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Decision Management 101
CEO of Decision Management Solutions
We work with clients to improve their business by identifying and modeling decisions, and applying business rules and analytic technology to automate & improve these decisions.
I have spent the last 12 years championing Decision Management.
Your Instructor – James Taylor
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Decision Management 101
The Power of Decision Management
Decision Discovery
Decision Services
Decision Analysis
Getting Started
Agenda
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Decision Management 101
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Decision Management
Decision Management allows an organization to control, manage, and automate the repeatable decisions at the heart of its business by effectively applying business rules, analytics, and optimization technology
Decision Management: Increases accuracy
Increases consistency
Increases agility
Reduces decision latency
Reduces costs
It is a proven framework for implementing Business Rules Management Systems and Predictive Analytics
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Decision Management 101
Manage Risk
Personalize communication
Detect fraud
Enforce policies and regulations
What Can Decision Management Do?
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Decision Management 101
Strategic Decisions
Tactical Decisions
Operational Decisions
Different Kinds of Decisions
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Decision Management 101
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Repeatable decisions
Non trivial decisions
With a measurable business impact
That are candidates for automation
Suitable Decisions for Management
Decision Management 101
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Operational Decisions Are Everywhere
Decision Management 101
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Scale For Large Impact
Strategic Decision
Tactical Decision
Operational Decision
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Decision Management 101
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Straight Through Processing
Processes stop when decisions must be made
Process Process Process Human
Decision Human Decision
Automated Decisions
Straight Through Processing
Manage Rules & Handle Exceptions
A B C
A B C
New
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Decision Management 101
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Maximize Customer Value
1:1 Marketing
Personalization
Next Best Offer
Next Best Action
Micro Segmentation
All ways of saying “Make each decision about a customer uniquely about that customer”
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Decision Management 101
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Effectively Manage Risk
Risk is not acquired in “big lumps”
Risk is acquired one transaction at a time Supply chain risk when the
wrong supplier is selected
Credit risk when a bad loan is approved
Delivery risk when a commitment is made for stock not available
…
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Decision Management 101
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Many Enterprise Systems …
Report but don’t learn
Wait rather than act
Escalate rather than empower
Mindlessly consistent
Decision Management 101
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Automate More Decisions
Complexity
Value
Automated
Decisions
Expert
Decisions
Manual
Decisions
Decision Management 101
3 stages to better operational decisions
Delivering Decision Management
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Identify the decisions that are most important to your operational success
Design and build independent decision services to automate these decisions
Create a “closed loop” between operations and analytics to measure results and drive improvement
Decision Management 101
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Repeatable decisions
Non trivial decisions
With a measurable business impact
That are candidates for automation
Suitable Decisions for Management
Decision Management 101
Business Processes
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Discovering Decisions
Business Intelligence
Brainstorm
KPIs
Micro and hidden Decisions
Decision Management 101
“… provide a common notation that is readily understandable by all business users... DMN creates a standardized bridge for the gap between the business decision design and decision implementation.”
OMG Specification – a peer to BPMN
Decision Management Solutions, IBM, Oracle, TIBCO, FICO, Escape Velocity, KUL, Model Systems, KPI, Visumpoint
Standard content finalized, approval expected Q4-2014
Use Cases
Modeling Human Decision-making
Modeling Requirements for automated Decision-making
Implementing automated Decision-making
Decision Modeling and Notation (DMN)
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Decision Management 101
Decision Requirements Diagram
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Information Knowledge
Decision
Increased Precision
Decision Management 101
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Decision Modeling
Identify a Decision Question
Allowed Answers
What is required to make this decision? Information
Reference Data
Transaction Data
Knowledge
Guidelines, policy
Expertise
Regulations
Analytic Insight
The results of other decisions
Reuse decisions
Identify new decisions
Decision Management 101
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Questions
Be specific with questions Subject
Timing
Scope or limitations
Avoid I, we
Questions that start “How”
Decision Good question Bad question
Customer
Retention
Which retention offer
should the company make
this customer when they
call to cancel their service?
How can we retain
this customer?
Supplier
Selection
Which of the company’s
approved suppliers should
be selected for this specific
parts order?
What supplier should
we use?
Preventative
Action
What is the prioritized list
of preventative actions for
this quality team on this
line today?
What preventative
action should the
quality team take?
