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Putting Predictive Analytics To Work


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My session from Predictive Analytics World in DC 2009 on how Decision Management helps put predictive analytics to work in operational systems.

Published in: Technology, Business

Putting Predictive Analytics To Work

  1. 1. Putting predictive analytics to work<br />James Taylor,<br />CEO<br />
  2. 2. The ROI of better operational decisions<br />Analytics and operational decisions<br />Challenges in putting predictive analytics to work<br />Decision Management<br />Next Steps<br />
  3. 3. The One Slide You Need<br />Better operational decisions yield high ROI<br />Analytics can improve operational decisions<br />You need to<br />Focus on actions<br />Deploy rapidly<br />Engage business and IT<br />Decision Management <br />Focuses on decisions,<br />Combines business rules with analytics<br />Puts predictive analytics to work<br />
  4. 4. Better operational decisions offer high ROI<br />
  5. 5. ©2009 Decision Management Solutions<br />5<br />There are different types of decisions<br />High-value, low-volume decisions<br />Medium-value, medium-volume decisions<br />Low-value, high-volume decisions<br />High<br />ECONOMIC IMPACT<br />Low<br />Low High<br />DECISION VOLUME<br />After Smart (Enough) Systems, Prentice Hall 2007<br />
  6. 6. ©2009 Decision Management Solutions<br />6<br />Small improvements add up<br />
  7. 7. “The essence of strategy is choosing to perform activities differently than rivals do.”<br />Dr. Michael Porter, Harvard Business School<br />
  8. 8. Better underwriting decisions<br />
  9. 9. Analytics improve operational decisions<br />©2009 Decision Management Solutions<br />9<br />
  10. 10. Analytics have power in decision making<br />CustomerRetention<br />CampaignResponse<br />AcquisitionRates<br />Online<br />Conversion<br />Fraud<br />Crime<br />WastedSpend<br />Risk<br />
  11. 11. ©2009 Decision Management Solutions<br />11<br />See through uncertainty with analytics<br />%<br />%<br />%<br />Predictive analytics turn uncertainty into usable probability<br />
  12. 12. Challenges in putting predictive analytics to work<br />
  13. 13. Knowing is not enough<br />©2009 Decision Management Solutions<br />13<br />Those who know first, win<br />Those who ACT first, win<br />Provided they act intelligently<br />
  14. 14. Time is accuracy, accuracy is money<br />
  15. 15. Operational decisions at the center<br />
  16. 16. Monitoring and compliance<br />
  17. 17. Takeaways<br />Better decisions means actions not predictions<br />Time to business impact is critical<br />The only results are business results<br />Analytics requires IT and business engagement<br />Compliance needs concrete execution<br />
  18. 18. Case: Premier Bankcard<br />©2009 Decision Management Solutions<br />18<br />Scores deployed<br />Fraud risk<br />Credit risk<br />Customer value<br />Critical Success Factors<br />Analytics must lead<br />Business must support <br />But deployment AND testing require IT engagement<br />Building IT respect takes time<br />
  19. 19. Decision Management<br />
  20. 20. ©2009 Decision Management Solutions<br />20<br />Decision Management is<br />A business discipline that builds on existing enterprise applications to<br />put data to work<br />manage uncertainty<br />increase transparency<br />give the business control<br />
  21. 21. ©2009 Decision Management Solutions<br />21<br />5 core principles of decisioning<br />Identify, separate and manage decisions<br />Use business rules to define decisions<br />Analytics to make decisions smarter<br />No answer is static<br />Decision-making is a process<br />
  22. 22. ©2009 Decision Management Solutions<br />22<br />Delivering Decision Management<br />3 stages to better operational decisions<br />Create a “closed loop” between operations and analytics to measure results and drive improvement<br />Design and build independent decision processes to replace decision points embedded in operational systems <br />Identify the decisions (usually about customers) that are most important to your operational success<br />
  23. 23. Addressing our challenges<br />
  24. 24. Case: Infinity Insurance<br />Claims Innovation<br />12,000-13,000 claims/month<br />Recession – lower expenses, 25% fewer staff<br />Claims adjudication with rules, analytics<br />Results<br />1100% increase in fast track rate<br />Loss adjustment expense from 14% to 11%<br />33% higher subrogation returns<br />Subrogation recovery up by $10m/year<br />
  25. 25. Next Steps<br />
  26. 26. Begin with the Decision in Mind<br />
  27. 27. Action Plan<br />
  28. 28. Blog:<br />