Fair Isaac specializes in applying mathematics to solve business problems.

Predictive analytics is a hot topic lately, fueled in part by increased emphasis on compliance, fraud detection and risk management. While other software companies are busy ramping up their capabilities in this area, Fair Isaac is in a very comfortable position. Why? Because Fair Isaac mathematicians have been honing their predictive analytic expertise for almost 50 years. That means they have analytics, algorithms and models that have been skillfully developed and tested repeatedly in industries ranging from financial services, retail and insurance to telecommunications, healthcare and government to help Fair Isaac customers reduce operating costs, increase their customer base, cut losses, speed decisions, increase revenues and grow customer value.

With more than 3,000 employees worldwide, Fair Isaac was founded in 1956 by engineer Bill Fair and mathematician Earl Isaac on the principle that data, used intelligently, can improve business decisions. Because of Bill and Earl's groundbreaking work in decision science, Fair Isaac's scoring systems for the risk and potential of businesses and individuals are now widely accepted as industry standard. More than 100,000 businesses worldwide depend on Fair Isaac solutions - either directly or through Fair Isaac partners.

As the company nears its fiftieth anniversary, Thomas Grudnowski, President and Chief Executive Officer of Fair Isaac, provides insight into the company, its products and how companies benefit from the science of predictive analytics. "Fair Isaac is a technology company, first and foremost," says Grudnowski. "Everything we do revolves around using math and analytics to help our customers predict the behavior of their customers. We're in the very high value part of the analytics world - the world of predictive analytics or decision science where algorithms are used to make decisions. We have years of experience writing great software, we have a consulting division and we run operations. Despite all of those sort of normal ways of looking at technology companies, what really separates us from others is our focus on applying mathematics to solve business problems," he adds. Through a combination of analytic solutions, decision management software and professional services, Fair Isaac solutions power more than 180 billion mission-critical decisions each year for businesses worldwide.

 


Decision Automation

"When I started at Fair Isaac five years ago, it was primarily a risk management company," Grudnowski continues. "I saw Fair Isaac as a wonderful technology company that could use mathematics to help companies across industries make many kinds of decisions in an automated fashion. The decisions Bill and Earl started on were related to credit risk. Now, we have either built or acquired applications across the entire customer life cycle. All I really had to do was take the DNA of the model that Bill and Earl had developed and replicate it in new industries, new verticals and new applications. We see that evolution continuing and believe that we're just at the beginning stages of applying mathematical models to business problem solving."

 

The Math Advantage

"The concept of mathematics applied to decision making is not one that is intuitively obvious," explains Grudnowski. "Because we are thought leaders, we tend to be at the leading edge of applying this kind of technology. Our core competency is hiring really brilliant mathematics Ph.D.s to develop sophisticated equations that use data - consortia data, data from an industry, external data or internal data - to drive some type of decision. It all begins with the exploration and analysis of an organization's data. Our mathematicians identify patterns in the data. Equations are then written that map present data to future performance and actions to results, which drives development of the smartest decision strategy to solve the business problem. A particular sort of math genius thrives on solving business problems. Our analysts obsess over a level of nuance and detail that would seem counter-productive if it weren't so clearly successful. Testing hundreds of combinations of variables to find the most consistently predictive, splitting hairs to distinguish one transaction from another in search of a sliver of insight - this is what it takes to build a model that outsmarts a high-tech fraud ring or that lifts marketing response rates out of the low single digits," explains Grudnowski.

"An analytic culture is a culture of perfectionists and fractional improvements, but it's also a culture of proof - of being able to show a company exactly how much more money they could save or gain using our models," he continues. "We conduct pilot projects for our potential customers using their data to show them that if they use Fair Isaac technology and algorithms, they will see results. We demonstrate how our analytics can help them do a better job of making decisions."

 

Enterprise Decision Management

The decision scientists at Fair Isaac have amassed years of experience creating analytic solutions to automate and improve decision strategies for their customers. Realizing the strength of the collective brainpower incorporated into Fair Isaac solutions, customers wanted more. "Our clients began asking us if they could use our underlying technology to build other applications, and we saw an opportunity to help them automate and improve any decision across the enterprise, an approach we call Enterprise Decision Management (EDM). Now, our clients can license and use the same tools we use in our own analytic solutions. We provide the tools that give them the analytic advantage - the model builders, rules engines and decision optimizers," explains Grudnowski.

Using Fair Isaac software tools, customers can build and deploy rules-based applications, incorporate predictive and decisioning analytics, provide decisioning services to legacy systems, and build state-of-the-art decision management applications. EDM, according to Grudnowski, is the science of automating and managing highly targeted decisions to accelerate strategic goals. "Because Fair Isaac has always focused on building models that make business decisions, we were able to put that logic into EDM. With EDM, enterprises can maintain their decisions independent of user interface, data sources or operating system. We believe that as enterprises around the world understand the benefits of predictive analytics, they will see EDM as a productivity enhancement for getting more predictive analytic applications built faster, better and cheaper. We have the practical know-how to operationalize decisions. We know how to put the rigor of that science into a tight bundle," says Grudnowski. "Fair Isaac believes that the environment for creating a decision, for learning from the decisions you've made and for connecting those decisions to all the touchpoints of your company is a capability that every enterprise should have," says Grudnowski.

 

Decision by Decision

"When I graduated from college, computers were just coming out - that is, unfortunately, how old I am," Grudnowski jokes. "Coding and building software programs was the thing to do. Thirty years ago, nobody knew what systems integration was all about. Today, everybody gets it. We believe that predictive analytics is very similar. By creating methodologies and technologies around decisioning as our scientists continue to do, there is going to be an explosion of this technology. Just as Oracle became a database company, I'd like Fair Isaac to become the decisioning company - and our scientists are progressing in that direction decision by decision by decision. With our decision management software, our clients can make millions of decisions a day more consistently, at a higher quality level and at far lower cost," says Grudnowski. That's math everyone can understand! 

For more information about enterprise data management, please visit the Fair Isaac sponsored portal on the topic at http://www.dmreview.com/edm/.

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