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James Taylor

I will use this blog to discuss business challenges and how technologies like analytics, optimization and business rules can meet those challenges.

About the author >

James is the CEO of Decision Management Solutions and works with clients to automate and improve the decisions underpinning their business. James is the leading expert in decision management and a passionate advocate of decisioning technologies business rules, predictive analytics and data mining. James helps companies develop smarter and more agile processes and systems and has more than 20 years of experience developing software and solutions for clients. He has led decision management efforts for leading companies in insurance, banking, health management and telecommunications. James is a regular keynote speaker and trainer and he wrote Smart (Enough) Systems (Prentice Hall, 2007) with Neil Raden. James is a faculty member of the International Institute for Analytics.

November 2008 Archives

Copyright © 2008 James Taylor. Visit the original article at New blog location.

This blog location is going to be retired and I will continue to blog at a new location - jtonedm.com. You can find all my posts there and can subscribe using the new feed feeds.feedburner.com/jtonedm.

Neil is blogging over on Intelligent Enterprise - check out www.intelligententerprise.com/blog/nraden.html

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Related posts:

  1. Read some of the best blog posts on Intelligent Enterprise
  2. Howard Dresner recommends the book
  3. James interviewed on the BizRules Blog


Posted November 29, 2008 9:44 PM
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Copyright © 2008 James Taylor. Visit the original article at New blog location.

Well as you might have noticed I have a new blog location - jtonedm.com (JT on EDM). The blog on smartenoughsystems.com/wp is now retired and all the posts will redirect here.

If you have a link to the smartenoughsystems blog please move it - just replace smartenoughsystems.com/wp with jtonedm.com (note the dropping of the /wp).


Posted November 29, 2008 9:02 PM
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Copyright © 2008 James Taylor. Visit the original article at More analytics in the cloud.

Having posted about Zementis - a company that allows you to deploy analytic models into the amazon coud - before I now see that Mathematica is getting in on this whole cloud thing. Personally I think that analytics and decisioning are ideal for operating in the cloud. Analytics take a lot of computing power when models are being developed, making the flexibility of cloud computing valuable. Decision management in the cloud means that any process, anywhere can connect to the cloud and get the questions answered it needs to operate effectively.

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  1. Buying predictive analytics like books - Zementis ADAPA
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Posted November 26, 2008 1:14 AM
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Copyright © 2008 James Taylor. Visit the original article at 1:1 Marketing works for the NHL.

Interesting article on how the NHL used the power of personalization and targeting (or extreme personalization) to improve results. It does not talk about how they do this but clearly they have made things like the front cover choice for their catalog and key elements of their web presence decisions so they can make them differently for each person they target.

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  1. Predictive Marketing (Lessons from the CMO Summit #3)
  2. Here’s why decisions matter to the 8 Ps of Marketing
  3. Transpromotional marketing with EDM


Posted November 26, 2008 1:07 AM
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Copyright © 2008 James Taylor. Visit the original article at Results of a survey on verification of business rules.

Some time ago I linked to an interesting looking research project and the results are now available - Development and Verification of Rule Based Systems - a Survey of Developers. Valentin did a nice job summarizing the results, comparing them to a previous study of more academic projects and drawing some distinctions between academic and commercial projects. Enjoy

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Posted November 24, 2008 7:40 PM
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Copyright © 2008 James Taylor. Visit the original article at The small impact of business rules on the big players.

Jim Sinur brought up an interesting point today when he blogged IBM, Microsoft, Oracle and SAP have bought Business Rule Technology. What’s up with that? The big players seem to be toying with business rules - there’s plenty of activity but not much understanding or commitment.

  • SAP bought Yasu but until recently did not show much sign of “getting” the potential (though Sandy’s post on a recent SAP presentation sounds more hopeful)
  • IBM is going to buy ILOG but we don’t have many details and the issue of how the WebSphere and Information Management/FileNet groups will integrate rules into their stories remains an open issue - there are folks at IBM who get it but concerns among watchers that the two groups will not make it work between them and only one piece (probably WebSphere) will end up with rules.
  • Oracle bought Haley/Ruleburst but has made it clear that its platform products for BPM/SOA will continue to use their JESS-based rules implementation and Decision Service API. This raises an interesting question about Oracle’s future plans - another acquisition (Blaze Advisor, say) or development of their own (as Savvion did recently) as part of the Fusion plans .
  • Microsoft meanwhile remains completely opaque with little bits of this and that as well as at least one company (InRule) with a perfect product should Microsoft decide to buy something.

So, will any of them “get it”? If so which one(s)? Guess we will have to wait and see but we live in interesting times…

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  1. First thoughts on the IBM/ILOG announcement
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Posted November 21, 2008 12:09 PM
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Copyright © 2008 James Taylor. Visit the original article at In the coming recession put your customers first with decision management.

I was pointed to a post today on the topic of customer service (Another Day, Another Customer-Service Nightmare on the EconoWhiner) that pointed out that companies

need to provide quality service and quality customer service if they’re going to survive an economic downturn as severe as this one?

