Operational and Analytical Decision Management -- What's the Difference?
cheryl wilson 270003VHSH firstname.lastname@example.org | | Tags:  business-rules predictive-analytics analytics decision-improvement decision-automation business-events optimization decision-management
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There was an interesting post last week on the MWD Advisors blog – Operational and Analytical Decision Management – can you tell the difference? It does a nice job of trying to clarify the difference between these two individual, but highly complementary, practices under the umbrella of Decision Management.
Here’s an excerpt from Helena Schwenk’s post:
I suppose the bottom line is that any decision (excuse the pun) about ODM or ADM shouldn’t only be predicated on technology requirements, but also needs to be grounded in the business opportunity or challenge that it aims to solve such as:
In the case of ODM and ADM, their technology capabilities are specialized, complementary and powerful. In addition to the differences described in Schwenk’s post (e.g., degree of certainty v. uncertainty, real-time action v. insights over time, business rules and events v. predictive analytics and optimization), the main distinction between ODM and ADM, for me, is the ability to act; the ability to provide a precise decision response based on the context of a particular interaction, transaction or process. While ADM is key to discovering insights in data that can be used to improve decision execution, ODM enables a real-time understanding of what actions to take and when to take them for intelligent decision automation and support.
So, ADM doesn’t “act” like ODM. ADM doesn’t ensure that operational systems behave consistently, accurately and quickly to meet the organization’s requirements, but it does ensure that decision making and execution are improved, if not optimal. If you’ve heard the phrase “turn insight into action,” ODM is the Action; ADM, the Insight. This comment is probably too reductive, but when I think of ODM, I think Action and Automation; when I think of ADM, it’s about Insight and Prediction – both make for better decision making. But do you need more insight or do you need to take precise action quicker? Or both?
Now, as Schwenk explained in her post, there are some gray areas and blurred lines between the two, but these lines become pretty sharp when your business challenge requires one or the other, or both. And there are certain business use cases that are sweet spots for ODM, such as credit and loan approvals; claims processing; underwriting; compliance and reporting; dynamic pricing and bundling; fraud detection; eligibility determination; cross-sell, upsell and product recommendations; customer loyalty programs; and customs and border control. So, I’ve come full circle and agree with Schwenk about grounding ODM and ADM in the business opportunity or challenge it aims to solve.