Más contenido relacionado La actualidad más candente (20) Similar a Using business rules to make processes simpler, smarter and more agile (20) Más de Decision Management Solutions (20) Using business rules to make processes simpler, smarter and more agile1. Using Business Rules to Make Processes
Smarter, Simpler and More Agile
Session ID 1582
James Taylor
CEO
Decision Management Solutions
IBM IMPACT 2009 Conference
May 2009
2. James Taylor
Independent consultant working with clients to :
Find the right decisions to apply business rules, analytics
Implement a decision management blueprint
Maximize the value of existing technology investments
Passionate advocate of decision management
20 years experience in all aspects of software
© Decision Management Solutions, 2009
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3. The One Slide You Need
Current business conditions require smarter, simpler and
more agile processes
Making business processes simpler, smarter and more agile
requires managed, automated decisions
Business rules are the best platform for automated
decisions
Analytics, not just your policies and expertise, must
influence operational decisions
Decisions take time to play out so you must test and learn
Decision Management is the business discipline that best
leverages business rules and puts analytics and
optimization to work in every transaction
© Decision Management Solutions, 2009
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4. Businesses Are Facing Complex Challenges
Real-time
Timeliness
Days
Complex
Objectives
Straightforward
Trade-Offs
Regulations Complex and global
Local and simple
Very High
Uncertainty
Low
Constant
Changes to Strategy
Every 3-5 Years
Increasingly
Decision-Making
Well-Defined
Complex
High
Low
Operational Volume
© Decision Management Solutions, 2009
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5. Businesses Must Respond
Manage Uncertainty
Ensure Compliance
Improve Agility
Cut Costs
Resource Efficiency
Core Application Value
© Decision Management Solutions, 2009
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6. Business Process Management Delivers
Manage Uncertainty Process simulation and
impact analysis
Ensure Compliance Run processes exactly as
documented
Improve Agility Easier workflow and
processes changes
Cut Costs Avoid coding changes to
multiple applications
Resource Efficiency Measure and adapt human
workflow
Core Application Value Share processes across
the enterprise
© Decision Management Solutions, 2009
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7. But More Is Possible
Manage Uncertainty Predict and test the future
Ensure Compliance Demonstrate compliance in
every action
Improve Agility Give business users control
with stable processes
Cut Costs Lower maintenance costs
and fewer manual reviews
Resource Efficiency Focus people on higher
value tasks
Core Application Value Modularize and modernize
© Decision Management Solutions, 2009
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8. We Need Processes That Are
Smarter
Learn from data
Learn through experimentation
Simpler
Transparent and Demonstrably Compliant
Externalized decisions
More Agile
Business-Driven
Process Agility AND Decision Agility
And
Operational
Real-Time
Customer-Centric
© Decision Management Solutions, 2009
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9. These Processes Make More Decisions
Manual Not Made
Managed
Before
After Not Made
Manual
Managed
New
Larger boxes represent more decisions, by volume
Smart (Enough) Systems, Prentice Hall 2007
© Decision Management Solutions, 2009
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10. More And More Operational Decisions Can
Be Automated
Expert
Decisions
Value Manual Decisions
Automated
Decisions
Complexity
Smart (Enough) Systems, Prentice Hall 2007
© Decision Management Solutions, 2009
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11. When All You Have Is A Hammer
Everything Looks Like A Nail
© Decision Management Solutions, 2009
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12. These Things Are Not The Same
Process Decision
Business users determine Business users determine
sequence actions
Based on business policies Based on
and services regulations, policies, expertise, a
nalytics
Rapidly model, assemble,
Rapidly define and evolve the
deploy, govern services
behavior of a service
Reuse business processes
Reuse business rules across
and services
services
End-to-end visibility of
Visibility within critical business
business process
services
© Decision Management Solutions, 2009
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13. A Vessel Underwriting Example
Gather Policy
Application Data
May include customer
visits, collection of
forms, etc.
Validate Policy
Completeness
Triggers more data
Triggers rejection
gathering process
Reject Bad process
steps
Applicants
Conduct Physical
Inspections
Calculate risk and determine
price, may trigger exception
handling
Underwrite Policy
Process Tasks
Decision Tasks
Process
Paperwork
© Decision Management Solutions, 2009
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14. Decision Management
A business discipline that builds on existing
systems and processes to create processes
that:
handle uncertainty
support business objectives
are flexible and business-led
are compliant and easy to change
are data-driven and constantly improve
© Decision Management Solutions, 2009
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15. Five Keys To Decision Management
Predictive Analytics
Business Rules
and Optimization
Operational
Decisions
Adaptive Control
Decision Analysis
and Simulation
© Decision Management Solutions, 2009
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16. What Is A Decision Anyway?