Decision Management 101
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Allowed Answers
Type Description Notes
Yes/No Yes or No Or True/False, 1/0 etc
Number A numeric value Often constrained to a value in a specific
range
Specific Value One of the values specified in a list For example Accept / Reject / Refer
Database value A value stored in a database Specify how to get the list of options -
products, pieces of content etc.
Other Generally a string or block of text Such as a custom script or personalized
email body
Structure A set of values each of which is of
one the allowed types
Some decisions involve the rolled-up
output of their component decisions.
Single Answer
List of Options
Structure with parts
Supporting Information Messages
Warnings
Notes
Explanations
Decision Management 101
Decision Requirements Diagram 1
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Decision
Decision Management 101
Business Entities
Consider Reference data
Case or transaction data
Best Practices Stick to logical “clumps” of information
Business objects not technical ones
Could be one system or database, could be many
Each Input Data object can have a data structure
Input Data
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Decision Management 101
Decision Requirements Diagram 2
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Information
Decision Management 101
Decisions Involve Lots of Knowledge
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Decision
Decision Management 101
This knowledge can be of various types External regulations
Internal policies
Expertise
Best Practices
Analytic Insight
Business Rules are found in Knowledge Sources
Consider What tells me what I must do?
What tells me what I should do?
What tells me what I can do?
What tells me what I will probably do?
What would help me do it better?
“If only we knew xyz we could make a more profitable decision”
Knowledge Sources
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Decision Management 101
Decision Requirements Diagram 3
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Knowledge
Decision Management 101
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Finding Dependencies in Decisions
What information do you need to make a decision Is that information available in the environment
Or must it be determined by making another decision?
Is the decision “atomic” or could someone stop part way through it? If they could get part way through the decision, what are the
logical components of the decision? Where could you stop?
How does someone make the decision? As someone describes the decision they will likely, naturally,
describe it in pieces
Is the decision made differently (or not made) in certain circumstances Decisions that determine those circumstances are therefore
relevant
Decision Management 101
Decision Requirements Diagram 4
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Increased Precision
Decision Management 101
Credit Limit Assignment
Credit Limit
Income
< $40,000 >= $40,000
Card Type
Standard $1,000 $2,000
Gold $1,500 $2,500
Applicant Risk
U
Applicant Age
Medical History Applicant Risk Rating
1 > 60
good Medium
2 bad High
3 [25..60] - Medium
4 < 25
good Low
5 bad Medium
Special Discount
Type of Order Web -
Customer Location US -
Type of Customer Wholesaler Retailer -
Special Discount % 10 5 0
F 1 2 3
DMN Decision Tables
Rules as rows
Rules as columns
Crosstab or “classic”
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Decision Management 101
Simplifying Business Processes
Detailed requirements for business rules
Business understanding for analytic projects
Define Decision Service boundaries
Impact analysis
High level overview of decision-making
Improving Business Intelligence deliverables
Training decision-making staff
…
Multiple uses for Decision Models
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Decision Management 101
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Explicit Decisions Simplify
Separating Decisions simplifies Processes
Modeling Decisions brings clarity
Decision Management 101
Process and Decision Models
Process Model Decision Requirements Decision Logic
Identifies decision tasks Links tasks to Decision Requirements
Models Specifies Decision Logic or business
rules for automated decisions
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Decision Management 101
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With Just a Bucket of Rules
How to manage sources?
How much detail for a given rule?
Who owns which rules?
How and where to document rules?
What are these rules for?
What is the right format for a rule?
How do we find the right metaphor for rules?
Decision Management 101
Decision requirements models break down complex, redundant, hard to manage rules
Each decision and sub-decision is described with simple, unique business rules
Source of rules and information shown
Dependencies are clear
Logical Modeling Helps Manage Rules
Documented sources
Coherent rule groups
Ownership, volatility
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Decision Management 101
Decision
Analytics Data
Cut Through By Focusing on Decisions
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Decision Management 101
Link Analytics Explicitly To Action
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Identify decision to be improved
Uses a non-technical notation
Model can be built by business analysts
Decision Management 101
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Define Decision Service Boundaries
Find the top most decision nodes that will be automated
Their sub-tree will be implemented in the decision service
Knowledge sources define the business rules or analytics to be implemented
Most information nodes will be data sources outside the decision services
Multiple phases can be defined
Decision Management 101
External Data
Big Data
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Building Decision Services
Business Rules
Predictive Analytics
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Performance Management
Enterprise Platform
Business Intelligence
Data Infrastructure
Application Context
Decision Service
Decision Analysis Business Rules
Predictive Analytics
Optimization
Business Process Management
Event Processing Enterprise
Application
Predictive Analytics
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Decision Management In Context
Decision Management 101
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Business Decisions Need Rules
Business decisions are
rich in business meaning
Business decisions require
collaboration Business
decisions are constantly changing
Decision Management 101
public class Application {
private Customer customers[];
private Customer goldCustomers[];
...
