Enterprise Decision Management
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Description:
As companies struggle with information systems that don't generate the returns they promised and with IT departments awash in maintenance projects and unused reports, Enterprise Decision Management or EDM is emerging as a discipline to address these, and other, issues.
James Taylor is widely recognized as a leading proponent of the EDM approach. Not only does James work with organizations to identify and bring to market advanced decision management solutions that will better solve their business needs, he also writes and speaks extensively on the subject. He recently published Smart (Enough) Systems (Prentice Hall) with Neil Raden, he has had many articles published, is often quoted and interviewed and has a number of positions as a result of his thought-leadership in this area.
James has experience in all aspects of software development including designing, developing, researching and marketing application development technology and platforms. He frequently presents at trade shows and conferences and writes a popular blog at Smart Enough Systems as well as a second on ebizQ. You can contact James by email.
You can find recent news about James, including upcoming speaking engagements, on the News page.
By James Taylor About this blogger
Posted on June 1, 2008 at 1:38:33 AM
Posted by Carole-Ann Matignon
A topic that passionates us at Fair Isaac is analytics deployment. We have spent 52 years figuring out how to build best of breed predictive models and how to make them available. I do fall in the same category... It keeps me awake at night. Not that I am worried about it, but I find exciting to keep pushing the challenge a step further.
You may have read many great posts from my colleagues on why it is a good idea, if not a necessity, to deploy predictive models and rules together. I would only quote one of those arguments here: time to deploy. We have heard many Financial Institutions complaining about how long it takes to deploy their current analytics. Almost half of the respondents to our survey said it takes 3-9 months or longer, over a year for many of them. Assuming those models address competitive pressure or a change in consumer habits / business conditions, it feels like a long time to endure once you have defined your new strategy.
With this context in mind, we have been working on many different ways to deploys those models in combination with business rules. The obvious reason we have explored this path is that business rules can be deployed in a very short time frame (technically in seconds, practically in hours given formal quality control processes). In one word: Agility.
We started many years ago with black box deployment that are made available to IT. For example, a Java deployment could then be integrated in a Java application. Many vendors are following this lead nowadays. We have since then adopted a complementary white box integration via PMML (predictive model markup language from Data Management Group). I would like to illustrate here a handful of lessons learned in that process.
- Don't tie your predictive model life cycle to a given technology: Relying on standards such as PMML gives you independence on where you ultimately deploy your models. If you use a Java deployment out of your modeling environment, it is unlikely you will be able to deploy in COBOL or .NET natively. I recommend that you consider where you need to deploy today and anticipate as much as possible the additional environments you will need to support in the future.
- Models should be used by business rules, not the other way around: Often you have a choice of where to put you business logic: eligibility rules may end up in the model itself, or they could reference the model (if your FICO score is too low, you will not qualify for a Jumbo loan). The key reason you should elect for the latter as much as possible is that business rules change and should be maintained by business users. Your scores may not change, or not at the same pace. Forcing your logic on the modeling environment forces the business to coordinate with modelers then IT before those changes get deployed into Production. You lose in agility what you gained in precision.
- Consider your model's life cycle management as a process: There are still a fair amount of companies that exchange model definitions as a paper document with little or no traceability to the source. In today's world where governance is becoming paramount, it is important to start linking those artifacts with all necessary documentation. Besides future regulations, there is already value today in doing so. When models need to be refreshed, it helps to know where they came from and how they were developed (training data, exploratory process, etc.).
- Don't assume that Modeling and Operational data models are the same: Modeling data is often prepared in a different way. The data model may have been flattened, data attributes may have been populated / filtered to avoid missing values that exist in real life, characteristics may have been pre-calculated, etc. Code developed to access the Modeling Data Model may therefore not be optimal or even executable reliably.
- Do not underestimate the need for IT to "debug" the model code: Having a black box deployment prevents IT to access the model definition for debugging or runtime performance profiling session. Authorization mechanism and IP Protection tools can effectively protect the model definition if this is a concern. There are times when IT needs to get involved, typically during an emergency, so do not architect your solution to make it impossible.
