Analytics First Approach- Businesses now have access to more data than ever before. However, big data is not what will enable businesses to win in today’s competitive environment. Forrester Research (paywall) predicted in a January 2018 report that one-third of all data lakes will no longer be funded, and most will fail. The reason? Their inability to help businesses take better actions.
In my 25-plus years of experience in analytics, I’ve frequently come across members of businesses who feel stuck in their digital transformations. I ask them, “What is your decision framework?” Oftentimes, the response is, “We don’t have one.”
I believe decision modeling is the missing component for most businesses. James Taylor and the Decision Management Solutions team said it best in their Decision Management Manifesto: “Decisions should be modeled first before considering how business rules and or analytics will be used.” Why? Because decisions tie business objectives to operations. When you understand what decisions — especially those daily yet complex operational decisions — your business makes, you understand what will move your business forward and where technology and analytics investments should be made.
So, where does a company start with this decision-first approach? With the customer. Businesses make many decisions about customers, but at the end of the day, customers only make one critical decision about you: to buy or not to buy from you. With this in mind, the big decision you should be making is what to offer a customer in order to maximize the chances of conversion while also maximizing profitability.
A lot goes into this decision. Within the larger decision of what to offer a customer are many sub-decisions. For example, is the customer who they say they are? What offers or products are they eligible for? Are they able and willing to pay? Are there regulatory or legal requirements to take into account? To make these sub-decisions automatically, businesses must rely on data, models and decision rules.