Enterprise Decision Management - a Weblog

Live from InterACT - It's a wrap

(Posted by guest blogger, James Taylor)

Here's a quick summary of the posts from InterACT.  Hope you enjoyed it.

Monday

• Mark Greene's keynote
• Live from InterACT - Ian Ayres
• Live from InterACT - New Approaches to Strategies
• Live from InterACT - Insurance in the 21st Century
• Live from InterACT - Building a Decision Engine
• Live from InterACT - Using Risk Applications to Drive Growth

Tuesday

• Bernhard Nann's Keynote
• Live from InterACT - Design for People, Build for Change
• Live from InterACT - Automate, Improve and Connect
• Live from InterACT - The Mortgage Crisis
• Live from InterACT - Scoring Innovation
• Live from InterACT - Optimal Pricing

Wednesday

• Live from InterACT - An Enterprise Decision Engine for Originations
• Live from InterACT - Changing the game
• Live from InterACT - What do bankers worry about in the current crisis?
• Live from InterACT - Closing Keynote

This may be my last post on this blog - it's been over 250,000 page views, more than 800 posts and about 3 years, and it's been fun. Hope to "see" you all on my other blog - www.smartenoughsystems.com/wp  

 

Visit my Smart (Enough) Systems Blog(Subscribe using RSS) or my ebizQ blog (RSS). Buy the book or visit the companion wiki.

Live from InterACT - What do bankers worry about in the current crisis?

(Posted by guest blogger, James Taylor)

Fair Isaac recently worked with TowerGroup, a well known analyst firm in financial services, to survey 108 executives at the top 50 U.S. banks and credit card issuers. The press release is here and there were a number of interesting results but two caught my eye:

• The top investment area among respondents in the coming 12 months is in the area of analytics, with fully 75 percent planning such improvements
  This is interesting as this is the opinion of people who already make huge investments in analytics. Clearly, even if you are already a very sophisticated analytic organization, analytics deserves (or perhaps even requires) an ongoing focus.
• While roughly half of respondents currently have an enterprise-wide fraud solution in place in their organizations, those who do not are most daunted by the perceived complexity of implementing one
  I was impressed that half already had an enterprise-wide solution but concerned about the other half. It's pretty clear that crooks will target any gap in your fraud defenses and so an enterprise-wide approach is really important.

Ted Iacobuzio of TowerGroup has a great quote in the press release:

No one doubts the seriousness of the current credit crisis, but it’s noteworthy that the largest financial institutions are more likely than others to characterize its impact as severe or worse. The fact that these larger institutions took on more risk in recent years and are feeling more pressure now that delinquencies are rising and defaults are increasing certainly has something to do with that perspective.

This reminded me of the presentation Joe Breeden gave yesterday in which he laid out the pattern of behavior that drove lenders, particularly large ones focused on how Wall Street sees their results, to  put themselves on the path to the current crisis.

Ted is about to present and I will be blogging that over on the Smart (enough) Systems blog.

Visit my Smart (Enough) Systems Blog(Subscribe using RSS) or my ebizQ blog (RSS). Buy the book or visit the companion wiki.

Live from InterACT - Tuesday Summary

(Posted by guest blogger, James Taylor)

Here's a quick summary of the posts so far at InterACT. You can follow the full series over on the Smart (enough) Systems blog and subscribe by RSS or Email so you don't miss anything.

Monday

• Mark Greene's keynote
• Live from InterACT - Ian Ayres
• Live from InterACT - New Approaches to Strategies
• Live from InterACT - Insurance in the 21st Century
• Live from InterACT - Building a Decision Engine
• Live from InterACT - Using Risk Applications to Drive Growth

Tuesday

• Bernhard Nann's Keynote
• Live from InterACT - Design for People, Build for Change
• Live from InterACT - Automate, Improve and Connect
• Live from InterACT - The Mortgage Crisis
• Live from InterACT - Scoring Innovation
• Live from InterACT - Optimal Pricing

Back to the Smart (enough) Systems blog for the rest of the show, barring a last summary.

Visit my Smart (Enough) Systems Blog(Subscribe using RSS) or my ebizQ blog (RSS). Buy the book or visit the companion wiki.

