Briefs

ALGORITHMS sound scary, of interest only to dome-headed mathematicians. In fact they have become the instruction manuals for a host of routine consumer transactions. Browse for a book on Amazon.com and algorithms generate recommendations for other titles to buy. Buy a copy and they help a logistics firm to decide on the best delivery route. Ring to check your order's progress and more algorithms spring into action to determine the quickest connection to and through a call-centre. From analysing credit-card transactions to deciding how to stack supermarket shelves, algorithms now underpin a large amount of everyday life.

Their pervasiveness reflects the application of novel computing power to the age-old complexities of business. "No human being can work fast enough to process all the data available at a certain scale," says Mike Lynch, boss of Autonomy, a computing firm that uses algorithms to make sense of unstructured data. Algorithms can. As the amount of data on everything from shopping habits to media consumption increases and as customers choose more personalisation, algorithms will only become more important.

...

Fraud detection has a touch more glamour to it. SPSS, another data-analysis firm, uses algorithms to scrutinise customer data and to build propensity scores that predict how people will behave. One of its clients is ClearCommerce, which provides payment-processing services to online merchants. SPSS helped ClearCommerce to build a system that looks at a customer's past transactions and learns what hints at fraud -- it might be the amount of money being spent, the shipping details and the time of day, and so on. Transactions then get a fraud-propensity score based on these characteristics; merchants decide which scores should ring alarm bells and how to respond.

Read more.