Decisions involve a choice, a selection of a course of action.
Decisions are arrived at after some consideration
Decisions ends uncertainty or dispute about something
Decisions select from alternatives
Decisions result in an action being taken, not just knowledge
being added to what’s known.
© Decision Management Solutions, 2009
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18. Delivering Decision Management
Decision Discovery
• Find and Prioritize
• Link to business objectives and measures
• Manage for reuse and consistency
Decision Services
• Define business rules for compliance
• Empower business owners for agility
• Analytically enhance for increased accuracy
Decision Analysis
• Measure then improve
• Simulate, test and learn
• Close the loop and optimize over time
© Decision Management Solutions, 2009
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19. Different Kinds Of Decisions
High
ECONOMIC IMPACT OF INDIVIDUAL DECISION
High-value,
low-volume
decisions
Medium-value,
medium-volume
decisions
Low-value, high-
volume decisions
Low
Low High
DECISION VOLUME
After Smart (Enough) Systems, Prentice Hall 2007
© Decision Management Solutions, 2009
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20. ALL Decisions Matter
“Most discussions of decision making assume
that only senior executives make decisions
or that only senior executives’ decisions
matter. This is a dangerous mistake.”
Peter Drucker
© Decision Management Solutions, 2009
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22. Better Results From Operational Decisions
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Test Group 1 Test Group 2 Test Group 3
Blanket Personalized
© Decision Management Solutions, 2009
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23. Types Of Operational Decisions
Eligibility Risk
“Is this person eligible for Risk is acquired one
this product/service” transaction at a time
Should be made A big gap between a
consistently every time. good decision and a bad
They are rules-based Analytics and rules
Calculations Opportunity
Mostly rules-based Customer-centric.
The rules are generally A small gap between
fixed and repeatable. good and bad decisions.
Calculations are often Analytics predict
embedded in code response and potential
© Decision Management Solutions, 2009
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24. What Are Operational Decisions For?
Event
2
Event Event
What
1 3
Step 1 Step 2
Next?
What
Next?
Should I
do this? ..or that?
© Decision Management Solutions, 2009
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25. Delivering Decision Management
Decision Discovery
• Find and Prioritize
• Link to business objectives and measures
• Manage for reuse and consistency
Decision Services
• Define business rules for compliance
• Empower business owners for agility
• Analytically enhance for increased accuracy
Decision Analysis
• Measure then improve
• Simulate, test and learn
• Close the loop and optimize over time
© Decision Management Solutions, 2009
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26. Applications have evolved
User Interface
Browser
Process Logic
BPM
Data
Enterprise
Database
© Decision Management Solutions, 2009
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27. Evolution Completed
What is a decision service?
A self-contained, callable
service with a view of all
the conditions and actions
that need to be considered
to make an operational
business decision.
Logic
Decision Services
A service that answers a
business question for other
services and processes.
