Business Rules Management Systems Managing Complex Decisions in your Organisation - Simply

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Business Rules Management SystemsManaging
Complex Decisions in your Organisation - Simply
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• Richard J.D. Collard
• Senior Industry Lead
• WW Business Development
• SME - Transactional Fraud, AML Risk
• richard.collard_at_uk.ibm.com
• 44 7917 612896

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Business Rules Management System - What Is
It????!!!!!!

• BRMS - more than a Rules Engine
• Enabling Complementary Component Technology
• In SOA, BPM or Stand-alone
• Empowers Business-users
• Provides Ability to make Complex Decisions
• Consistently, Simply and Quickly
• Externalises Makes Business Logic Available to
  Business-users
• Hard-coded Business Logic becomes redundant
• Benefits for IT and Lines of Business

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Why use Business Rules with BPM?

• Business Rules
• Automate key decisions in Business Processes by
  Externalising Business Logic
• Simplify the Business Process structure
• Are invoked from the Business Process as
  standards-based Services
• Are quicker to modify than the Business Process
  orchestration

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Engage and Support Separate Life Cycles

• BPM and BRMS do not typically share the same
  velocity of change.
• Business rules typically require more frequent
  and more rapid change cycles than a process.

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Combining BPM BRMS
BPM Alone BPM BRMS
Decision Support
Business Decision Making Human Automated / Assisted
Decision Maintenance Process re-engineering Rules updates
Decision change cycle Months Days
Decision Ownership IT IT Business
Decision Sharing Cut and Paste Central Repository / TDS
Scalability lt 50 Rules (when rules enable) Thousands
Supported decisions Routing Business Decisions Task allocation Dynamic routing

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Traditional Approach for Managing Decision Change

• Business rules are crucial to operational
  systems, and they change over time. The
  traditional (ad hoc) approach of dealing with
  rule changes leads to

• Reduced organizational agility
• Reduced employee productivity
• Increased load on IT

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Manage and Automate Decision Logic with BRMS

• Eliminate decision silos
• Make decision logic accessible to Business and IT
• Implement fine-grained, context-specific logic

Business Rule Management System
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Business Rules Made Simple

• Customizable vocabulary specific to your
  organization, industry, application etc.
• Supports language localization
• Integrates with external data sources e.g. list
  of countries
• Drop-down lists for customized domain data
• Templates facilitate new rule creation

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Flexible Rule Management for Business Users
Graphical representations
Text-based (point-and-click guided editing)
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IBM ILOG JRules BRMS Product Components
Business Environment
Technical Environment
Production Environment
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Benefits of a BRMS Approach
What does it enable?
What is the value?

• Reduce time and resources required to deploy
  changes
• Author and maintain rules using non-technical
  language
• Express decision logic with increased precision
• Make decisions based on specific context
• Increase decision automation
• Improve visibility and understanding of how
  decisions control systems

• Lower maintenance costs respond quickly to
  change
• Business experts can manage and validate decision
  logic
• Increase profitability of product, pricing and
  promotional offerings
• Customize decisions when possible, standardize if
  needed
• Improve process efficiency
• Ensure compliance enable sharing/re-use of
  decision logic

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Precise, Automated Process Decisions with
WebSphere ILOG BRMS
Horizontal Best/appropriate price, Cross-sell/
up-sell recommendations, Loyalty promotions,
Exception identification, Risk/fraud assessment,
Straight-through processing approvals
Insurance Banking Healthcare Government Energy/Util./Telco
Claim Validation STP approval Exception routing Policy/Underwriting Eligibility Risk Pricing Annuity Recommendation Commissioning Payout calc. Loan Eligibility Risk Pricing Account Cross-sell Fraud/Alerts Credit Card Mktg Offers Fraud Credit limit Patient Care Drug interaction risk warnings Follow-up alerts Member Services recommendation Eligibility Benefit calculation Provider Patient eligibility for services Benefits Eligibility Calculations Tax Payer Classification Audit flagging Citizen Program(s) recommendation Land/Permits Conveyance processing Contract compliance Service Mgmt Service prioritization SLA alerts Maintenance alerts Order configuration
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ILOG BRMS customers in payments
Use case Customer Description
Pricing JRules-based pricing engine for all payments products Differentiated pricing and complex bundle pricing Reduction of time-to-market for pricing policies from 6 months to 10 days ING Belgium considers its business as unique and cannot manage its pricing policies using a package
Selection of clearing channels Minimizing CS costs Consistent selection of least-cost channel (by consolidating all routing decisions in a centralized decision service) Rapid adaptation to price changes (e.g. new pricing scheme of channels, on us settlement channel after acquisition)
Semantic validation of messages Increase straight-through processing Separate valid messages that can be processed in STP from messages that need exception handling
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ILOG BRMS customers in payments
Use case Customer Description
Validation of account numbers Increase straight-through processing (country-specific validation rules) Integration with EPP-based payments hub Other use cases being analyzed customer-specific conditions for corporates
Anti-Money Laundering Top-10 US Bank Rule service performing country-specific AML checks Integration with EPP-based payments hub Standard-based (ISO20022) service definition
Card fraud detection Fraud patterns captured as business rules to react quickly to new fraudulent behaviors
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ILOG BRMS customers in card and online payments
Use case Customer Description
Message validation, calculation of merchant fees internal routing 150M transactions processed in a 8 hour time window Shorter time-to-market for new products Specific rules for various regions
Clearing and Settlement System Expose business policies for validation, interchange and pricing Speed of change defect analysis, handling late change Flexibility ability to re-order rules or change flows quickly Quicker learning curve for new starters
Merchant-level fraud detection Merchant-level fraud detection provided as a value-added service to banks Business rules as a way for TSYS to exploit value by extracting knowledge from huge volume of card transactions
Online fraud detection Global e-Auction Fraud patterns captured as business rules to react quickly to new fraudulent behaviors
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Case Study European PC Insurance Company

