James Taylor VP Enterprise Decision Management Fair Isaac Real-World Experience in Applying Business Intelligence to Business Processes James Taylor VP Enterprise Decision Management Fair Isaac

Introductions Agenda The problem of hindsight Challenges in analytic improvement of business process Enterprise Decision Management Some examples

Business Intelligence Alluring… Provides much more information access and insight Increases knowledge worker productivity Describes and synthesizes past performance … and yet limited Need action not insight Applying the insight to identify the ideal action is too hard No operational improvement Need to use intelligence to improve operational processes More hindsight than insight We need to predict and optimize future performance

Applying intelligence to business processes Lots of approaches Process Analytics Operational BI Business Activity Monitoring None really satisfactory The process is not the business These analytics don’t use customer information or the rules of your business to control the process Systems cannot read reports No matter how real-time and how focused, reports and cubes don’t help “code” get smarter People, people, people BAM is still aimed at getting people to do something. So much for straight through processing…

So What is Enterprise Decision Management? EDM is a systematic approach to automate and improve decisions across the enterprise. It allows businesses to: Make more profitable and targeted decisions PRECISION In the same way, over and over again CONSISTENCY While being able to adapt “on-the-fly” AGILITY

Operational decisions across the enterprise Operational Systems and Process CRM SCM ERP Call Center Website Email POS Etc. Business Rules Decision Service Rules http://www Models Analytic Models Enterprise Data External Data

Components of Fair Isaac’s solution Blaze Advisor™ business rule management system SmartForms rules-driven data capture Model Builder Software and Mentoring Predictive Models – Risk, Opportunity Evidence-based Rules Professional Services

Various Analytics Can Improve Results X Descriptive Analytics How do I use data to learn about my customers? Predictive Modeling How are those customers likely to behave in the future? How will they react? Decision Optimization How do I leverage that knowledge to recommend the best action? Knowledge - Description Action - Prescription

The business case for EDM Timeliness of Decisions Days Real-time / Point of Contact Complexity of Decisions Local / Simple Corporate Objectives / Trade-Offs Constraints on Decisions Static / Simple Dynamic / Complex Changes to Decisions Every 3-5 Years Frequent Adjustments Observation Data Point Better decisions drive better results 93% felt that operational decisions impacted profitability 61% significantly Not leveraging data properly 70% of CIOs/CTOs did not get the most value from data. 47% because could not blend business rules with insight Large number of unaddressed decisions 51% had automated about 25% or less 79% had automated about 50% or less

There are many dimensions to the benefits Precision Effectiveness Granularity Quantitative Metrics Cost Efficiency Cost – Value Trade-off Activity Based Consistency Repeatability Compliance Expected Outcomes Speed Responsiveness Service Levels Opportunity Cost Agility Adapting to Change Testing Design & Deployment Costs

And many possibilities for competitive advantage We measure operational improvements in decisioning in 5 areas Precision, consistency, agility, speed and cost (build) We identify the best practice on each dimension, map an organization against this and move to improve all dimensions As discussed in Harvard Business Review, June 2005 Page 11

EDM provides tremendous benefits Precision Higher revenue yield per customer interaction Lower costs through improved risk management Lower costs through less waste / fewer ‘off target’ messages Consistency Lower costs of making decisions through automation Lower costs of compliance, regulatory requirements Better customer service across channels Agility Improved strategic alignment Capitalize on new product & market opportunities….fast Lower IT / Development costs to change decisions

Successful companies harness both approaches Strategic decisions have broad business scope but occur less frequently Tactical decisions determine how to manage processes and customers Operational decisions deal with individual transactions

Enterprise Decision Management in Action: Legacy Renewal for Motor Vehicle Agency 2,000+ rules applied to 70,000 transactions a day generating $4B in revenue 13,000 hours of maintenance saved in the first year 90% reduction in problem resolution time Reuse across batch, 170 offices, new web service Government agencies world wide use Fair Isaac solutions 80

Enterprise Decision Management in Action: Managing Risk in Financial Services Change time from 35 days to 2 Manual referrals reduced 75% Income increased by 1.5% Provision for bad debt reduced by 1% 0% downtime since it went live in February 2003 ROI ~6 months with subsequent savings >£5M annually (>$9M annually) of the world’s top 100 banks work with Fair Isaac 2/3 card accounts worldwide are managed using Fair Isaac solutions 700 million

Enterprise Decision Management in Action: Marketing Sharper in Retail Advanced analytics deployed using business rules Personalized recommendations in categories with no prior purchases Deeper customer relationships More customer visits and bigger baskets 17% began buying in new product categories a 2,000% lift IDC ranks Fair Isaac #4 in Worldwide Automation Applications Revenue #4 of the top 10 global pharmaceuticals companies have worked with Fair Isaac 8

Enterprise Decision Management in Action: Streamlining Operations in Insurance Automated more than 3,000 underwriting rules Update strategies, policies and rules easily, without programming Processing 99% of new policy applications automatically Held expenses down as applications grew by 35% and agents accessing the system tripled of the top 50 U.S. P&C insurers use Fair Isaac technology 70% insurers and healthcare payers worldwide use Fair Isaac technology 400+

Enterprise Decision Management in Action: Fighting Fraud in Telecommunications Cut fraud losses in half with fewer “false positives” Prevented $14 million in early-life bad debt in one year Return on investment of 100% in less than four months transactions are reviewed every day by one provider using our network analytics 1.5 billion of all roaming cellular call records in North America are processed with our technology 90%

Things you can do Go to Fair Isaac’s website: http://www.fairisaac.com/edm Come to our booth - #305 Automate decisions with Fair Isaac Blaze Advisor http://www.fairisaac.com/rules Read my blog http://www.edmblog.com Send me questions or comments jamestaylor@fairisaac.com