Uploaded byDecision Management Solutions
How to Build Decision Management Systems Part 3 - Decision Analysis
The document discusses decision management systems and their importance in automating and improving business decisions through analytic technology. It outlines a three-step process for decision management: discover, build, and improve, while emphasizing the need for continuous decision improvement and reaction to changing regulations and data patterns. Additionally, it highlights the critical connection between decision-making and key performance indicators (KPIs) to enhance operational effectiveness.
More Related Content
Similar to How to Build Decision Management Systems Part 3 - Decision Analysis
More from Decision Management Solutions
How to Build Decision Management Systems Part 3 - Decision Analysis
- 1. How to build Decision Management James Taylor Systems CEO Decision Analysis
- 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. Recapping Parts I& II: Discover & Build
- 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. 3 Steps toDecision Management Discover Build Improve ©2011 Decision Management Solutions 5
- 7. Decisions Making choices or selections and taking action ©2011 Decision Management Solutions 6
- 8. Suitable decisions Repeatable Non trivial Measurable Candidate for business automation impact ©2011 Decision Management Solutions 7
- 9. ©2011 Decision ManagementSolutions 8
- 10.
- 11. Decisions are highchange 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. Drivers of change New regulations or policies ©2011 Decision Management Solutions 11
- 13. Change the rulesfor 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. React to policyand 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. Drivers of change New Changes to regulations business or policies goals ©2011 Decision Management Solutions 14
- 16. 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 15
- 17. Decision to KPImapping KPIs impacted by decision Customer Customer Service … … Churn Service Availability Calls What is the best up sell/cross- sell for this customer? * * What is the price of this service? * * Can this customer buy this service? * * What retention offer should we make this customer? * … ©2011 Decision Management Solutions 16
- 18. Decisions are linked Customer Strategic Centric Decision Strategy Tactical Operational Decision Decision Make Change Treatment Decision Decision Making Approach Evaluate Track Alternative Results Approaches ©2011 Decision Management Solutions 17
- 19. Drivers of change New Changes to regulations business or policies goals Changes in underlying data ©2011 Decision Management Solutions 18
- 20. React to changesin 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. Decision Analysis DecisionAnalysis <> Maintenance Also about making decisions better Increase profit Reduce losses Improve retention … Continuous decision improvement ©2011 Decision Management Solutions 20
- 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. 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. Impact May TakeTime to Play Out ©2011 Decision Management Solutions 23
- 25. Moving Towards OptimalDecisions ©2011 Decision Management Solutions 24
- 26. Don’t just createa decision point ©2011 Decision Management Solutions 25
- 27. Create Continuous improvement ©2011 Decision Management Solutions 26
- 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. Where new approachescome 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. An environment forimprovement Business User • My rules, in context • Only allow changes that make sense Rules 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. Simulation and What-Ifare critical Constraints Market Conditions Assumptions
- 32. Scenarios can bepre-planned
- 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.
- 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 decisionmanagementsolutions.com/book ©2011 Decision Management Solutions 34
- 36. This is partof 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.
- 38. Begin with theDecision in mind Discover Build Improve Find the decisions that matter to your business and model them ©2011 Decision Management Solutions 37
- 39. Find the rulesof decision-making Discover Build Improve Analyze and manage the business rules that underpin your operational decisions ©2011 Decision Management Solutions 38
- 40. Embed Predictive Analytics Discover Build Improve Decision Build predictive analytic models and embed them in operational systems ©2011 Decision Management Solutions 39
- 41. Measure decision performance Discover Build Improve Log decision outcomes and execution. Monitor and assess decisions. ©2011 Decision Management Solutions 40
- 42. Learn to experiment Discover Build Improve Learn to experiment and use the data from experiments ©2011 Decision Management Solutions 41
- 43. Thank You James Taylor, CEO james@decisionmanagementsolutions.com 42