• Using BPM and BRMS Together
• Chose the claims process as the best target for
  Nordic-level unification and automation
• Combination of WebSphere Process Server and
  WebSphere ILOG JRules was based on the positive
  results from a test project in Finland
• Decreased the cost of claims incurred
• Increased of customer satisfaction through faster
  turnaround
• Substantial savings of employee work
• Uses of BRMS in this solution
• Claims submission validation
• Decision automation for liability and
  compensation
• Payment calculation
• Straight-through processing determination
• Manage and automate decision variation across
  countries, processes and systems
• Accelerate implementation of decision changes

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Société Générale Customer Risk Management

• SG Major French retail bank, 9M customers,
  2500 Branches, 13,000 branch advisors
• Branch Advisors spend 1,5 hr each day to
  understand their customers account situation and
  make decisions on what to do next
• They apply their own knowledge to decide which
  customer situation to fix first and how to fix it
• There is a fairly high turnover of staff, so
  there is little control on this knowledge
• The Banks Management needs to understand how
  many and which situations are solved, handled,
  and which ones may become critical
• Management has identified there is a possibility
  to reduce risk, whilst improving the advisors
  productivity and support

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Project High-level Specification

• Identify risky situations on customer groups
• A risky situation is
• An non compliant situation that requires an
  action from the bank
• It is generated, modified, closed upon reception
  of an event
• It applies to an individual or to a service
• It stays open until resolution
• Risky situations are presented to branch advisors
  on a daily basis to help them
• analyze the level of customer risk
• assess which decisions should be taken.
• Assist Branch Advisors by recommending a course
  of action
• Explanations
• Integrated rule based pre built customer letters,
   click and send 
• Integrated interview management
• Notification of actions to other applications
• Build an history of actions taken by the advisor
  for each customer
• Provide a synthetic presentation of all open
  situations, by level of urgency/priority
• Provide a synthetic view of open situations at
  the Branch level

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Business case targeted ROI

• High risk customer profile process
• Benefits
• Manage 200 risk management profiles in 7
  categories
• Allow business users to manage understand the
  risk profiles
• Gain 1 hour/day/advisor

Night
Advisors working day
Get explanations And actions plan
Rules Batch
Get list of letters For a customer
4,000,000 events on 9,000,000 accounts
400,000 High Risk profiles about 5 of customers
Get High Risk Profiles When logging in
Update actions plan
13,000 advisors 2,500 branches

• 50,000 letters
• per day

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Société Générale Risk Management

• Improve risk detection and management
• Increase branch financial advisor efficiency
  managing risk profiles
• Automate action recommendations

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BNP Paribas - Project OPRA Business
Requirements

• Offer and Product Repository Applications
• BNPP wanted to improve its understanding and
  management of the multiple banking offers that
  were being made to customers
• A - Flexible solution to allow definition of
  banking offers with
• B - Ability to understand relationship between
  offers and
• C - Determine conditions for appropriate,
  ethical sale
• Requirement to allow Client Advisors to look into
  the product catalogue and filter by customer
  eligibility and profile with differential pricing
  tariffs applied
• Need to distribute offers to operational systems
  mainframe and distributed

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BNP Paribas - Project OPRA Implementation

• OPRA is based on IBM InfoSphere MDM Server for
  Product Information Management and..
• .IBM WebSphere ILOG JRules / BRMS
• InfoSphere MDM Server provides offer authoring
  and relationship management.
• .thereby ensuring offer package compatibility,
  base tariff enforcement and conditional
  eligibility
• ILOG BRMS provides the capability for BNPP to
  model eligibility and pricing rules
• The SOLUTION allows BNPP to build / maintain a
  catalogue of of product / offer packages while
  managing collaborative processes associated with
  implementation / deployment of Business Rules

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BNP Paribas - Project OPRA Benefits

• OPRA is based on IBM InfoSphere MDM Server for
  Product Information Management and..
• .IBM WebSphere ILOG JRules / BRMS
• Together providing
• Improved Time-To-Market for new products and
  services
• Ability for non-technical users to generate and
  manage offers
• Accurate and complete view of offer / product
  information
• Multi-channel servicing initiatives
• Personalised offerings
• Evolution of offers according to market dynamics
• Reduced likelihood of mis-selling