With those tips in your hand, you can now question the technologies that you have selected and the current design for addressing decision management. How effectively can your system deploy predictive analytics and business rules together? Have you architected the process with enough flexibility?
Posted on June 1, 2008 at 1:38:33 AM
Posted by Carole-Ann Matignon
A topic that passionates us at Fair Isaac is analytics deployment. We have spent 52 years figuring out how to build best of breed predictive models and how to make them available. I do fall in the same category... It keeps me awake at night. Not that I am worried about it, but I find exciting to keep pushing the challenge a step further.
You may have read many great posts from my colleagues on why it is a good idea, if not a necessity, to deploy predictive models and rules together. I would only quote one of those arguments here: time to deploy. We have heard many Financial Institutions complaining about how long it takes to deploy their current analytics. Almost half of the respondents to our survey said it takes 3-9 months or longer, over a year for many of them. Assuming those models address competitive pressure or a change in consumer habits / business conditions, it feels like a long time to endure once you have defined your new strategy.
With this context in mind, we have been working on many different ways to deploys those models in combination with business rules. The obvious reason we have explored this path is that business rules can be deployed in a very short time frame (technically in seconds, practically in hours given formal quality control processes). In one word: Agility.
We started many years ago with black box deployment that are made available to IT. For example, a Java deployment could then be integrated in a Java application. Many vendors are following this lead nowadays. We have since then adopted a complementary white box integration via PMML (predictive model markup language from Data Management Group). I would like to illustrate here a handful of lessons learned in that process.
- Don't tie your predictive model life cycle to a given technology: Relying on standards such as PMML gives you independence on where you ultimately deploy your models. If you use a Java deployment out of your modeling environment, it is unlikely you will be able to deploy in COBOL or .NET natively. I recommend that you consider where you need to deploy today and anticipate as much as possible the additional environments you will need to support in the future.
- Models should be used by business rules, not the other way around: Often you have a choice of where to put you business logic: eligibility rules may end up in the model itself, or they could reference the model (if your FICO score is too low, you will not qualify for a Jumbo loan). The key reason you should elect for the latter as much as possible is that business rules change and should be maintained by business users. Your scores may not change, or not at the same pace. Forcing your logic on the modeling environment forces the business to coordinate with modelers then IT before those changes get deployed into Production. You lose in agility what you gained in precision.
- Consider your model's life cycle management as a process: There are still a fair amount of companies that exchange model definitions as a paper document with little or no traceability to the source. In today's world where governance is becoming paramount, it is important to start linking those artifacts with all necessary documentation. Besides future regulations, there is already value today in doing so. When models need to be refreshed, it helps to know where they came from and how they were developed (training data, exploratory process, etc.).
- Don't assume that Modeling and Operational data models are the same: Modeling data is often prepared in a different way. The data model may have been flattened, data attributes may have been populated / filtered to avoid missing values that exist in real life, characteristics may have been pre-calculated, etc. Code developed to access the Modeling Data Model may therefore not be optimal or even executable reliably.
- Do not underestimate the need for IT to "debug" the model code: Having a black box deployment prevents IT to access the model definition for debugging or runtime performance profiling session. Authorization mechanism and IP Protection tools can effectively protect the model definition if this is a concern. There are times when IT needs to get involved, typically during an emergency, so do not architect your solution to make it impossible.
With those tips in your hand, you can now question the technologies that you have selected and the current design for addressing decision management. How effectively can your system deploy predictive analytics and business rules together? Have you architected the process with enough flexibility?
Posted on May 16, 2008 at 4:58:27 PM
I have met many of you over the years at industry shows or in customer meetings, probably not all of you though, so an introduction may be in order. I am in charge of Product Management for the Decision Management tools at Fair Isaac, which means that I am responsible for elaborating the vision for our technology products, building the roadmap and making it happen with the collaboration of Product Development of course, and all other necessary functions. As you will soon discover, I have a real passion for decision management.
