This document discusses how predictive analytics can improve operational decisions and business outcomes. It provides examples of how predictive models can be applied to decisions around customer retention, campaign response, risk assessment, and fraud detection. The key challenges are effectively deploying models and ensuring analytics lead to concrete business actions. Decision management systems aim to address this by separating decision-making processes from operations and creating a closed loop between analytics and measurable results. The document advocates starting with high-impact decisions, engaging both business and IT stakeholders, and moving rapidly from predictions to actions through decision management.

1. Putting predictive analytics to workJames Taylor,CEO

2. The ROI of better operational decisionsAnalytics and operational decisionsChallenges in putting predictive analytics to workDecision ManagementNext Steps

3. The One Slide You NeedBetter operational decisions yield high ROIAnalytics can improve operational decisionsYou need toFocus on actionsDeploy rapidlyEngage business and ITDecision Management Focuses on decisions,Combines business rules with analyticsPuts predictive analytics to work

4. Better operational decisions offer high ROI

5. ©2009 Decision Management Solutions5There are different types of decisionsHigh-value, low-volume decisionsMedium-value, medium-volume decisionsLow-value, high-volume decisionsHighECONOMIC IMPACTLowLow HighDECISION VOLUMEAfter Smart (Enough) Systems, Prentice Hall 2007

6. ©2009 Decision Management Solutions6Small improvements add up

7. “The essence of strategy is choosing to perform activities differently than rivals do.”Dr. Michael Porter, Harvard Business School

8. Better underwriting decisions

9. Analytics improve operational decisions©2009 Decision Management Solutions9

10. Analytics have power in decision makingCustomerRetentionCampaignResponseAcquisitionRatesOnlineConversionFraudCrimeWastedSpendRisk

11. ©2009 Decision Management Solutions11See through uncertainty with analytics%%%Predictive analytics turn uncertainty into usable probability

12. Challenges in putting predictive analytics to work

13. Knowing is not enough©2009 Decision Management Solutions13Those who know first, winThose who ACT first, winProvided they act intelligently

14. Time is accuracy, accuracy is money

15. Operational decisions at the center

16. Monitoring and compliance

17. TakeawaysBetter decisions means actions not predictionsTime to business impact is criticalThe only results are business resultsAnalytics requires IT and business engagementCompliance needs concrete execution

18. Case: Premier Bankcard©2009 Decision Management Solutions18Scores deployedFraud riskCredit riskCustomer valueCritical Success FactorsAnalytics must leadBusiness must support But deployment AND testing require IT engagementBuilding IT respect takes time

19. Decision Management

20. ©2009 Decision Management Solutions20Decision Management isA business discipline that builds on existing enterprise applications toput data to workmanage uncertaintyincrease transparencygive the business control

21. ©2009 Decision Management Solutions215 core principles of decisioningIdentify, separate and manage decisionsUse business rules to define decisionsAnalytics to make decisions smarterNo answer is staticDecision-making is a process

22. ©2009 Decision Management Solutions22Delivering Decision Management3 stages to better operational decisionsCreate a “closed loop” between operations and analytics to measure results and drive improvementDesign and build independent decision processes to replace decision points embedded in operational systems Identify the decisions (usually about customers) that are most important to your operational success

23. Addressing our challenges

24. Case: Infinity InsuranceClaims Innovation12,000-13,000 claims/monthRecession – lower expenses, 25% fewer staffClaims adjudication with rules, analyticsResults1100% increase in fast track rateLoss adjustment expense from 14% to 11%33% higher subrogation returnsSubrogation recovery up by $10m/year

25. Next Steps

26. Begin with the Decision in Mind

27. Action Plan

28. Blog: www.jtonedm.com