Models Collecting Dust
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Data scientists sometimes lament, "Why can't I get anyone to use my predictions?" Great models that make accurate predictions are sometimes disconnected from organizational decision-making. This hurts the business and reduces the data scientists’ perceived value the within the organization. But it doesn't have to be this way. Leading expert James Taylor, author of Decision Management Systems: A Practical Guide to Business Rules and Predictive Analytics, has developed a practical approach you can use to improve adoption and elevate your organization.
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Models Collecting Dust
- 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 2
- 3. Challenges Or why your models are gathering dust
- 4. Knowing is not enough Those who know first, win Those who ACT first, win Provided they act intelligently ©2012 Decision Management Solutions 4
- 5. It’s hard to communicate your value ©2012 Decision Management Solutions 5
- 6. Time to deploy models matters ©2012 Decision Management Solutions 6
- 7. Cottage industries don’t scale ©2012 Decision Management Solutions 7
- 8. Challenges with predictive analytics 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 8
- 9. Begin with the decision in mind
- 10. Decision Management is the proven approach used to manage decisions and apply predictive analytics effectively ©2012 Decision Management Solutions 11
- 11. 3 Steps to Decision Management Discover Build Improve ©2012 Decision Management Solutions 12
- 12. What is a decision? Data is gathered, considered A choice or selection is made That results in a commitment to action ©2012 Decision Management Solutions 13
- 13. Different kinds of decisions 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 14
- 14. Decisions are the focal point for risk Risk is not acquired in “big lumps” but one transaction at a time ©2012 Decision Management Solutions 15
- 15. Decisions maximize customer value ©2012 Decision Management Solutions 16
- 16. Three kinds of analytic decisions Risk Fraud Opportunity ©2012 Decision Management Solutions 17
- 17. Analytics power operational decisions 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 18
- 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 19
- 19. A business context for decision making
- 20. Candidate decisions Determine if 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 22
- 21. Target decision-making on KPIs Strategy defines KPIs KPIs measure operations Operational decisions affect KPIs The link between decisions and KPIs is critical ©2012 Decision Management Solutions 23
- 22. Decision to KPI mapping 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 24
- 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 25
- 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 26
- 25. Case study: Insurer Business challenges 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
- 27. Embed Predictive Analytics ? ? Decision ©2012 Decision Management Solutions 29
- 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 30
- 29. Build decision-making components Operational Systems Decision Analytic Systems ©2012 Decision Management Solutions 31
- 30. Case study: Cable TV 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 32
- 31. Some Pitfalls and how to avoid them.
- 32. Operational decisions are at the center Business Decision ©2012 Decision Management Solutions 34
- 33. Don’t just create a decision point ©2012 Decision Management Solutions 35
- 34. Create Continuous improvement ©2012 Decision Management Solutions 36
- 35. Case: State dept of 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 37
- 36. Questions?
- 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 39
- 38. In a Predictive Enterprise, 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 40
- 39. Begin with the Decision in mind Discover Build Improve Find the decisions that matter to your business and model them ©2012 Decision Management Solutions 41
- 40. Create an Analytic Factory ©2012 Decision Management Solutions 42
- 41. Thank You James Taylor, CEO james@decisionmanagementsolutions.com 43