public void checkOrder() {
for (int i = 0; i < numCustomers; i++) {
Customer aCustomer = customers[i];
if (aCustomer.checkIfGold()) {
numGoldCustomers++;
goldCustomers[numGoldCustomers] = aCustomer;
if (aCustomer.getCurrentOrder().getAmount() > 100000)
aCustomer.setSpecialDiscount (0.05);
}
}
}
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Business Rules Can Be Opaque
Decision Management 101
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Elements of a BRMS
Decision Service
Testing and Debugging
Technical Rule Management
Non-technical Rule
Management
Impact Analysis
Data Management
Verification and Validation
Deployment
Rule
Repository
Decision Management 101
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Insight
Information
Data
Data, Information, Insight
Decision Management 101
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Usage Scenarios
Confirm or validate expert
rules
Automatically discover patterns
in data
Identify segments or groups with
similar behavior
Predict trends or likely future
behavior
Decision Management 101
Data Management
Data Preparation
Data Visualization
& Analysis
Model Monitoring
Model Validation
Modeling
Deployment
Model Repository
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Elements Of An Analytic Workbench
Rule Repository
Operational Data Store
Decision Service
Decision Management 101
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Four Main Drivers Of Change
New regulations or policies
Changes to business
goals
Changes in underlying
data
Overall decision
performance
Decision Management 101
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An Environment For Improvement
• My rules, in context • Only allow changes that make sense
• No unnecessary information
Business User Rules Management
• Rapidly see business impact of changes • Design impact and execution impact • More than testing
Impact Analysis
• Swapset analysis for comparison
• Simulation and what - if analysis • Business performance comparison
Alternatives Assessment
• Model performance monitoring
• Self learning models • Managed model refresh
Analytic Models Management
Decision Management 101
Decision Models link Business Performance to Execution
Improve Business Performance
Improve Cross-Sell
A
Total Number of
Orders
Most Recent Order
Total Orders last 12
months
Lifetime Order Total
Customer Status
1 >= 5 < 90 days > $10,000 - Gold
2 >=10 < 180 days > $20,000 - Gold
3 >= 20 < 360 days > $40,000 - Gold
4 - < 180 days - > $1,000,000 Gold
5 - - - > $2,000,000 Gold
Gold Customer Determination
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Decision Management 101
Identify your decisions Decisions that matter to customers
Transactional, operational decisions
Decisions that drive your business KPIs
Hidden and micro decisions
Model Decisions Decision and Process Models help clarify requirements
Decision Requirement Models capture Information and Knowledge
Decision Requirement Models decompose decision-making for clarity
Decisions first, rules second Model decisions before writing rules
Work top-down to reveal context
Iteratively extend the model, write the rules, develop the analytics, repeat
Key to Success - Focus On Decisions
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Decision Management 101
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Key to Success - Technology Blueprint
Adopt a Business Rules Management System Approach and technology
Management and governance
Change the relationship between business and IT
Integrate Data Mining and Predictive Analytics Data Mining for rules
Predictive reporting
Executable analytics
Make Decision Services part of your architectural approach
Performance Management
Enterprise Platform
Business Intelligence
Data Infrastructure
Application Context
Decision Service
Decision Analysis Business Rules
Predictive Analytics
Optimization
Business Process Management
Event Processing Enterprise
Application
Predictive Analytics
Decision Management 101
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Key to Success - Three Groups
Business
Decision
Decision Management 101
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Additional Resources
Technologies Available for
Decision Management
Decision Management
Overview
BPMN and DMN
Modeling
DecisionsFirst Modeler
Decision Management 101
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Wrapping Up
Thanks for attending the class
If you have any questions please email us: [email protected]
Lots of additional content on our website, blog, twitter: decisionmanagementsolutions.com
decisionmanagementsolutions.com/blog
@decisionmgt
More about DecisionsFirst Modeler decisionmanagementsolutions.com/decisionsfirst-modeler