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

1. Business Rules Management SystemsManaging Complex Decisions in your Organisation - Simply

2. Richard J.D. Collard Senior Industry Lead WW Business Development SME - Transactional Fraud, AML & Risk richard.collard@uk.ibm.com +44 7917 612896

3. 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

4. Why use Business Rules with BPM? Validation Eligibility Validation Rules Eligibility Rules Pricing Rules Pricing • 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

5. 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.

6. Combining BPM & BRMS 6 6

7. Business rules are crucial to operational systems, and they change over time. The traditional (ad hoc) approach of dealing with rule changes leads to… Issues Where Business Rules Typically Exist • Rules are hidden in code or isolated within the organization • Changes are hard to track and maintain over time • Rules used by systems have to be programmed and require IT resources • Duplication and multiple versions of the same rules • Lack of auditability, traceability • Decision changes cannot be easily tested or simulated Processes People Documents Applications Traditional Approach for Managing Decision Change • Reduced organizational agility • Reduced employee productivity • Increased load on IT 7

8. Manage and Automate Decision Logic with BRMS Processes People Applications • Eliminate decision silos • Make decision logic accessible to Business and IT • Implement fine-grained, context-specific logic Business Rule Management System Where Business Rules Typically Exist Rules are Defined, Analyzed and Maintained User Tools Rules are Stored and Shared Rule Repository Documents Rules are Deployed, Executed and Monitored Rule Server 8

9. 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

10. Flexible Rule Management for Business Users Rule Solutions for Office Graphical representations Text-based (point-and-click + guided editing)

11. IBM ILOG JRules BRMS Product Components Rule Developer Decision Validation Service Testing & Simulation framework RuleManager System Administrator Rule Team Server Web-based Application for Rule Maintenance Rule Studio Eclipse-based Rule IDE Rule Service design & development Deployrules Deployrules Rule Repository Rule Execution Server Single node or cluster (J2SE & J2EE compliant) Web-based console to monitor & control rule execution Business Environment Technical Environment Production Environment

12. Benefits of a BRMS Approach 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 BRMS What does it enable? What is the value? • 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

13. 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 13

14. ILOG BRMS customers in payments

15. ILOG BRMS customers in payments

16. ILOG BRMS customers in card and online payments

17. Case Study: European P&C 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 17

18. 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 customer’s 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 Bank’s 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

19. 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

20. 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 Rules Services Rules Services Rules Services Rules Services Night Advisor’s 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

21. Société Générale – Risk Management Situation • Long time spent each day by branch officers to assess customer and account situations requiring actions • Complexity of cases and related actions • Inconsistent operations leading to unmanaged situations Goals • Service Oriented Architecture sharing 400 business rules • 7 rule services ( Batch and Transaction processing programs) detecting and managing 400,000 high risk customer cases • Determine status and priority of the risky situations • Recommend and explain client actions to branch financial advisors • Generate personalized mails as actions ( 100,000 to 200,000 mails per day) Solution • Manage 200 risk management profiles in 7 categories • Allow business users to manage and understand the risk profiles • Gain 1 hr/day/advisor (13,000 advisors in 2,500 branches) Benefits • Improve risk detection and management • Increase branch financial advisor efficiency managing risk profiles • Automate action recommendations 21

23. 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

24. 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

25. 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

26. Productconfiguration Fee calculation Accounting & reconciliation Validation Routing Approval rules SLA-based exception mgt SEPA DD 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 26 03/02/09

27. Customer Success – Simplifying the Process 27

28. IBM ILOG Customers......................... e-Gov Capital Markets Banking T & T etc.. Insurance

29. The Value of Simplification

30. 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

31. Using the Right Tools for Different Types of RulesIntegration with other Components & Services 31

32. 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)

33. 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

34. BRMS for Legacy Applications Business Rule Management System • Increased agility for management of automated business decisions in COBOL applications • Improved visibility of decision logic • Enables progressive application modernization strategy Rules are Defined, Analyzed and Maintained User Tools Rules are Stored and Shared Rule Repository 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

35. JRules and Lombardi Teamworks: Standards-based Integration Rule Management User Tools Rule Repository 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

36. Rule Studio Rule Team Server Rule Repository Content Repository FileNet BPM/ECM & WebSphere ILOG BRMS Business Rule Management FileNet Business Process • Integration Flexibility • Web Services • Messaging • Java/.NET APIs Web Services / APIs Messaging Queues FileNet Content Management Communication Interface Rule Execution Server Deploy • Multi Platform Support: • Java/J2EE • z/OS • .NET Windows/Unix/Linux Server or Mainframe 36