Enterprise Decision Management the final step in decomposing applications for your SOA Mark Layden VP/GM, EDM Technologies Fair Isaac November 7, 2006

The ever changing enterprise Application The App

The ever changing enterprise Application Data Process Logic User Interface

The ever changing enterprise Application 10 1 010 1 1 01 1 01 10 1 10 1 10 10 1010 1 Data 0 0 0 1 10 1 10 1 10 01 1 01 1 10 0 10 1 010 Process Logic User Interface

The ever changing enterprise Application Data Process Logic User Interface

The ever changing enterprise Application Data Process Logic User Interface BPM Browser Enterprise Database

How can we evolve the Logic of applications? Logic Decision Services A self-contained, callable service with a view of all the conditions and actions that need to be considered to make an operational business decision What is a decision service? A service that answers a business question for other services What does it look like when an organization excels with decision services?

Enterprise Decision Management Enterprise Decision Management (EDM) is a systematic approach to automating and improving decisions across the enterprise. It allows businesses to: Make more profitable and targeted decisions PRECISION In the same way, over and over again CONSISTENCY While being able to adapt “on-the-fly” AGILITY

Enterprise Decision Management (EDM) is a systematic approach to automating and improving decisions across the enterprise.

It allows businesses to:

Implementing an effective decision Analysis Identify patterns that guide decisions Design Create strategies that produce better future results Deploy Automate strategies and processes to make real-time decisions Data Collect complete past and current information

The core disciplines of decision management Make instant, consistent decisions in real time, across the enterprise Software for defining, testing and executing rules, processes and strategies Business Rules Management Systems Design strategies that increase profit, response, other key metrics Analytic techniques for identifying best actions or treatments to meet objective under constraints Decision Analysis and Optimization Improve risk assessment Target marketing opportunities Prevent fraud losses Analytics for forecasting future individual behavior Predictive Modeling Improve speed and quality of decisions Services to acquire, access, deliver and manage data from internal and external sources Data Access and Management USES DESCRIPTION TECHNOLOGY

Operational decisions across the enterprise Models Rules Analytic Models Business Rules Decision Service Data Request for Decision Decision Decision Analysis Customer Behavior and Strategy Performance Rule & Model Repository http://ww Call Center Web Email Telemarketing CHANNELS Direct Mail Store / Branch Kiosk / ATM Field ERP CRM OPERATIONAL SYSTEMS Billing SCM

EDM Roles and Functions Models Rules Analytic Models Business Rules Decision Service Data Request for Decision Decision Decision Analysis Customer Behavior and Strategy Performance Analytic Modeling Deployment Control Rules Authoring Portfolio Optimization Rule & Model Repository http://ww Call Center Web Email Telemarketing CHANNELS Direct Mail Store / Branch Kiosk / ATM Field ERP CRM OPERATIONAL SYSTEMS Billing SCM

Our recipe for successful Enterprise Decision Management Analyze decisions’ potential for improvement (Decision Yield) Remove decision process from production applications Integrate decision services Apply predictive and decision analytics Give business users a simple interface to maintain and change business rules Provide change management and evolutionary guidance

Analyze decisions’ potential for improvement (Decision Yield)

Remove decision process from production applications

Integrate decision services

Apply predictive and decision analytics

Give business users a simple interface to maintain and change business rules

Provide change management and evolutionary guidance

Streamlining Operations in Insurance Automated more than 3,000 underwriting rules Update strategies, policies and rules easily, without programming Processing 99% of new policy applications automatically Held expenses down as applications grew by 35% and agents accessing the system tripled of the top 50 U.S. P&C insurers use Fair Isaac technology 70% insurers and healthcare payers worldwide use Fair Isaac technology 400+

Automated more than 3,000 underwriting rules

Update strategies, policies and rules easily, without programming

Processing 99% of new policy applications automatically

Held expenses down as applications grew by 35% and agents accessing the system tripled

Fighting Fraud in Telecommunications Cut fraud losses in half with fewer “false positives” Prevented $14 million in early-life bad debt in one year Return on investment of 100% in less than four months transactions are reviewed every day by one provider using our network analytics 1.5 billion of all roaming cellular call records in North America are processed with our technology 90%

Cut fraud losses in half with fewer “false positives”

Prevented $14 million in early-life bad debt in one year

Return on investment of 100% in less than four months

Legacy Renewal for Motor Vehicle Agency 2,000+ rules applied to 70,000 transactions a day generating $4B in revenue 13,000 hours of maintenance saved in the first year 90% reduction in problem resolution time Reuse across batch, 170 offices, new web service Government agencies world wide use Fair Isaac solutions 80

2,000+ rules applied to 70,000 transactions a day generating $4B in revenue

13,000 hours of maintenance saved in the first year

90% reduction in problem resolution time

Reuse across batch, 170 offices, new web service

Does this sound like your business? Decision-Making Boundaries Well-Defined Cross Channels / Geography / Departments Timeliness of Decisions Days Real-time / Point of Contact Level of Objectives Local / Simple Corporate Objectives / Trade-Offs Regulatory Constraints Static / Simple Dynamic / Complex Changes to Decision Strategy Every 3-5 Years Frequent Adjustments Value Creation Workforce Productivity Precision / Consistency / Agility / Cost / Speed Operational Volume Low / Manual High / Automated

Decision Yield The value of improving your decisions As discussed in Harvard Business Review, June 2005

Operational decisions are everywhere Buy or use a cell phone Submit a medical claim Use a credit/debit card Use an ATM Buy or refinance a home Make online purchases Take out auto insurance File for workers’ comp

Organizations such as Amazon, Harrah’s, Capital One, and the Boston Red Sox have dominated their fields by deploying industrial-strength analytics across a wide variety of activities. In essence, they are transforming their organizations into armies of killer apps and crunching their way to victory. “ ”

EDM Market Definition The Enterprise Decision Management market is defined as … the software, services and data which are used to automatically make a discrete decision or recommendation for action, which includes elements of uncertainty, and occurs in large transaction volumes. These decisions are repeatable and have a measurable value associated with them . Even if the action is not automatic there must be a recommendation that is relatively automatically generated Automatically make a discrete decision There must be a clear financial value or financial risk associated with the decision to the enterprise Measurable value associated with each transaction Similar decisions need to be repeated on a regular basis, potentially hundreds of times in an hour (such as credit card approvals), or at least several times each day Large transaction volumes, repeatable Some element of judgment or analytics are required Includes elements of uncertainty Some action, most likely with a third party must be taken (e.g. a loan approved, a part ordered) Results in a decision or recommendation for action

The Enterprise Decision Management market is defined as

… the software, services and data which are used to automatically make a discrete decision or recommendation for action, which includes elements of uncertainty, and occurs in large transaction volumes. These decisions are repeatable and have a measurable value associated with them .

The Worldwide EDM Market Size The Worldwide EDM market is over twice the size of the North America market and grows at a slightly lower rate NORTH AMERICA AND WORLDWIDE MARKET Market Size $, billions Worldwide North America Type 10% 11% Annual Growth %

We make decisions smarter Fair Isaac is the leader in Enterprise Decision Management powered by advanced analytics #1 - Worldwide Services Operations Analytic Applications Software Revenue #1 - Worldwide Business Rules Management Software Revenue