RealTime IT News

Decision Help For The PhD-Impaired?

Ilog has rolled out a solution allowing line-of-business owners to take part in decision-optimization work that has thus far been the exclusive province of optimization experts.

The Optimization Decision Management System (ODMS) allows executives to review predictive mathematical models in terms they can understand, and help translate strategic decisions into tactical and operational decisions.

Thus, they can perform what-if analysis and scenario comparisons so they can understand their options and balance conflicting business goals, such as service level agreements and various costs such as labor or fuel.

Heretofore, these business owners had to rely on PhD-level mathematicians to develop those predictive models.

According to Jeff Kilbreth, director of optimizations product marketing for ILOG, ODMS allows business owners to peek into the black box and give quicker, more accurate feedback to the math wizards.

"Historically there needed to be a mathematical god to build the models. ODMS is making it easy for business people to participate in the model development process and trust the results of the models," he told internetnews.com.

ODMS allows the developers to generate a working application for which executives can provide feedback.

"With a working decision support application, the non-mathematician can easily understand all of the costs, constraints, resources, and goals" input into the model.

This allows them to vet the assumptions made by the developer.

"They tell the optimization expert what is missing or incorrect and then they do it again. Typically three prototype applications gets you to a final model and therefore a final application," said Kilbreth.

"Business users won't use the information unless they're sure they can trust it," he added.

Most companies using this type of solution are in manufacturing, where ODMS can be used to resolve supply chain issues like optimizing truck routes or raw materials utilization.

Solutions of this kind are also being used to resolve complex decision-making puzzles in other industries, such as scheduling staff in large hospitals, pricing routes in the airline industry or calculating portfolio weightings in financial services.

Ilog solutions are already imbedded as rules engines within supply chain applications from vendors like SAP and Manhattan Associates .

But the modeling used by those applications tends to be too generic for many larger companies with specialized problems to resolve.

Ilog solutions have also been adopted as stand-alone applications run by operations research professionals at large enterprises.

Ilog says 88 of the world's 200 largest companies use its solutions to build their own optimization models.

Bob Parker, vice president of research at Manufacturing Insight, noted that ODMS will help companies actually implement better decisions more quickly.

"What this gets you is you can iterate the decisions much faster," he explained.

ODMS doesn't solve every problem in the decision chain, however.

"You still need to write the new decision back to the transaction system so you operate against that [new] plan. That process is still not streamlined," Parker said.

Still, he said, the solution addresses a very real problem.

"It's something that's been needed in the market in this area for quite a while," he told internetnews.com.

Manufacturing Insight includes decision optimization modeling as part of the business intelligence market, which Parker said drives approximately 20 percent of external IT spending.

"We see that doubling over the next five years," he said. "Demand for this is really going to grow."

Ilog currently generates $50 million from decision optimization solutions, and Kilbreth said the company expects to double that figure within three years.

Kilbreth said the solution costs anywhere from $250,000 to $500,000, depending on the amount of customization of the ODM-generated screens, the complexity of the optimization model, the complexity of the integration work and whether the company has any operations research skills in-house.