Live from InterACT - Bernhard Nann's Keynote

(Posted by guest blogger, James Taylor)

Back to this blog for a session on Fair Isaac's product road map presented by Bernhard Nann, Fair Isaac's CTO. Fair Isaac is in the middle of a major evolution in their decision management solutions and in their platform for these applications. Today decision management solutions tend to be fragmented both by line of business and by customer life cycle - fraud, originations, credit cards, auto loans are all separate. Each of them is quite sophisticated but they are not connected, meaning that the decision process is discontinuous. Risk managers cannot manage the whole life cycle and criminals can use the gaps to target companies. This has to change he says.

The market for decision management applications has changed for a number of reasons.

• Risk management increasingly crosses across silos and product lines, as does customer value assessment. Deposit, investment and brokerage accounts are being combined with credit accounts.
• Chief Risk Officers are more common in financial services and more central to an overall risk strategy. Companies are talking about a corporate foundation for risk that can be pushed out to multiple countries and business lines while still taking advantage of local opportunities - control but flexible control with localized rules and models for local regulations, opportunities and customer preferences.
• Banks and insurance companies are also looking to optimization and adaptive analytics, analytics that have a closed loop response, to improve results.
• Finally, all of this comes with a greater pressure for transparency from Basel II and similar regulations - monitoring, reporting and notification must cover the whole life cycle and all products.

Technology too has been changed.

• Distributed, component-based computing has become mainstream allowing a service-oriented architecture or SOA.
• Disparate systems no longer require integration using batch transfers of data but take advantage of dynamic, more real-time integration.
• The externalization of business logic has become mainstream with business rules management systems supporting business logic across the enterprise and across multiple decision management systems - many point solutions can share rules and decisions.

These two sets of trends and driving the new set of decision management systems Fair Isaac is delivering.  These new applications will be connected so that decisions can be managed consistently across the life cycle and across products and so that preventative, not remedial, decisions can be made by applying what is learned at one point to another. These connected systems also improve visibility by consider customers across products, across accounts and over time. Integration of these systems into the corporate IT architecture is easier also, a critical issue as financial services organizations standardize on a common IT platform with more re-use, less data and logic replication. Lower total cost of ownership is critical both on the technical side and on the business side - the same code, the same data but also the same management of rules, same development of models. Organizations want to manage common logic and common models once and share them across multiple systems and use the same skills to customize their behavior in different countries. Fair Isaac feels it can do all this because they understand how to build decision management solutions, how to develop and use decision platform products like business rules management systems and analytic models. Their partnership with IBM allows them to use IBM's middleware - WebSphere - as a base. The new products will share a number of items:

• Shared data model to ensure data can be shared effectively across decisions
• A single business rules management system, Blaze Advisor, will manage the business logic across all the applications enabling decision logic, models and flows to be shared and reused
• IBM's Enterprise Service Bus (ESB) makes integration of these decision management systems, and the components within them, easy and straightforward
• A unified reporting environment provides transparency and understanding across the systems and customers
• A single case management environment allows cases to move between groups and reflect what happens at each stage

Bernhard gave an overview but pointed a session that I will be blogging on the Smart (enough) Systems blog later for more details. Fair Isaac plans to roll out new versions of all its core applications over the coming years that support connected decisions and are built on a service-oriented component architecture.

Back to the Smart (enough) Systems blog for the next few sessions
 

Visit my Smart (Enough) Systems Blog(Subscribe using RSS) or my ebizQ blog (RSS). Buy the book or visit the companion wiki.

Live from InterACT - Monday Summary

Posed by guest blogger, James Taylor)

Here's a quick summary of the posts from today (and yesterday) at InterACT. You can follow the full series over on the Smart (enough) Systems blog and subscribe by RSS or Email so you don't miss anything.

• Mark Greene's keynote
• Live from InterACT - Ian Ayres
• Live from InterACT - New Approaches to Strategies
• Live from InterACT - Insurance in the 21st Century
• Live from InterACT - Building a Decision Engine
• Live from InterACT - Using Risk Applications to Drive Growth

More tomorrow - Bernard Nann's keynote on this blog, everything else over on the Smart (enough) Systems blog. 

 

Visit my Smart (Enough) Systems Blog(Subscribe using RSS) or my ebizQ blog (RSS). Buy the book or visit the companion wiki.

