Business Rule Management Business Rule Management in Financial Services:in Financial Services:

Implementing Implementing Transparent Decision ServicesTransparent Decision Services

Stephane MarouaniOperations Manager, ILOG Australia P/L

Stephane MarouaniOperations Manager, ILOG Australia P/L

Sydney, December 6th, 2006

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Agenda

Faster implementation and consistent execution of operational policies

Collaboration between IT and business for policymanagement: the controlled Agility paradigm

Reuse of decision services as a key element of SOA

BPM, BRM, BI : the corner stones of modern Banking IT architecture

Case studies

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Finally, STP is there

No Automation

Highly Automated

(STP)

time

Leve

l of A

utom

atio

n

Automated WorkflowsFewer Human interventionsmostly for Decision-making

activities

Little or No AutomationManual Processes

Many Human interactionsand exchanges

Automated DecisionsHuman interventions

only for handling exceptions

Process Automation Stage

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Crisis

Regulation

Market

CompetitionInternal process

Business Operations

New Product Lines

New Segments

New Desks

New TerritoriesAttractive Offerings

New ServicesNew Bundles

ReorganizationRestructuring

M&A

Basel II

IAS / IFRS

Breakouts

Tsunami

UnexpectedEvents

Drivers for Change

Continuous Need for Change

Need for Agility

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Ability to react to change

Years

Months

Weeks

Days

Hours

Minutes

Seconds

1960s 1970s 1980s 1990s 2000s

Process execution

Product Lifecycle

Process change and built time

Source : Gartner

… is the key differentiator

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Where is the bottleneck?

Business Decisions are in:

Spreadsheets

Databases

ManualProcesses

Mainframe

MonolithicApplications

Challenges for a Change Request

• Need to redefine manual processes

• Every change has to go through IT

• This type of change was not planned

• Rigid legacy system

• Change has to happen in many places

• Change has implications throughout the process

• No easy way to test/simulate the change

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Decisions are business rules rich

Many Decisioning Elementsthroughout the process, such as:

Pricing / QuotingEligibility DeterminationScoringCase AssignmentData validation / ComplianceReconciliation / Transformation…

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Introducing Business Rules Management

Spreadsheets

Databases

ManualProcesses

Mainframe

MonolithicApplications

Rule Repository

User Tools

Decision service

Business Rules are extracted

into a Rule Repository

Rule EngineprovidesDecision

execution and

deployment

User Tools

provide

accessibility and

rule management

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Business Rules for Agile SOA

Validation

Pricing

EligibilityValidation Rules

Eligibility Rules

Pricing Rules

Business Rules• Automate key business decisions• Simplify process and integration logic• Are invoked as standards-based

service from the process• Are much easier and faster to change

than the orchestration

Key benefits

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Transparent Decision Services

Yes

NoRiskAssessment

AcceptableRisk?

Loan Processing Example

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Yes

No

Rule Service

RiskAssessment

AcceptableRisk?

1- loan applicationmisc. data: scores…

2- risk evaluation(Yes/No/Referral)

Loan Processing Example

Transparent Decision Services

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Rule Service User Tools

Rule Repository

Maintain & Audit

Business Rules

Deploy new/updated

Business Rules

Scoring, rating, referral rulesPricing rules

…

Loan Processing Example

Transparent Decision Services

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Loan Processing Example

Rule Service User Tools

Rule Repository

Deploy new/updated

Business Rules

Scoring, rating, referral rulesPricing rules

…

Transparent Decision Services

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Rule Service User Tools

Rule Repository

Maintain

Business Rules

Deploy new/updated

Business Rules

Scoring, rating, referral rulesPricing rules

…

Loan Processing Example

Transparent Decision Services

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SOA stack

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Rule Service

Rule Service

Rule Service

The corner stones of SOA

AutomatedProcesses

Rule basedDecisionServicesB

usin

ess

Inte

llige

nce

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Smart Decisions from End to End

BPMS

Software to automate, integrate and monitor end-to-end business processes

Evolution of Workflow / EAI

Focuses on how people and systems interact

BRMS

Software to model, automate, maintain and monitor business rules

and policies

Evolution of Rule Engines

Focuses on how decisions are made

BI

Software to mine, correlate and display the right

information

Evolution of Data Mining

Focuses on giving the right information to decision

makers

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Credit Decisioning

Goals

Improve customer experience and satisfaction Consolidate inventory of decisioning and automation capabilities into one integrated platformProvide greater customer control by enabling rules management at customer level

Benefits

Improved customer retention and acquisition with enhanced and new service (ASP)Reduced time-to-market by 50%

Policy changes in real-time or days vs. weeks and monthsMore standardized decision making while enabling custom solutions

Solution

ILOG BRMS to support risk assessment, compliance and credit decisioningBusiness rules re-use across business processes, channels and custom solutionsExtend certain rule management capabilities to customers through web-based access

Situation

Decisioning platform would not scale to adapt to growing customer baseLong turn around time to implement new or updated customer policiesHard to integrate and use all data sources

Questions & AnswersThank You

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