FICO: Everyone Knows the ‘Score’ but not the Software


Financial services organization is a 60-year ‘overnight’ success in analytics, O.R., AI, optimization development and business transformation. 

It wasn’t very long ago that a fellow attendee at an INFORMS conference looked at my badge and asked, “So, what does FEE-Co do?” I could only smile at such a humbling question because it reminded me of the marketing challenge I face every day: Everyone knows the FICO Score and its burgeoning role in consumer lending, but only real analytics cognoscenti know that FICO has also been a leader in analytics, AI and optimization software for decades.

Outsmarting Vexing Business Problems

It all started in 1956 when engineer Bill Fair and mathematician Earl Isaac founded FICO – with an investment of $400 each – on the principle that data, used intelligently, can improve business decisions. They pitched their idea of scoring credit risk to multiple institutions. Only one replied and created the beginning of the FICO story. Today, FICO is a $1 billon+ organization with 10,000+ clients in 100+ countries supported by 2,000+ employees around the world.

For more than 60 years, FICO has been at the forefront of analytically driven business transformation, having helped thousands of companies worldwide to make faster, smarter and more profitable decisions over the lifespan of every customer relationship.

Though FICO is a household name in consumer credit scoring for financial services – 98 of the 100 largest financial institutions in America and two-thirds of the world’s largest banks trust the FICO Score and our decision management solutions as the foundation of their lending operations – the company has also quietly been a leader in operations research, management science and analytics since 1983. Following the Dash Optimization acquisition in 2008, FICO integrated the Xpress-MP product portfolio into the FICO Platform, leading to an explosion in business growth and industry expansion.

Today, thousands of companies, and tens of thousands of users, rely on FICO Xpress Optimization – which includes Xpress Insight, Solver, Nonlinear, Mosel, Workbench and Decision Optimizer – for their most demanding advanced analytics projects. And that’s just the beginning.

FICO Xpress Optimization is part of the Decision Management Platform, which is a unified platform to build, deploy and execute analytic-powered applications, that has helped customers boost and transform their businesses. Our connected, automated platform has proved to reduce portfolio risk, cut costs, improve customer experience and accelerate business growth. Customers can easily go from insights to actions by executing, managing, scaling and centralizing their analytically powered decision management solutions.

Ranked as a leader in the Forrester New Wave: Digital Decisioning Platforms, FICO was awarded for best companies automating consequential business decisions. Because FICO supports both business-rules authoring and advanced analytics modeling, enterprises can use FICO to make sophisticated decisions. FICO also offers business solutions that encapsulate decision expertise for vertical and horizontal applications.

Success Stems from its Customers’ Success

FICO’s customers include the most forward-thinking leaders in banking, insurance, government, healthcare, energy, travel, transportation, e-commerce, consumer package goods, pharmaceuticals, manufacturing, logistics and many more industry segments in which decision management and optimization are crucial competitive differentiators. More than 300 academic institutions use FICO Xpress Optimization in their O.R., analytics and MBA programs, making it a popular choice among the next generation of business leaders. And FICO has seen more than 30,000 adopters of its free Xpress Community License.

One thing all Xpress Optimization users have in common is that they are a demanding and unrelenting breed who don’t settle for an “almost-right” solution. They are all looking for that game-changing “right” solution that propels their organization to new heights. This includes some of the world’s largest companies in a variety of industries including:

Top 3 global e-commerce & logistics company

  • FICO customer since 2004, now operating nearly 1,000 facilities across two-dozen countries worldwide
  • Optimizes global transportation and logistics, workforce planning, robotic execution, network design and execution, etc.
  • Maximizes ROI on hundreds of millions of SKU-level inventory decisions every day
  • Insights enabled cost-effective two-day, one-day and same-day shipping to preferred customer
  • Developed and deployed five Xpress Insight applications in just 90 days
  • Deployed a workforce scheduling POC in just over a month (compared to a year or more before FICO)

Top 5 U.S. Airline

  • Decreased costs by $19 million a year by optimizing fuel tankering strategies
  • Reduced annual fuel costs by $20 million per year by optimizing the annual fuel contracts process
  • Increased on-time flight performance by 10%-15% for operational disruptions related to weather
  • Increased overall on-time flight performance by 2%
  • Increased reserve crew availability and lowered overtime pay by creating a more efficient crew schedule
  • Increased the number of consistent lines for pilots by 15%, which increases crew satisfaction

Top 3 global food & beverage company

  • Schedules production of 2 million bags of chips per plant per day
  • Automated beverage mixing processes in plants that were doing this manually
  • Evolved dock door scheduling from daily reactive manual model to proactive system, while growing from seven to 20 sites (70-80 trips each warehouse); reduced planning process from 80 to 2 minutes
  • Able to optimize strategic sourcing plan based on changing conditions
  • Optimizes universal case packers (UCPs) during workweek and schedules labor at a constant speed

Top 3 global captive auto financing company

  • Reduced annual losses by up to $12 million
  • Increased loan approval rates with 40% fewer credit exceptions
  • Millions in losses avoided in the first year
  • Prevented 1,600 repossessions and 150 skips
  • Maintaining collections costs amidst 9% portfolio growth
  • Faster loan negotiations and lower labor costs
  • Greater consistency and transparency for reduced risk

