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Models collecting dust? How to transform your results from interesting to impactful
James Taylor, CEO of Decision Management Solutions, discusses the importance of decision management and analytics in businesses to optimize operations and enhance decision-making. He outlines the challenges companies face with predictive analytics, emphasizes the need for a business context for analytics, and suggests a structured approach to decision management. Case studies illustrate the successful application of these principles across various industries, highlighting the value of integrating operational and analytic technologies.
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Models collecting dust? How to transform your results from interesting to impactful
- 1. Models Collecting Dust? James Taylor CEO
- 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 ©2012 Decision Management Solutions 1
- 3. Challenges Or why yourmodels are gathering dust
- 4. Knowing is notenough Those who know first, win Those who ACT first, win Provided they act intelligently ©2012 Decision Management Solutions 3
- 5. It’s hard tocommunicate your value ©2012 Decision Management Solutions 4
- 6. Time to deploymodels matters ©2012 Decision Management Solutions 5
- 7. Cottage industries don’tscale ©2012 Decision Management Solutions 6
- 8. Challenges with predictiveanalytics Actions are needed not just predictions Begin with the decision in mind The business does not understand analytics A business context for analytics Analytic models age quickly Cottage industries don’t scale Industrialize your analytic processes ©2012 Decision Management Solutions 7
- 9. Begin with the decisionin mind
- 10. Decision Management isthe proven approach used to manage decisions and apply predictive analytics effectively ©2012 Decision Management Solutions 9
- 11. 3 Steps toDecision Management Discover Build Improve ©2012 Decision Management Solutions 10
- 12. What is adecision? Data is gathered, considered A choice or selection is made That results in a commitment to action ©2012 Decision Management Solutions 11
- 13. 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? ©2012 Decision Management Solutions 12
- 14. Decisions are thefocal point for risk Risk is not acquired in “big lumps” but one transaction at a time ©2012 Decision Management Solutions 13
- 15. Decisions maximize customervalue ©2012 Decision Management Solutions 14
- 16. Three kinds ofanalytic decisions Risk Fraud Opportunity ©2012 Decision Management Solutions 15
- 17. Analytics power operationaldecisions How do I… prevent this customer from churning? convert this visitor? acquire this prospect? make this offer compelling to this person? identify this claim as fraudulent? correctly estimate the risk of this loan? It’s not about “aha” moments It’s about making better operational decisions ©2012 Decision Management Solutions 16
- 18. Case: Retailer Business challenges Solution Benefits Grocery chains are Tailored promotions Increased revenue battling for market integrated with Deep knowledge of share loyalty program customers across Customer loyalty is Integrated system formats essential for growth from back office to More effective Loyalty to the brand, point of sale promotional not a single store Consistently campaigns format compelling offers across channels ©2012 Decision Management Solutions 17
- 19. A business contextfor decision making
- 20. Candidate decisions Determineif a customer is eligible for a loan Calculate the discount for an order Assess the risk of a transaction Select the terms for a deal Choose which claims to Fast Track These are decision words The system must answer a question each time ©2012 Decision Management Solutions 19
- 21. Target decision-making onKPIs Strategy defines KPIs KPIs measure operations Operational decisions affect KPIs The link between decisions and KPIs is critical ©2012 Decision Management Solutions 20
- 22. 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 ? … ©2012 Decision Management Solutions 21
- 23. 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 Predictive Analytic Models Data Mining Results The results of other decisions ©2012 Decision Management Solutions 22
- 24. Decisions provide context Processes Know which business Activities require decisions processes will be improved by your analytics Events Know when your analytics Trigger decisions might be calculated Systems Know how you will have to Implement decisions deploy your analytics Organizational Units Know who cares about Make decisions your analytics and who will Own decisions have to believe them Are impacted by decisions ©2012 Decision Management Solutions 23
- 25. Case study: Insurer Businesschallenges Solution Benefits Use analytics to Model and Find the decisions improve underwriting decompose decisions that could be Map decisions to impacted and Embed analytics in refocused analytic claim processing systems and organizations effort application Constrained analytic effort to ensure successful implementation
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- 27. Embed Predictive Analytics ? ? Decision ©2012 Decision Management Solutions 26
- 28. Analytic Insight Management Data Management Data Preparation Data Visualization & Analysis Modeling In-database Modeling Model Validation Deployment and Scoring In-database Scoring Model Monitoring Model Tuning Model Tuning Repository ©2012 Decision Management Solutions 27
- 29. Build decision-making components Operational Systems Decision Analytic Systems ©2012 Decision Management Solutions 28
- 30. Case study: CableTV Business challenges Solution Benefits 1.2M households Predictive analytics to 13-18% cross-sell hit Many single-product predict churn, cross- rate on average households sell Up to 40% cross-sell Whole industry Business rules use analytics and data to success rate for some suffers from low loyalty and 20%+ drive dynamic scripts Teams using the customer churn Embedded in call scripts have more Increasing center application to sales competition and improve decision making Reduced churn by 20- changing regulations 30% ©2012 Decision Management Solutions 29
- 31. Some Pitfalls and howto avoid them.
- 32. Operational decisions areat the center Business Decision ©2012 Decision Management Solutions 31
- 33. Don’t just createa decision point ©2012 Decision Management Solutions 32
- 34. Create Continuous improvement ©2012 Decision Management Solutions 33
- 35. Case: State deptof taxation Business challenges Solution Benefits Paper tax returns Single central Recovered millions increased costs and taxpayer database of dollars from slowed responses Integrated system dubious tax returns Information system Sophisticated real- Increased collection silos time predictive of unpaid taxes Manual fraud analytics Decreased number detection and return of questionable review returns Increased customer satisfaction ©2012 Decision Management Solutions 34
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- 37. 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. Discount Code: TAYLOR4389 For more information about this new release, visit www.decisionmanagementsolutions.com/book ©2012 Decision Management Solutions 36
- 38. In a PredictiveEnterprise, analytics are… Used in every transaction Pervasive At the point of contact/delivery In operational decision making From reporting to prediction and forecasting Predictive Data mining Predictive analytics and scoring Actionable Decisions being made, actions being taken Decision Management Systems Decision Support Systems ©2012 Decision Management Solutions 37
- 39. Begin with theDecision in mind Discover Build Improve Find the decisions that matter to your business and model them ©2012 Decision Management Solutions 38
- 40. Create an AnalyticFactory ©2012 Decision Management Solutions 39
- 41. Thank You James Taylor, CEO james@decisionmanagementsolutions.com 40