The Mindset of Decision-Making: Best Practices to Increase Agility and Visibility with Operational Decision Management (ODM)

The Mindset of Decision-Making: Best Practices to Increase Agility and Visibility with Operational Decision Management (ODM)

Ryan Trollip Practice Director, Decision Management

Agenda

Decision Management & Automation

Why now?

Decisions and Process (BPM)

Practical Decision Automation

Innovation & Optimization

Decision Automation Example

Decision Management & Automation

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Decisions Everywhere

Horizontal: best/appropriate price, cross-sell/ up-sell recommendations, loyalty promotions, exception identification, risk/fraud assessment, straight-through processing approvals

Claim • Validation • STP approval • Exception routing

Policy/Underwriting • Eligibility • Risk • Pricing

Annuity • Recommendation • Commissioning • Payout calc.

Loan • Eligibility • Risk • Pricing

Account • Cross-sell • Fraud/Alerts

Credit Card • Mkg Offers • Fraud • Credit limit

Patient Care • Drug interaction risk

warnings • Follow-up alerts

Member • Services

recommendation • Eligibility • Benefit calculation

Provider • Patient eligibility for

services

Benefits • Eligibility • Calculations

Tax Payer • Classification • Audit flagging

Citizen • Program(s)

recommendation

Land/Permits • Conveyance

processing • Contract compliance

Service Mgmt • Service prioritization • SLA alerts • Maintenance alerts • Order configuration

Insurance Banking Healthcare Government Energy/Util./Telco

Decision Management - Discipline Vs. Technology

Decision Identification/Creation

Decision Modeling

Decision Optimization

Decision Automation

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Why do I care?

Decisions are your IP

Costs money to manage change

Slow to change

Often not visible

Dispersed & duplicated, Inconsistent

Lack of clear ownership

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Difficult to manage!

public class Application { private Customer customers[]; private Customer goldCustomers[]; ... public void checkOrder() { for (int i = 0; i < numCustomers; i++) { Customer aCustomer = customers[i]; if (aCustomer.checkIfGold()) { numGoldCustomers++; goldCustomers[numGoldCustomers] = aCustomer; if (aCustomer.getCurrentOrder().getAmount() > 100000) aCustomer.setSpecialDiscount (0.05); } } }

Simple & Visible

Centralize

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public class Application { private Customer customers[]; private Customer goldCustomers[]; ... public void checkOrder() { for (int i = 0; i < numCustomers; i++) { Customer aCustomer = customers[i]; if (aCustomer.checkIfGold()) { numGoldCustomers++; goldCustomers[numGoldCustomers] = aCustomer; if (aCustomer.getCurrentOrder().getAmount() > 100000) aCustomer.setSpecialDiscount (0.05); } } }

Why now?

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Nexus of forces

Mobile Financial App Sign in to mobile financial app to access personal financial data

In-context social recommendations See social recommendations in financial app for banks. Initiate account opening from app

Secure cloud-based personal data Financial app populates cloud based personal financial data into bank’s account opening steps

Customer propensity with big data insight Bank combines customer data with big data benchmarks on external data to determine customer propensity for specific products offered during account opening – i.e. offer money market, credit cards?

Rules for credit limits & up-sell Automatic decision points on credit

limits and approval levels. Determine post account opening offers – migrate

401K account transfers?

Process for approvals & orchestration Streamlined process to combine activation

and approval routing for recommended products – checking accounts, overdraft

protection line of credit and money market

Account is activated and funded before customer logs off

Account opening with

The gap in business operations is widening

Time to open a new account in retail banking

5 minutes – best 76 minutes – worst

Availability of loan funds

2 days – best

37 days – worst

Time for conditional mortgage approval

15 minutes – best in class 4 hours - median

Source: Boston Consulting Group, The “New New Normal” in Retail Banking, 2012

Drivers to Externalize Rules

Maturity of technology

Nexus of forces

Customer expectations

Competition

Customer Centricity

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Decisions in Process (BPM & Workflow Automation)

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Simplify Business Processes Complexity leads to

Us doing the wrong things Losing sight of the customer The customer losing interest in us

“Simplicity is the ultimate sophistication” Leonardo da Vinci

Simplifying business processes means enabling and

managing business decisions Extract business rules from business processes Encapsulate business rules in decision models Enable ownership of processes and decisions

Accept low-risk applicant

Decline high-risk applicant

Process medium-risk

applicant

Age 21 to 75

Age 16 to 21

Age over 75



Process medium-risk

applicant

Previous Accident, Existing Infraction

Good Record

Age 21 to 75

Age 16 to 21

Age over 75



Process medium-risk

applicant


Good Record

New Customer

Long-standing Customer

1 or fewer Claims Multiple Claims

Age 21 to 75

Age 16 to 21

Age over 75



Process medium-risk

applicant


Good Record

New Customer



Car Type

Custom Car

Sports Car

Age 21 to 75

Age 16 to 21

Age over 75



Process medium-risk

applicant


Good Record

New Customer



Car Type

Custom Car

Sports Car

Decisions in process/apps cause complexity

Age 21 to 75

Age 16 to 21

Age over 75

Process low-risk applicant

Process high-risk applicant

Process medium-risk

applicant

Low risk

Medium risk

High risk

Determine applicant type

Identifying decisions simplifies them

Process Simplicity

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Practical Decision Automation

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Signals for Decision Management

Scale

Agility

Transparency

Ownership

Precision & Consistency

Which Decisions?