Now I am not going to pick on AOL or even argue that his particular problem with AOL is the result of poor decision management (basic data management seems like the primary cause) - although making the billing decision a real decision not just a price look up would have allowed for discount rules based on problems.  What struck me was how many companies are listed in the comments! Clearly bad customer service is epidemic and, thanks to the internet, companies with bad customer service are going to be “outed”.

If you believe, as I do, that better customer experiences and putting your customers front-and-center will help you survive the recession, what can decision management do to help? First you could read my series of posts on using decision management to deliver a 21st Century Customer Experience. More specifically:

  • You can make sure that your automated systems actually treat customers as people by making customer treatment decisions explicit and then putting your customer service people in charge of how those decisions get made.
  • Take this approach to the self-service applications you have for your customers and you can make sure self-service helps rather than hinders
  • You can also make sure your agents know how to treat your customers by providing them with decisions rather than data, targeted actions not general purpose lists etc. Your agents need to focus on the conversation and the customer, not on reading and analyzing customer data.
  • Because customers respond to every decision you make as though it was personal and deliberate you can ensure that customer treatment decisions actually are by really personalizing your interactions
  • You can also use decision management to make better churn and retention decisions and so retain customers - especially profitable ones!
  • Using decision management to take control of customer treatment decisions helps make sure all your people and all your systems treat your customers the way you want to and so institutionalize great service

Check out my posts on Customer Experience for more thoughts

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Posted November 20, 2008 4:13 PM
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Copyright © 2008 James Taylor. Visit the original article at First Look - Predigy.

Predigy is a technology originally developed by Intelligent Results (founded in 2001) that was acquired by First Data in 2007. It was originally focused on the military (particularly on the analysis of unstructured data) but has subsequently moved into commercial applications. Predigy is now a decisioning platform with some applications in banking, collections, telecommunications and utilities. These applications are primarily in marketing, customer care, loyalty, retention, risk, fraud, collections and recovery. The intent of the platform is to support data-driven decisions throughout the customer lifecycle.

Predigy supports decision trees, predictive models and strategy design. It provides an offline business environment with some simulation and a production engine. This is all provided in a hosted environment and is web based as part of First Data’s environment. Predigy has four main components:

  • Cluster
    An automated approach to finding natural groupings in portfolio accounts -Partitioning Around Medoid (an instance that best represents a cluster) is a proprietary clustering technique available only in Predigy. The use of the Medoid means that each cluster has an exemplar.
  • Modeler
    Develop and deploy new models. Strong points are fast deployment, comparison tools and the ability to use directly in strategies. The models can include unstructured data and, like a growing range of modeling tools, provide a lot of automation of the leg work involved in developing models.
  • Strategy
    Offline design of decision tree/model combinations - strategies - combined with the ability to use data to see business impact through simulation of strategies with various datasets.
  • Production Engine

The product is increasingly integrated with First Data data stores and this means less data work for a typical FD customer. The base environment offers datasets, variables, formulas, samples, strategies, models, clusters and reports. Some interesting points:

  • Variables can be explicit or calculated or even models - integration means that everything, even models, shows as a variable. Also supports formulaic clean up of data with extra variables -to fill in blanks for instance, transform and limit.
  • Modeling is all automated, can use structured and unstructured data without issue. The automated unstructured analysis simply looks for strings and maps to outcomes - explicit entity identification in unstructured data is manual. The environment is aimed at modelers and focuses on automating base tasks like data cleaning and finding variables.
  • Formulas allow you to define calculations about which you care in the tree. Formulae can be very complex and then built into decision trees. There is a function builder interface as well as java like language for modelers.
  • Models can be created in other tools and use Predigy as the execution engine - the user simply pastes the model definition into a formula. PMML support is under development
  • Sampling is support for building/testing, focusing in on a subset of population.
  • Strategies are a decision tree environment. The tool tries to simplify the trees required by using models as characteristics and cuts. The user can specify costs and benefits of different actions on nodes for simulation/analysis and can drill into the data to see cost/benefit of the strategy. The decision making leaves on the trees have codes for either the customer’s own downstream system or the FD systems/call center/letter shop. The trees provide strategy code and action code to support Champion/Challenger.
  • Clustering technology (PAM) is undirected model development - what are the groups in this dataset. Because medoids are real people the clusters can be described. The modeling environment is for targeting specific outcomes - directed analytics.
  • The simulation tool flows sample data through the tree. The user can ask what would have happened if I had deployed this in the past. They can apply factors/constants/formulae to see what the outcomes would look like - target response rates for a given profit or return given a known response rate for instance.

Predigy is a nice, all-in-one decisioning platform squarely focused on the customer lifecycle, especially the customer credit lifecycle. It’s hosted platform and integration with First Data datasets are interesting capabilities. Currently it has no other rule formats- just decision trees, though this may change.

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Posted November 20, 2008 3:32 PM
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Copyright © 2008 James Taylor. Visit the original article at On Best Buy’s success and being decision-centric.

