Putting Predictive Analytics To Work

Putting predictive analytics to work
James Taylor,
CEO

The ROI of better operational decisions
Analytics and operational decisions
Challenges in putting predictive analytics to work
Decision Management
Next Steps

The One Slide You Need
Better operational decisions yield high ROI
Analytics can improve operational decisions
You need to
Focus on actions
Deploy rapidly
Engage business and IT
Decision Management
Focuses on decisions,
Combines business rules with analytics
Puts predictive analytics to work

Better operational decisions offer high ROI

©2009 Decision Management Solutions
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There are different types of decisions
High-value, low-volume decisions
Medium-value, medium-volume decisions
Low-value, high-volume decisions
High
ECONOMIC IMPACT
Low
Low High
DECISION VOLUME
After Smart (Enough) Systems, Prentice Hall 2007

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Small improvements add up

“The essence of strategy is choosing to perform activities differently than rivals do.”
Dr. Michael Porter, Harvard Business School

Better underwriting decisions

Analytics improve operational decisions
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Analytics have power in decision making
CustomerRetention
CampaignResponse
AcquisitionRates
Online
Conversion
Fraud
Crime
WastedSpend
Risk

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See through uncertainty with analytics
%
%
%
Predictive analytics turn uncertainty into usable probability

Challenges in putting predictive analytics to work

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

Time is accuracy, accuracy is money

Operational decisions at the center

Monitoring and compliance

Takeaways
Better decisions means actions not predictions
Time to business impact is critical
The only results are business results
Analytics requires IT and business engagement
Compliance needs concrete execution

Case: Premier Bankcard
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Scores deployed
Fraud risk
Credit risk
Customer value
Critical Success Factors
Analytics must lead
Business must support
But deployment AND testing require IT engagement
Building IT respect takes time

Decision Management

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Decision Management is
A business discipline that builds on existing enterprise applications to
put data to work
manage uncertainty
increase transparency
give the business control

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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

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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

Addressing our challenges

Case: Infinity Insurance
Claims Innovation
12,000-13,000 claims/month
Recession – lower expenses, 25% fewer staff
Claims adjudication with rules, analytics
Results
1100% increase in fast track rate
Loss adjustment expense from 14% to 11%
33% higher subrogation returns
Subrogation recovery up by $10m/year

Next Steps

Begin with the Decision in Mind

Action Plan

Blog: www.jtonedm.com