© Decision Management Solutions, 2009
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28. Decisions Remain In Sync With Market Changes
Conventional Approach Decision Management
Other Systems
CRM
CRM
System
Decision
System
Service
Other Systems
Infrequent code changes
Frequent code changes
Programmers Programmers
Frequent policy changes
Policy Changes
Businessusers
Businessusers
Smart (Enough) Systems, Prentice Hall June 2007. Fig 2.11
© Decision Management Solutions, 2009
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29. How People Make Decisions
Analysis of
Context Information
Expertise
and
experience
Pre-
conceptions
& biases
Policies and
regulations
© Decision Management Solutions, 2009
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30. The Decision Management Stack
Business Process Management
Decision Service
Optimization Adaptive
Control
Data Monitoring
Analytics
Simulation Decision
Business
Analysis
Rules
Platform
© Decision Management Solutions, 2009
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31. Building Decision Services
Predictive
Analytics
System
Decision
Service Business
Business Process
Data
Rules
Warehouse
Enterprise IT Infrastructure
Adaptive
Operational
Control
Data Store
Smart (Enough) Systems, Prentice Hall June 2007. Fig 5.1
© Decision Management Solutions, 2009
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32. Business Rules Drive Decisions
Decision Regulations
Policy
History
Experience
Legacy Applications
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33. Why Manage Business Rules
Reduce Costs
• Fewer resources, less time to change decisions
• Lower fines, legal costs from bad decisions
• Reduced IT costs to implement decisions
Improve Decision Making
• Clear policies and procedures
• Consistently applied across channels, systems
• Increased accuracy from business users control
Business Agility
• More rapid response to business threats
• Fewer missed opportunities
• Faster time to market
© Decision Management Solutions, 2009
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34. Business Rules Management System
Decision Validation
Services
Testing
Validation
and
Verification
Decision
Deployment
Service Production
Rule
Application
Repository
Rule
Engine
Rule Execution
Server
Design Rule
Tools Management
Applications
Operational
Rule Team Database
Rule Studio Server
After Smart (Enough) Systems, Prentice Hall June 2007. Fig 6.6
© Decision Management Solutions, 2009
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35. Process Rules are Not Decision Rules
Flow control, routing
Analyst/IT ownership
Business
Governed as part of
the process
Process
Lifecycle dependent
Rules
on process lifecycle
Business Process
Decision Point
Business decision making
Tasks Analyst/LOB Manager
ownership
Governed by the business
Independent lifecycle
Decision Rules
After Gladys Lam, BRSolutions
© Decision Management Solutions, 2009
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36. Help the Business to Manage Decisions
I want to relax my
underwriting
policy
I want to be able to
promote a new product
So you business- combination
types want to be
able to change your
business rules?
I need to add the
new regulations
No…
© Decision Management Solutions, 2009
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37. Which Would Your Users Prefer?
public class Application {
private Customer customers[];
private Customer goldCustomers[];
...
public void checkOrder() {
for (int i = 0; i < numCustomers; i++) {
Customer aCustomer = customers[i];
if (aCustomer.checkIfGold()) {
numGoldCustomers++;
goldCustomers[numGoldCustomers] = aCustomer;
if (aCustomer.getCurrentOrder().getAmount() > 100000)
aCustomer.setSpecialDiscount (0.05);
}
}
}
© Decision Management Solutions, 2009
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38. Or Maybe They Would Rather Use Word…
© Decision Management Solutions, 2009
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39. Rules reduce IT costs
Non-Programmers No IT resources to
Manage Rules make updates
5 months ROI 10-20x
v hard coding
not 30 months
© Decision Management Solutions, 2009
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40. Five Keys To Decision Management
Predictive Analytics
Business Rules
and Optimization
Operational
Decisions
Adaptive Control
Decision Analysis
and Simulation
© Decision Management Solutions, 2009
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41. Defining Analytics
A process encompassing a range of techniques dealing with the
collection, classification, analysis, and interpretation of data to
gain insight, reveal patterns, anomalies, key variables and
relationships.
Data-driven insight for better decisions
Analytics simplify data to amplify its value
Predictive Analytics turn uncertainty into usable probability
© Decision Management Solutions, 2009
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42. Analytics Have Power
Customer Online Acquisition Campaign
Retention Conversion Rates Response
Fraud Wasted Crime Risk
Spend
© Decision Management Solutions, 2009
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43. The Challenge Is To Put Analytics To Work
© Decision Management Solutions, 2009
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44. Data Mining - Improve Rules
High
High income,
Income
low-moderate education
Moderate-high education
Low-moderate
low-moderate income
income, young
Education
High
Moderate education,
low income, middle-aged
High
Low education,
low income
© Decision Management Solutions, 2009
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45. Predictive Analytics – Add Insight
Member renews
Member fails to renew
© Decision Management Solutions, 2009
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46. Straight Through Processing
Eliminated many Underwriters
manual reviews manage rules
8 Point Reduction in
Combined Ratio
Focus on book Improved risk
management, agents management
© Decision Management Solutions, 2009
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47. Optimization Makes Sense when
Have interrelated choices – circular dependencies or a need to
change several variables at once
Risk/reward trade-offs within a regulatory framework for instance
Answer is not obvious and is more than a simple chain of
calculations
Trying to minimize or maximize something
© Decision Management Solutions, 2009
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48. A mathematical process for finding the best
Optimization
decision for a well defined problem –
highest profit, lowest cost etc.
