model-management-whitepaper.pdf - WHITEPAPER Introducing Model Management A Framework to Build a Model-Driven Business Introducing Model Management 1

model-management-whitepaper.pdf - WHITEPAPER Introducing...

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WHITEPAPER Introducing Model Management A Framework to Build a Model-Driven Business
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Executive Summary Part 1: Models—What They Are and Why They Matter Part 2: The Model Myth Holds Us Back Part 3: The Solution Model Management Conclusion 3 4 8 12 18 Contents
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3 Introducing Model Management Executive Summary This paper introduces Model Management, a new organizational capability for companies that want to put models at the core of business processes. Models are the central output of data science, and they have tremendous power to transform companies, industries, and society. Amazon and Netflix — two of the most successful businesses of this decade — are just two examples of companies using models to create new products and drive ongoing operational improvement. Despite the advantages of being model-driven, most companies are stuck trying to get there. A recent MIT Sloan study found only 5% of companies were extensively utilizing models in their business. Why is this happening? Companies are treating models like software when they are, in fact, very different — we call this the Model Myth. Even though models look like software and involve data, models have different input materials, different development processes, and different behavior. To overcome the Model Myth, companies need to develop a new organizational capability called Model Management. Previously, model management referred to monitoring production models, but we believe it should encompass a much broader capability. Just as companies have built capabilities in sales, marketing, people management, finance, and so on, they need an equivalent capability in data science. Model Management is a new category of technologies and processes that work together to enable companies to reliably and securely develop, validate, deliver, and monitor models that create a competitive advantage. Organizations that successfully build a Model Management capability will reap exponential rewards as more models drive better customer experiences and better margins. As models build on each other, more models also means more data and capacity for organizations to invest in new and better models. Those organizations will also better navigate common pitfalls that stymie the impact of models such as ethics and compliance risk. Ultimately, the haves and the have nots of this next era of computing will be determined by the quality of an organization’s Model Management. This paper is our effort to synthesize our learnings, distill the problem, and propose a path forward to achieve the full potential of data science. Part One describes what a model is and discusses how models drive business value. Part Two focuses on the essence of the problem — that models are different from anything built to date and it is a myth that organizations can manage them like other assets. Part Three dives into the details of a proposed framework for a new capability of Model Management which addresses the unique properties of models.
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4 Introducing Model Management
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