Live from InterACT - Mark Greene's Keynote

(Posted by guest blogger, James Taylor)

As Mark is the CEO of Fair Isaac I thought I would blog this one over on this blog rather than on the Smart (enough) Systems blog where the rest are going to be.

Mark started off talking about the increased risk management issues prevalent in the markets today - the sub-prime crisis - and that have made it a tough year for financial services. Financial services companies are facing a range of old and new issues like rising risk, changing payment behaviors (what gets paid off first), organic growth, fraud, consolidation and its focus on operational efficiency, competitive pressure on profits and the old standby of compliance with new and old regulations. Managing risk in this environment is key and this, managing risk, is the theme of the conference.

A recent Tower Group study of banks found that the #1 technology imperative for coping with the current situation is improved analytics. This is clearly Fair Isaac's focus - new and improved analytic models and techniques. Fair Isaac scores, technology and approaches are critical in assessing risk, detecting fraud and managing clients. The challenges of the market are not lost on Fair Isaac, specifically whether the FICO score stood up to the sub-prime market. Fair Isaac feels that the score continued to do what it does but that, as always, it must be combined with other good lending practices like loan to value ratios. Part of the problem with the sub-prime crisis was an over-reliance on the score as a stand-alone item.

That said, clearly Fair Isaac could help in new ways beyond just educating companies on using scores. Innovation includes:

• Forward-looking credit capacity score
• Portfolio performance sensitivity
• Portfolio valuation based on some of the same analytics as the Basel II work
• Optimization, through the acquisition of Dash

Besides this research oriented stuff, Fair Isaac has also been working on FICO 08, a new FICO score. The plan was to improve the score particularly in its ability to predict risk in credit shoppers and sub-prime borrowers. The score should be available from the bureaus this summer.

Fair Isaac is also investing in its software platform for decision management. Using Blaze Advisor for business rules and Model Builder, Fair Isaac's analytic platform, the solution is based on the IBM Middleware platform. This was announced last year and new applications based on this will start coming towards the end of the year and will be discussed tomorrow in the keynote.

Research Exchange Partnership was another program announced last year to work on client's premises to solve tough problems. One of these was an optimization factory for HSBC where the research was to introduce uncertainty into the models - something I am sure Ian Ayres would appreciate given his focus on confidence intervals. The second was to help a large Canadian company to establish analytics to improve share of wallet by focusing on their most profitable customers and trading off profitability and attractiveness to customers. In particular new work on segmentation was critical - Action Segments is the name of the new product. Nominations for the next REP projects are open so it will be interesting to see what projects come up.

Mark closed with a nice little factoid - 10,000 people have attended InterACT over the years in the US, Europe, Japan and most recently China. Ian Ayres is up next and I will blog over on the Smart (enough) Systems blog for the next few sessions, including his.
 

Visit my Smart (Enough) Systems Blog(Subscribe using RSS) or my ebizQ blog (RSS). Buy the book or visit the companion wiki.

InterACT 2008 and Social Media

Posed by guest blogger, James Taylor)

Well it's almost time for InterACT - I will be arriving on Sunday and will blog furiously for three or so days. I will post summaries here on the edmblog and blog about the two Fair Isaac keynotes here also. The rest will be live and independent over on the Smart (enough) Systems blog (you can subscribe using RSS).

I will also be using twitter at the conference and you can follow my posts at twitter.com/jamet123 and the conference at http://hashtags.org/tag/interact2008/

Anyone who is attending and using twitter, please go to hashtags.org and follow the bot so you can include #interact2008 in your twitter posts and contribute to the collective memory.

You can get more information on the event here. I hope to see you there.

Visit my Smart (Enough) Systems Blog(Subscribe using RSS) or my ebizQ blog (RSS). Buy the book or visit the companion wiki.

