From Business Intelligence to Predictive Analytics

From Business Intelligence to Predictive AnalyticsJames Taylor, CEO

Your presenter – James Taylor CEO of Decision Management Solutions Works with clients to improve their business by applying analytics and analytic technology to automate and improve decisions Spent the last 9 years developing the concept of Decision Management 20 years experience in all aspects of software including time in FICO, PeopleSoft R&D, Ernst & Young ©2011 Decision Management Solutions 2

AGENDA 1 2 Business Intelligence Today Introducing Predictive Analytics 3 Predictive Analytics in Operations 4 5 6 Decision Tips for Success Wrap and next Management steps Technologies

The one slide you need Business Intelligence and Predictive Analytics add value by improving decisions Predictive Analytics improves operational decisions in particular Decision Management is a proven approach for applying predictive analytics in operations Decision Management takes you from Business Intelligence to Predictive Analytics ©2011 Decision Management Solutions 4

Business Intelligence today

The value is of BI is better decisions BI adds value by delivering intelligence about your business that enables better decisions Individualized customer interactions, targeted offers, fraud detection, risk based pricing, dynamic routing… ©2011 Decision Management Solutions 8

A focus on the past works … for people Challenge Decisions impact the future Data summarizes the past 10 People See patterns 5 Extrapolate 0 Day Day Day Day Day Day Day Day Day 1 2 3 4 5 6 7 8 9 Day 1 Day 2 Day 3 ©2011 Decision Management Solutions 10

IntroducingPredictiveAnalytics

Different kinds of analyticsBusiness Intelligence Descriptive Analytics Predictive Analytics * * * * * * * * * * * * * * * ** * *** * * * * * * * * ** ** * * * * * * * * * * ** * * * * ** * * *How do I use data to Who are my How are thoselearn about my best/worst customers likely tocustomers? What customers? How do behave in thehas been happening I turn my data into future? How do theyin my business? rules for better react to the myriad decisions? ways I can “touch” them?Knowledge - Description Action - Prescription ©2011 Decision Management Solutions 12

What can predictive analytics do? They can automatically discover patterns in data Patterns that show problems Patterns that identify opportunities They can predict trends or likely future behavior They can be used to identify population segments They turn uncertainty about the future into usable probability ©2011 Decision Management Solutions 13

Descriptive analytics group and cluster High Income High income, low-moderate education * * Moderate-high educationLow-moderate * * * * *income, young * * low-moderate income * * * * * * * * * * * * * * * * * * * * * * * * * * Education * High * * * * * Moderate education, * * * * * low income, middle-aged * * * * * * * * High Low education, low income ©2011 Decision Management Solutions 14

Proven use cases for Predictive Analytics Identify cross-sell opportunities Predict cancellation Predict likely interests Predict what a customer might want to do next Predict lifetime value Predict someone is not who they say they are Predict non-responders Predict riskiness of a customer ©2011 Decision Management Solutions 16

Predictiveanalytics inoperations

But predictions matter in operations How likely is this customer to churn? How likely is this offer to convert this visitor? How likely is it that this claim is fraudulent? What is the risk that this loan will not be paid? Which offer is likely to retain this customer? How likely is this person to respond to this? Is this person who they say they are? ©2011 Decision Management Solutions 20

Predictive Analytics must be applied ? * ** * ** * * * * * * * * * ** * * ** * * * ** * * * * * * * * ** * * * * * * * ** * * * * ** * * * Predictive Analytics must be executable at a decision point ©2011 Decision Management Solutions 21

Steps to decision management 3 stages to better operational decisions Create a “closed loop” between operations and Design and build analytics to independent measure results decision and drive processes to improvement Identify the replace decision decisions (usually points embedded about customers) in processes that are critical to your operational processes ©2011 Decision Management Solutions 24

Analytic operational decisionsRisk decisions Opportunity decisions How risky is this deal How profitable might this and what should we do? customer be? Predict risk of a bad outcome Predict response, Rigorous, regulated opportunity, potential Rapidly evolving Fraud decisions How likely is this to be fraudulent? Predict risk of fraud “Black box” ©2011 Decision Management Solutions 26

Decision Analysis Decision Analysis is NOT maintenance work Decision Analysis is about making decisions better Increase profit Reduce losses Improve retention … A process for formal and continual review and improvement ©2011 Decision Management Solutions 28

Technologiesfor DecisionManagement

Technologies for managing decisions Business Process Management, Enterprise Applications Web Services Visualization Decision Service BI Descriptive Predictive Decision Performance Analytics Analytics Analysis Management Database Business Rules Data Warehouse Enterprise Platform ©2011 Decision Management Solutions 30

Data Mining and Predictive Analytics Business Process Management, Enterprise Applications Web Services Visualization Decision Service BI Descriptive Predictive Decision Performance Analytics Analytics Analysis Management Database Business Rules Data Warehouse Enterprise Platform ©2011 Decision Management Solutions 31

Business Rules Management Business Process Management, Enterprise Applications Web Services Visualization Decision Service BI Descriptive Predictive Decision Performance Analytics Analytics Analysis Management Database Business Rules Data Warehouse Enterprise Platform ©2011 Decision Management Solutions 32

Data Infrastructure Business Process Management, Enterprise Applications Web Services Visualization Decision Service BI Descriptive Predictive Decision Performance Analytics Analytics Analysis Management Database Business Rules Data Warehouse Enterprise Platform ©2011 Decision Management Solutions 33

Performance Management Business Process Management, Enterprise Applications Web Services Visualization Decision Service BI Descriptive Predictive Decision Performance Analytics Analytics Analysis Management Database Business Rules Data Warehouse Enterprise Platform ©2011 Decision Management Solutions 34

Tips for success

Focus on detailed data Monthly Totals400300 Summaries can200100 obscure 0 Store, integrate, clean and use the details of behavior Daily Minutes in May 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ©2011 Decision Management Solutions 38

Adopt Business Rules Management Business Rules Management Systems give you Visible, business friendly analytic implementation Platform for all three groups to share Rapid deployment Support for defining actions If customer is GoldCustomer and Home_Equity_Loan_Value is more than $100,000 then college_loan_discount = 0.5% If member has greater than 3 prescriptions and prescription’s renewal_date is less than 30 days in the future then set reminder=“email” If patient’s age is less than 18 and member’s coverage is “standard” and member’s number_of_claims does not exceed 4 then set patient’s coverage to “standard” ©2011 Decision Management Solutions 40

Wrap Up

The one slide you need Business Intelligence and Predictive Analytics add value by improving decisions Predictive Analytics improves operational decisions in particular Decision Management is a proven approach for applying predictive analytics in operations Decision Management takes you from Business Intelligence to Predictive Analytics ©2011 Decision Management Solutions 42

Action Plan Identify your decisions before applying Predictive Analytics Focus Predictive Analytics on operations Adopt Business Rules as a platform for Predictive Analytics ©2011 Decision Management Solutions 43

Decision Management Solutions Decision Management Solutions can help you Focus on the right decisions Implement a technology blueprint Build decisioning systems For assistance, to find out more or if you have questions james@decisionmanagementsolutions.com http://www.decisionmanagementsolutions.com http://jtonedm.com @jamet123 or @decisionmgt ©2011 Decision Management Solutions 44

Thank you! James Taylor, CEO james@decisionmanagementsolutions.comwww.decisionmangementsolutions.com/learnmo re

From Business Intelligence to Predictive Analytics

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