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Delivering the Business Value of Analytics

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A rebroadcast of one of the best reviewed sessions at this year's Predictive Analytics World. Learn the critical success factors in delivering business value with advanced analytics.

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Delivering the Business Value of Analytics

  1. 1. @jamet123 #decisionmgt © 2018 Decision Management Solutions James Taylor, CEO Delivering the Business Value of Analytics Predictive Analytics World 2018 Change how you define business understanding Adopt a decision- centric approach Consider decision- making technologies as a set
  2. 2. @jamet123 #decisionmgt © 2018 Decision Management Solutions 3 Delivering Value Cheaper Better Sooner More Satisfying Business Value Analytic Value Business value is added by delivering a product or service more cheaply, improving its quality to make it better value, delivering that value sooner or by making it more satisfying to the customer. Analytics deliver value in exactly the same way.
  3. 3. @jamet123 #decisionmgt © 2018 Decision Management Solutions 4 Barriers to Business Value In Analytics Not Actionable Solves wrong problem Too hard to use Too expensive to use Not Actioned Not Integrated Not Believed Not Used
  4. 4. @jamet123 #decisionmgt © 2018 Decision Management Solutions 5 These Barriers are Widespread Analytics efforts very or extremely important Analytic efforts have had a broad positive impact High impact NOT High Impact ▪ Studies show that this is a common problem. ▪ 70% of organizations say analytics is really important but only 2% have delivered on the promise. ▪ There are far more companies failing to deliver high impact (80%) than succeeding in generating impact. ▪ Broken links: Why analytics investments have yet to pay out” ZS and the Economist Information Unit, Ltd. June 2018 and “Raising returns on analytics investments in insurance” by McKinsey Broken links: Why analytics investments have yet to pay out” ZS and the Economist Information Unit, Ltd. June 2018 Source: McKinsey - “Raising returns on analytics investments in insurance”
  5. 5. @jamet123 #decisionmgt © 2018 Decision Management Solutions 6 A Definition valuable analytic Adjective-Noun Pair: an analytic model of any type (regression, classification, ensemble, machine learning, neural network etc.) that has caused the organization that paid for its development to change its behavior in a way that adds business value to that organization.
  6. 6. @jamet123 #decisionmgt © 2018 Decision Management Solutions 7 Build Valuable Analytics: Use Actionable Analytics in the Front Line  Build an analytic  That addresses an operational problem or opportunity  In a way that can be used in operations  That is believed by the people who run operations  And embed it in the systems/processes that support operations if analytics does not lead to more informed decisions and more effective actions, then why do it at all? Mike Gualtieri, VP, Principal Analyst Serving Application Development & Delivery Professionals
  7. 7. @jamet123 #decisionmgt © 2018 Decision Management Solutions 8 Three Critical Success Factors Adopt a decision-centric approach Change how you define business understanding Consider decision-making technologies as a set ▪ Adopt a business decision-centric approach to analytics – one that puts business decisions first. ▪ Change how you define analytic requirements and business understanding to bring more business knowledge into your analytic projects. ▪ Consider advanced analytics as one of a set of decision-making technologies not a standalone technology stack.
  8. 8. @jamet123 #decisionmgt © 2018 Decision Management Solutions 9 Data Business Understanding Data Understanding Modeling Data Preparation Evaluation Deployment Adopt A Business-Centric Approach To Analytics  Put Business Understanding First  Then understand your data  Prepare your data  And build your analytic models  Evaluate for Business Impact  Deploy the results  Repeat CRoss Industry Standard Process for Data Mining
  9. 9. @jamet123 #decisionmgt © 2018 Decision Management Solutions 10 Put Decisions First For Business Understanding  What (business) measures?  Customer satisfaction  What (business) decisions have an impact?  Pricing, claims handling, renewal  Which decision should we improve?  Claims handling  What does improve mean?  Increase STP rate without more fraud or waste Make the project about the Decision, not the Analytic
