This continues a series of guest columns from practitioners and bloggers I respect. The category - The Real Deal describes them well.
James Taylor is co-founder of Smart(enough)Systems and co-author of a book with the same name.
"While almost anyone who has to use one of today’s typical enterprise applications probably has a long list of things that are wrong with their particular application, there is at least one thing that is common to almost all of them: they are dumb. Now that’s a pretty strong statement but think about it. A typical enterprise application, whether custom or packaged, let’s you put in data, stores it for you and regurgitates it when you ask nicely.
Such an application relies entirely on people for any intelligence, for any decision making. This reliance:
- Limits straight through processing in any but the simplest processes.
- Means that 24x7 operations require 24x7 staffing.
- Reduces the ROI of event processing or business activity monitoring
More than anything, it means that none of the data in these systems is being used to improve their response to your customers, suppliers or partners. The data simply gets stored and then shows up in reports – past behavior and results do not inform the next transaction. And if your data is not being used to improve your operations then you are failing to use one of your most important assets – the unique visibility you have into your own business. Traditional BI approaches are focused on delivering insight to knowledge workers – they are not going to work for automated systems or high-volume, operational transactions.
Fortunately there is a well established path to improving the value of enterprise applications and taking more advantage of your data. This approach is known as Enterprise Decision Management (or Business Decision Management or just Decision Management). Here’s a definition:
Enterprise Decision Management is an approach for automating and improving high-volume operational decisions. Focusing on operational decisions, it develops decision services using business rules to automate those decisions, adds analytic insight to these services using predictive analytics and allows for the ongoing improvements of decision-making through adaptive control and optimization.
Identifying the critical operational decisions that inform, personalize, target and control the transactions within your enterprise applications can make those applications smarter – not intelligent, but smart enough to be useful. Instead of offering every customer the same price, your application can take a pricing decision. Instead of telling a customer someone will get back to them, your website can determine the risks and tiers for a policy and underwrite it. Instead of adding a generic cross-sell offer to the call script, your call center application can customize the script to maximize the value of this conversation with this customer. Instead of an account manager starting their day finding a message that a delayed shipment might upset a key customer, your system can re-route deliveries across customers to minimize the cost impact based on service level agreements. And so on.
When you focus on these decisions there is a way to add insight from your data. The pricing model can be based on an optimization model that uses historical trends, the underwriting decision can use risk scorecards that turn past behavior into future probabilities, the cross-sell can use data-driven segmentation to target customers. Suddenly the data you have can be put to work making your operations smarter.
The technology to do this exists today. Not only are there a number of decisioning platforms, there is a strong market for business rules management systems, plenty of data mining and predictive analytic tools, optimization products and growing integration between them. Processing power, data storage and virtualization, integration technologies and SOA have all helped make this approach cost effective and practical.
It’s time to end the era of dumb applications and start making your computers do more of the work."
Read James's blog at http://www.smartenoughsystems.com/wp
