Real-World Experience in Applying
Business Intelligence to Business Processes
James Taylor
VP Enterprise Decision Management
Fair Isaac
Introductions

Agenda
 The
problem of hindsight
 Challenges
in analytic
improvement of business
process
 Enterprise
Decision
Management
 Some
Copyright © 2006 Fair Isaac Corporation. All rights reserved.
examples
2
Business Intelligence
Alluring…
… and yet limited
Provides much more
information access and
insight
Need action not insight
Applying the insight to identify the
ideal action is too hard
Increases knowledge
worker productivity
No operational improvement
Need to use intelligence to improve
operational processes
Describes and
synthesizes past
performance
More hindsight than insight
We need to predict and optimize
future performance
Copyright © 2006 Fair Isaac Corporation. All rights reserved.
3
Applying intelligence to business processes
Lots of approaches
None really satisfactory
Process Analytics
The process is not the business
These analytics don’t use customer
information or the rules of your
business to control the process
Operational BI
Systems cannot read reports
No matter how real-time and how
focused, reports and cubes don’t
help “code” get smarter
Business Activity
Monitoring
People, people, people
BAM is still aimed at getting people
to do something. So much for
straight through processing…
Copyright © 2006 Fair Isaac Corporation. All rights reserved.
4
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 In the same way, over
and targeted
and over again
decisions
PRECISION
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CONSISTENCY
While being able to
adapt “on-the-fly”
AGILITY
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Operational decisions across the enterprise
Operational
Systems and
Process
CRM
Decision Service
Business
Rules
Rules
Models
Analytic
Models
SCM
ERP
Call Center
http://www
Website
Email
0
01
POS
Enterprise Data
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External Data
Etc.
6
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
Copyright © 2006 Fair Isaac Corporation. All rights reserved.
7
Various Analytics Can Improve Results
Descriptive Analytics
X
X
X
X
X
X
X
X
X
Decision Optimization
How are those
customers likely to
behave in the
future? How will they
react?
How do I leverage
that knowledge to
recommend the
best action?
X
X
X X
X X
X
Predictive Modeling
X
X
X
X
X
X
X
X
XX X
X X XX XX X
X X X X XXX X
X X XX
X
X X
X XX
X X XX X X
X
X
X
X X
X
X X XX
X
How do I use data to
learn about my
customers?
Knowledge - Description
Copyright © 2006 Fair Isaac Corporation. All rights reserved.
Action - Prescription
8
The business case for EDM
Days
Timeliness of Decisions
Real-time /
Point of Contact
Local /
Simple
Complexity of Decisions
Corporate Objectives
/ Trade-Offs
Static / Simple
Constraints on Decisions
Dynamic / Complex
Every 3-5 Years
Changes to Decisions
Frequent
Adjustments
Observation
Data Point
Better 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

51% had automated about 25% or less

79% had automated about 50% or less
Large number of unaddressed
decisions
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There are many dimensions to the benefits
Precision
Effectiveness
 Granularity
 Quantitative Metrics

Cost
Consistency
Efficiency
 Cost – Value Trade-off
 Activity Based

Repeatability
 Compliance
 Expected Outcomes

Speed
Responsiveness
 Service Levels
 Opportunity Cost

Copyright © 2006 Fair Isaac Corporation. All rights reserved.
Agility
 Adapting
to Change
Testing
 Design & Deployment Costs

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And many possibilities for competitive advantage
As discussed in Harvard Business Review, June 2005
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11
EDM provides tremendous benefits
Precision

Higher revenue yield per customer interaction

Lower costs through improved risk management

Lower costs through less waste / fewer ‘off target’ messages
Consistency

Lower costs of making decisions through automation

Lower costs of compliance, regulatory requirements

Better customer service across channels
Agility

Improved strategic alignment

Capitalize on new product & market opportunities….fast

Lower IT / Development costs to change decisions
Copyright © 2006 Fair Isaac Corporation. All rights reserved.
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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
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13
Enterprise Decision Management in Action:
Legacy Renewal for Motor Vehicle Agency
80
Government agencies world wide use
Fair
solutions
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FairIsaac
Isaac Corporation.
All rights reserved.

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
14
Enterprise Decision Management in Action:
Managing Risk in Financial Services
700 million

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)
card accounts worldwide are
managed using Fair Isaac solutions
Copyright © 2006 Fair Isaac Corporation. All rights reserved.
2/3
of the world’s top 100 banks
work with Fair Isaac
15
Enterprise Decision Management in Action:
Marketing Sharper in Retail
#4
IDC ranks Fair Isaac #4 in Worldwide
Automation
Revenue
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Isaac Corporation. AllApplications
rights reserved.
8

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
of the top 10 global pharmaceuticals companies
have worked with Fair Isaac
16
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
400+
insurers and healthcare payers worldwide
use
Fair AllIsaac
technology
Copyright © 2006 Fair Isaac
Corporation.
rights reserved.
70%
of the top 50 U.S. P&C insurers
use Fair Isaac technology
17
Enterprise Decision Management in Action:
Fighting Fraud in Telecommunications
1.5 billion
transactions are reviewed every day by
one
provider using our network analytics
Copyright © 2006 Fair Isaac Corporation. All rights
reserved.
90%

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
of all roaming cellular call records in North
America are processed with our technology
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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]
Copyright © 2006 Fair Isaac Corporation. All rights reserved.
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