Arlington, Va., small business adapts Cold War inspiration to create decision-making solution
When the Washington Metropolitan Area Transportation Authority learned it would receive several million dollars from the federal stimulus package, its officials had a long wish list of projects ready for funding.
“Knowing that the stimulus was coming down the pike, we quickly identified [pending] projects that could be implemented within the potential requirements,” said Patricia Hendren, manager of capital and strategic planning at WMATA.
What WMATA officials didn’t have was a prioritized list of those rail and surface projects that would meet stakeholders’ needs and the stimulus package’s strict fiscal requirements.
WMATA brought in its board of directors; its D.C., Maryland and Virginia funding partners; and its passenger advisory committees to establish criteria that would determine which of the projects would also meet the agency’s strategic goals to improve overall rail and surface transportation.
That’s when the agency reached out to Decision Lens Inc., a provider of 21st-century decision-making software that had its origins in 20th-century Cold War arms negotiations.
“They have the tool that facilitates a prioritization process,” Hendren said.
Using Decision Lens’ interactive tool, executives from all branches of WMATA met for several days to assess each proposed project and measure it against the strategic goals, which included delivering quality service and creating a safety culture.
For example, one WMATA program calls for replacing the system’s oldest buses every seven and a half years. That program was stalled.
During the meetings, a project manager explained how replacing the buses would improve safety and deliver quality service. Committee members then used the Decision Lens interactive tool to rate how well the project met the WMATA strategic goals.
“There was a scale from zero to five,” Hendren said. “The scale ranged from ‘no impact at all’ to ‘critical to accomplishing the goal.’”
Cold War tool
The theory is based on relative math and matrix algebra, said John Saaty, Decision Lens’ chief executive officer. The idea is to identify and organize project variables into a hierarchy, including key objectives and related factors.
Participants compare objectives, evaluate the numerous and often competing projects or programs, and reach a value score for each, he said. They then test the outcome by performing a what-if analysis; that is, how would changing the weight of the objective change the results?
WMATA is also using Decision Lens to reprioritize projects because the agency’s share of the stimulus funding has declined from the originally proposed $530 million to $350 million and finally to $200 million, Hendren said.
“The two key benefits are obviously the interactive collaborative element of the tool and our ability to do in essence what-if scenarios and really look at different funding constraints,” she said.
“We started the company based on a decision-making theory that my father invented,” said John Saaty, who founded the Arlington, Va., small business with his brother Daniel.
Their goal was to take the guesswork out of enterprise planning and financial, information technology and performance-related decisions.
Their mathematician father, Thomas Saaty, a professor at the University of Pittsburgh’s Katz Graduate School of Business, developed his analytic process in the 1960s while working for the Arms Control and Disarmament Agency on the Strategic Arms Limitation Talks with the Soviet Union in Helsinki.
“We were approaching [arms reductions] from an economic perspective — what’s the cost of decommissioning the missiles, the cost of storage, the cost of transportation,” John Saaty said. “The Soviets looked at it as a multifaceted problem, and we were getting our clocks cleaned in these negotiations.”
When the elder Saaty returned home, he looked for an established system that would allow a group of stakeholders, such as a team of arms negotiators, to examine and make trade-offs among a series of competing elements. Then they could establish priorities and use them to establish a course of action, John Saaty said.
“There was nothing at the time,” he added. “So he invented a theory, which he called the Analytic Hierarchy Process.”
Help with complex decisions
Three years ago, the brothers adapted their father’s theory, gave it a user interface and launched Decision Lens as a private company in 2005.
John Saaty calls it group-enabled software. “It can be used for almost any kind of decision where you have multiple trade-offs,” he said.
Within months, the Defense Department’s Military Health System became the company’s first government client.
MHS had been allocating its funds by armed service. That meant each branch might have duplicate health care facilities such as dental clinics, which often were not only underutilized but occasionally were within a few miles of each other, said Daniel Saaty, Decision Lens’ president.
MHS is now using Decision Lens for its budget-allocation process. “They are one of our most successful clients,” he said.
“You can bring people together and combine their judgments,” John Saaty said.
“You’re not asking them actually for consensus, they don’t have to agree,” he said. “What you’re asking them to do is be explicit about why they are valuing certain elements over others. And through that, you actually prioritize in a very explicit way, quantitatively, what’s their most important objective down to their least important.”
DOD’s Joint Improvised Explosive Device Defeat Organization recently used Decision Lens to prioritize its funding in three mission areas: disrupting IED networks, defeating IED devices and training soldiers in counter-IED measures.
Amtrak is another customer. “The first portfolio we did with them was their stimulus [package] portfolio,” Daniel Saaty said.
Amtrak has purchased a two-year license for enterprisewide use of Decision Lens’ software. “Now they’re starting to do their entire capital-planning process using the software,” he said.
Other government clients includes the Joint Staff, Navy, Air Force, Nuclear Regulatory Commission, the intelligence community, and the Agriculture and Education departments. State government clients are the Maryland Transit Administration and the Pennsylvania Department of Transportation.
“We’re in a cycle counter to the market,” John Saaty said. “With this downturn, our business is actually taking off.”
Decision Lens’ pricing is determined by the size of the organization and the scope of its decisions, John Saaty said. “Our platform ranges anywhere from the $8,000 range up to several hundred thousand dollars, depending on the configuration. And that includes both desktop and Web versions.”
The hardware includes keypads for voting on priorities either on their PC or via the Web. Training is also included.
The company has grown from its two founders to 17 employees and revenues have doubled year over year since 2005, John Saaty said. But he added that he has no specific five-year revenue targets. “I think we want to just continue to grow at probably anywhere from 50 [percent] to 80 percent a year, and we’ll be good.”