Implementing analytics? You need business rules

Implementing Analytics? You need Business Rules
James Taylor,
CEO

The power of analytics
Challenges in analytics
Introducing business rules
Integrating business rules and analytics
Decision Management
Wrap Up

©2009 Decision Management Solutions
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The one slide you need
Analytics have great potential, especially in improving day to day operations
Challenges include
taking action with analytics
acting rapidly
engaging the business and IT
supporting monitoring and compliance
Business rules and a business rules management system provide an ideal platform for analytics
Decision Management ties analytics and business rules together in an effective framework

The power of analytics
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Analytics have power
CampaignResponse
AcquisitionRates
Online
Conversion
CustomerChurn
Fraud
Risk

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And that power is operational
How do I…
prevent this customer from churning?
convert this visitor?
acquire this prospect?
make this offer compelling to this person?
identify this claim as fraudulent?
correctly estimate the risk of this loan?
It’s not about “aha” moments
It’s about making better operational decisions

Multiplying the power of analytics
Type
Strategy
Tactics
Operations
Economic impact
Low
High
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Case: Telco
Example: Analytics enabling an individualized decision about the best plan/upgrade offer to make to each customer

Challenges in Analytics
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Knowing is not enough
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Those who know first, win
Those who ACT first, win
Provided they act intelligently

Latency in decisions costs you
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Business event
Decision latency
Action taken

Operational decisions are at the center

Monitoring and compliance matter

Analytics improves operations but…
Power of analytics is in improving operations
Specifically operational decisions
Which means :
Focus on actions not predictions
Minimize the time to impact
Engage analytics, IT, and business teams
Handle monitoring and compliance

Case: Trade credit insurance

Introducing business rules

What are business rules?
“… a directive intended to influence behavior.”
“… a formal expression of knowledge or preference, a guidance system for steering behavior (a transaction) in a desired direction.”
“… statements of the actions you should take when certain business conditions are true.”

Business Rules are everywhere
Policy Manuals
Regulations
Legacy Systems
Experienced Personnel
Historical Data

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Business rules drive decisions
Decision
Policy
Regulations
History
Experience
Legacy Applications

public class Application {private Customer customers[];private Customer goldCustomers[];...public void checkOrder() { for (inti = 0; i < numCustomers; i++) { Customer aCustomer = customers[i]; if (aCustomer.checkIfGold()) {numGoldCustomers++;goldCustomers[numGoldCustomers] = aCustomer; if (aCustomer.getCurrentOrder().getAmount() > 100000)aCustomer.setSpecialDiscount (0.05); } }}
Unmanageable business rules

A Business Rules Management System
RuleRepository
Operational
Database
Testing
Validation and Verification
DecisionService
Deployment
ProductionApplication
Rule Engine
DesignTools
RuleManagementApplications
After Smart (Enough) Systems, Prentice Hall June 2007. Fig 6.6

Manageable business rules
Smart (Enough) Systems, Prentice Hall June 2007. Fig 4.3

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Rule Sheets
Set of rules that share common action(s)
Sequence does not matter
Typically exhaustive and exclusive
Sometimes called a decision table, rule family

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Decision Table
Set of rules that return a single result
Look up tables, comparing attribute values
Sequence does not matter

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Decision Tree
Set of rules that select a goal from a set
Divides into increasingly fine grained groups
Often a powerful thinking tool
YN
YN
YN

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A list of rules representing a rule set

Why manage business rules

Cross-channel coordination ensures that all relevant offers, including loyalty programs, are combined at the point of sale, with consistent pricing rules applied.
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Case: International retailer

Integrating business rules and analytics

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Different kinds of analytics
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High income,low-moderate education
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Moderate education,low income, middle-aged
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Low education,low income
Data Mining
Predictive Analytics
Business Intelligence
Who are my best/worst customers? How do I turn my data into rules for better decisions?
How do I use data to learn about my customers? What has been happening in my business?
How are those customers likely to behave in the future? How do they react to the myriad ways I can “touch” them?
Knowledge - Description
Action - Prescription

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Your data is a source of insight

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High
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Insights must drive action

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Descriptive analytics

Predictive analytics

Scorecards are a powerful tool
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Building Decision Services
OperationalData Store
Business Analytics
Decision Service
DataWarehouse
ProductionProcess
BusinessRules
Enterprise IT Infrastructure
Events
AdaptiveControl

Case: Underwriting

Analytics improves operations but…
Power of analytics is in improving operations
Specifically operational decisions
Which means:

Decision Management

Decision Management
An approach or business discipline for automating and improving decision-making
It improves day to day business results by
Supporting
Automating and
Improving operational decisions
It builds on existing enterprise applications to
put data to work
manage uncertainty
increase transparency
give the business control

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Delivering Decision Management
3 stages to better operational decisions
Create a “closed loop” between operations and analytics to measure results and drive improvement
Design and build independent decision processes to replace decision points embedded in operational systems
Identify the decisions (usually about customers) that are most important to your operational success

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5 core principles of decisioning
Identify, separate and manage decisions
Use business rules to define decisions
Analytics to make decisions smarter
No answer is static
Decision-making is a process

Case: State dept of taxation
Business challenges
Solution
Benefits
Paper tax returns increased costs and slowed responses
Information system silos
Manual fraud detection and return review
Single central taxpayer database
Integrated system
Sophisticated real-time predictive analytics
Recovered millions of dollars from dubious tax returns
Increased collection of unpaid taxes
Decreased number of questionable returns
Increased customer satisfaction

Wrap Up

The one slide you need
Analytics have great potential, especially in improving day to day operations
Challenges include
taking action with analytics
acting rapidly
engaging the business and IT
supporting monitoring and compliance
Business rules and a business rules management system provide an ideal platform for analytics
Decision Management ties analytics and business rules together in an effective framework
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Action Plan
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Decision Management Solutions
Decision Management Solutions can help you
Focus on the right decisions
Implement a blueprint
Define a strategy
For assistance, to find out more or if you have questions
decisionmanagementsolutions.com/learnmore
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Implementing analytics? You need business rules

by Decision Management Solutions on Dec 14, 2010

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Implementing analytics? You need business rules — Presentation Transcript