Increasing BPM agility and effectiveness with Decision Management
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The document discusses the importance of decision management in business process management (BPM), emphasizing that decisions should be managed separately from processes to enhance agility and effectiveness. It outlines principles of decision management, illustrates its significance through graphs, and highlights best practices and steps for implementation. The content is presented by James Taylor, CEO of Decision Management Solutions, and offers actionable insights for improving operational decisions in organizations.
Increasing BPM agility and effectiveness with Decision Management
- 1. Increasing BPM agility and effectiveness with James Taylor, Decision CEO Management
- 2. Your presenter CEO of Decision Management Solutions Decision Management Solutions works with clients to improve their business by applying analytics and analytic technology to automate and improve decisions Spent the last 9 years developing the concept of Decision Management 20 years experience in all aspects of software including time at FICO, PeopleSoft, Ernst & Young ©2011 Decision Management Solutions 2
- 3. The one slide you need Decisions are not processes Managing decisions as well as processes Makes your processes simpler Makes your processes more agile Makes your processes more effective Focuses on your customers Decision Management is a proven approach To increasing BPM agility and effectiveness For applying business rules management systems ©2010 Decision Management Solutions 3
- 4. AGENDA 1 2 Decisions are not processes Decision Management and Business 3 Decision Management Process 4 5 6 Management Decision Results: More Wrap and next Management and agile, effective steps Business Rules business processes
- 5. Decisions are not processes
- 6. 30 similar processes? ©2010 Decision Management Solutions 6
- 7. Just one ©2010 Decision Management Solutions 7
- 8. Decisions are separate from processes Decisions are high change components Embedded decisions increase process complexity Decisions enable straight through processes Managing decisions separately reduces process complexity and makes changes easy to implement ©2010 Decision Management Solutions 8
- 9. A process is different than a decision Process Decision Sequence over time Action at a point in time Service sequence Service behavior End-to-end visibility Transparent services Coordinate systems Use data from systems
- 10. Embedded decision, complex process Age<21 No Class I or II sports Accept low-risk applicant Class II sport Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Class I sport Process medium-risk Good Medical Record applicant Age>50 1 or fewer Claims Multiple Claims New Customer … Long-standing Customer ©2011 Decision Management Solutions 10
- 11. Separate decision, simpler process Low risk Process low- risk applicant Medium risk Process Determine medium-risk applicant type applicant High risk Process high- risk applicant ©2011 Decision Management Solutions 11
- 13. BPM meets Decision Management Decision Management is the proven approach used to manage decisions independently of processes ©2010 Decision Management Solutions 13
- 14. Why manage decisions independently Simpler Higher processes productivity that are and resource easier to utilization manage Easier to use Enables analytic continuous insights for improvement better of results decisions ©2010 Decision Management Solutions 14
- 15. Decisions are high change components Regulations change Change to keep eligibility decisions compliant Policies change Change validation to track new data requirements Competitors change Change the discount to remain competitive Markets change Change the assessment to manage risk Consumer behavior Change to keep selecting the changes right deal terms Fraudsters adapt Change the routing to focus on new fraud ©2011 Decision Management Solutions 15
- 16. Separation adds agility Matched change cycle v1 v2 v3 v4 v5 v1 v2 V3 V4 v5 Variable change cycle v1 v2 v1 v2 v3 v4 Vv5 v6 Stable business process v1 v1 v2 v3 v4 v5 ©2010 Decision Management Solutions 16
- 17. A graphical example “before” “after” ©2010 Decision Management Solutions 17
- 19. Operational decisions in your processes Examples: Determine if someone is eligible for a benefit Validate the completeness of an invoice Calculate the discount for an order Assess the risk of a transaction Select the terms for a deal Choose which claims to Fast Track These are decisions The process must answer a question each time ©2011 Decision Management Solutions 19
- 20. Principles of decision management Begin with the decision in mind Focus on decisions, especially operational decisions Be transparent and agile By externalizing your logic as managed business rules Be predictive not reactive Put analytics to work predicting future probabilities Test, learn, and continuously improve Experiment, simulate, learn ©2011 Decision Management Solutions 20