Last week I saw a post comparing Best Buy and Circuit City - one thriving and one going into bankruptcy - and it made me think about the role of decision management in Best Buy’s success. I have head Best Buy present various times an a number of elements of their successful customer-centricity strategy are decision-centric.

The first thing to note is that, overall, Best Buy focuses not on customer acquisition but on growing existing customers - especially since the best customers drive 4x the revenue of an average one. This focus on customer development and retention is common in decision-centric companies as existing customers generate lots of behavioral data that can be used to develop analytics and so improve decision-making. It also generates a great ROI.

One thing Best Buy has done is develop some very sophisticated personas. These are not based on judgmental criteria but the result of sophisticated analytics (I have discussed using analytics to improve personas before) and these models are used to asses the different demographic segments visiting each store so that they can be targeted with different store facilities and styles. Store layout and review for Best Buy is now very customer-centric rather than focused on store operations. This same insight into customer segmentation is used to change outbound marketing to a balance of mass-marketing, mass-personalized and truly personalized materials. This segmentation then is used not just as a decision support tool - to change the layout of stores - but also in an automated, decision management environment. This broad use of segmentation is another characteristics of decision-centric companies.

Best Buy uses analytics for more than just segmentation, however, additionally developing models to find products relevant to customers and to predict when they will be interesting. These purchase patterns over time are then used to drive direct marketing campaigns, increasingly across different channels. Some of these purchase patterns are long so Best Buy also uses the analytics to keep customers engaged in what can be a long sales cycle. For instance Home Theater is about 12 month cycle - 5 months dreaming, 5 months researching, 2 month active buying and Best Buy targets the 12 touches or so this involves. They also use these analytics to personalize the offers made through the loyalty program with targeted messaging, special offers in your areas of interest and so on. In the future they want to connect all this insight and apply more of their loyalty vision. This very fine-grained and targeted insight was described in a McKinsey concept of “cell-level insight” (see Capitalizing on customer insights - subscription required). The paper uses Best Buy as an example. One of the first things Best Buy did was hook up its revenue to individual customers, a key step to providing “cell-level” data. Once they had this “cell-level” insights Best Buy uses decision management to turn these insights into actions - you must embed these insights into “key decisions” to get value.  Best Buy, for instance, applies these insight to their direct marketing, offers and increasingly to the systems their staff use when interacting with a customer. Decision-centric companies are focused on using fine-grained analytics across channels and this focus on time-based analytics is where the more sophisticated are headed.

I believe that Best Buy is not successful only because it is customer-centric but also because it is decision-centric.

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Posted November 19, 2008 3:42 PM
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Copyright © 2008 James Taylor. Visit the original article at Using decision management to prepare for an unknown future.

Recently, Ronan Bradley discussed the challenges for banks in the area of compliance, given the rapidly changing environment. He made three specific points with which I agree and that I think shows the value of a decision management approach for banks and others facing an unknown but difficult regulatory environment in the next year or two:

  • “compliance will remain a major driver of IT projects in 2009″
    Compliance has always been a driver of decision management as the use of declarative, rules-based approaches and the explicit identification and management of decisions make it much easier for organizations to ensure and demonstrate compliance in those decisions. Opaque and poorly managed decisions are hard for regulators to evaluate and for companies to report on. Decision management eases the compliance burden significantly.
  • “opportunistic responses to specific requirements”
    One of the values of decision management is increased agility in systems. Even if I don’t know what changes will be required, if I have adopted decision management then I will be better placed to find the decisions that must change and to make the right changes to those decisions. Decisions hidden in code buried away in applications or in process specifications are too hard to change fast.
  • “much stronger focus on real time assessment of risk”
    Decision management allows for risk models - predictive analytic models of risk - to be applied in real-time in operational systems. Essentially every decision in every transaction uses the risk approach of the organization (as developed into its risk models) to help balance risk and reward for that transaction. Only decision management can realistically deliver this kind of in-line risk management.

So, to prepare for an uncertain regulatory future, adopt decision management now.

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Posted November 18, 2008 7:52 PM
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Copyright © 2008 James Taylor. Visit the original article at First Look - Savvion Business Rules Management System.

Savvion today announced it has released a Business Rules Management System. Now this may suprise you - after all Savvion is a Business Process Management vendor - but I think it is a sign of the growing recognition that decision management is important to business process management. Before this announcement Savvion was using Yasu’s product but, when that was acquired by SAP, they decided to develop their own.

While the new product is not the most sophisticated BRMS on the market, Savvion has done a nice job with the first version. They have provided an Eclipse-based environment that is integrated with their Eclipse-based BPMS tools but that creates independent projects. These can be deployed with a process or separately and so support both Savvion and non-Savvion applications. This is a key feature as decisions, and the rules within them, must often be reused across applications, channels and processes so restricting the decisions to execution within a process (as many BPMS vendors do) will not work. When integrated with business processes defined in Savvion then the rules and decisions consume the same information model - speeding development and easing integration. This new feature is in addition to their existing event rules where simple decisions can be defined with expression builder in the process modeler.

