Operationalizing Your Analytics: Closing the gaps in the analytic value chain

Transcription

1 TDWI Savannah Solution Summit October 2017 Operationalizing Your Analytics: Closing the gaps in the analytic value chain James Taylor, CEO #decisionmgt 2017 Decision Management Solutions

2 You Want to Use Analytics To Get Business Value From Data You collect, store and analyze data to create business value. Any investment you make in data, or Big Data, or analytics is valuable if it can generate a return from better business results. Better decisions analytic decisions are what drive #decisionmgt 2017 Decision Management Solutions 2

3 Everyone Agrees Analytics are important But Impact Is Low Analytics efforts very or extremely important Analytic efforts have had a broad positive impact High impact NOT High Impact Studies show that this is a common problem. Many organizations say analytics is really important but few have delivered on the promise. There are far more companies failing to deliver high impact than succeeding in generating impact. Broken links: Why analytics investments have yet to pay out ZS and the Economist Information Unit, Ltd. June 2017 and Raising returns on analytics investments in insurance by #decisionmgt 2017 Decision Management Solutions 3

4 The Problem: Breaks In The Analytic Value Chain As with any business value creation there s a value chain. Creating business value from data through analytics involves multiple steps and those steps make up the value chain. The problem is that the value chain for analytics is #decisionmgt 2017 Decision Management Solutions 4

5 The Analytic Value Chain Is Broken At The Beginning And At The End Broken links: Why analytics investments have yet to pay out ZS and the Economist Information Unit, Ltd. June 2017 Your analytic value chain is most vulnerable to breakage at the beginning and end It s easy to define, frame and design the wrong approach And its easy to fail to operationalize the result to ensure business value is created Source: McKinsey - Raising returns on analytics investments in #decisionmgt 2017 Decision Management Solutions 5

6 Two Things To Fix The Broken Links End The Telephone Game: Make sure analytics are focused on the right problem and ensure the business context of analytics is clear Operationalize Analytics: Take action - don t just know, do. Make sure you know how to change the way decisions are made Operationalize Analytics In Decision Making End The Telephone Game Decision Requirements Decisions #decisionmgt 2017 Decision Management Solutions 6

7 The Analytic Value Chain Understand The Problem Understand The Data Prepare The Data Build Analytic Models Evaluate Model Effectiveness Deploy The links in the analytic value chain are straightforward Understand the problem and the data Prepare the data and build analytic models from it Evaluate the effectiveness of these models and deploy them if they #decisionmgt 2017 Decision Management Solutions 7

8 The Analytic Value Chain These steps are the core of the most common analytic methodology CRISP-DM has been around a long time but is still the best framework for analytics It s iterative and business-centric approach is critical to analytic success Understand Business Understanding The Problem Understand Data Understanding The Data CRoss Industry Standard Process for Data Mining CRISP-DM Deployment Data Evaluate Evaluation Model Effectiveness Prepare Data The Preparation Data Build Analytic Modeling #decisionmgt 2017 Decision Management Solutions 8

9 CRISP-DM Business Understanding And Deployment Are Key End The Telephone Game Business Goals Decision Making Decision Makers Act, Don t Just Know Make Analytics Actionable Decision Support Decision Automation Business Results Business Understanding Deployment Data Evaluation Data Understanding Data Preparation #decisionmgt 2017 Decision Management Solutions 9

10 Business Understanding: Measure Success Business Measures Not Analytic Ones Objectives of the sponsors Objectives of the modelers Measures of success Reduce claims in litigation Improve the loss ratio Measures of accuracy Error rate Lift Understanding how to measure success in business terms, not just analytic ones, is critical. Make sure both the business and analytics teams know which business metric needs to be improved and how it can be #decisionmgt 2017 Decision Management Solutions 10

11 Business Understanding: Find The Decisions That Matter The good news is that using analytics can really make a difference to business metrics. The bad news is that you can t apply analytics directly to a metric. What you can do is use analytics to improve decision-making. Understanding which decisions will make a difference is key step to linking business metrics to #decisionmgt 2017 Decision Management Solutions 11

12 Business Understanding: Define Decision Making Specific questions Allowed answers Data Sub-Decisions Knowledge Context Decision to be improved Sub-Decisions Knowledge A decision determines an output or select an option from inputs A decision model clarifies all the components of decision-making It defines relationships between decisions, metrics, organizations and processes #decisionmgt 2017 Decision Management Solutions 12

13 Business Understanding: Frame Analytics Map Existing Analytics Ask If Only Find new ones Decision to be improved If only we could predict this For analytic teams, decision models: Provide decision structure - who, what, how, when Standardize the approach to decision making Provide transparency of decision approach Foster innovation in the business model Show improvements to the business model Promote buy #decisionmgt 2017 Decision Management Solutions 13

14 Evaluation: Focus On Business Results Don t focus on analytic accuracy Connect analytic to business value Too many analytic teams worry only about their analytic accuracy. They often evaluate success against analytic measures, finishing once the analytic is predictive and accurate. They need to measure business value instead and are only done when the business value is being #decisionmgt 2017 Decision Management Solutions 14

15 Deployment: Make Analytics Actionable With Business Rules Business Rules Analytics Decisions often involve analytics and business rules scoring and thresholds or constraints Decision models explicitly document what these are and how they #decisionmgt 2017 Decision Management Solutions 15

16 Deployment: Make Analytics Usable (And Used) What is the analytic used for? Which decision? Who has to: Use it Understand it Believe it Where? When? Decision models are linked to the organizations involved in decision-making as well as measures of business value and an operational context. This allows the role of analytic to be clearly defined and understood in terms of the decision-making it is #decisionmgt 2017 Decision Management Solutions 16

17 Decisions First: Fix The Analytic Value Chain Be The Hero: 1. Formalize your value chain methodology with CRISP-DM 2. Use Decision Modeling to ensure Business Understanding 3. Operationalize Analytics to deliver the value Put Decisions #decisionmgt 2017 Decision Management Solutions 17

18 If you have further questions or comments: James Taylor CEO, Decision Management Solutions Thank You For more on Decision Management, go to: #decisionmgt 2017 Decision Management Solutions