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Automating decisions along a payments flow

• Validation auto-repair
• Validation of account numbers (country-specific
  rules)

• Real-time charge calculation
• Monthly discount calculation
• Payment bundles
• Agreement and customer-specific conditions

• Determine product and configure payment
  attributes based on instructions and customer
  profile

• Least-cost routing in CSM selection
• Customer preferences
• CSM operational constraints, e.g. type of
  payments supported, cutoff times

• Customer-specific and SLA-based limits

• Mandate management

• Determine what to do next upon an exception
• Automate SLA conditions

• Example How to reverse a cancelled payment that
  is part of a batch

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03/02/09
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Customer Success Simplifying the Process
Customer Process Pains BPM - Decision Service Results
Loan Origination Highly manual process Delays arose as applications were routed through approvals via interoffice mail Lengthy approval turnaround time WebSphere ILOG BRMS to handle a variety of business logic for a IBM BPM-orchestrated process - Routing - Compliance - Scoring rating Cost savings 1.5M over 5 years 15 days to 1 approval time reduction Improved staff focus and satisfaction
Social benefits eligibility Fragmented systems with inconsistent data meant decisions to grant benefits were not consistent from one center to another Several departments but no clear interface for the citizens IBM BPM to manage the application process end-to-end ILOG JRules to determine the eligibility of applicants to social benefits Better service delivered to the citizens fewer interactions required, clear and fair application process Consistency of eligibility decisions same criteria and rules applied across all agencies and centers Transparency and auditability eligibility rules can be reviewed and validated by non-technical users
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IBM ILOG Customers.........................
e-Gov
Capital Markets
Banking
Insurance
T T etc..
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The Value of Simplification
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Five Ways to Fast ROI With BRMS

• Cost reduction
• 1. Reduced application development
• and maintenance
• 2. improve payments margins
• 3. Improved regulatory compliance
• Revenue generation
• 4. Provide value-added services
• 5. Faster time-to-market

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Using the Right Tools for Different Types of
RulesIntegration with other Components Services
Rules Types Rule Examples Where are Rules Defined? Right Tool
Business Event Stream Pattern-Match Event pattern person on the CIA watch list, purchases chemicals , purchases a one-way plane ticket, uses cash. Event-stream specific Business Events (CEP)
Process Flow / Task Assignment Assign loan review task to the Underwriter with the lowest number of tasks-in-queue. Process specific BPM
Process Monitoring (SLAs) Trigger notification / process when Response Time KPI for Final Approval task exceeds maximum threshold value. Process specific BPM-BAM
Variable, Complex Business Decisions and Policies Best Offer (pricing and promotions), Eligibility Determination, Risk Assessment and Mitigation, Straight-through Processing Determination Decoupled from applications BRMS
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Business Event Processing/BRMS Combined Use Case
- Retail

• Promotional Offers
• Use BEP to detect opportunity
• Customer with regular history of book purchases
  visits website after 3 months absence
• Customer browses to 2 successive book categories
  with no shopping cart activity ? Raise
  opportunity alert
• Use BRMS to determine/decide whether to offer a
  targeted special, and if so, for what
• Apply customer information against promotions
  rule-set
• Determine best offer (e.g., no shipping charges
  for any purchases in the next 1 hour)

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Business Processing BRMS Combined Use Case - AML

• Anti-Money Laundering
• Use BEP to detect situation at risk
• Successive near net-zero cash deposits/transfers
• Absence of previous history of this pattern, or
  special circumstances
• Use BRMS to determine if a genuine violation, no
  problem, or a watch
• Evaluate customer history and events data against
  fraud score and regulatory policies
• Evaluate overriding factors
• If not an actual violation, determine likelihood
  that activity is suspicious ? set watch or
  investigate status

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BRMS for Legacy Applications

• Increased agility for management of automated
  business decisions in COBOL applications
• Improved visibility of decision logic
• Enables progressive application modernization
  strategy

Rules are generated as COBOL copybook for
execution in IMS, CICS, batch

• New in v7.0
• Simplified creation of Business Object Model for
  COBOL applications
• Enhanced ability to import, verbalize and manage
  the business model for the COBOL project
• Additional JRules rule authoring capabilities for
  generation of enhanced COBOL code

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JRules and Lombardi Teamworks Standards-based
Integration
Map to JRules Rule Services via standard
Teamworks Integration Services
Teamworks Process
Communication Interface / ESB
DEPLOY

• Interface Flexibility
• Web Services
• Messaging
• Java APIs

Rule Execution Server
Windows/Unix/Linux Server
Business Initiative Presentation to Agricorp
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FileNet BPM/ECM WebSphere ILOG BRMS
FileNet Business Process
Business Rule Management

• Integration Flexibility
• Web Services
• Messaging
• Java/.NET APIs

Web Services / APIs Messaging Queues
FileNet Content Management
Rule Execution Server
Deploy

• Multi Platform Support
• Java/J2EE
• z/OS
• .NET

Windows/Unix/Linux Server or Mainframe
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