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January 3, 2007
Some predictions for 2007
Towards the end of last year I asked various people to make some predictions for 2007. Here, in no particular order, is what they said. Interestingly pricing and customer-centricity both came up more than once.
Bruce Richardson, Chief Research Officer of AMR Research sent me this one (though I am not sure he is serious)
- EDM will revolutionize professional sports, particularly baseball and football. Take football, especially this week’s Wild Card match up between the Patriots and the Jets.
- As the Pats coach breaks down game film, he enters data on how the quarterback responded to the defense (or vice versa) depending upon which down, yardage needed to first down, field position, score, time left in the half or game, field conditions, etc.
- All of this gets coded and entered into a computer.
- All of the data is stored and analyzed, and rules are generated - If 3rd and 15 with plenty of time and only one blocker in the backfield, the defense should...
- Rather than consult those plastic-coated charts with plays on them, the coaches watching from the skybox enter the formations into a handheld or laptop.
- The computer responds with a series of probabilities based on the best historical matches as well as input from the team’s head coach.
- These results in the new rules.
- Eventually, self-learning robots replace players...
Mike Schoeffler, President of Profitdesk Software had this to say:
- A nomination for the next big decision automation in an industry: bank loan and deposit pricing. Behind the scenes, one industry after another has automated pricing of their products - airlines, clothing stores, supermarkets. Bank pricing is equally broken. It is often guided by C-level executives, who rely upon their intuition and art because the tools have not been available. The changes this year will be invisible to customers if implemented properly, but will noticeably expand bank profits, even in an inverted yield curve.
David Raab of Client X Client had a couple of hot trends:
- Complex event processing: the notion of linking and finding patterns in multiple customer activities and using these to guide customer treatments. No different from normal customer management, except that it requires more sophisticated technology and richer data, including customer activities, customer profiles, environmental inputs (location, competitor behavior, weather, economic news, etc.) and business situation (products, inventory, etc.) Yes, it's yet another perfect application for EDM.
- Marketing mix modeling: part of underlying marketing ROI and optimizing marketing investments as a result. It's becoming a feature of marketing resource management systems, which are a logical home because they have all the information on marketing programs to begin with. But you need to add more information on results and more sophisticated analytics to make it the mix modeling possible.
- Both trends build on the wider accessibility of customer data, both as captured in enterprise warehouses and as visible in place through service oriented architecture, and on customer data integration technologies that make it easier to assemble the data from different sources and relate it to individual customers. Both also point to a need for over-arching management of the customer experience across all interactions (their specialty at Client X Client).
Barb von Halle and Larry Goldberg of KPI had a couple:
- There will be at least one, maybe two, new business-friendly software products available by 2Q2007 through which business-focused (not technology-focused) rule authors can write rules independent of a BRMS. Possibly with generation into 1 or 2 BRMS products
- There will emerge a business rule formalism that we believe will enable business rules and Enterprise Decision Management to integrate well in an SOA world by 3Q2007.
Henry Morris of IDC said
- In 2007, we will see delivery of more industry-specific composite applications that combine transactional, analytic, and collaborative decision-making tasks. Pricing decisions (which have a distinct vertical flavor) will be a popular subject area for these applications -- monitor changes to demand, analyze new trends, adjust the price in the transactional system, monitor, etc. Some will be packaged; many will be custom-built. The packaged applications will require extensive on-site customization. Providing an interface for model-based configuration and customization (at a level of abstraction suitable for business analysts) will be a differentiator for the packaged composite applications.
Sandy Kemsley, my fellow blogger over on ebizQ, had a piece on 2007 trends here and highlighted this one:
- There are two more Web 2.0 characteristics that I think we're going to start seeing in BPM in 2007: tagging and process syndication. Tagging would allow anyone to add free form keywords to a process instance (for example, one that required special handling) to make it easier to find that instance in the future by searching on the keywords. Process event syndication would allow internal and external process participants to "subscribe" to a process, and feed that process' events into a standard feed reader in order to monitor the process, thereby improving visibility into the process through the use of existing feed technologies such as RSS (Really Simple Syndication).
Ian Turvill, the other regular blogger on this blog, had a couple too:
- Increasingly, retailers will see Enterprise Decision Management as a key way in which they can drive customer centricity across the organization. A "Customer Centric" enterprise is one that delivers marketing, sales, and service to strategically distinct segments in very different ways so as to maximize the overall customer portfolio value. Customer Centricity is an approach which has been used by leading retailers, such as Best Buy and Tesco, as well as other recognized consumer service organizations, such as Harrah’s and Royal Bank of Canada, to achieve substantially superior financial performance. Customer Centricity involves five key steps:
- Understanding the current and potential lifetime value of customer relationships
- Explicitly choosing and focusing on a select set of customer segments
- Understand those customers in depth, including how to build larger relationships with them
- Engineering a "winning" value proposition across these customers’ entire shopping experience, including marketing, sales, and service
- Aligning the enterprise around delivering that proposition
- Insurance companies will adopt Decision Services to get better Decision-Making across the board. Insurers are recognizing that the benefits of predictive analytics and decision automation that they have seen in personal lines underwriting can also be realized in other functions and in other lines of business. They will respond by creating a separate decision-making capability an inherent part of their overall information technology architecture through the creation of "decision services". A similar prediction has been made before. In a July 2005 report, Karen Pauli, a Senior Analyst at TowerGroup, stated that: "The insurers that will survive this competitive environment are those that leverage technology to advance their business and operations. . . . One of the primary ways insurers are transforming their infrastructure is by supporting the insurance value chain in a modular way, such that applications are not all in one and can decouple and share some core components. . . .". What makes 2007 different is the rapid and widespread adoption of Service Oriented Architectures, which make it now possible to deploy the applications which exploit the SOA approach.
Craig Dillon, who heads up our ScoreNet business here at Fair Isaac, had another (he and I presented on Decision Service Providers recently).
- Technologies that control business rules will enable companies to increasingly move key decision points outside their four walls, enabling new classes of business process outsourcing. This will enable a new class of business †BPO networks with embedded business rules running at the hub.
As for yours truly, I have a couple:
- Every BI vendor will talk about having predictive analytics as a core component of their technology. Few of them will actually manage this.
- Every BPM vendor with long term prospects will partner with a major BRMS vendor and multiple integrated solutions will start to emerge.
- The idea of decisioning and decision services as a class of development will become mainstream or at least more mainstream.
- BRMS vendors will devote much of 2007 to improving the ability of business users to test, check and manage business rules
- Predictive Analytic workbench vendors will focus more and more on deployment of the models, not just development of them
- Some useful standards will be published and increasingly adopted in business rules and analytics, increasing the speed of adoption
- A really great book will get published on EDM and all the readers of this blog will buy multiple copies for their friends and family enabling the authors to take well-earned vacations in paradise.
One more thing. There was a nice 2007 Trends article over on Intelligent Enterprise about which I blogged here.
Technorati Tags: AMR, analytics, BI, BPMS, BRMS, EDM, Enterprise Decision Management, IDC, insurance, KPI, Marketing, predictive analytics, ScoreNet, SOA, standards, customer centricity
Posted by James Taylor at January 3, 2007 5:13 PM
