From Business Intelligence to Predictive Analytics

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  • Companies are taking the next step from Business Intelligence to a truly intelligent business by integrating predictive analytics into their operations. Companies need to build on their investments in reporting, visualization and dashboards to move up the analytic maturity curve.
    Companies that successfully adopt predictive analytics are outperforming their competitors in areas such as underwriting, origination, marketing, customer retention, fraud detection, collections and more.
    In this on demand webinar, James Taylor, CEO of Decision Management Solutions, explains:
    How to focus on the decisions that matter to your business
    The power of predictive analytics to improve decisions
    What technologies you should consider
    How to overcome obstacles and achieve analytic success
    This on-demand webinar is available at https://decisionmanagement.omnovia.com/archives
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From Business Intelligence to Predictive Analytics

  1. 1. From Business Intelligence to Predictive AnalyticsJames Taylor, CEO
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. Business Intelligence today
  6. 6. The value of BI is not software Software is a foundation Web Analytics ETL MDM Reporting OLAP ©2011 Decision Management Solutions 6
  7. 7. The value of BI is not data Timely and reliable data is useful ©2011 Decision Management Solutions 7
  8. 8. 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
  9. 9. Different kinds of decisions Type Strategy TacticsOperations Low Economic impact High ©2011 Decision Management Solutions 9
  10. 10. 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
  11. 11. IntroducingPredictiveAnalytics
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. Predictive analytics rank order ©2011 Decision Management Solutions 15
  16. 16. 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
  17. 17. Sample techniques ©2011 Decision Management Solutions 17
  18. 18. Predictiveanalytics inoperations
  19. 19. Operational systems can’t see patterns 10 5 0 Day 1 Day 2 Day 3 ©2011 Decision Management Solutions 19
  20. 20. 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
  21. 21. Predictive Analytics must be applied ? * ** * ** * * * * * * * * * ** * * ** * * * ** * * * * * * * * ** * * * * * * * ** * * * * ** * * * Predictive Analytics must be executable at a decision point ©2011 Decision Management Solutions 21
  22. 22. Decision Management Decision Management is a proven approach to deploy and apply predictive analytics ©2011 Decision Management Solutions 22
  23. 23. 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
  24. 24. Decision Discovery Risk & Fraud Opportunity Three kinds of analytic decisions ©2011 Decision Management Solutions 25
  25. 25. 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
  26. 26. Decision Services ©2011 Decision Management Solutions 27
  27. 27. 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
  28. 28. Technologiesfor DecisionManagement
  29. 29. 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
  30. 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
  31. 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
  32. 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
  33. 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
  34. 34. Tips for success
  35. 35. Don’t start by focusing on the data Better decision Analytic insight Derived information Available data ©2011 Decision Management Solutions 36
  36. 36. Begin with the decision in mind Better decision Analytic insight Analytic Derived insight Derived information Available information data Available data ©2011 Decision Management Solutions 37
  37. 37. 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
  38. 38. Focus on all three legs for success Business Decision ©2011 Decision Management Solutions 39
  39. 39. 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
  40. 40. Wrap Up
  41. 41. 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
  42. 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
  43. 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
  44. 44. Thank you! James Taylor, CEO james@decisionmanagementsolutions.comwww.decisionmangementsolutions.com/learnmo re

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