How about our 2010 Predictions?

on January 6, 2011
SMARTS™ Data-Powered Decision Management Platform

Well, well… it’s been a year since Carole-Ann started this blog. Time sure flies, although we accomplished a lot in the meantime. Carole-Ann provided us with a list of her predictions for 2010. As somebody (Niels Bohr, the physicist) said, “Prediction is very hard, especially if it is about the future”.  Of course, Carole-Ann’s predictions focused on Decision Management, and had that optimism we all love that puts high hopes for the future of the industry.

I, on the other hand, am more of a glass-half-empty type of person… or to be more precise, a glass-will-take-longer-to-fill-up type of person. That’s why I am not good at asserting predictions, but I do have fun looking at how predictions made by others fare.

So let me review Carole-Ann’s prediction and provide my “rating” on them. “Stump the chumps” theme in the background…

1. Stress Testing your Decisions under Uncertainty

Carole-Ann wrote:

“Given my previous post on uncertainty, Decision Modeling could not be omitted from my list of predictions. Plotting the business outcome of a change in direction is the miracle everyone dreams about. Access to Stress Testing tools is still limited to an élite unfortunately. Designing a good model can take months for a domain expert. This is an area where tools and technology will need to evolve to become more usable by “normal” people. 2010 will aim at educating the market on this under-utilized discipline, and I will contribute actively in this blog.”

I have remained involved in the Decision Management space over the past year, and have talked to a number of partners involved in the overall management of decisions. What I have seen is that in industries in which decisions carry significant consequences (health, finances in particular), the need to stress test decisions to increase understanding, lessen risk and characterize performance, remains paramount. Some of these organizations set up their whole decision life-cycle approach around the principle that each and every decision to be automated or supported by automation undergoes technical, analytical and business testing before being applied to their customer base at large.

In the area of finances, 2010 saw the continuation of the renewed efforts to stress test banks.

As far as increasing the visibility of stress testing of decisions, Carole-Ann has frequently discussed this imperative in this blog, discussions in other blogs and communities, as well as in the presentations delivered at Rules Fest 2010 and Business Rules Forum 2010.

More education can be done, and, am sure, will be done over 2011.

Grade: Right prediction, wrong year – it will take longer.

2 . Measuring Success

Carole-Ann wrote:

“The related low-hanging fruit for the industry is Decision Performance Monitoring (DPM), which is the term I came up with to cover Business Activity Monitoring (BAM) but applied more widely to business performance rather than specifically to information flow. I am not married to that term of course and as always we will eventually settle on one after generating many different variations…
The interesting aspect here is to monitor the value of decisions. This has been a pretty important value brought by Business Process Management (BPM) products. Operationalizing the practice and extending its scope to business decisions rather than technical aspects of those decisions will add value to the business owners within the enterprise. Dashboards and other forms of insights (notifications, alerts, etc.) will spread quickly once those business users will get a taste of it.”

Focus on the performance of operationalized decisions is a sign of maturity in an application. My experience up to not too long ago had been that, expect in a few very specific cases, decision management had been much more focused on the correctness of the decisions (ensuring they are compliant to legislation, and faithful to the practices, policies and procedures the experts agree on) than on their business performance. Part of the reason for that is that measuring the value of decisions is difficult. Identifying what business value is derived from what decision or series of decisions is not simple, and few organizations are set up to cope with the data and processes that are required to be successful in measuring success.

However, and tied to the inclusion of stress testing of decisions, the practice of taking decision performance monitoring into account in large scale enterprise applications is starting to take hold, and this is particularly true in industries in which the degree of decision automation is already high: for them, measuring the performance of decisions is now a key to differentiation through decision improvement. It will take a few years, in my opinion, for those applications to become mainstream, but the direction is clearly established.

As with stress testing, I expect more to be done in this area in 2011.

Grade: Right prediction, on track – almost the right year, but not a slam dunk.

3. Lowering Risk with Better Forecasts

Carole-Ann wrote:

“I posted a few months ago in edmblog an article on the momentum I saw in the marketplace for Predictive Analytics. Why is that? Simply because many business realize that they have been shooting darts in the dark. Backing decisions with data feels safer of course but it does create a competitive advantage. Assume that a population of clients are available out there, if you had a way to measure risk or potential revenue, you would be able to cherry-pick who to go after, who to decline, leaving the bad apples to your competitors. Although some models have not worked too well for the mortgage industry, it had to do with the wrong or lazy assumptions we applied rather than the potential of the technology. On the contrary, one of the lessons learned was the importance of a good predictive model!
This demand is real. I have seen a huge increase in end-user demand for such technologies. While the Financial Services industry has been a traditional consumer of Predictive Analytics, many others are now also trying to get educated on the subject. There is still a lot of confusion between the various types of analytics and more specifically Business Intelligence and Predictive Analytics. I foresee that this trend will continue in 2010, still focusing more on education without necessarily translating into significantly increased adoption yet.”