The core interface is what Savvion calls a decision table but that I consider a Rule Sheet:

  • Each row is a rule
  • Different columns represent the various variables used in conditions
  • Each cell contains a specific condition against the variable of that column
  • One or more actions are defined for each row

The rules can also be defined in Excel and then imported. The rules can be modified in Savvion’s portal allowing business users to maintain the rules in the same environment they monitor and manage their processes. The rules projects can be called as part of the process definition and as part of the presentation definition (for user interface elements built with Savvion). When working on processes or presentations you can navigate directly to the rules being used and manage them. Inferencing execution (using Rete) is supported as is a reasonable set of deployment options (stateless, stateful). All the process APIs can be executed by rules allowing for rules to drive the process nicely and everything is stored in the existing Savvion repository giving you versioning, access control etc. All in all a nice package, taking advantage of Savvion’s existing tools and repository.

I am pleased to see Savvion release this as I think it is important that BPM vendors get serious about decision management and that they realize (as Savvion did) that this is not the same as supporting process control rules. I really like the option to independently deploy the decisions as this helps people to manage process and rules as peers, another crucial step.

This is clearly part of a broader trend. SAP added Yasu to improve its rules capability in Netweaver, albeit only as part of the process definition. IBM is acquiring ILOG, presumeably allowing for independent decisions as well as improving the support for decisions inside WebSphere and FileNet. Pega has long had a rules-based approach to process management. With Savvion supporting not just rules in the process but independent decisions also I expect to see this trend continue.

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Posted November 17, 2008 7:46 PM
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Copyright © 2008 James Taylor. Visit the original article at First Look - Be Informed.

Last week I got a chance to catch up with a Dutch company in the decision management space - Be Informed. Be Informed arose out of work within a big systems integrator building complex processes, especially in government, that was unable to find good tools for case management and complex knowledge-based processes. The company started to build a product in 2002-2003 and launched a separate company in 2006 (selling the SI business to Ordina, one of the largest SI’s in the Netherlands). The company has about 130 people split more or less evenly between development and supporting customer implementations. They have seen a steady increase in the scope of projects on which they work and have expanded beyond the Dutch government (although this still represents 50% of their work) to financial services companies in the Netherlands as well as companies elsewhere in the European Union. Historically lots of case management projects but increasingly they are working on more operational projects like deciding which ships to inspect or about awarding specific permits.

They like to talk about separating “the know from the flow” - keeping decisions and processes linked but ensuring that one is not embedded in the other. They find this allows them to define standard process/flow with separate knowledge services that are custom for different customers and to provide process variations. The knowledge services turn a reference process into a “Process of me”. In one agency they took hundreds of processes and reduced them to one generic one using knowledge services that were different, a nice illustration of how decision management can simplify processes.

They believe that if knowledge differentiates you then you should put it at the center. They have what they call a “Knowledge Infrastructure” to develop, record, validate, apply, manage, govern knowledge (rules or policies) and support this by generating forms, case management processes etc. They offer a range of what they call “knowledge instruments” including query tree, classification, navigation, calculator, comparator and search engine. All these instruments use the semantic model for logic, classification, calculation, searching, and so forth.

The product suite consists of:

  • ?Be Informed Knowledge Server
    Delivers decision services - answers questions for other services and components.
  • ?Be Informed Case Management Server
    Their process execution environment, focused on case management processes. They also have customers using Siebel, Global 360 and FileNet to execute processes and access the knowledge server.
  • Be Informed Studio
    Graphic environment for developing the semantic models at the heart of the product plus analysis tools. These models can be executed by the Knowledge Server and the Case Management Server of can be exported to third party tools. One of their clients is working with them to use their product for knowledge management and then exporting the rules to Blaze Advisor for production processing.
  • Be Informed Editing Server
    Supports editing and collaboration as well as “time travel” (being able to see the state of the repository at a particular time in the past), versioning etc. Models can be compared, linked and impact analysis conducted.
  • Be Informed Repository.

At the heart of the product is an Ontology mapped to the business objects that the organization has in its systems and into which the rules are integrated. The knowledge model connects business rules to the ontology while the semantics of the system map to objects in the physical data layer. They use a typical structured natural language approach for rules along with some graphical metaphors. Functions for business rules management, search, information access, governance, case management, dynamic software components and “Knowledge as a service” are all wrapped around this single ontology or semantic model.

One of the interesting side effects of their knowledge focus is that, although knowledge is turned into executable rules for automated decisions, if the system cannot make a decision from the rules then it can present the guiding principles of the knowledge model etc to decision maker to support the manual process - an interesting mix of automated decisions and decision support.

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Posted November 17, 2008 12:16 AM
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Copyright © 2008 James Taylor. Visit the original article at Decision Management and fixing healthcare.