  10. 10. @jamet123 #decisionmgt © 2018 Decision Management Solutions 11 Build Business Understanding  Decision  Specific question  Allowed answers  Data  Sub-Decisions  Knowledge A decision model clarifies all the components of decision- making, breaking down the decision into sub-decisions, showing where data is used and how relevant knowledge and analytics are applied. Decision models are defined using the Decision Model and Notation (DMN) standard. Data Knowledge Sub-Decisions Decision to be improved Decision Understanding
  11. 11. @jamet123 #decisionmgt © 2018 Decision Management Solutions 12 Use Decision Understanding to Frame Analytics  Map Analytics  Ask “If Only” Find new ones ▪ For analytic teams, decision models: ▪ Provide decision structure - who, what, how, when ▪ Standardize the approach to decision making ▪ Provide transparency of decision approach ▪ Foster innovation in the business model ▪ Show improvements to the business model ▪ Promote “buy in” Decision to be improved If only we could predict this…
  12. 12. @jamet123 #decisionmgt © 2018 Decision Management Solutions 13 Business (People) Understanding  Let experts speak  Model the decision  Let experts frame the problem ▪ Too many analytic teams let the data speak but ignore SMEs. ▪ Model the decision to capture what the SMEs know about how the decision is, or should be, made. ▪ Let what the experts know-how frame the problem for the analytic project. Let them identify: ▪ Which analytics ▪ Applied where ▪ In what format ▪ With what level of accuracy and timeliness Make sure it will be actionable Before you build it
  13. 13. @jamet123 #decisionmgt © 2018 Decision Management Solutions 14 Mix And Match Decision-Making Technology  Most decisions need more than just predictions  Descriptive analytics and statistics  Rules and decision logic  Data mining  Predictive analytics  Machine Learning  AI  … Use a decision model to mix and match
  14. 14. @jamet123 #decisionmgt © 2018 Decision Management Solutions 15 Define Better Decisions Make Analytics Actionable With Business Rules ▪ While analytics can improve decision-making, they often must be combined with business rules that define thresholds or constraints. ▪ Decision models explicitly document what the different elements of a decision are and how they interact. ▪ This allows analytics, business rules, ML and AI to be combined to make a better business decision. Business Rules Descriptive Analytic Predictive Analytic
  15. 15. @jamet123 #decisionmgt © 2018 Decision Management Solutions 16 A Recent Analyst Report  Enterprises waste time and money on unactionable analytics  Digital decisioning can stop this insanity  Institute a culture of digital decisions-first design thinking  Think of digital decisioning as the nexus of business rules, data, analytics, and machine learning models.  One smarter, automated decision can be worth millions in terms of customer acquisition, retention, and/or operational efficiency The Dawn Of Digital Decisioning: New Software Automates Immediate Insight-To-Action Cycles Crucial For Digital Business John R. Rymer and Mike Gualtieri
  16. 16. @jamet123 #decisionmgt © 2018 Decision Management Solutions 17 The Bottom Line Analytic teams are done when the business changes its decision-making in a way that creates business value and not before
  17. 17. @jamet123 #decisionmgt © 2018 Decision Management Solutions 18 Be a Hero Make Analytics Actionable and Acted On  Decisions First  Know what decision you are improving  Let The Experts Speak  Let them tell you how they decide  Adopt Business Rules  Partner with IT to adopt business rules technology  Analytics Don’t Stand Alone  Remember, it’s all about decision-making  Change The Business  Measure analytic teams on business value added
  18. 18. @jamet123 #decisionmgt © 2018 Decision Management Solutions 19 Your Questions James Taylor, CEO  james@decisionmanagementsolutions.com  +1 650 400 3029  @jamet123
  19. 19. @jamet123 #decisionmgt © 2018 Decision Management Solutions 20 Thank You  More resources for success with Analytics  decisionmanagementsolutions.com/cao  Decision Management Solutions works with clients to improve their business by applying analytic technology to automate & improve decisions.  We can help you deliver value with a DecisionsFirst approach to analytics.
  20. 20. Thank You For more on Decision Management, go to: decisionmanagementsolutions.com @jamet123 #decisionmgt © 2018 Decision Management Solutions If you have further questions or comments: James Taylor CEO, Decision Management Solutions james@decisionmanagementsolutions.com +1 650 400 3029

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