Predictive Analytics for Government Chih-Feng Ku Solutions Manager, Business Analytics IBM Asia Pacific Business Analytics

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1 Predictive Analytics for Government Chih-Feng Ku Solutions Manager, Business Analytics IBM Asia Pacific Business Analytics 1

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3 The world is changing and becoming more Instrumented Interconnected Intelligent The resulting explosion of information creates a need for a new kind of intelligence to help build a Smarter Planet

4 To ensure the economic health, welfare and security of their citizens, smart governments are working toward smart CITIZEN-CENTERED CENTERED government GOVERNMENT EXPERIENCES Connecting people to programs based on individual needs achieving sustainable outcomes while reducing operational costs and maximizing taxpayer value. ACCOUNTABILITY Leveraging business intelligence and planning to improve insight and elevate performance with visibility and control. GREEN GOVERNMENT FOR A GREENER PLANET Deploying environmentally responsible operations, from energy efficiency and conservation to transportation management and the pursuit of renewable resources. 4 SENSE AND RESPOND CAPABILITIES Enabling defense and law enforcement, Border, immigration, Treasury enforcement and compliance organizations to achieve situational awareness, increased speed of command and information superiority.

5 Many Organizations are Operating with Blind Spots; Those Applying Information & Analytics are Breaking Away 1 in 3 Business leaders frequently make decisions based on information they don t trust, or don t have 1 in 2 Business leaders say they don t have access to the information they need to do their jobs Top Performers Demonstrate Expertise 15X Predict and prepare for the future by evaluating trade-offs proactively Industry Top performers Industry Under performers Source: IBM: Break Away with Business Analytics and Optimization Study 5

6 but not (quite) yet the Age of Analytics.I will accept that intelligence, by its nature, is imperfect, but it is increasingly clear that intelligence was not fully analyzed or fully leveraged US President Obama on failure to leverage intelligence to prevent the 2009 Christmas eve bomb attempt

7 Analytics Critical for Driving Competitive Advantage At a time when companies in many industries offer similar products and use comparable technology, high-performance business processes are among the last remaining points of differentiation. Tom Davenport, Competing on Analytics BI/Analytics #1 investment to improve competitiveness Business Intelligence and Analytics Virtualization Risk Management and Compliance Mobility Solutions Ten Most Important Visionary Plan Elements Interviewed CIOs could select as many as they wanted 66% 73% 70% 71% 77% 76% 80% 86% IBM Global CIO Study 2009 Customer and Partner Collaboration Self-Service Portals Application Harmonization Business Process Management 62% 61% 64% 63% 67% 71% 70% 73% Low growth High growth SOA/Web Services 55% 68% Source: IBM Global CIO Study 2009; n = 2345 Unified Communication 57% 63%

8 The Key is Leveraging Information and Analytics Informed, Real-time Decisions at the Point of Impact Breakaway Approach Predict and act Volume Lack of Insight Velocity Inefficient Access Sense and respond Instinct and intuition Skilled analytics experts Real-time, fact-driven Everyone Inability to Predict Variety Back office Automated Point of impact Optimized 8

9 Analytics can mean many things Data Management? Statistics? Predictive Modeling? Reporting / MIS? Optimization? Database Marketing? Operations Research? Programs / Campaigns?

10 Analytics ranges from data management to reporting to advanced analytics Advanced Analytics osegmentation, Predictive modeling and Optimization Value and Impact Power Analysis o Multi-dimensional analysis to better understand business challenges Benchmarking okey Performance Indicators (KPIs) operformance Measured against Best Practices Basic Reporting o Standard reporting that is reasonably automated o Slice and dice data based on standard variables Data Management oconsolidation of data odata quality and accuracy Time and Resources Based on : Competing on Analytics, Davenport and Harris, 2007

11 Predictive Analytics offers Unique Insights to Answer those Tough Business Questions Predictive Analytics is a transformational technology that enables more proactive decision making, driving new forms of competitive advantage Analyzes patterns found in historical and current transaction data as well as attitudinal survey data to predict potential future outcomes

12 With SPSS, IBM adds a key technology needed to drive better decision making Gartner Magic Quadrant : CRM Data Mining, 2008 Forrester Wave : Complex Event Processing (CEP) Platforms, Q3 09 Forrester Wave : Business Rules Engines, Q2 08 Gartner Magic Quadrant : Business Process Management Suites 2009 Gartner Magic Quadrant : Business Intelligence Platforms 2008 The Forrester Wave : Enterprise Data Warehousing Platforms, Q1 2009

13 The Different Styles of Analysis Broad Usage (Consumers) Focused Usage (Specialist) Analytical Reporting Drill Trending Slice and Dice Scenario Modeling What-if Predictive Modeling What might be Top down view Drillable reports Sort top & bottom Analyze then query Personal exploration Compare & contrast Rotate and nest Work disconnected Model scenarios Reorganize, reshape Compare scenarios Save versions Uncover patterns Apply algorithms Mine data and text Predict outcomes Market shifts Product ranking Sales trend analysis Market analysis Financial analysis Profitability analysis Fraud prevention Churn analysis IBM Cognos 8 BI Reporting IBM Cognos 8 BI Analysis IBM Cognos 8 Planning IBM Cognos TM1

14 Introducing SPSS, an IBM Company A leading provider of predictive analytic software, services and solutions Software data collection, text and data mining, advanced statistical analysis and deployment technologies Services implementation, training, consulting, and customization Solutions combine software and services to deliver high-value line-ofbusiness solutions; used for optimizing marketing campaigns, call center effectiveness, identification of fraudulent activity and more 40 years of experience and a broad customer base 250,000 customers: 100 countries, 50 states, 100% of top universities Enables decision makers to to predict future events and proactively act act upon that insight to to drive better business outcomes