I think alot about how decision management can be used to improve healthcare. Neil Versel is one of the bloggers I read in this space and he had a post this week called “A modest proposal” in which he repeated some comments about the failure of the medical profession to use Clinical Decision Support systems (CDS) to improve outcomes. He quoted Dr. Bill Bria, chairman of the Association of Medical Directors of Information Systems:

Our profession has really stumbled on this one

I remain convinced that technolgy can, and will, make a big difference in the delivery of care and decision support is one way it can. Ensuring that, when a medical professional knows that he or she should make a decision they have tools and support to make the best possible decision. However there is another whole area of technology support for medical professionals - Clinical Decision Management if you like. These systems are working on behalf of the medical professionals to make decisions when there is no staff available (in automatic monitoring of patients, for instance) and when medical professionals don’t realize that a decision needs to be made (or when they appear to have forgotten). With the increasing desire to have patients monitor their own health and do so from home and the costs of having people come to hospitals unecessarily, clinical decision management would seem to be essential. Clinical decision management can reduce costs and improve results while also improving the patient’s experience and there are not many technologies that can say that…

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Posted November 14, 2008 10:54 PM
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Copyright © 2008 James Taylor. Visit the original article at First Look - Savvion 7.5.

I got a quick overview of Savvion 7.5 this week. Savvion is one of the pure-play BPM vendors with customers in Telecommunications, Media, Financial Services and Manufacturing (along with some retail and healthcare). They released version 7.5 at the end of September.

Savvion has recently been investing in domain-specific vertical solutions built on their horizontal platform, especially in communications, financial services and life sciences as well as adding business solutions like residential lending built on these foundations. They have also been increasing their partner network, in implementation partners and business solution developers. They also have some partners focused on delivering these newly developed applications through business process outsourcing (BPO). Savvion themselves are delivering more professional services around process analysis, change strategy, governance - business transformation services if you will - as well the more traditional process automation, support and change management. This reflects that their customers are moving to more enterprise-centric approaches and are focused on business transformation not projects.

While this vertical and partner expansion has been going on they have continued to develop their platform. In particularly they have been working on business process communities, the ability to execute process tasks in a multi-channel environment, business rules and project-style processes.

They have seen that some customers have tension between project management and process management. For instance, in situations like cell tower installation or product introduction customers want both project management and process management. They want multi-path branching and other elements of process management but need milestones, critical path analysis etc. Project-Oriented Processes (PoP) is Savvion’s solution.

The 7.5 product suite for 2008 will contain

  • Process Modeler
    Includes the ability to model a process already embedded in some software and hook it up to measurement points so the process can be managed without having to be re-built in the BPMS.
  • Process Asset Management
    To support reuse and management of process components and related artifacts
  • Process Solution Studio
    To manage the execution side of processes
  • BusinessExpert
    To handle notifications and Business Activity Monitoring
  • BusinessManager
    To let business users manage tasks and processes. This portal environment has got a makeover.
  • Business Rule Management
    They have replaced their previous out of the box support of Yasu (now part of SAP) and developed a nice looking business rules management system of their own of which more later - not quite released
  • Document Management connectors
    Including Documentum and Al Fresco.
  • Project-oriented Process support
    One of the interesting features here is support for tabular modeling. They have found process diagrams a little tough for some project-oriented folks. The new interface looks like the tabular view from a project management tool and generates a process diagram. This can be created from Microsoft Project and is bidirectional - changes to either are kept synchronized.

There’s some nice stuff in this release but it is the thoughtful integration with business rules that most struck me. More, as I said, to come. Other bloggers have taken a look at this release and associated news include Bruce Silver and Sandy Kemsley.

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Posted November 11, 2008 4:21 PM
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Copyright © 2008 James Taylor. Visit the original article at Using Decision Management for Customer Retention.

CRM Daily had a nice little article on Customer Retention that reminded me of the example I often use for how the elements of decision management contribute to more effective customer retention decisions. Large organizations spend vast sums on retention - one bank, for instance, spends $1Bn annually - and retention is a perfect candidate for EDM for a number of reasons:

  • Each retention decision is for and by a single customer
  • Retention decisions must be relayed across channels
  • There are lots of rules about retention
  • Segmentation and other analytics can make retention more effective
  • Retention rates are measured today and improvement is clearly related to better retention decision making

A number of critical elements need to be considered:

  • The Value of Customer
    Ideally the future value of the customer, not just the past value. Also the likely future value given plans for new products, pricing should be included.
  • Risk of churn
    Both how likely this customer to be retained if nothing is done and the overall target retention rate - after all, many companies are judged by retention rate and even retaining unprofitable customers may be necessary.
  • Customer’s likelihood of accepting various offers
    Many different offers can be considered and each customer or customer segment will prefer some over others
  • Regulations and Policies

It is often helpful to walk through how making a retention offer can be evolved using EDM:

