Decision Yield (InterACT)

Slide 1: EDM Methodology Questions Answered How do we What are the possibilities and How do we get What capabilities must be developed ensure continual potential benefits? there? to realize the benefits? improvement? Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 Stage 6 Stage 7 Build and Modify the Set Strategy & Identify Identify Critical Design Business Build Data Environment Build Mathematical Continually Improve the Operational the Business Decisions & Potential Architecture for Required to Inform Models to Improve Decisioning Environment to Enable Opportunity/Problem Decision Yield Decision Environment Decisions Decisions Environment Decision Execution High H DEVELOPMENT & TR AN SACTION Precision MANAGEMENT EXECUTION F CH ANNE LS Call Center DECISION SERVICE D Web Analytic OP E RAT I ONAL Services SYSTEMS Email C Analytic Business Decision ERP Intelligence Development Alignment Request Tele- Modeler Tools CRM marketing with Direct BILLING G Consist E Decision Cost Mail Current Business Rule & Model Configuration Rules Data SCM User Services Services Store/ Repository & Deployment Tools Offerings Branch Services ency I Kiosk/ IT Tools ATM Field Rules J Management Business User A Tools B Decision Analysis External Data Source(s) Reporting & Adaptive Analytics Services Low Speed Agility Customer Behavior and Data Operational Warehouse Strategy Performance Data Store Low High Revenue Potential What strategic Where are the What are the best What data do we How much can we What does it take Are we realizing        and/or economic important decision analytic methods have? improve our to integrate the expected opportunities are points? Who is to apply to our analytic decision rules – improvements? What data do we  most compelling? making them? decision sets? performance? with consistency – need? Can we identify  How are they into our business Which problems Which specific Which charac- areas for    How do we  made? environment? are most decision areas teristics have the additional efficiently and important? (e.g. strategies, greatest impact on Who owns the on- improvement?  What is our  effectively rules, processes) model outcomes? going current decision What are the most integrate the Are there new   must be management and performance? important necessary data decision-areas to addressed? Is it operationally maintenance of decisions? into our be addressed? Can we improve  feasible? our decision- What capabilities decisioning  decision making in How do we Where and when   making need to be environment? this area? capitalize on the do we invest to environment? created or opportunities? further improve Financial - modified? Who has authority  our decision- Functional - to establish What making ability?  Technical decision rules and - organizational parameters? changes (e.g. What  roles, Who needs to be  improvement is responsibilities, trained in using possible? structure) are these capabilities? required? PATENT PENDING 1 © 2007 Fair Isaac Corporation. © 2007 Fair Isaac Corporation.

Slide 2: To Manage Successfully, You Must Measure Strategic Decisions Made by: board, senior High execs, P&L managers Measure of success: Return on Investment (ROI), Share Price Tactical Decisions Made by: P&L managers, (Semi-) Automated Decisions middle management Value of Made by: automated by CRM and Measure of success: rules management systems or Each manually by call center reps, P&L impact, ROI Decision customer service staff What’s the “missing metric”? Low Low High Volume of Decisions 2 © 2007 Fair Isaac Corporation. © 2007 Fair Isaac Corporation.

Slide 3: Decision Yield: 5 Key Dimensions of (Semi-) Automated Decisions Precision Cost Consistency Speed Agility Best Practice Results Initial 3 © 2007 Fair Isaac Corporation. © 2007 Fair Isaac Corporation.

Slide 4: 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). 4 © 2007 Fair Isaac Corporation. © 2007 Fair Isaac Corporation.

Slide 5: 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 5 © 2007 Fair Isaac Corporation. © 2007 Fair Isaac Corporation.

Slide 6: Illustrative Question How easy is it for you to change the application decision criteria and change or introduce new approval decisions? System is hard- Requires vendor’s Changes to Key elements are Business can coded intervention models, cut-offs parameterised make their own and/or significant and application within application changes to model internal IT processing rules processing and calculations, resources require IT to decisioning strategy rules, change systems model cut-offs parameters in one and application Allows business or more systems, workflow, easily, users to make taking weeks or quickly and in a some changes months controlled way without IT intervention Changes can be made and tested through simulations in hours rather than weeks or months      (Laggard) (Follower) (Leader) 6 © 2007 Fair Isaac Corporation. © 2007 Fair Isaac Corporation.