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From Business Intelligence to Predictive Analytics
This document discusses moving from business intelligence to predictive analytics. It introduces predictive analytics and how they can automatically discover patterns in data to predict trends or future behavior. Predictive analytics turn uncertainty about the future into usable probabilities. The document also discusses how predictive analytics can be applied in operations through decision management, which is a proven approach to deploy and apply predictive analytics at decision points.
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From Business Intelligence to Predictive Analytics
- 1. From Business Intelligence to Predictive Analytics James Taylor, CEO
- 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. 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. The one slideyou 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
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- 6. The value ofBI is not software Software is a foundation Web Analytics ETL MDM Reporting OLAP ©2011 Decision Management Solutions 6
- 7. The value ofBI is not data Timely and reliable data is useful ©2011 Decision Management Solutions 7
- 8. The value isof 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. Different kinds ofdecisions Type Strategy Tactics Operations Low Economic impact High ©2011 Decision Management Solutions 9
- 10. A focus onthe 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
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- 12. Different kinds ofanalytics Business Intelligence Descriptive Analytics Predictive Analytics * * * * * * * * * * * * * * * ** * *** * * * * * * * * ** ** * * * * * * * * * * ** * * * * ** * * * How do I use data to Who are my How are those learn about my best/worst customers likely to customers? What customers? How do behave in the has been happening I turn my data into future? How do they in 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. What can predictiveanalytics 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. Descriptive analytics groupand cluster High Income High income, low-moderate education * * Moderate-high education Low-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. Predictive analytics rankorder ©2011 Decision Management Solutions 15
- 16. Proven use casesfor 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. Sample techniques ©2011 Decision Management Solutions 17
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- 19. Operational systems can’tsee patterns 10 5 0 Day 1 Day 2 Day 3 ©2011 Decision Management Solutions 19
- 20. But predictions matterin 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. Predictive Analytics mustbe applied ? * ** * ** * * * * * * * * * ** * * ** * * * ** * * * * * * * * ** * * * * * * * ** * * * * ** * * * Predictive Analytics must be executable at a decision point ©2011 Decision Management Solutions 21
- 22. Decision Management DecisionManagement is a proven approach to deploy and apply predictive analytics ©2011 Decision Management Solutions 22
- 23. Steps to decisionmanagement 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. Decision Discovery Risk & Fraud Opportunity Three kinds of analytic decisions ©2011 Decision Management Solutions 25
- 25. Analytic operational decisions Riskdecisions 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. Decision Services ©2011 Decision Management Solutions 27
- 27. Decision Analysis DecisionAnalysis 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
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- 29. Technologies for managingdecisions 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. Data Mining andPredictive 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. 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. 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. 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
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- 35. Don’t start byfocusing on the data Better decision Analytic insight Derived information Available data ©2011 Decision Management Solutions 36
- 36. Begin with thedecision in mind Better decision Analytic insight Analytic Derived insight Derived information Available information data Available data ©2011 Decision Management Solutions 37
- 37. Focus on detaileddata Monthly Totals 400 300 Summaries can 200 100 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. Focus on allthree legs for success Business Decision ©2011 Decision Management Solutions 39
- 39. Adopt Business RulesManagement 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
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- 41. The one slideyou 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. 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. 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. Thank you! James Taylor, CEO james@decisionmanagementsolutions.com www.decisionmangementsolutions.com/learnmo re