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Decision Management Systems Part One Decision Discovery
The document outlines the concept of decision management systems as a method to automate and improve business decisions through analytics. It details the types of decisions (strategic, tactical, operational) and emphasizes the importance of operational decisions in maximizing customer value and optimizing business processes. The text also highlights the need to align decisions with key performance indicators (KPIs) for effective decision-making.
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Decision Management Systems Part One Decision Discovery
- 1. How to build Decision Management James Taylor Systems CEO Decision Discovery
- 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 developing the concept of Decision Management © Decision Management Solutions, 2011 1
- 3. Decision Management Systems Introduced
- 4. A changing world Changing Scale Changing Expectations Changing Interactions ©2011 Decision Management Solutions 3
- 5. What are DecisionManagement Systems? Agile Analytic Adaptive ©2011 Decision Management Solutions 4
- 6. Decision Management Systems… Keep the Are decision in transparent mind and agile Are Test, learn, predictive and improve not reactive ©2011 Decision Management Solutions 5
- 7. 3 Steps toDecision Management Discover Build Improve ©2011 Decision Management Solutions 6
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- 9. Decisions Making choices or selections and taking action ©2011 Decision Management Solutions 8
- 10. Different kinds ofdecisions Strategic Decisions • Few in number, large impact • Should we acquire this company or exit this market? Tactical Decisions • Management and control, moderate impact • Should we re-organize this supply chain, change risk management approach? Operational Decisions • Day-to-day decisions that affect one transaction or customer • Best offer for this customer ?How risky is this loan? Is this claim fraudulent? ©2011 Decision Management Solutions 9
- 11. Suitable decisions Repeatable Non trivial Measurable Candidate for business automation impact ©2011 Decision Management Solutions 10
- 12. Operational decisions arekey ©2011 Decision Management Solutions 11
- 13. Decisions implement strategy ©2011 Decision Management Solutions 12
- 14. Decisions are thefocal point for risk Risk is not acquired in “big lumps” but one transaction at a time ©2011 Decision Management Solutions 13
- 15. Decisions maximize customervalue ©2011 Decision Management Solutions 14
- 16. Decisions scale forlarge impact Strategic Decision Tactical Decision Operational Decision ©2011 Decision Management Solutions 15
- 17. Different types ofoperational decision Eligibility Validation Calculation Risk Fraud Opportunity ©2011 Decision Management Solutions 16
- 18. Three kinds ofanalytic decisions Risk Fraud Opportunity ©2011 Decision Management Solutions 17
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- 20. A simple process Age<21 No Class I or II sports Accept low-risk applicant Class II sport Previous Heart Attack, Existing Cancer Decline high-risk applicant 21<=Age<50 Class I sport Process medium-risk Good Medical Record applicant Age>50 1 or fewer Claims Multiple Claims New Customer … Long-standing Customer ©2011 Decision Management Solutions 19
- 21. The same processwith a decision Low risk Process low-risk applicant Medium risk Determine applicant Process medium-risk type applicant High risk Process high-risk applicant ©2011 Decision Management Solutions 20
- 22. Candidate decisions Determineif 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 21
- 23. Target decision-making onKPIs Strategy defines KPIs KPIs measure operations Operational decisions affect KPIs The link between decisions and KPIs is critical ©2011 Decision Management Solutions 22
- 24. Decision to KPImapping KPIs impacted by improvement in decision Customer Customer Losses Retention KPI 5 Churn Service Budget Calls What retention offer should be made? ↑ ↑ ↓ ? What initial price should be offered? ↑ ↑ Should an intervention call be made? ↓ ↓ Decision 3 ? … ©2011 Decision Management Solutions 23
- 25. Define decisions Name Repeatability One-off Continuous Description Measurability Poor Specific Time to value A question Immediate Delayed A defined set of allowable Degrees of answers Freedom Few Many Value Range Any other results to be Narrow Gap Wide Gap returned with the answer Timeliness Slow Real-Time Volume Key facts like volume, Few Many complexity, latency ©2011 Decision Management Solutions 24
- 26. Decompose the decisioning What is required to make decision? Guidelines, policy documents Human expertise Regulations Existing system logic Data describing the case External reference data The results of other decisions ©2011 Decision Management Solutions 25
- 27. Decision decomposition example Can this customer buy this What is the price of this service? service? Customer Profile Is the service available where this customer lives? Promotions Is there capacity on this Is the customer eligible for Pricing rules service? this service? Geographical Availability Eligibility rules Capacity and Usage Purchase propensity What is the best up sell/cross- sell for this customer? Is there an additional service? What similar service is this customer eligible for? Is there a compelling replacement service? What services are similar to Which services is the requested service? customer eligible for? Churn risk Product hierarchy ©2011 Decision Management Solutions 26
- 28. Prioritization of decisions Difference between good and bad decisions? How many decisions a year? What spend is committed based on them? How well can you measure good v bad decisions? What’s it worth … and to whom? ©2011 Decision Management Solutions 27
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- 30. 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. Available October 20, 2011 For more information about this new release, visit Discount Code: TAYLOR4389 www.ibmpressbooks.com/title/9780132884389 ©2011 Decision Management Solutions 29
- 31. Check in forthe other webinars How to Build Decision Management Systems Part 1 – Decision Discovery Recording will be available Part 2 – Decision Services October 27, 10am Pacific Part 3 – Decision Analysis November 29, 10am Pacific ©2011 Decision Management Solutions 30
- 32. Other opportunities tohear me speak SAS Forum Netherlands – October 5, Amsterdam Information Management 2011 – October 12, Copenhagen Predictive Analytics World – October 18, New York eMetrics – October 19, New York Information on Demand – October 24-26, Las Vegas Building Business Capability – October 31-November 1, Miami ©2011 Decision Management Solutions 31
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- 34. Begin with theDecision in mind Discover Build Improve Find the decisions that matter to your business and model them ©2011 Decision Management Solutions 33
- 35. Thank You James Taylor, CEO james@decisionmanagementsolutions.com 34