EDM Methodology Questions Answered What are the possibilities and potential benefits? What capabilities must be developed to realize the benefits? Set Strategy & Identify the Business Opportunity/Problem What strategic and/or economic opportunities are most compelling? Which problems are most important? What are the most important decisions? How do we capitalize on the opportunities? Identify Critical Decisions & Potential Decision Yield Where are the important decision points? Who is making them? How are they made? What is our current decision performance? Can we improve decision making in this area? Financial Functional Technical What improvement is possible? How do we get there? Design Business Architecture for Decision Environment What are the best analytic methods to apply to our decision sets? Which specific decision areas (e.g. strategies, rules, processes) must be addressed? What capabilities need to be created or modified? What organizational changes (e.g. roles, responsibilities, structure) are required? Build and Modify the Operational Environment to Enable Decision Execution What does it take to integrate decision rules – with consistency – into our business environment? Who owns the on-going management and maintenance of our decision-making environment? Who has authority to establish decision rules and parameters? Who needs to be trained in using these capabilities? Build Mathematical Models to Improve Decisions How much can we improve our analytic performance? Which charac-teristics have the greatest impact on model outcomes? Is it operationally feasible? Build Data Environment Required to Inform Decisions What data do we have? What data do we need? How do we efficiently and effectively integrate the necessary data into our decisioning environment? How do we ensure continual improvement? Continually Improve the Decisioning Environment Are we realizing the expected improvements? Can we identify areas for additional improvement? Are there new decision-areas to be addressed? Where and when do we invest to further improve our decision-making ability? Precision Cost Consistency Speed Agility Stage 7 Stage 6 Stage 5 Stage 4 Stage 3 Stage 2 Stage 1 PATENT PENDING

What strategic and/or economic opportunities are most compelling?

Which problems are most important?

What are the most important decisions?

How do we capitalize on the opportunities?

Where are the important decision points? Who is making them? How are they made?

What is our current decision performance?

Can we improve decision making in this area?

Financial

Functional

Technical

What improvement is possible?

What are the best analytic methods to apply to our decision sets?

Which specific decision areas (e.g. strategies, rules, processes) must be addressed?

What capabilities need to be created or modified?

What organizational changes (e.g. roles, responsibilities, structure) are required?

What does it take to integrate decision rules – with consistency – into our business environment?

Who owns the on-going management and maintenance of our decision-making environment?

Who has authority to establish decision rules and parameters?

Who needs to be trained in using these capabilities?

How much can we improve our analytic performance?

Which charac-teristics have the greatest impact on model outcomes? Is it operationally feasible?

What data do we have?

What data do we need?

How do we efficiently and effectively integrate the necessary data into our decisioning environment?

Are we realizing the expected improvements?

Can we identify areas for additional improvement?

Are there new decision-areas to be addressed?

Where and when do we invest to further improve our decision-making ability?

To Manage Successfully, You Must Measure Volume of Decisions Value of Each Decision Low High Low High What’s the “missing metric”? Strategic Decisions Made by: board, senior execs, P&L managers Measure of success: Return on Investment (ROI), Share Price Tactical Decisions Made by: P&L managers, middle management Measure of success: P&L impact, ROI (Semi-) Automated Decisions Made by: automated by CRM and rules management systems or manually by call center reps, customer service staff

Decision Yield: 5 Key Dimensions of (Semi-) Automated Decisions Precision Cost Consistency Speed Agility Best Practice Results Initial

Overview Decision Yield is designed to evaluate automated decisions which are typically: Customer-facing —from approving loans to pricing insurance to determining cross-sell offers. Very frequent —often many thousands of times a day. Driven by strategies and rules , and often supported by predictive models, decision models and optimization. Executed in real-time (credit overlimit approval) or in batch mode (matching an offer with a prospect).

Decision Yield is designed to evaluate automated decisions which are typically:

Customer-facing —from approving loans to pricing insurance to determining cross-sell offers.

Very frequent —often many thousands of times a day.

Driven by strategies and rules , and often supported by predictive models, decision models and optimization.

Executed in real-time (credit overlimit approval) or in batch mode (matching an offer with a prospect).

Decision Performance Audit Multiple-choice questions Some questions “process-oriented” Others “outcome-oriented” Addressing core stages of process under investigation Each question addresses one or more dimensions of Decision Yield: Same dimension may be addressed through multiple questions Responses defined on a scale of 1-5: Laggard – 1 out of 5: Very weak level of performance Follower – 3 out of 5 : Average or middling standard Leader – 5 out of 5 : Best practice in the industry

Multiple-choice questions

Some questions “process-oriented”

Others “outcome-oriented”

Addressing core stages of process under investigation

Each question addresses one or more dimensions of Decision Yield:

Same dimension may be addressed through multiple questions

Responses defined on a scale of 1-5:

Laggard – 1 out of 5: Very weak level of performance

Follower – 3 out of 5 : Average or middling standard

Leader – 5 out of 5 : Best practice in the industry

Illustrative Question How easy is it for you to change the application decision criteria and change or introduce new approval decisions? (Leader) (Follower) (Laggard)      Business can make their own changes to model calculations, strategy rules, model cut-offs and application workflow, easily, quickly and in a controlled way Changes can be made and tested through simulations in hours rather than weeks or months Key elements are parameterised within application processing and decisioning systems Allows business users to make some changes without IT intervention Changes to models, cut-offs and application processing rules require IT to change parameters in one or more systems, taking weeks or months Requires vendor’s intervention and/or significant internal IT resources System is hard-coded