Putting Analytics to Work Overcoming the challenges of putting analytics to work in information systems James Taylor Principal Smart (enough) Systems LLC September 2008

Agenda Getting value by impacting systems Decisions, decisions, decisions Challenges Recommendations

Getting value by impacting systems

Decisions, decisions, decisions

Challenges

Recommendations

Why Smarter Systems? Decision-Making Well-Defined Increasingly Complex Timeliness Days Real-time Objectives Local and clear Complex Trade-Offs Regulations National and simple Complex and global Changes to Strategy Every 3-5 Years Constant Operational Volume Low High

So What IS A Smarter System Operational Real-Time Rapidly evolving - agile Learning Demonstrably Compliant Cost-Effective Business-Driven

Operational

Real-Time

Rapidly evolving - agile

Learning

Demonstrably Compliant

Cost-Effective

Business-Driven

Smarter Systems Make More Decisions People Not Made Embedded People Embedded Not Made New Before After Larger boxes represent more decisions, by volume

Different kinds of decisions Low High High ECONOMIC IMPACT OF INDIVIDUAL DECISION Low DECISION VOLUME High-value, low-volume decisions Medium-value, medium-volume decisions Low-value, high-volume decisions

Decisions, Decisions, Decisions

Analytics put the “smarts” in smarter systems Automate Decision Apply policies, regulations Segment customers Predict risk, value Optimize decision Web http://www.f Email Call Center Mobile

Automate Decision

Apply policies, regulations

Segment customers

Predict risk, value

Optimize decision

Putting Analytics To Work – More Examples Process Automation Analytics Commercial Loans Capture and validate data Apply policies and regulations Order additional reports Manage worklists Dispatch outcomes Turn historical payment data into an assessment of this prospect’s credit risk Segment prospects based on statistically significant factors Sales Capture sales order Calculate pricing, discounts Display cross-sell offer Capture payment information Process order Display delivery estimate Dispatch goods Optimize price to maximize value Identify the cross-sell offer most likely to be successful Predict likelihood of on-time delivery Returns Capture return Validate that return does not violate policy Make exception if appropriate Process refund or store credit Calculate risk of fraudulent return Calculate likely future value of customer when considering exception

Challenges Predictions into actions Time to deploy The business IT Impact analysis Monitoring Compliance

Predictions into actions

Time to deploy

The business

IT

Impact analysis

Monitoring

Compliance

Turning predictions into actions Those who know first, win Those who ACT first, win Provided they act intelligently

Takeaways Better decisions require actions, outcomes, not just predictions

Better decisions require actions, outcomes, not just predictions

Time to deploy models

Takeaways Better decisions require actions, outcomes, not just predictions Consider your analytics “done” only once they are impacting the business

Better decisions require actions, outcomes, not just predictions

Consider your analytics “done” only once they are impacting the business

The Business

Takeaways Better decisions require actions, outcomes, not just predictions Consider your analytics “done” only once they are impacting the business Only business users can truly decide if one approach is better than another. Teach them adaptive control, give them simple interfaces, project business results

Better decisions require actions, outcomes, not just predictions

Consider your analytics “done” only once they are impacting the business

Only business users can truly decide if one approach is better than another. Teach them adaptive control, give them simple interfaces, project business results

IT Attribute Data Design Application Database Historical Data

Takeaways Better decisions require actions, outcomes, not just predictions Consider your analytics “done” only once they are impacting the business Only business users can truly decide if one approach is better than another. Teach them adaptive control, give them simple interfaces, project business results Broad adoption of analytics in operational systems requires analysts to reach out and educate IT

Better decisions require actions, outcomes, not just predictions

Consider your analytics “done” only once they are impacting the business

Only business users can truly decide if one approach is better than another. Teach them adaptive control, give them simple interfaces, project business results

Broad adoption of analytics in operational systems requires analysts to reach out and educate IT

Impact analysis for changes, new data

Takeaways Better decisions require actions, outcomes, not just predictions Consider your analytics “done” only once they are impacting the business Only business users can truly decide if one approach is better than another. Teach them adaptive control, give them simple interfaces, project business results Broad adoption of analytics in operational systems requires analysts to reach out and educate IT Work with IT to develop a common impact analysis approach so that data changes don’t break models

Better decisions require actions, outcomes, not just predictions

Consider your analytics “done” only once they are impacting the business

Only business users can truly decide if one approach is better than another. Teach them adaptive control, give them simple interfaces, project business results

Broad adoption of analytics in operational systems requires analysts to reach out and educate IT

Work with IT to develop a common impact analysis approach so that data changes don’t break models

Monitoring

Takeaways Better decisions require actions, outcomes, not just predictions Consider your analytics “done” only once they are impacting the business Only business users can truly decide if one approach is better than another. Teach them adaptive control, give them simple interfaces, project business results Broad adoption of analytics in operational systems requires analysts to reach out and educate IT Work with IT to develop a common impact analysis approach so that data changes don’t break models Monitor decisions closely and be part of improving them

Better decisions require actions, outcomes, not just predictions

Consider your analytics “done” only once they are impacting the business

Only business users can truly decide if one approach is better than another. Teach them adaptive control, give them simple interfaces, project business results

Broad adoption of analytics in operational systems requires analysts to reach out and educate IT

Work with IT to develop a common impact analysis approach so that data changes don’t break models

Monitor decisions closely and be part of improving them

Compliance

Takeaways Better decisions require actions, outcomes, not just predictions Consider your analytics “done” only once they are impacting the business Only business users can truly decide if one approach is better than another. Teach them adaptive control, give them simple interfaces, project business results Broad adoption of analytics in operational systems requires analysts to reach out and educate IT Work with IT to develop a common impact analysis approach so that data changes don’t break models Monitor decisions closely and be part of improving them When compliance is an issue, focus on models with concrete execution and rules that can be logged

Better decisions require actions, outcomes, not just predictions

Consider your analytics “done” only once they are impacting the business

Only business users can truly decide if one approach is better than another. Teach them adaptive control, give them simple interfaces, project business results

Broad adoption of analytics in operational systems requires analysts to reach out and educate IT

Work with IT to develop a common impact analysis approach so that data changes don’t break models

Monitor decisions closely and be part of improving them

When compliance is an issue, focus on models with concrete execution and rules that can be logged

Action Items Decisions Education Architecture Rules / Execution Constant Improvement

Decisions are at the heart of three groups

Smart (Enough) Systems – The Book How key business trends impact the decision-making process Why organizations need systems smart enough to cope with these trends How decision automation can make their systems smart enough How to translate decisions into a corporate asset and competitive advantage The ROI and business impact of better decisions and smarter systems The core concepts and technologies needed and how they work together The book is full of insightful examples of problems solved by applying Enterprise Decision Management across various industries and outlines a practical and incremental method for implementing the technology.

How key business trends impact the decision-making process

Why organizations need systems smart enough to cope with these trends

How decision automation can make their systems smart enough

How to translate decisions into a corporate asset and competitive advantage

The ROI and business impact of better decisions and smarter systems

The core concepts and technologies needed and how they work together

Thank You James Taylor [email_address] http://www.smartenoughsystems.com Blog: http://www.smartenoughsystems.com/wp