James Taylor - Decision Management Systems: A Practical Guide to Using Business Rules and Predictive Analytics

A Practical Guide to Using Business Rules and Predictive Analytics

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ISBN-13: 978-0-13-288438-9
ISBN-10: 0-13-288438-0

Text printed in the United States on recycled paper at R.R. Donnelley in Crawfordsville, Indiana.
First printing October 2011

For Meri, even though its not poetry
For my parents
And for my boys, again

Over the last couple of decades, businesses gained a competitive advantage by automating business processes. New companies and ecosystems were born around ERP, SCM, and CRM. We are at a point where automation is no longer a competitive advantage. The next wave of differentiation will come through decision optimization. And at the heart of decision optimization is a smart decision system, a topic that James Taylor does an outstanding job of explaining in this book.

As James explains, a smart decision system encapsulates business rules, predictive models, and optimization. Business rules codify the best practices and human knowledge that a business builds up over time. Predictive models use statistics and mathematical algorithms to recommend the best action at any given time. Optimization, through constraint-based programming or mathematical programming techniques originally applied to operations research, delivers the best outcome. It is the combination of all three disciplines that enables organizations to optimize decisions. What used to be called artificial intelligence became predictive and advanced analytical techniques and are now Decision Management Systems, which are increasingly populating business processes and making adopters competitive.

As James describes in the book, a Decision Management System optimizes decisions not only for knowledge workers, but for all workers. This enables a call center representative to make the best offer to reduce customer churn, a claims processing worker to maximize fraud detection, and a loan officer to reduce risk while maximizing return. And its not just decisions made by peoplea Decision Management System can enable your e-commerce site to present the next best offer, traffic control systems to automatically make adjustments to reduce congestion, and so on. Well-designed Decision Management Systems keep track of decisions taken and outcomes achieved, then have the ability to make or recommend automatic mid-course corrections to improve outcomes over time. Decision Management Systems provide competitive differentiation through every critical business processes, at each decision point, leading to optimized outcomes.

Im convinced that Decision Management Systems have the ability to deliver significant competitive advantage to businesses, governments and institutions. James does a thorough job of explaining the business value and the design elements of Decision Management Systems that are the enablers of a formidable business transformation.

Deepak Advani
Vice President, Business Analytics Products & SPSS, IBM

In the past 30 years, the evolution of computer science can be described as a constant effort to reify, a long march to transform all activities into digital things. We started with the structuring of data and the advent of relational database systems, which led to the ascension of Oracle; then with the reification of processes, with the Enterprise Resource Planning software wave leading to the emergence of SAP, and later of I2 for Supply Chain Management and Siebel Systems for Customer Relationship Management.

We moved on to the Business Process Management wave, which now enables the description of most service activities into well-defined sequences of processes weaving human-based processes with computer-based processes. This BPM emergence sets the stage for the next reification wave: that of decisions.

And this is what this book by James Taylor is about: how we can transform the fleeting process of decisions into digital things that we can describe, store, evaluate, compare, automate, and modify at the speed required by modern business.

The rate of change of everything is the global variable, that has changed most over the last 30 years. Relational databases postulated the value of slow-changing table structures. Enterprise Resource Planning systems embedded best-of-breed processes into rather inflexible software architectures. However, nowadays, most decisions live in a very fast-changing environment due to new regulations, frequent catastrophic events, business model changes, and intensely competitive landscapes. This book describes how these decisions can be extracted, represented, and manipulated automatically in an AAA-rated environment: Agile, Analytic, and Adaptive.