15 How can Predictive Analytics help in Government Tax & Revenue Collection Improve tax compliance & reduce tax gaps Education Enrolment Management, Student Retention, Student Performance Analysis 15 Public Security Support public safety & security efforts Interaction data Descriptive data People Attitudinal data Behavioral data Healthcare Promote Public Health and Welfare Fraud Detect improper payments and minimize fraud, waste, and abuse

16 Enabling the Predictive Analytics Process Capture Predict Act Data Collection delivers an accurate view of customer attitudes and opinions Predictive capabilities bring repeatability to ongoing decision making, and drive confidence in your results and decisions Unique deployment technologies and methodologies maximize the impact of analytics in your operation Text Mining Data Mining Statistics Data Collection Platform Deployment Technologies Pre-built Content Attract Up-sell Retain

17 Statistics: Derive the Attributes of Universe from a Small Sample A Sample of Data A Universe of Data

18 Data Mining: Predict the Behavior of the Next Case with a Model A Universe of Data A Predictive Model Attributes: Married, 1 kid Lives in Suburbs of Chicago Owns two Cars 38 years old Drinks Scotch Predicted Attributes Likes Guns n Roses Likes Johnnie Walker Black Works long hours Commutes Upper Middle Income Predicted Behavior Wants to Buy a Sports car! Buys Car Washes! Buys Chardonnay Vacations where it s warm

19 SPSS Predictive Analytics Software 4 Key Categories Data Collection Delivers accurate view of customer attitudes & opinions IBM SPSS Data Collection Statistics Drives confidence in your results & decisions IBM SPSS Statistics Modeling Brings repeatability to ongoing decision making IBM SPSS Modeler IBM SPSS Text Analytics Deployment Maximizes the impact of analytics in your operation IBM SPSS Decision Management IBM SPSS Collaboration & Deployment Services 19

20 Capture: SPSS Data Collection Data collection capabilities to capture attributes, interactions, behaviors, and attitudes for customers, employees or constituents Augments internally captured data with sentiment and opinion data and use this combination as part of the analytic process Delivers an an accurate view view of of customer attitudes and and opinions 20

21 Predict: SPSS Statistics Advanced statistics and data management for analysts researching business problems Collection, preparation, analysis, interpretation, explanation and presentation of data Provides insight into a sample of data and tools for prediction and forecasting based on the data Drives confidence in in your your results and and decisions 21

22 Predict: SPSS Modeler Workbench with data preparation functions to build analytic streams or jobs and a run time environment for job execution Set of mining algorithms that provide insight and prediction Enables the discovery of key insights, patterns and trends in data that can be used to optimize business decisions Brings repeatability to to ongoing decision making 22

23 Predict: SPSS Text Analytics Uses natural language processing heuristic rules and statistical techniques to reveal conceptual meaning in text Extracts concepts from text and categorizes them Makes unstructured qualitative data more quantifiable, enabling the discovery of key insights from sources such as survey responses, documents, s, call center notes, web pages, blogs, forums and more Brings repeatability to to ongoing decision making 23

24 Act: SPSS Collaboration and Deployment Services Flexible enterprise foundation for managing and deploying analytics throughout the organization Automates analytical processes Enables collaboration by securely sharing and reusing analytic assets Streamlines deployment of analytical information on a scheduled or realtime basis Maximizes the the impact of of analytics in in your your operation 24

25 Act: IBM SPSS Decision Management Set of tools to automate highvolume decision making enterprise-wide Injects powerful predictive analytics into core business processes Extends predictive insights to the business user at the point of decision E.g. Should a claim be fast tracked or evaluated more closely based on a calculated risk score? Maximizes the the impact of of analytics in in your your operation

26 Predictive Analytics drives value Visible ROI Predictive Analytics SPSS provides a small but critical piece of the solution equation BPM / CPM / BI Back Office Applications Middleware & Infrastructure Technologies Existing IT Investment Organizations have a difficult time cost justifying large and existing IT infrastructures that are often not leveraged to their full potential Operational Systems Hardware 26

27 Customers Experience a Measurable ROI 94% of customers achieved a positive ROI, average payback in 10.7 months Over 90% of users attributed an increase in productivity to SPSS 81% of projects were deployed on time, 75% on or under budget This is one of the highest ROI scores Nucleus has ever seen in its Real ROI series of research reports Rebecca Wettemann, VP of Research, Nucleus Research

28 Public Sector Successes Department Agency Need Results Tax Public Health Healthcare Profiling Audit Targets Coordinating Disease Information Detection/Prevention of Medicaid and Medicare Fraud Streamlined audit selection and closure process Multi-modal data collected on E. Coli outbreaks, post-katrina diseases Identified fraudulent providers Public Security Richmond Police Department Enforce public safety Education City University of NY Successfully gains and retains students

29 Commercial Sector Successes Sector Company Need Results Improved availability, Retail Market Mix Analysis overall profitability, higher propensity to move SKUs at stores Insurance Insurance Abrogation Found overpayments and collected millions Consumer Goods Product Design & Customer Sensitivity Researched key product features to drive increased retail penetration and differentiation Telecommunications Customer Intimacy Reduced customer churn from 19% to 2%

30 SPSS, an IBM Company Enables Next-Generation Decision Making A leading provider of predictive analytic software, services and solutions with 40 years of experience and a broad customer base Enables decision makers across the organization to predict future events and proactively act upon that insight to drive better business outcomes From sense and respond to predict and act!

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