Analytics & Optimization The Harvard Business Review focuses on Decisions

Jan112006

In this month's (January 2006)  Harvard Business Review there are a whole series of articles on decisions and decision-making. You can see the table of contents on the site. I will write something about a number of these articles over the next week or so as decisioning is something close to my heart. It also reminded me about a great article published some time ago in HBR by a colleague of mine - Little Decisions Add Up - on Decision Yield. The first one I would like to cover is this - Who Has the D? Now those of you without subscriptions will only be able to see the abstract on the link - sorry. This article is a fascinating look at how organizations can become more decisive. A couple of quotes seem to me particularly relevant if one is considering how Enterprise Decision Management can make an organization more decisive.The authors outline an approach called "RAPID" - Recommend, Agree, Perform, Input, and Decide.I liked this approach with its clear definition of roles - who recommends action, who has to agree, who has input and who actually...

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Analytics & Optimization If you are building a tax system, use a business rules engine. Please!

Jan102006

Another interesting piece in Computerworld today - Buggy App Causes Tax Problems in Wisconsin. This sounds like the classic piece of government tax software - lots of problems. The system "was designed to automatically process sales and use taxes and to determine how much revenue is distributed to Wisconsin's 58 counties and two professional sports districts". As I was reading it, though, some great comments leapt out at me:She attributed the bulk of the problems to "design flaws" in the system as delivered by CGI-AMS in December 2002. In an e-mail, a CGI-AMS spokeswoman said that "the system was designed according to the original specifications. We are committed to working with the DOR to resolve outstanding issues" without charge. Well this is a classic. The state says it is all caused by design flaws while the developer says it was designed to meet the specifications. Of course, both of these could be correct! Just becuase a system is designed to meet the specifications written at the start does not mean it will not have design...

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Customer Engagement But what about the Celtics’ website?

Jan102006

I saw this article in Computerworld today - Celtics Turn to Data Analytics Tool for Help Pricing Tickets. Now this real-time display of ticket sales trends stuff sounds great and I am sure it really helps experienced sales executives figure out how to price remaining tickets etc. I have two questions though: What about less experienced sales executives? How are they meant to interpret this given their lack of experience? What about the website? Their website links to Ticketmaster for tickets but the pricing there is not dynamic, not informed by the data analytics they are doing. Now what if the Celtics had taken an EDM approach instead? They would have taken the rules of thumb of their experience staff, plus any rules the NBA has about how tickets can be priced, and combined those with predictive analytic models that predicted how likely a game was to sell out or how likely a particular area of the stadium was to have open seats etc. With these they would have built a pricing engine that sat behind the CRM systems the sales executives use and made that decision...

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Analytics & Optimization Enhancing Legacy Systems with business rules

Jan062006

Interesting piece in Insurance and Technology this week - Enhancing your legacy. Lots of good discussion about the challenges and options with legacy and then this fascinating question:How can insurers guarantee that new systems are designed for the future?The various people being interviewed made a number of good points which made me think about business rules in this context. "Design flexibility into the system"This is the key benefit of using a business rules management system as part of a new system (or to modernize part of a legacy system). Using business rules, especially using templates to define classes of business rules, allows the system to evolve as regulations, best practices and policies change. "Implement components that are user-configurable, requiring fewer programmers to maintain"Again, key benefit of business rules is the ability of business users to maintain their own rules allowing programmers to move on to new things. In my section on legacy modernization I have some stories about how to do this without replacing the...

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Analytics & Optimization If an automated compliance framework is the problem, business rules may be the solution

Jan042006

Interesting post by Mitch Irsfeld in the CMP compliance blog. He discusses the need for sustainable compliance:Sustainable compliance can mean the ability of a tool to easily integrate changing requirements and add new policies and controls processes, and add new stakeholders to the workflow. It can also mean the tools are built using open standards and deployed in a services oriented architecture (SOA). An SOA can also ensure reuse of the software for several different regulatory compliance and risk management initiatives. Still others consider sustainability to include the ability to tie compliance tasks with decision support and executive information systems...He discusses some other aspects of sustainable compliance and summarizes by sayingSustainability can and often does comprise all of the above. Ultimately, sustainability is an end user goal, not a feature of a product or service. Sustainability is driven by the need reduce the ongoing cost of compliance activities. Most often, but not always, involves automating repetitive tasks. Nevertheless,...

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Analytics & Optimization How many rules is REALLY typical?

Jan042006

In his blog recently (well not that recently), Marco Ensing stated:In all my years of experience, I've never encountered a client with more than 500 rules in a single rule policy. The reason is not any scalability issues on inference engines. The reason is simple. It is difficult for a business expert to manage a very large rule policy maintain a very large rule policy verify and validate a large rule policyNow I have to take issue with this. I think Marco is talking to a different group of customers than I am. Clearly I talk to those with more need for a business rules management system and with more complex problems but I speak to many who have thousands of rules. Take a specific example - Auto Club Group and their auto-underwriting system. Now auto underwriting is not the world's most complicated kind of insurance, even when you are trying to handle multiple states. Despite that they have 3,000 rules - far more than 500. These rules are managed and maintained by the business user (they change them every week) and they are able to verify and validate and...

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Analytics & Optimization Predictive Analytics and Insurance

Dec202005

Interesting news on discussion of predictive analytics at the Casualty Actuarial Society (CAS) - PREDICTIVE MODELING RAISES OPPORTUNITIES AND ISSUES FOR ACTUARIES AND INSURERS, CAS ANNUAL MEETING IS TOLD.  Typical quote:"The use of predictive modeling techniques is becoming increasingly popular among a wide variety of insurance companies because of its potential to give insurers – especially personal lines insurers – an edge in competitive markets."A number of key issues were identified at this meeting: Don't blindly implement - make sure you understand the impact Explicability - make sure you can explain how the models work to a regulator Right tools - use appropriate tools An Enterprise Decision Management approach works perfectly for this. Business rules and scorecards make it easy to explain decisions. Unlike other kinds of predictive models, Fair Isaac scorecards are specifically designed to show how and why a particular score resulted. Business rules are also easy to understand and make it easy to track which rules fired for a given...

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