  1. Automate Decision
    Initially we have different channels and our approach to retention is probably different in each.
    The first step, then, is to take control of the decision so we can make it consistently across channels.
  2. Apply rules
    We should also use rules to describe it so that the decision can be automated correctly and managed by business staff, not IT.
  3. Close the Loop
    Before we go any further we should ensure we can track the results of our retention decisions and see how well things are going, how they change, what the impact of changes is and so on.
  4. Segment customers
    Not all customers are the same so we should analyze them and segment them so we can retain them differently depending on what is going to work. This is not going to stay static so we need to make sure we can keep analyzing and improving our segmentation.
  5. Adaptive Control
    We are likely to have multiple opinions as to what might work and different potential segmentation schemes so we should institute adaptive control so that we can test our “champion” approach against some “challengers” to see if any of the challengers is more effective. This needs to be part of our ongoing improvement cycle.
  6. Predict risk, value
    Segmenting based only on the data we have is interesting but it would be more useful if we could also use predictions as to their risk of leaving, lifetime value of them etc as part of our decision. Back to the data, then, to build predictive insights.
  7. Optimize decision
    Working to continually improve the outcomes and ultimately to build models of the trade-offs that can be optimized mathematically and we end up with an optimized decision.

Each step adds value, the final result is an optimal retention decision. What does customer retention decisioning look like where you work?

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Posted November 11, 2008 1:15 AM
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Copyright © 2008 James Taylor. Visit the original article at Using decision management to surive an IT squeeze.

An old friend sent me a link to an article on the Financial Times - How to survive an IT squeeze. I was struck by a couple of quotes:

Scarcity of capital will generate increased competition for the cash that is available. Consequently it will be even more important that businesses do everything they can to make sure their existing customers stay with them and keep spending

I agree that spending has to focus on customer retention and development given how hard customers will be to find and that means focusing on customer treatment decisions so that you optimize the value of your existing customers.Using EDM to retain and develop customers by making more precise, consistent and agile customer treatment decisions is going to be critical. As the article went on to say

concentrate on building agility and capability into … organisations, emphasising(sic) an agile approach to emerging business needs which will complement their work on cost and efficiency

Empowering the business to take control of critical decisions not only reduces IT costs it also improves agility by allowing the business to control change and by reducing the IT impedance between a business change and a systems change. Back in February I wrote a series of posts on using EDM to thrive in a recession so I will leave it at that - read the series if you want more.

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Posted November 7, 2008 6:33 PM
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Copyright © 2008 James Taylor. Visit the original article at Using decision management to surive an IT squeeze.

An old friend sent me a link to an article on the Financial Times - How to survive an IT squeeze. I was struck by a couple of quotes:

Scarcity of capital will generate increased competition for the cash that is available. Consequently it will be even more important that businesses do everything they can to make sure their existing customers stay with them and keep spending

I agree that spending has to focus on customer retention and development given how hard customers will be to find and that means focusing on customer treatment decisions so that you optimize the value of your existing customers.Using EDM to retain and develop customers by making more precise, consistent and agile customer treatment decisions is going to be critical. As the article went on to say

concentrate on building agility and capability into … organisations, emphasising(sic) an agile approach to emerging business needs which will complement their work on cost and efficiency

Empowering the business to take control of critical decisions not only reduces IT costs it also improves agility by allowing the business to control change and by reducing the IT impedance between a business change and a systems change. Back in February I wrote a series of posts on using EDM to thrive in a recession so I will leave it at that - read the series if you want more.

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Posted November 7, 2008 6:33 PM
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Copyright © 2008 James Taylor. Visit the original article at Treat your customers as people by managing customer treatment decisions.

Great comment from monkchips on twitter today:

the key to customer relationship management is to treat your clients as people rather than accounts. everything else follows from that.

Of course the challenge is how to make sure that all the people who work for you and all the systems your clients use do this. While you can invest in training and measures and corporate culture that says our clients are people not accounts, this won’t help your systems do so and may be unrealistic if you have thousands of potentially outsourced or loosely affiliated staff dealing with clients. Only a systematic attempt to manage the decisions you make about customer interactions can ensure that these decisions are all taken in a way that treats your clients as people. The other reason it is important to build this kind of treatment into your processes and systems is that you want to keep your clients loyal to your company, not to one individual.

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Posted November 7, 2008 4:04 PM
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Copyright © 2008 James Taylor. Visit the original article at On the importance of holistic decision making.

I was chatting with someone the other day who shared a story of a European health insurer.  Their decision-making in claims looked only at the validity of the claim and nothing else. This of course created a situation where good (and very profitable customers) could be treated correctly but ineffectively - such as one member who had paid over $30,000 in premiums and had not made a claim in 10 years who had a $500 claim denied.

The first problem is that there are two decisions here - is the claim valid and should we pay it? While many organizations treat these as one and the same they are clearly not. We might decide a claim is invalid but pay it anyway based on customer history, lifetime value, potential to churn or something. We might decide it is invalid but not worth the expense of litigating or investigating and so on.

Being thorough about the decisions involved and being holistic when identifying the rules and data that drive the decisions can help you avoid this kind of situation.

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Posted November 7, 2008 2:18 AM
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Copyright © 2008 James Taylor. Visit the original article at The Technology of Decision Management.

