market research

Advanced analytics
Descriptive Analytics
Classify or categorize individuals or entities
Examples:
Decision tree
Cluster model
Segmentation
“Data Mining”
Predictive Analytics
Predict future behavior of individual
Examples
Credit or risk score
Neural network
Additive scorecard
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Analytics simplify data to amplify its meaning.
“
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HighIncome
High income,low-moderate education
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Moderate-high educationlow-moderate income
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Low-moderateincome, young
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Moderate education,low income, middle-aged
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Low education,low income
Descriptive analytics
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Predictive analytics
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Predictive analytics turn uncertainty into usable probability.
“
”
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Challenges in Business Intelligence

Knowing is not enough
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Those who know first, win
Those who ACT first, win
Provided they act intelligently

Is the value of BI …
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Software?
Web Analytics
ETL
MDM
Reporting
OLAP

Is the value of BI …
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Timely and reliable data?
Such as reports, dashboards etc

No. The value is of BI is
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Intelligence about your business,
That enables better decisions
such as individualized customer interactions across multiple channels, targeted offers, fraud detection…

Limitations of Web Analytics

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Some typical web analytics questions
How much traffic is coming to our website?
I want a conversion rate
I want a path analysis for our visitors
I want to the list of top exit pages on our website
How many web leads did we get this month?
What are the click-through rates for promotions?
Thanks to AvinashKaushik at Occam’s Razor

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Instead you need business questions
According to Avinash , business questions:
Are open-ended and at a much higher level
Require you to go outside your current systems and sources to look for data and to measure success
Rarely include columns and rows for your data

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How can I improve revenue by 15 percent in the next three months from our website?
What are the most influential buckets of content on our website?
Do fully featured trials or Flash demos work better on the website?
What is the effect of our website on our offline sales?
What offers should I make to which visitors to boost revenue?
What content should I display to which visitor to maximize conversion?
Which visitors should get demos and which should get trials?
What cross-sell offer should I make to minimize cannibalization
But you need actionable questions

Problems with Advanced Analytics

HighIncome
High income,low-moderate education
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Moderate-high educationlow-moderate income
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Low-moderateincome, young
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Education
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Moderate education,low income, middle-aged
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High
Low education,low income
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Analytic insights must drive action
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Latency in decisions costs you
Business event
Decision latency
Action taken

So time to deploy models matters
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Operational decisions are at the center
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Monitoring and compliance are tricky
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Decision Management

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Think differently about analytics
It’s not the data and reports and visualizations that matter
It’s the decisions your company is able to make because of them.

“
Making information more readily available is important, but making better decisions based on information is what pays the bills.
”
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What is a decision?
Data is gathered, considered
A choice or selection is made
That results in a commitment to action

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Different kinds of decisions
Type
Strategy
Tactics
Operations
Economic impact
Low
High

“
Most discussions of decision making assume that only senior executives make decisions or that only senior executives’ decisions matter. This is a dangerous mistake
”
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Micro decisions for customer-centricity
Make each decision for each customer
Don’t treat everyone the same, treat them uniquely
How many decisions are involved in sending a letter to 10,000 customers?
Just a few design decisions
Or 10,000 micro decisions - one per customer

Blow up your home page
“
”
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Decision Management
An approach or business discipline for automating and improving decision-making
It improves day to day business results by
Supporting
Automating and
Improving operational decisions
It builds on existing enterprise applications to
put data to work
manage uncertainty
increase transparency
give the business control
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Delivering Decision Management
3 stages to better operational decisions
Create a “closed loop” between operations and analytics to measure results and drive improvement
Design and build independent decision processes to replace decision points embedded in operational systems
Identify the decisions (usually about customers) that are most important to your operational success

5 principles of decision management
Little decisions add up so focus on operational decision making
The purpose of information is to decide so put your data and analytics to work
You cannot afford to lock up your logic so externalize it as business rules
No answer, no matter how good, is static so experiment, challenge, simulate, learn
Decision Making is a process so manage it
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Don’t start by focusing on the data
Better decision
Analytic insight
Derived information
Available data
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Start by focusing on the value
Better decision
Analytic insight
Analytic insight
Derived information
Derived information
Available data
Available data
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Think decision services
ExternalData
Analytics
Web Data
HistoricalData
Ask a question about a customer
Decision Service
BusinessRules
Give an answer about a customer
DecisionAnalysis

The evolution of a retention offer
http://www.f
Web
Call Center
Email
Mobile
Automate Decision
Apply rules
Close the Loop
Segment customers
Decision analysis
Predict risk, value
Optimize decision
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Wrap Up

The one slide you need
Analytics is an overused term
More than just reports, dashboards, web analytics
Data mining, predictive analytics have potential
All these kinds of analytics have challenges
Analytics must focus on decisions, especially operational decisions to add value
Decision Management is a framework to put analytics to work
That let's you “begin with the decision in mind”
48

Action Plan
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Decision Management Solutions
Decision Management Solutions can help you
Focus on the right decisions
Implement a blueprint
Define a strategy
For assistance, to find out more or if you have questions
decisionmanagementsolutions.com/learnmore
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Decision analytics: More than BI and Web Analytics

by Decision Management Solutions on Dec 13, 2010

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Decision analytics: More than BI and Web Analytics — Presentation Transcript