Real-World Experience in Applying Business Intelligence to Business Processes

Real-World Experience in Applying Business Intelligence to Business Processes

James TaylorVP Enterprise Decision Management

Fair Isaac

2Copyright © 2006 Fair Isaac Corporation. All rights reserved.

Introductions Agenda

The problem of hindsight Challenges in analytic

improvement of business process

Enterprise Decision Management

Some examples


Business Intelligence

Alluring…

Provides much more information access and insight

Increases knowledge worker productivity

Describes and synthesizes past performance

… and yet limited

Need action not insightApplying the insight to identify the ideal action is too hard

No operational improvement Need to use intelligence to improve operational processes

More hindsight than insightWe need to predict and optimize future performance


Applying intelligence to business processes

Lots of approaches

Process Analytics

Operational BI

Business Activity Monitoring

None really satisfactory

The process is not the businessThese analytics don’t use customer information or the rules of your business to control the processSystems cannot read reportsNo matter how real-time and how focused, reports and cubes don’t help “code” get smarter

People, people, peopleBAM is still aimed at getting people to do something. So much for straight through processing…


So What is Enterprise Decision Management?

EDM is a systematic approach to automate and improve decisions across the enterprise.

It allows businesses to:

Make more profitable and targeted

decisions

PRECISION

In the same way, over and over again

CONSISTENCY

While being able to adapt “on-the-fly”

AGILITY


Models

Operational decisions across the enterprise

Operational Systems and

Process

CRMCRM

SCMSCM

ERPERP

Call CenterCall Center

WebsiteWebsite

EmailEmail

POSPOS

Etc.Etc.

Rules

AnalyticModels

BusinessRules

Enterprise Data External Data

010

http://www

Decision Service


Components of Fair Isaac’s solution Blaze Advisor™ business rule management system SmartForms rules-driven data capture Model Builder Software and Mentoring Predictive Models – Risk, Opportunity Evidence-based Rules Professional Services


Various Analytics Can Improve Results

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Descriptive Analytics

How do I use data to learn about my

customers?

Predictive Modeling

How are those customers likely to

behave in the future? How will they

react?

Decision Optimization

How do I leverage that knowledge to recommend the

best action?

Knowledge - Description Action - Prescription


The business case for EDM

Timeliness of Decisions Days Real-time / Point of Contact

Complexity of Decisions Local / Simple

Corporate Objectives / Trade-

Offs

Constraints on Decisions Static / Simple Dynamic / Complex

Changes to Decisions Every 3-5 Years Frequent Adjustments

Observation Data PointBetter decisions drive better results

93% felt that operational decisions impacted profitability 61% significantly

Not leveraging data properly 70% of CIOs/CTOs did not get the most value from data. 47% because could not blend business rules with insight

Large number of unaddressed decisions

51% had automated about 25% or less 79% had automated about 50% or less


There are many dimensions to the benefits

Precision Effectiveness Granularity Quantitative Metrics

Cost Efficiency Cost – Value Trade-off Activity Based

Consistency Repeatability Compliance Expected Outcomes

Speed Responsiveness Service Levels Opportunity Cost

Agility Adapting to Change Testing Design & Deployment Costs


And many possibilities for competitive advantage

As discussed in Harvard Business Review, June 2005


Agility Improved strategic alignment Capitalize on new product & market opportunities….fast Lower IT / Development costs to change decisions

Consistency Lower costs of making decisions through automation Lower costs of compliance, regulatory requirements Better customer service across channels

Precision Higher revenue yield per customer interaction Lower costs through improved risk management Lower costs through less waste / fewer ‘off target’ messages

EDM provides tremendous benefits


Successful companies harness both approaches

Strategic decisions have broad business scope but occur less frequently Tactical decisions determine how to manage processes and customers Operational decisions deal with individual transactions


Enterprise Decision Management in Action:Legacy Renewal for Motor Vehicle Agency

2,000+ rules applied to 70,000 transactions a day generating $4B in revenue

13,000 hours of maintenance saved in the first year

90% reduction in problem resolution time

Reuse across batch, 170 offices, new web service

Government agencies world wide use Fair Isaac solutions 80


Enterprise Decision Management in Action:Managing Risk in Financial Services

Change time from 35 days to 2 Manual referrals reduced 75% Income increased by 1.5% Provision for bad debt reduced

by 1% 0% downtime since it went live

in February 2003 ROI ~6 months with

subsequent savings >£5M annually (>$9M annually)

of the world’s top 100 banks work with Fair Isaac2/3card accounts worldwide are

managed using Fair Isaac solutions700 million


Enterprise Decision Management in Action:Marketing Sharper in Retail

Advanced analytics deployed using business rules

Personalized recommendations in categories with no prior purchases

Deeper customer relationships

More customer visits and bigger baskets

17% began buying in new product categories a 2,000% lift

IDC ranks Fair Isaac #4 in Worldwide Automation Applications Revenue#4 of the top 10 global pharmaceuticals companies

have worked with Fair Isaac8


Enterprise Decision Management in Action:Streamlining Operations in Insurance Automated more than

3,000 underwriting rules Update strategies,

policies and rules easily, without programming

Processing 99% of new policy applications automatically

Held expenses down as applications grew by 35% and agents accessing the system tripled

of the top 50 U.S. P&C insurers use Fair Isaac technology70%insurers and healthcare payers worldwide

use Fair Isaac technology400+


Enterprise Decision Management in Action:Fighting Fraud in Telecommunications

Cut fraud losses in half with fewer “false positives”

Prevented $14 million in early-life bad debt in one year

Return on investment of 100% in less than four months

transactions are reviewed every day by one provider using our network analytics

1.5 billion of all roaming cellular call records in North America are processed with our technology90%


Things you can do

Go to Fair Isaac’s website:http://www.fairisaac.com/edm

Come to our booth - #305 Automate decisions with Fair Isaac Blaze Advisor

http://www.fairisaac.com/rules Read my blog

http://www.edmblog.com Send me questions or comments

[email protected]

http://www.fairisaac.com/edm

http://www.fairisaac.com/rules

http://www.edmblog.com/

mailto:[email protected]

Documents

Real-World Experience in Applying Business Intelligence to Business Processes