Maybe it’s because my vision is compromised by the time I spend working on Decision Management problems, but I do believe that 2010 has been a year in which analytics under its various names and forms has taken center stage. I even hijacked part of Rules Fest 2010 to talk mostly about the available “big data” and how mining the information contained in it is to become core to any large scale decision management application.

2010 was the year of the rise of the Data Science, following on the momentum created previously.

All sorts of organizations have opened API access (free or paying) to their data, others have made it simple to leverage that data to create insight and improve decisions with them: Google Prediction API, IBM Many Eyes, etc…

All this data work results in the creation of analytics – either with humans leading the effort assisted by algorithms and visualization, or with models created through model building technologies – which are fully integrated in the automation and improvement of decisions.

Grade: Right on!

4. Clouding your judgment?

Carole-Ann wrote:

“The economy has definitely changed the way businesses are looking at technology investment, shifting capital expenditures (CapEx) towards operational expenditures (OpEx). The goal being to lower the costs, I am not sure that all businesses are actually considering too much the total cost of ownership (TCO) as the primary objective. In the current economy, the focus is on the initial risk, the initial stakes. With a pay-as-you-go model such as Cloud offerings, corporate buy-in may be easier to get. Less initial licenses and installation cost and duration is appealing for business applications deployed as a Service (SaaS). is the example on everybody’s mind.
Platform-as-aService (PaaS) does not enjoy the same pace of adoption. Low level services have become available in 2009. Decision Management remains under-represented. Sandy Kemsley presented at Business Rules Forum 2009 an interesting state-of-the-art intro to Business Process Management (BPM). It is still quite immature though with mostly design capabilities exposed for collaboration rather than full execution. This may evolve this year as Microsoft Azure is now finally also available as a credible player, pushing the Amazon and competition to the next level. I expect that we will get some traction there in 2010.
I have had a number of conversations with Industry Analysts on this subject. There seems to be a consensus about the slow demand for Decision Management on the Cloud so far. I believe this will evolve quickly when underlying Cloud Computing platforms evolve and Business Tools become more accessible.”

Cloud Computing has become a well established solution to solve the scale and even reliability issues frequently encountered with in-house IT organizations, has enabled to move from CapEx to more manageable OpEx, and has created the opportunity for countless young companies to enter markets that would have simply been otherwise closed to them for lack of infrastructure.

Gartner states that the cloud services market grew by 16.6% in one year, reaching $68B in 2010. Not only did simply double its revenue in 2010 (reaching $2B), we also saw Microsoft continue to expand its Azure offering, and Google and Amazon grow their cloud platforms. Amazon is expected to derive over $0.5B in less than a year. Even Oracle has embraced it, in spite of its now legendary initial reluctance.
We expect this to grow, privacy and security issues may create distractions, but the trend is solidly established.

Grade: Right on!

5. Complex Technology Choices

Carole-Ann wrote:

“Technology decisions are always difficult… How to know what technology to use? Is this a good fit? Is this the best fit? How do I know it will accommodate my needs for the longer term?
After a few excruciating years, we finally got a consensus as far as Business Process Management (BPM) and Business Rules Management Systems (BRMS). Now we see more activity and confusion around Complex Event Processing (CEP). Some claim it replaces BPM. Others claim it replaces BRMS. In reality, I believe it does overlap a little but mostly it is an execution algorithm that will fit within one or the other, or may remain a separate piece of the modern architecture. It certainly does not cover all that BPM or BRMS aims to cover.
2010 will see an increase in CEP adoption as a result of the hype initiated in the marketplace but I am afraid that we will see many disappointing failures. Not because CEP is not a good technology but because its over-promises in capabilities or applicability. Projects will miss the mark in terms of business user management (which is truly the main goal of BRMS) or in terms of document management and other BPM capabilities.
I do wish we collectively do a better job at categorizing those technologies such that the marketplace understands what to use and when… Confusion may seem like an appealing marketing strategy but I am convinced that it always bites back. The industry would be better served with clarity.”