I just wrote an article for BPM Institute on The Technology of Business (Enterprise) Decision Management. It’s short but, if you want more, Neil and I are working on a multi-vendor study of the technology for decision management that we should have available really soon…

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Posted November 4, 2008 7:00 PM
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Copyright © 2008 James Taylor. Visit the original article at First Look - Bosch Acquires Innovations Software Technology.

David Kim, MD of the Americas for Innovations Software Technology briefed me recently on the Bosch acquisition of the company. Innovations Software Technology was founded in 1997 and had grown to about 120 employees by September when it was acquired by the Bosch group.

Bosch is a $63B company (61% automotive, 13 %industrial, 26% consumer and building) with products in everything from car parts to appliances and tools. Like many German companies Bosch is focused on export (75% of its revenue comes from outside Germany), committed to R&D (about 7-8% of sales) and is privately owned with 92% of the share capital held by Robert Bosch Stiftung GmbH, a charitable foundation.

Since the acquisition Innovations has grown to 200+ employees with the extra staff coming from a mix of new hires and Bosch transfers. They are adding offices in Palo Alto and Singapore to their current German and Chicago locations. Bosch’s stated direction is to create a new independent software company as part of the group based around the core acquired with Innovations Software Technology. Innovations Software Technolgy has a long history of developing embedded applications - their software runs in trains, the German mail sorting machines and cell phones - and Innovations was always split between custom development and their BRMS-based business. Clearly both strands of history were interesting to someone like Bosch as more and more pieces of machinery are becoming “smarter” in today’s environment.

Details of the target markets/product mix for this new company are not yet public but Innovations’ BRMS Visual Rules will apparently remain at the core and they will continue to sell both their packaged industry solutions and their newer Dynamic Application Framework. With the support of the Bosch group, Innovations now offers broader worldwide support with new offices, more stability and, so far at least, no change in business focus.

We did not have time for a full update on Visual Rules - soon perhaps - but it now consists of the long standing Modeler product, a repository (Team Server) and an execution server for Decision Services. The dynamic application framework is built on top of this as are the industry solutions.

Overall David presented the acquisition as a positive for Innovations and made the point that it had not needed to be acquired - it was profitable and self-funded - and that it had turned down other offers. Hopefully he is correct and we will see a strong new player in the decisioning space. With all the change going on in the market there is clearly an opportunity for some well-funded and managed pureplays.

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Posted November 4, 2008 2:08 PM
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Copyright © 2008 James Taylor. Visit the original article at First Look - Bosch Acquires Innovations Software.

David Kim, MD of the Americas for Innovations Software briefed me recently on the Bosch acquisition of the company. Innovations Software was founded in 1997 and had grown to about 120 employees by September when it was acquired by the Bosch group.

Bosch is a $63B company (61% automotive, 13 %industrial, 26% consumer and building) with products in everything from car parts to appliances and tools. Like many German companies Bosch is focused on export (75% of its revenue comes from outside Germany), committed to R&D (about 7-8% of sales) and is privately owned with 92% of the share capital held by Robert Bosch Stiftung GmbH, a charitable foundation.

Since the acquisition Innovations has grown to 200+ employees with the extra staff coming from a mix of new hires and Bosch transfers. They are adding offices in Palo Alto and Singapore to their current German and Chicago locations. Bosch’s stated direction is to create a new independent software company as part of the group based around the core acquired with Innovations Software. Innovations Software has a long history of developing embedded applications - their software runs in trains, the German mail sorting machines and cell phones - and Innovations was always split between custom development and their BRMS-based business. Clearly both strands of history were interesting to someone like Bosch as more and more pieces of machinery are becoming “smarter” in today’s environment.

Details of the target markets/product mix for this new company are not yet public but Innovations’ BRMS Visual Rules will apparently remain at the core and they will continue to sell both their packaged industry solutions and their newer Dynamic Application Framework. With the support of the Bosch group, Innovations now offers broader worldwide support with new offices, more stability and, so far at least, no change in business focus.

We did not have time for a full update on Visual Rules - soon perhaps - but it now consists of the long standing Modeler product, a repository (Team Server) and an execution server for Decision Services. The dynamic application framework is built on top of this as are the industry solutions.

Overall David presented the acquisition as a positive for Innovations and made the point that it had not needed to be acquired - it was profitable and self-funded - and that it had turned down other offers. Hopefully he is correct and we will see a strong new player in the decisioning space. With all the change going on in the market there is clearly an opportunity for some well-funded and managed pureplays.

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Posted November 4, 2008 2:08 PM
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Copyright © 2008 James Taylor. Visit the original article at EDM Summit - some closing thoughts.

I thought I would wrap up with some closing thoughts for the week:

  • Lots of discussion of the importance of data - understanding it, integrating it, cleaning it and making the same data available to those reporting on it, doing analytics with it and running operational systems.
  • Interesting times in the rules market with recent acquisitions by SAP, IBM, Oracle and Bosch
  • Definite signs of growing awareness that decisioning is at the intersection of rules, analytics, data mining and more
  • Some companies are showing great returns on an investment in decision management using both business rules and analytics
  • Worries about the short term impact of the global crisis were balanced with optimism that the current problems will make companies more focused on building the kind of rules-based, analytically-enhanced, agile systems that can help prevent these problems in the future

Lots of people blogged - me, Sandy, Paul, Angie, Mike. Here’s the full list of posts I have found - I will edit it if any more show up

Tutorials

Day 1

Day 2

Day 3

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Posted November 3, 2008 3:04 PM
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Copyright © 2008 James Taylor. Visit the original article at EDM Summit - Emerging Trends Panel.