- 21. Steps to decision management 3 stages to better operational decisions Create a “closed loop” between operations and Design and build analytics to independent measure results decision and drive processes to improvement Identify the replace decision decisions (usually points embedded about customers) in processes that are critical to your operational processes ©2010 Decision Management Solutions 21
- 22. Decision Management and Business Rules
- 23. What are business rules? “ statements of the … actions you should take when certain business conditions are true. ” ©2011 Decision Management Solutions 23
- 24. Business rules drive decisions Decision Regulations Policy History Experience Legacy Applications ©2011 Decision Management Solutions 24
- 25. Process rules are different than decision rules Flow control, routing Analyst/IT ownership Governed as part of Business the process Process Lifecycle dependent on process Rules 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 ©2011 Decision Management Solutions 25
- 26. 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 participation Business Agility • More rapid response to business threats • Fewer missed opportunities • Faster time to market ©2011 Decision Management Solutions 26
- 27. When should you use business rules? The decision is based on many policies or regulations The decision changes often The decision is complex or has complex interactions You want business users to truly participate and collaborate. You need to apply analytics ©2011 Decision Management Solutions 27
- 28. A business rules management system If customer is GoldCustomer and Home_Equity_Loan_Value is more than $100,000 then college_loan_discount = 0.5% If member has greater than 3 prescriptions and prescription’s renewal_date is less than 30 days in the future then set reminder=“email” If patient’s age is less than 18 and member’s coverage is “standard” and member’s number_of_claims does not exceed 4 then set patient’s coverage to “standard” ©2011 Decision Management Solutions 28
- 29. Result: More agile, effective processes
- 30. Processes can get complicated Age<21 No Class I or II sports Accept low-risk applicant Class II sport Previous Heart Attack, Decline high- Existing Cancer risk applicant 21<=Age<50 Class I sport Process medium-risk Good Medical Record applicant Age>50 1 or fewer Claims Multiple Claims New Customer … Long-standing Customer ©2011 Decision Management Solutions 30
- 31. Decision Management for agility Low risk Process low- risk applicant Medium risk Process Determine medium-risk applicant type applicant High risk Process high- risk applicant Class I Class II New # Age sports sports Heart Attack? Cancer? Customer? Claims Action <21 N N Low Risk <21 Y High Risk <21 Y N Medium Risk 21 - 50 Y High Risk 21 - 50 Y High Risk 21 - 50 N N Medium Risk >50 Y High Risk >50 N <2 Medium Risk >50 N >1 High Risk ©2011 Decision Management Solutions 31
- 32. Processes can stop too often Task Task Task + + Task X Task Task Manual Review Worklist Escalation ©2010 Decision Management Solutions 32
- 33. Decision Management for effectiveness Task Task Task + + Task X Task Task Automate approval Determine eligibility Make risk determination ©2010 Decision Management Solutions 33
- 34. Decisions drive customer-centricity What’s the next best action for this customer? How do I retain this customer? Can I approve this customer’s request? What’s the best way to handle this problem? Make a micro decision for each customer Don’t treat them consistently, treat them uniquely One process, many customer treatments ©2010-2011 Decision Management Solutions 34
- 35. Wrap up and next steps
- 36. The one slide you need Decisions are not processes Managing decisions as well as processes Makes your processes simpler Makes your processes more agile Makes your processes more effective Focuses on your customers Decision Management is a proven approach To increasing BPM agility and effectiveness For applying business rules management systems ©2010 Decision Management Solutions 36
- 37. Action Plan Identify the decisions embedded in your processes Use business rules to manage these decisions Combine Decision Management with BPM ©2010 Decision Management Solutions 37
- 38. For more info Whitepapers The Decisions at the Heart of Your Processes Maximizing the Value of Business Rules Becoming a Decision-Centric Enterprise Webinars Customer centricity with decision management Core principles of Decision Management Office Hours First Friday of every month at 8:30am Pacific Time ©2010 Decision Management Solutions 38
- 39. Decision Management Solutions Decision Management Solutions can help you Focus on the right decisions Implement a technology blueprint Build decisioning systems For assistance, to find out more or if you have questions james@decisionmanagementsolutions.com http://www.decisionmanagementsolutions.com http://jtonedm.com @jamet123 or @decisionmgt ©2011 Decision Management Solutions 39
- 40. Thank you! James Taylor, CEO james@decisionmanagementsolutions.com www.decisionmangementsolutions.com/learnmo re