Using EDM to build effective sales scripts

Posed by guest blogger, James Taylor)

CRM Daily had an interesting piece on the power of scripting sales. The article's main focus was on how to disqualify bad prospects quickly but it made me think about the power of Enterprise Decision Management or EDM to improve sales scripts. Let's take some of the points in the article. First, she discusses three keys to a sales call from which I have extracted some key points:

trust, respect, brand recognition, quality, and price

Clearly these 5 points are important to closing a sale. Effective use of EDM can help with these points. Rules-driven scripts can take account of known preferences and restrictions, to ensure that the sales person does not step over lines the prospect laid down in their preferences. Companies can use adaptive control, a key element of EDM, to see what phrase(s) bring out the best brand recognition in prospects. Testing different ways of naming the company or product to see which one resonates can make the overall process more effective. EDM cannot, at this point, make a product better but predictive analytics might help identify which elements of the product will make it seem high quality to this particular customer. Lastly we can use EDM to optimize the price for this customer.

Rapport is about commonality. Rapport-builders look for attributes or experiences they share with prospective clients

So can EDM help generate a script that will build rapport? Perhaps, if you have information about the customer and their prior experiences that can be used to generate an effective script. You could ask if a prior problem has been resolved, ask how they like something they purchased recently etc. This data exists and using it will make your sales person seem like they cared enough about the customer to check.

Then explain what you are selling. Continue with two compelling features of what it is you are selling/offering -- this is your offer

But which features or benefits? Again, predictive analytics might help you find the features that are most compelling to this particular customer so that they can be used in the script.

Your script should be 45 words at most

EDM can make sure they are the right 45 words. Here are some other posts you might enjoy:

• Is your system smart enough to make your customers feel good?
• Data Mining, Predictive Analytics and Markets of 1
• Using EDM to deliver Relationship-Based Pricing

Don't forget to say hi if you see me at InterACT next week - there's a photo of me here.

Visit my Smart (Enough) Systems Blog(Subscribe using RSS) or my ebizQ blog (RSS). Buy the book or visit the companion wiki.

A chance to win a camera by talking about rule bases

Posed by guest blogger, James Taylor)

Valentin Zacharias is conducting an online survey on the development of rule bases and would really appreciate your opinion! The survey is very short and should only require a few minutes to complete. Any additional feedback or comments are also very welcome. If you answer all questions and enter your email address at the end of the survey, you have a chance to win a Canon SD1100 that will be given to one of the participants.

To participate please go to: surveymonkey.com/s.aspx?sm=sZ1_2fndMD1QnCLgWQfR_2bsBw_3d_3d

The goal of the survey is to give an overview of the kind of methods and tools actually used for the development of rule-based systems (with a focus on verification and validation). It also tries to identify some of the challenges facing rule-base development. The results of the survey will be publicly available. Drop him a note or enter your email address at the end of the survey to have them sent to you. The results will also be accessible on the website vzach.de/blog/ and I will likely blog about them too.

<Apologies for cross-posting to all 3 blogs>

Visit my Smart (Enough) Systems Blog(Subscribe using RSS) or my ebizQ blog (RSS). Buy the book or visit the companion wiki.

10 reasons YOU should be coming to InterACT even if you aren't a Fair Isaac client

Posed by guest blogger, James Taylor)

1. It's at the Palace Hotel in lovely San Francisco
2. Ian Ayres, author of Super Crunchers is speaking
3. The analytic symposium is a complete math-geekfest and a chance to hear about some leading edge analytic techniques and approaches
4. Financial Services companies can learn how to cope with the current banking crisis with sessions on managing highly indebted consumers, risk management, helping the unbanked, the mortgage crisis, better collections strategy and much more
5. Insurance companies can find a whole track on claims, underwriting, customer service and marketing in the new world of insurance
6. John Rymer of Forrester, one of my favorite analysts, is speaking on dynamic business applications, a really interesting area
7. Companies of all shapes and sizes can learn how to detect, manage and control fraud from internal and external threats
8. The growing array of regulations - Basel II and others - are covered so you can grow through your response to regulation not collapse under its weight
9. Scoring, of course, will get a thorough working over so you won't be confused about the benefits and limitations of scoring - unlike so many mortgage companies
10. Lastly, and most importantly, I will be there blogging and I want to meet you!

Once again the EDM Blog is offering a discount for readers - just enter the discount code SFJT when you register and get the unlimited registration for just $1,345. This is a great deal!

You can register here and get more information on the event here. I highly recommend the show and I hope to see you there.

Visit my Smart (Enough) Systems Blog(Subscribe using RSS) or my ebizQ blog (RSS). Buy the book or visit the companion wiki.