Repeatable

Non-Trivial

Measureable Business Impact

Frequency of change

Automation Complexity

If x = 1 Then Y = X

Manual Decisions

Expert Decisions

Simple Decisions

Decision Words

Determine if a customer is eligible for a product Validate the completeness of an application Calculate the discount for an order Assess which driver is high risk Select the terms for a loan Choose which loan to Fast Track

Innovate & Optimize

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Use Analytics to Improve

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Why? - Prescriptive

Deeper Analysis of Trends & Patterns

• Analysis and Exploration

• Ad-hoc Query

• Trend and Statistical Analysis

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What should we be doing? Predictive

Foresight to Plan & Allocate Resources • What-If Analysis

• Predictive Analysis

ANALYTIC-DRIVEN ORGANIZATIONS are distinguished by their ability to leverage …

All perspectives Past (historical, aggregated)

Present (real-time) Future (predictive)

At the point of impact

All decisions Major and minor

Strategic and tactical Routine and exceptions Manual and automated

All information All information

Transaction data Application data

Machine data Social data

Enterprise content

All people All departments

Experts and non-experts Executives and employees

Partners and customers

33

All Processes Operational

Management Etc.

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Optimization

Decision Automation Example

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Reference Architecture

Centralize Decision & Workflow Cache for performance (if necessary) SOA backbone

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Decision Management

Workflow / BPM

ESB / SOA

MDM

Cache

System System System

Customer Behavior & Cross Sell

Channels have different answers.. Sometimes conflicting. Inability to capture & act on

interesting behavior. events, risk, etc.

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Web Call Center Branch

Channels

Customer Cross-Sell

Capture Predict Act

Customer Data • Demographics • Account Activity • Product Holdings • Channel Activity • Information Requests • Complaints • …

Campaign Data • Contact history • Response/purchases • Test campaigns • …

Analyses Predict who is likely to

respond, based on their customer profile when receiving the campaign

Scoring

Marketing campaign process

Key Performance Predictors and Campaign Results

Rank best 3 offers

Attitudinal Data • Customer Surveys • Twitter • Discussion Forums • Blogs • …

Website recommendation

engine

Sales campaigns

Use Case - Customer Behavior - Interest

Customer hits information pages on the site Web interest captured in product/service B

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Decision Management Workflow

ESB / SOA

MDM

Cache


A B C D …

B A C D …

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Use Case – External Events

External events change internal priorities based on rules/model

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ESB / SOA

MDM

Cache

Baby Web Call

Center Branch

A B C D …

B C A D …

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Use Case – Call Center

Not interested in certain products Or tell me about it later

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ESB / SOA

MDM

Cache


B C A D …

B C A D …

6 Months

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Use Case – 6 Months Later

Workflow (BPM) kicked off by event Customer called Closed deal, update cache

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ESB / SOA

MDM

Cache


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Improve

Which product is more attractive to a wealthy customer? Who do we risk loosing most as a customer?

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ESB / SOA

MDM

Cache


BIG Data

Approach Identify

Analytics and other techniques to identify what needs improving

Model Models visualize, simplify and clarify business understanding

Automate

Automate complex decisions, processes and models

Manage Automation is great… But the more complex the more difficult to

manage/change Specialization of systems workflow, Modeling, BRMS, CRM, ECM etc. Good management of decisions and process is key to flexibility and efficiency

Improve

Analytics used to improve processes and decisions

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5 things to remember about Decision Management:

Decisions are independent of process

Brings agility, visibility, consistency, centralization of decisions

Makes process simpler & smarter

Decouples decisions from the development lifecycle

Allows the business to manage their own decisions

Wrap-up

Next Steps

See Operational Decision & Process Management in action

Learn what’s possible with Prolifics Offerings & Combination offering By Prolifics & Decision Management Solutions Discovery Workshop Application Assessment Iteration 1 Decision Modeling Training

Implement a 10 week quick start

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Ryan Trollip practice director, decision management prolifics | office: (646) 380-2895 | mobile: (774) 641-3666 [email protected] | yahoo IM: rtrollip_prolifics

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