Decision
Variables
Constraints
Objective
function
Solver
Data Solution
Variable 1: xxx
Variable 2: yyy
…
© Decision Management Solutions, 2009
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49. Optimization and Rules
Business Modeling Team
Analysts Update Model
Update Rules
Rules Configure
Data Solver Results
Engine Model
© Decision Management Solutions, 2009
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50. Delivering Decision Management
Decision Discovery
• Find and Prioritize
• Link to business objectives and measures
• Manage for reuse and consistency
Decision Services
• Define business rules for compliance
• Empower business owners for agility
• Analytically enhance for increased accuracy
Decision Analysis
• Measure then improve
• Simulate, test and learn
• Close the loop and optimize over time
© Decision Management Solutions, 2009
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51. Closing The Loops
Information
Evaluate
Results
Reaction Decision
Update Update
Decision Models
Action Business &
Analytic
Experts
Create Refine
Challengers Rules
Customer
© Decision Management Solutions, 2009
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52. Impact May Take Time to Play Out
© Decision Management Solutions, 2009
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53. Simulation
Constraints
Market
Conditions
Assumptions
© Decision Management Solutions, 2009
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54. Scenarios
© Decision Management Solutions, 2009
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57. Business Rules Make Processes More Agile
Act in an agile and
automated way Decide which
Acting Sensing events matter
Improve
collaboration
Communicating Strategizing
Communicate
between business
and IT
Deciding
Analyze and test
possible rules
Source: Gartner (April 2006) Smart (Enough) Systems, Prentice Hall June 2007. Fig 1.3
© Decision Management Solutions, 2009
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58. Analytics Make Decisions (and Processes) Smarter
Automate Decision
Apply rules
http://www.f
Close the Loop
Web
Segment customers
Call Centre
Adaptive Control
Email
Predict risk, value
Optimize decision
Mobile
© Decision Management Solutions, 2009
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59. Risk and Benefits
Process without Decisions Process with Decisions
Decisions an afterthought Decisions first class object
Decisions buried in process Decisions linked not buried
Process becomes complex New process is simplified
Inconsistency of rules likely One version of rules
Decisions only evolve with Independent process &
process decision changes
Hard to share decisions Decisions (and Decision
Services) are reusable
© Decision Management Solutions, 2009
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61. “The essence of strategy is choosing to perform
activities differently than rivals do.”
Dr. Michael Porter, Harvard Business School
© Decision Management Solutions, 2009
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62. Consequences Of Decision Management
Business Control of Decisions
Externalization Control and Agility Integration Points
from Legacy in Business for Advanced
Applications Processes Analytics
Focus on Decisions
© Decision Management Solutions, 2009
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63. Some IBM Examples
Process Results
• Speed to market gain over 50%
Healthcare Claims
• Changes to business rules now implemented in
Processing
days
• Significant productivity gain on 1M+ claims
processed on a monthly basis
• 93% improvement for approval - 15 days to 1
Commercial Loan
• Cost savings from greater control & easier audits
Origination
• Better service - clear & consistent processing
Government Social
• Transparency & auditability
Benefits Eligibility
• Rapid response to changes in government
policies
© Decision Management Solutions, 2009
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64. Action Plan
Identify your decisions Adopt Business Rules
Decisions that matter to Approach and technology
customers Management and governance
Hidden decisions Change the relationship
Transactional decisions between business and IT
Consider Investigate Data Mining
and Predictive Analytics
Who takes them now
Data Mining for rules
What drives changes in them
Predictive reporting
What the context is for them
Executable analytics
Assess
Build Adaptive Control into
Change Readiness
your applications
Technology adoption
Organizational change
© Decision Management Solutions, 2009
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65. The One Slide You Need
Current business conditions require smarter, simpler and
more agile processes
Making business processes simpler, smarter and more agile
requires managed, automated decisions
Business rules are the best platform for automated
decisions
Analytics, not just your policies and expertise, must
influence operational decisions
Decisions take time to play out so you must test and learn
Decision Management is the business discipline that best
leverages business rules and puts analytics and
optimization to work in every transaction
© Decision Management Solutions, 2009
65
66. More on Decision Management
jtonedm.com
decisionmanagementsolutions.com
smartenoughsystems.com
ebizq.net/blogs/
brcommunity.com/taylor.php
decision_management
james@decisionmanagementsolutions.com
© Decision Management Solutions, 2009
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