Not really live this post as I am working from notes I took - after all I was on the panel and it’s hard to participate and blog at the same time. Joining me on the panel were Don Baisley of Microsoft, Ron Ross and Jim Sinur (of Gartner) - Neil had to leave. We were all asked to comment on a few topics and what follows is a collection of our thoughts with attribution only when it seems absolutely necessary.

  • Global financial meltdown
    In response to the global financial meltdown the panel suggested a number of things might be on the cards. A focus on customer retention and growth in existing customer base was one as was a search for what-if simulation capabilities to manage development of potential scenarios to try and be ready in the future based on a determination not to get caught again. Less innovation because less money will be available and more pressure on ROI and spending were expected as was an increase in Mergers and Acquisitions as companies become cheaper. Some companies will just try to survive, some to thrive at the expense of those just trying to survive and some to outpace others by innovating. Overall the crisis offers a long term prospect for growth in rules and decisioning as a potential solution to some of the problems exposed by the crash.
  • Decisions v Rules
    Decision management was discussed as a convergence of events, process, rules, policies, data among other things. Business rules it was said have business value but the key artifact is a decision. In addition the move to the knowledge economy will make the intangibles, and thus the decisions, of a company more important. Making good decisions has obvious business value and rules are a key part of this in the context of repeatable decisions.
  • Danger of relying on statistics when the world changes
    If your data does not have a record of a similar event then models will not respond to the new event. That said, rules and models may still do better than people would, even if they don’t adapt automatically. Models clearly are not enough, need a valid strategy also and creativity in thinking through the potential scenarios so they can be planed for and tested because you need to have scenarios ready to hand when the world changes.
  • What will it take to expand the decisioning market
    Business owners who feel ownership of their systems and tooling aimed and non-technical users as well as process owners handling larger processes, more complex ones see value in decisions
  • Natural language rules
  • This was one topic with some disagreement - Don on one side and me on the other. There is a general need, it was agreed, to be able to get from natural language rules to systems and from natural language queries to answers. While Don felt that this required a narrow business domain in the short term I was more cynical arguing that we will required such a focus for an extended period. After all, how do you get “unambiguous rules in natural language” when lawyers, business people, customers and technical folks all talk differently. We did all agree that we must keep moving solutions toward the business and eliminating IT impedance

There was also an interesting discussion of whether EDM was important to strategy or strategy to EDM, a broad agreement that business issues are the key ones and a recognition that we need people comfortable at the intersection of business and IT.

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    Posted November 3, 2008 5:04 AM
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    Copyright © 2008 Neil Raden. Visit the original article at Look Before You Leap.

    Jim Sinur wrote “Rules Initiated the Real Estate Meltdown

    Of course he is 100% correct, but there are antecedent conditions that cause the behaviors he mentions. When I was a young lad working as a P/C actuary at AIG in New York, we bought a small mortgage insurance company (can’t remember the name) to compete with the big gorilla at the time, MGIC (Mortgage Guaranty Insurance Corp).  At the time, if you wanted to buy a house with a residential first mortgage with less than 20% down, you had to purchase, at your expense, mortgage insurance to protect the lender against your possible default. I believe it was typical to carry this insurance for the first 6-7 years. The only other ways to buy a home were through FHA or VA loans or, obviously, private lending or cash.

    But something happened in the 80’s. The federal government made it clear to lenders that they wanted to expand the rate of home ownership. The problem was that Wall Street and Fannie/Freddie had already started collateralized mortgage-backed securities, which as a precondition for inclusion in a package, had to have mortgage insurance. No one wanted a security without a AAA rating.

    In the 90’s the federal government wanted to see home ownership increase among less well-heeled people. It was at this point that lenders started to relax the mortgage insurance requirement.

    Were they crazy?

    Maybe not. In college, I learned economics from a brilliant trouble-maker named Hy Minsky. His approach at the time was completely overlooked in favor of the Chicago School, but he is getting a lot of respect today. In fact, many economists refer to the crisis today as a “Minsky Moment” (unfortunately, he passed away in 1996). His premise was that the economy is largely driven by speculative bubbles and catastrophic busts. And here is the best part - the bubbles always start with an abuse of credit.

    Sound familiar? So once actors see other actors making money, they jump in causing the bubble. Here in Santa Barbara, in 2006, over 60% of the houses sold were sold to speculators, not residents.

    So to make a long story short, he’s right - before changing rules, take a look around and make sure you’re not doing the lemmings thing.

    -NR twitter nraden

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    Posted November 1, 2008 5:05 PM
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