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What IS Enterprise Decision Management or EDM?

Enterprise Decision Management (EDM) is an approach that automates, improves and connects decisions across the enterprise. Businesses using EDM gain much greater control over the results from high-volume operational decisions. EDM aims to increase the precision, consistency and agility of these decisions while reducing the time taken to decide and the cost of the decision.

Enterprise Decision Management, commonly abbreviated to "EDM", entails designing, deploying and managing automated decisions. These decisions are typically those decisions that an organization uses to manage its interactions with customers, employees and suppliers. Computerization has changed the way you approach decision-making by enabling decisions to be based on historical data, prior decisions and their outcomes, corporate policies and regulations. EDM takes this computerization to the front-line by focusing on the operational decisions taken by the staff that interact directly with customers and to the systems that support them or provide self-service to your customers directly.

EDM is a planned, methodical approach to automating decisions. It is not about automating decisions as a side-effect of some other activity such as automating a process or implementing an ERP system but a deliberate focus on decisions. The key to doing this, in the words of Bill Fair, one of Fair Isaac's founders, is to "grab the decision by the throat and not let go". You must treat decisions, in other words, as separate entities that can be addressed distinctly. It is not enough, however, to automate a decision, you must improve it also. Simply automating bad decisions, like automating bad processes, results in little gain in anything except speed. You want to identify how you would like to take a decision and then automate that improvement. Improving a decision means not only working on every aspect of it to see where you can improve it but also establishing processes and mechanisms for monitoring and constantly improving that decision over time. It is often this improvement over time that offers the greatest value in EDM.

EDM is focused on operational business decisions - those taken in large volume, every day. They can be clearly differentiated from "strategic" decisions such as where to open a new store or when to drop a product line that are rarely the same twice and that simply do not happen that often. Clearly these are important, but you are not likely to automate them or try and make them in "real-time". These "blue collar" operational decisions are typically, though not always, part of interactions with customers or prospective customers. These decisions have the highest volume and greatest time pressure of any in your business. You can probably think of many examples including approve/decline, next-best-offer to make a customer, authorization of a sale, fraud detection in a claim, account application processing and so on.. Typically you must make these decisions in real time or near-real time. Indeed, you may find that these decisions must be automated to deliver the requisite throughput and timeliness. There is a gray area between strategic and operational decisions. These "tactical" decisions determine the way in which you will manage processes and customers such as decisions about which segments of a customer base will receive which precise offer. You might support these decisions with EDM systems but you are unlikely to completely automate them. Operational decisions can also be considered as those that require the shortest "decision latency", a concept developed by Richard Hackathorn. Decision Latency is the time it takes to receive an alert, review the analysis, decide what action is required, if any, based on knowledge of the business, and take action. Operational decisions require very low decision latency.

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