Decision Management Systems Part One Decision Discovery

How to build Decision ManagementJames Taylor Systems CEO Decision Discovery

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 developing the concept of Decision Management © Decision Management Solutions, 2011 1

Decision Management Systems Introduced

Decisions

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? ©2011 Decision Management Solutions 9

Discovering Decisions

A simple process Age<21 No Class I or II sports Accept low-risk applicant Class II sport Previous Heart Attack, Existing Cancer Decline high-risk applicant 21<=Age<50 Class I sport Process medium-risk Good Medical Record applicant Age>50 1 or fewer Claims Multiple Claims New Customer … Long-standing Customer ©2011 Decision Management Solutions 19

The same process with a decision Low risk Process low-risk applicant Medium risk Determine applicant Process medium-risk type applicant High risk Process high-risk applicant ©2011 Decision Management Solutions 20

Candidate decisions Determine if a customer is eligible for a benefit Validate the completeness of an invoice Calculate the discount for an order Assess the risk of a transaction Select the terms for a loan Choose which claims to Fast Track These are decision words The system must answer a question each time ©2011 Decision Management Solutions 21

Decision to KPI mapping KPIs impacted by improvement in decision Customer Customer Losses Retention KPI 5 Churn Service Budget CallsWhat retention offer shouldbe made? ↑ ↑ ↓ ?What initial price should beoffered? ↑ ↑Should an intervention callbe made? ↓ ↓Decision 3 ?… ©2011 Decision Management Solutions 23

Define decisions Name Repeatability One-off Continuous Description Measurability Poor Specific Time to value A question Immediate Delayed A defined set of allowable Degrees of answers Freedom Few Many Value Range Any other results to be Narrow Gap Wide Gap returned with the answer Timeliness Slow Real-Time Volume Key facts like volume, Few Many complexity, latency ©2011 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 The results of other decisions ©2011 Decision Management Solutions 25

Decision decomposition example Can this customer buy this What is the price of this service? service? Customer Profile Is the service available where this customer lives? Promotions Is there capacity on this Is the customer eligible for Pricing rules service? this service?Geographical Availability Eligibility rules Capacity and Usage Purchase propensity What is the best up sell/cross- sell for this customer? Is there an additional service? What similar service is this customer eligible for? Is there a compelling replacement service? What services are similar to Which services is the requested service? customer eligible for? Churn risk Product hierarchy ©2011 Decision Management Solutions 26

Prioritization of decisions Difference between good and bad decisions? How many decisions a year? What spend is committed based on them? How well can you measure good v bad decisions? What’s it worth … and to whom? ©2011 Decision Management Solutions 27

Learn More

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. Available October 20, 2011For more information about this new release, visit Discount Code: TAYLOR4389www.ibmpressbooks.com/title/9780132884389 ©2011 Decision Management Solutions 29

Check in for the other webinars How to Build Decision Management Systems Part 1 – Decision Discovery Recording will be available Part 2 – Decision Services October 27, 10am Pacific Part 3 – Decision Analysis November 29, 10am Pacific ©2011 Decision Management Solutions 30

Other opportunities to hear me speak SAS Forum Netherlands – October 5, Amsterdam Information Management 2011 – October 12, Copenhagen Predictive Analytics World – October 18, New York eMetrics – October 19, New York Information on Demand – October 24-26, Las Vegas Building Business Capability – October 31-November 1, Miami ©2011 Decision Management Solutions 31

Questions?

Thank You James Taylor, CEOjames@decisionmanagementsolutions.com 34

Decision Management Systems Part One Decision Discovery

by Decision Management Solutions on Sep 21, 2011

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