This is a much tougher one to judge. I agree with Carole-Ann that the current technology choices in Decision Management are too complicated in their structure, and that there is too much overlap among them.
While CEP has made inroads in the market place – it is now followed by analysts, has a few vendors pushing it forward, even appears in Google Trends now – the confusion remains as big as before.

I actually think we will go through more confusion before things settle. That seems to be the patterns with most “new” domains – and I will venture Decision Management is “new” in that sense.

Grade: Not sorted out, not yet…

6. Business Users at the Helm

Carole-Ann wrote:

“Decision Management is a Business discipline, supported by technology of course. We tend to forget who the main constituent is though. Tools have been developed sometimes with the business user in mind but way too often for the usage of technical users. Developed by developers for developers, user interfaces remain often techie. Even when tools offer a business view into the decisions, their implementations do not always reflect those capabilities.
With the on-going requirement for lean, and the vocal involvement of key industry analysts such as Jim Sinur from Gartner and Mike Gualtieri from Forrester, I expect that more attention will be given to the choices of representation.
Forrester emphasized the Business Technology transformation at Forrester Business Technology Form in Chicago late last year. I do agree that empowered business owners will want to take charge and IT will have to speak their language more than they have in the past. This will accelerate the evolution promoted by thought leaders in the industry.”

Putting the business user in control of the management of decisions has been the core theme of Business Rules Management Systems, and their key differentiator with respect to other rules systems.
2010 saw a fair amount of confirmation of the importance of this need to not just put the business user in control, but enable him/her with the right tools to achieve success

Business Rules Forum 2010 combined the traditional business rules community with the business analyst community, and that combination led to a number of very interesting and illuminating discussions and debates.

Analytics themselves, frequently the realm of specialists when it comes to building models or preparing reports, is seeing a revolution. SaaS BI removes a lot of complexity in the operations around BI, and enables putting business users closer to control points. IBM shipped IBM SPSS Decision Management which offers business analysts support for leveraging predictive models through point and click interfaces.

We have seen the same trend accelerate in our communications with the industry. In our blogs, some of the posts that have generated the most discussion and traffic have been around the importance of business analyst control, the accelerating collaboration between business analysts and business users, and even the failure of standards that do not account for proper business exceptions – something that is crucial for proper business user control.

Grade: Right on!

7. A Few Good Men

Carole-Ann wrote:

“Well, I will not argue that you can’t handle the truth… We all know that the industry is Consolidation at the speed of light. Giant platform vendors like IBM are absorbing smaller technology vendors in the Decision Management space like crazy. This covers Business Rules Management Systems (BRMS) of course but more aggressively Business Intelligence (BI) — to the point where there seem to be no independent vendors left! — Business Process Management (BPM) and Optimization and Analytics companies.
The BPM space is actually changing pretty dramatically with very few independent vendors left. Global 360, Metastorm and K2 come to mind. So the main question that comes to mind is what that means for the market. All seems to indicate that the big platform vendors: IBM, Microsoft, Oracle and SAP are beefing up those capabilities and will be busy in 2010, likely translating in little innovation. Yet again, smaller nimble players may be what we should be looking at. In 2010, some of them may end up gobbled up as well, leaving the space pretty sterile for a little while.
Don’t take me wrong. This is not necessarily a bad thing. This will open the door for new modern technologies to develop in the coming year to fill the gap. I am sure this will be an interesting year to watch. I am glad I got a front-row seat!”

Well, not much to argue with here. In the Decision Management world – extending beyond just BRMS, Predictive Analytics and Optimization – most large companies have continued acquiring and building significant product portfolios. Already mid 2010 the trend was clear. Of course, a lot of the acquisitions are driven by the hot sectors of Cloud Computing and SaaS, but a lot of these are relevant to decision-heavy industries and the Decision Management space.

For example, just a couple of weeks ago, Teradata announced the acquisition of Aprimo – a decision platform / tools company venturing into a decision heavy application space. Two days later, Callidus acquired ForceLogix, expanding its portfolio of SaaS-based talent management capabilities. A month of so earlier, Oracle bought eCommerce veteran ATG, a big player in personalization.

So, yes, a few good men left standing. But the dead bodies around them are fertile ground to new ventures…

Grade: Right on!

So…All in all, a number of good predictions, and some that I would say were a little over-optimistic. But it’s by being optimistic that the future is shaped, I know that!

This was fun. Another one in a year!

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