How to Build Decision Management Systems Part 2 Decision services


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The second in our 3 part series on How to Build Decision Management Systems. Part 2 Decision Services describes the core of a Decision Management System, a set of software components that make these decisions accurately, reliably and responsively, leveraging advanced analytics and business rules management systems.

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How to Build Decision Management Systems Part 2 Decision services

  1. 1. How to build Decision ManagementJames Taylor Systems CEO Part Two: Decision Services
  2. 2. Your presenter – James Taylor CEO of Decision Management Solutions Works with clients to improve their business by applying analytic technology to automate & improve decisions Spent the last 9 years championing Decision Management and developing Decision Management Systems ©2011 Decision Management Solutions 1
  3. 3. Recapping Part I:Decision Discovery
  4. 4. A changing world Changing ScaleChanging Expectations Changing Interactions ©2011 Decision Management Solutions 3
  5. 5. What are Decision Management Systems? Agile Analytic Adaptive ©2011 Decision Management Solutions 4
  6. 6. 3 Steps to Decision Management Discover Build Improve ©2011 Decision Management Solutions 5
  7. 7. Decisions Making choices or selections and taking action ©2011 Decision Management Solutions 6
  8. 8. Suitable decisions Repeatable Non trivial Measurable Candidate for business automation impact ©2011 Decision Management Solutions 7
  9. 9. Candidate decisions Determine if a customer is eligible for a benefit Validate the completeness of an invoice Calculate the discount for an order Assess the risk of a transaction Select the terms for a loan Choose which claims to Fast Track These are decision words The system must answer a question each time ©2011 Decision Management Solutions 8
  10. 10. Decision’s should be decomposed Can this customer buy this service? Customer Profile Is the service available where this customer lives? Is there capacity on Is the customer this service? eligible for this service? Geographical Availability Capacity and Eligibility rules Usage Purchase propensity ©2011 Decision Management Solutions 9
  11. 11. Build
  12. 12. Decision latency is a challenge Business event Decision latency Action taken © Decision Management Solutions, 2011 11
  13. 13. The rules of decisions matter Decision ©2011 Decision Management Solutions 12
  14. 14. What are business rules? “ … statements of the actions you should take when certain business conditions are true. ” ©2011 Decision Management Solutions 13
  15. 15. But most are unmanageablepublic class Application {private Customer customers[];private Customer goldCustomers[];...public void checkOrder() { for (int i = 0; i < numCustomers; i++) { Customer aCustomer = customers[i]; if (aCustomer.checkIfGold()) { numGoldCustomers++; goldCustomers[numGoldCustomers] = aCustomer; if (aCustomer.getCurrentOrder().getAmount() > 100000) aCustomer.setSpecialDiscount (0.05); } }} ©2011 Decision Management Solutions 14
  16. 16. Patterns inform decision-making1050 Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8 Day 9 Day 10 ©2011 Decision Management Solutions 15
  17. 17. How to look forward? ©2011 Decision Management Solutions 16
  18. 18. Bring three groups together Business Decision ©2011 Decision Management Solutions 17
  19. 19. Build decision-making components Operational Systems Decision Analytic Systems ©2011 Decision Management Solutions 18
  20. 20. What do you need in a platform? Design Transparency Execution Transparency Collaboration Impact Analysis Platform for analytics © Decision Management Solutions, 2011 19
  21. 21. A Business Rules Management System Validation and Testing VerificationBusiness Deployment DecisionSimulation Rule Service Production Repository Application Rule Engine Design Rule Tools Management Applications Operational Database After Decision Management Systems, IBM Press 2011 ©2011 Decision Management Solutions 20
  22. 22. Clarity and transparency are needed 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 21
  23. 23. Help the business to manage decisions I want to relax my underwriting policy I want to be able to promote a new product combination So you business-types want to be able to change your business rules? I need to add the new regulations No… ©2011 Decision Management Solutions 22
  24. 24. Why Manage Business Rules Reduce Costs • Fewer resources, less time to change decisions • Lower fines, legal costs from bad decisions • Reduced IT costs to implement decisions Improve Decision Making • Clear policies and procedures • Consistently applied across channels, systems • Increased accuracy from business users control Business Agility • More rapid response to business threats • Fewer missed opportunities • Faster time to market ©2011 Decision Management Solutions 23
  25. 25. Three kinds of analytic decisions Risk Fraud Opportunity ©2011 Decision Management Solutions 24
  26. 26. Predict RiskHow risky isthis customer’sapplication forservice…And how shouldwe price it? ©2011 Decision Management Solutions 25
  27. 27. Predict Fraud How likely is this claim to be fraudulent…. and what should we do about it? ©2011 Decision Management Solutions 26
  28. 28. Predict OpportunityWhat represents thebest opportunity tomaximize loyalty andrevenue?And when shouldwe promote it? ©2011 Decision Management Solutions 27
  29. 29. Predictive Analytics turnuncertainty about the future into usable probabilities ©2011 Decision Management Solutions 28
  30. 30. Embed Predictive Analytics ? ? Decision ©2011 Decision Management Solutions 29
  31. 31. ©2011 Decision Management Solutions 30
  32. 32. Lessons learned Managing decisions involves business rules and predictive analytics in combination More rules in the hands of business users improves agility and accuracy Predictive analytics are most valuable when they are embedded to inform individual transactions Legacy systems can be modernized without expensive rip and replace projects Processes can be simplified and made more agile if decisions are externalized ©2011 Decision Management Solutions 31
  33. 33. Learn More
  34. 34. Decision Management Systems What if you could make your systems active participants in optimizing your business? What if your systems could act intelligently on their own? Decision Management Systems can do all that and more. This book shows how to integrate operational and analytic technologies to create more agile, analytic, and adaptive systems. For more information about this new release, visit ©2011 Decision Management Solutions 33
  35. 35. Check in for the other webinars How to Build Decision Management Systems Part 1 – Decision Discovery Recording available Part 2 – Decision Services Recording will be available Part 3 – Decision Analysis November 29, 10am Pacific ©2011 Decision Management Solutions 34
  36. 36. Questions?
  37. 37. Begin with the Decision in mind Discover Build Improve Find the decisions that matter to your business and model them ©2011 Decision Management Solutions 36
  38. 38. Find the rules of decision-making Discover Build Improve Analyze and manage the business rules that underpin your operational decisions ©2011 Decision Management Solutions 37
  39. 39. Embed Predictive Analytics Discover Build Improve Decision Build predictive analytic models and embed them in operational systems ©2011 Decision Management Solutions 38
  40. 40. Thank You James Taylor, 39