Top 3 global consumer package goods

  • Optimized its supply chain initiative planning, saving millions of dollars per year
  • Boosted analytic efficiency more than 90% reducing weekly analysis time to less than five minutes
  • Supported sustainability goals by minimizing initiative-related waste
  • Eliminated all previous manual efforts on ETL (100% reduction) so efforts are now spent on sensitivity analysis
  • Support the efforts of hundreds of planners around the world running 1,000+ scenarios on a regular basis 

These companies and thousands of others chose FICO Xpress Optimization not only because it is second-to-none in terms of advanced analytics capabilities, but because:

  1. FICO Xpress Optimization is a key component in the FICO Decision Management Platform (DMP). This means it is part of a proven, 130-product family of analytics, optimization and enterprise decisioning solutions, all working together to ensure that analytics projects and business goals remain aligned throughout the lifecycle of a project.
  2. Xpress Optimization is business user-friendly, enabling business users to perform analytics studies and test strategies, while freeing operations researchers/data scientists to focus on higher-level projects. With experts reporting that 85% of analytics projects fail to reach deployment because of disconnects between technical and business communities, FICO Xpress Optimization and DMP ensure maximum collaboration and synergy across the enterprise from project conception to deployment.
  3. Xpress Optimization is part of the industry’s most comprehensive range of solutions for business and operational decisioning. FICO is recognized for its unique prowess in deploying AI, machine learning and other advanced technologies to help customers maximize revenue and minimize costs, while minimizing fraud, risk and other digital disruptions.

How Does FICO Create Value?

Numerous recent studies talk about challenges that companies encounter when attempting to operationalize analytics. Data issues, legacy systems, the human element and many other obstacles drastically reduce the likelihood that ideas and algorithms (AI/ML) can make their way out of the research lab and into value-creating business production. So what do FICO, and FICO Xpress in particular, do about this?

It started with the foresight, decades ago, to commercialize the first LP solver for PCs. Then, as commercial and academic adoption increased in capital-intensive industries, FICO continued to invent new capabilities and features to empower its customers to solve increasingly difficult problems.

As early as 2001, when operations research was still establishing itself as a mainstream analytic discipline, FICO foresaw the need to make mathematical optimization more accessible. Legacy mathematical modeling languages existed aplenty, and they still do, but we knew we could do better, by both empowering non-sophisticated users to build mathematical models for their business and allowing experts to take full advantage of algorithmic capabilities … and Xpress Mosel was born. Several companies exist today thanks to Mosel empowering them to move faster than their competitors and ratchet their way toward industry leadership. Market valuations in the range of billions to hundreds of billions of dollars have benefitted from the emergence of Mosel. Innovation in Mosel continues to this day, as it still confers an “unfair advantage” to its adopters.

As global supply chains have grown in the early 2000s, more inventory items needed to be stored in more locations with longer planning horizons than ever. In response, FICO has added the ability to solve problems with hundreds of millions of decision variables and billions of nonzero coefficients. As traditional LP and MIP formulations began to reach their limits, and even hybrid algorithms became stretched, FICO added distributed parallel computing to the modeling layer, not just the solver.

As the need for analytics became more pervasive across industries that needed to compete to survive, FICO made a big leap to democratize advanced optimization and make it accessible to business operations folks. At the same time when the intelligence of the underlying algorithms has come to the point where few humans on the planet fully understand how they work, the same algorithms are empowering front line workers to make smarter decisions about their work, bank reps to better serve their clients, and transportation dispatchers to make better decisions in their day-to-day activities. Xpress Insight laid the foundation for the two extremes to come together in a unified, seamless continuum of analytic innovation, artificial intelligence, and human expertise and experience.

When FICO’s banking customers need to solve pricing optimization problems with millions of decision variables, we’ve enhanced the nonlinear solver to allow data scientists to solve these problems out of the box. When they told us that their models are trained using ML techniques and don’t have a stable functional form, we’ve enhanced the Xpress black box solver with innovative distributed computing features to bring together optimization and ML.

More than 90% of FICO’s optimization customers are completely self-sufficient, requiring no specialized consulting or even training. Students and early practitioners who start their journey with Mosel and Insight get a massive leg up in terms of turning ideas into solutions and bringing their colleagues along through the journey. Deployed performance and industry changing outcomes are the satisfying result of this process.

We’ve seen junior developers turn into CIOs and budding O.R. practitioners turn into chief analytics officers. It is extremely rewarding to witness the personal success of the individuals who’ve chosen to work with us. We are looking forward to supporting the next generation of experts making the world a better place through the application of operations research.

George Bernard Shaw wrote that “Reasonable people adapt to the world; the unreasonable ones persist in trying to adapt the world to themselves. Therefore, all progress depends on unreasonable people.” As our customers’ expectations for scale, speed and deployment of advanced analytics solutions continue to grow to levels that may have seemed unreasonable in the past, FICO continues to innovate and adapt to serve their needs and enable progress. So, while much has changed since 1956, our founding principle – data, used intelligently, can improve business decisions – continues to provide a solid foundation for our growth and for the success of our customers.

Horia Tipi is the vice president and head of Global Optimization at FICO.

Article was previously published in OR/MS Today magazine.