How to Build Decision Management Systems Part 3 - Decision Analysis


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How to Build Decision Management Systems, Part Three - Decision Analysis introduces a robust model of decisions to track and improve business performance. The webinar recording is available on demand on our website.

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How to Build Decision Management Systems Part 3 - Decision Analysis

  1. 1. How to build Decision ManagementJames Taylor Systems CEO Decision Analysis
  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 Parts I & II: Discover & Build
  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. ©2011 Decision Management Solutions 8
  10. 10. Improve
  11. 11. Decisions are high change components Regulations change Change to keep eligibility decisions compliant Policies change Change validation to track new data requirements Competitors change Change the discount to remain competitive Markets change Change the assessment to manage risk Consumer behavior Change to keep selecting changes the right deal terms Fraudsters adapt Change the routing to focus on new fraud ©2011 Decision Management Solutions 10
  12. 12. Drivers of change New regulations or policies ©2011 Decision Management Solutions 11
  13. 13. Change the rules for decisions 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” Decision ©2011 Decision Management Solutions 12
  14. 14. React to policy and regulatory change 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 ©2011 Decision Management Solutions 13
  15. 15. Drivers of change New Changes to regulations business or policies goals ©2011 Decision Management Solutions 14
  16. 16. Target decision-making on KPIs Strategy defines KPIs KPIs measure operations Operational decisions affect KPIs The link between decisions and KPIs is critical ©2011 Decision Management Solutions 15
  17. 17. Decision to KPI mapping KPIs impacted by decision Customer Customer Service … … Churn Service Availability CallsWhat is the best up sell/cross-sell for this customer? * *What is the price of thisservice? * *Can this customer buy thisservice? * *What retention offer shouldwe make this customer? *… ©2011 Decision Management Solutions 16
  18. 18. Decisions are linked Customer Strategic Centric Decision StrategyTactical OperationalDecision Decision Make Change Treatment Decision Decision Making Approach Evaluate Track Alternative Results Approaches ©2011 Decision Management Solutions 17
  19. 19. Drivers of change New Changes to regulations business or policies goals Changes in underlying data ©2011 Decision Management Solutions 18
  20. 20. React to changes in data patterns What is the best up sell/cross-sell for this customer? Purchase propensity Is there an additional service? Product hierarchy Is there a compelling replacement service? What similar service is this customer eligible for? What services are Which services is the similar to requested Churn risk customer eligible for? service? ©2011 Decision Management Solutions 19
  21. 21. Decision Analysis Decision Analysis <> Maintenance Also about making decisions better Increase profit Reduce losses Improve retention … Continuous decision improvement ©2011 Decision Management Solutions 20
  22. 22. Drivers of change New Changes to regulations business or policies goals Changes in Overall underlying decision data performance ©2011 Decision Management Solutions 21
  23. 23. Monitoring decision effectiveness To support decision analysis you need to log: Decision execution Responses Results Apply performance management to see Trends Hotspots Logging also supports compliance, audit ©2011 Decision Management Solutions 22
  24. 24. Impact May Take Time to Play Out ©2011 Decision Management Solutions 23
  25. 25. Moving Towards Optimal Decisions ©2011 Decision Management Solutions 24
  26. 26. Don’t just create a decision point ©2011 Decision Management Solutions 25
  27. 27. Create Continuous improvement ©2011 Decision Management Solutions 26
  28. 28. Continuous decision improvement Monitor Decisions Compare Approaches Adopt Best Adopt Best Approach Adopt Best Approach Approach Devise Alternatives Execute Execute Execute Best Approach Alternative Alternative Monitor Decisions
  29. 29. Where new approaches come from Promote challenger Select from A/B alternatives Synthesize new approach Completely new approach Don’t forget new challengers/alternatives ©2011 Decision Management Solutions 28
  30. 30. An environment for improvement Business User • My rules, in context • Only allow changes that make senseRules Management • No unnecessary information • Rapidly see business impact of changes Impact Analysis • Design impact and execution impact • More than testing Alternatives • Swapset analysis for comparison • Simulation and what-if analysis Assessment • Business performance comparison Analytic Models • Model performance monitoring • Self learning models Management • Managed model refresh ©2011 Decision Management Solutions 29
  31. 31. Simulation and What-If are critical Constraints Market Conditions Assumptions
  32. 32. Scenarios can be pre-planned
  33. 33. Drivers of change New Changes to regulations business or policies goals Changes in Overall underlying decision data performance ©2011 Decision Management Solutions 32
  34. 34. Learn More
  35. 35. 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 34
  36. 36. This is part of a set How to Build Decision Management Systems Part 1 – Decision Discovery Recording available Part 2 – Decision Services Recording available Part 3 – Decision Analysis Recording will be available ©2011 Decision Management Solutions 35
  37. 37. Questions?
  38. 38. Begin with the Decision in mind Discover Build Improve Find the decisions that matter to your business and model them ©2011 Decision Management Solutions 37
  39. 39. Find the rules of decision-making Discover Build Improve Analyze and manage the business rules that underpin your operational decisions ©2011 Decision Management Solutions 38
  40. 40. Embed Predictive Analytics Discover Build Improve Decision Build predictive analytic models and embed them in operational systems ©2011 Decision Management Solutions 39
  41. 41. Measure decision performanceDiscoverBuildImprove Log decision outcomes and execution. Monitor and assess decisions. ©2011 Decision Management Solutions 40
  42. 42. Learn to experiment Discover Build Improve Learn to experiment and use the data from experiments ©2011 Decision Management Solutions 41
  43. 43. Thank You James Taylor, 42