Several customers have insisted over time to have people like me reveal what we do, why we do it and how you will benefit from it. As this blog is changing hands, we have decided to finally give you this insider story directly from the Product team. It is an exciting opportunity to share my perspective and my excitement on our products, what new features are to be released and how we thought they would help you. I have also convinced by dear friend and colleague Carlos, head of Product Development, to join me on this blog.
Another area I would like to explore with you is our take on the direction of the marketplace, and our vision of how new technologies or new trends are impacting our industry,
Being in product management, I can't help myself... and have to ask for your feedback : -) That also includes anything else you would like me to blog about!
I am not afraid of speaking my mind but that does not mean that I am not also interested in a constructive argument: I encourage you to speak up and share your views on the blog, or for a private discussion send me an email at caroleannmatignon@fairisaac.com.
I look forward to our lively discussions.
Carole-Ann
Posted on May 16, 2008 at 4:58:27 PM
I have met many of you over the years at industry shows or in customer meetings, probably not all of you though, so an introduction may be in order. I am in charge of Product Management for the Decision Management tools at Fair Isaac, which means that I am responsible for elaborating the vision for our technology products, building the roadmap and making it happen with the collaboration of Product Development of course, and all other necessary functions. As you will soon discover, I have a real passion for decision management.
Several customers have insisted over time to have people like me reveal what we do, why we do it and how you will benefit from it. As this blog is changing hands, we have decided to finally give you this insider story directly from the Product team. It is an exciting opportunity to share my perspective and my excitement on our products, what new features are to be released and how we thought they would help you. I have also convinced by dear friend and colleague Carlos, head of Product Development, to join me on this blog.
Another area I would like to explore with you is our take on the direction of the marketplace, and our vision of how new technologies or new trends are impacting our industry,
Being in product management, I can't help myself... and have to ask for your feedback : -) That also includes anything else you would like me to blog about!
I am not afraid of speaking my mind but that does not mean that I am not also interested in a constructive argument: I encourage you to speak up and share your views on the blog, or for a private discussion send me an email at caroleannmatignon@fairisaac.com.
I look forward to our lively discussions.
Carole-Ann
Posted on April 30, 2008 at 3:17:45 PM
Posted on April 30, 2008 at 3:17:23 PM
Posted on April 30, 2008 at 2:04:44 PM
(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.
Posted on April 30, 2008 at 2:04:44 PM
(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.
Posted on April 30, 2008 at 11:04:47 AM
(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.MondayMark Greene's keynoteLive from InterACT - Ian AyresLive from InterACT - New Approaches to StrategiesLive from InterACT - Insurance in the 21st CenturyLive from InterACT - Building a Decision EngineLive from InterACT - Using Risk Applications to Drive GrowthTuesdayBernhard Nann's KeynoteLive from InterACT - Design for People, Build for ChangeLive from InterACT - Automate, Improve and ConnectLive from InterACT - The Mortgage CrisisLive from InterACT - Scoring InnovationLive from InterACT - Optimal PricingBack 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.
Posted on April 30, 2008 at 11:04:47 AM
(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
Tuesday
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.
Posted on April 29, 2008 at 7:45:54 PM
(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.
h
Posted on April 29, 2008 at 7:45:54 PM
(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.
h
Posted on April 28, 2008 at 8:47:45 PM
(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.
Posted on April 28, 2008 at 8:47:45 PM
(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.
Posted on April 28, 2008 at 8:45:48 PM
Posted on April 28, 2008 at 8:45:48 PM
Posted on April 25, 2008 at 12:10:35 PM
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.
Posted on April 25, 2008 at 12:09:19 PM
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.
Posted on April 22, 2008 at 5:16:12 PM
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:
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Posted on April 22, 2008 at 5:16:12 PM
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 priceClearly 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
