At Fair Isaac's recent InterACT Budapest I presented on "Preserving Agility: How Rules Management Improves Business Processes – internally and with BPOs" with a colleague from Microsoft - Sanjay Katyal from Emerging Ecosystems Development, Platform Strategy Group. he and I discussed how business rules are essential in a process-oriented approach that mixes Business Process Management (BPM) and Business Process Outsourcing (BPO). Here's a summary. One of the potential problems with Business Process Outsourcing is that it tends to ossify processes - attempts to guarantee performance contractually at a detailed level can force a BPO to stick to the old process while some BPOs run a very standard, and very fixed, process to deliver cost efficiencies. Even when BPOs use more software and less people it can be hard for their customers to manage changes resulting in overly static processes. Business Process Management software, used to automate a process internally, can fail the 80/20 rule - the technology can reduce costs by eliminating the 80% of tasks...

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Basel II is a worldwide banking accord with the stated goal of improving global financial stability though adjustment of loan reserves to match risk. The final version of the Accord was published June 2004 and has an all-encompassing impact on credit and risk management practices. For Basel II, key components for compliance appear simple on the surface and have three pillars: Pillar I requires Data Models, Validation and Documentation; Pillar II requires oversight, stress testing, governance and functional independence; Pillar III requires reporting disclosure. In addition demonstrated compliance requires banks to meet the "Use Test". Any approach adopted will need to be “proven” to supervisors, requiring clarity and ease of replication while very tight implementation timelines leaves little room for “reinventing the wheel”. Add to this the use of distinct systems, separate lines of business, the mix of centralised and decentralised processes and the fact that lenders are beginning from a variety of levels of sophistication and an apparently...

Sorry for the lack of posting - been at Fair Isaac's big European show, InterACT Budapest. Anyway, back now and starting to post some of the great stories from the show. One of them was the results a major UK online bank got from implementing Blaze Advisor - check it out here as it is a fantastic illustration of the  power of business rules.

Back in 2002 a major UK online bank set out to implement a new credit management system. This was intended to: Improve the operational management of credit risk Reduce the effort expended in manual interventions Reduce disparate IT systems into a cohesive whole Develop a customer-level decisioning capability Provide readily available data for credit analytics The bank set out to make more informed decisions and reduce bad debt, increased acceptance rates and ensure more appropriate allocation of limits. They also hoped to improve the customer experience and decrease costs while increasing revenue. They selected Fair Isaac Blaze Advisor for this program based upon 6 key areas: Flexibility Business ownership of scorecards, strategies and policies Minimal IT involvement post implementation Time to market The front-end decisioning process deals with customer or prospect initiated contacts, categorises customer contacts, manages limit increases or decreases as well as payments holidays. Customer-driven product feature personalisation was also key as was...

A colleague of mine shared a presentation given by Neil MacDonald of Gartner, Inc. titled "The End of the IT Department". Neil gave the presentation at the Financial Services Technology Summit in August of 2005. There's a lot of good stuff in here but let me summarize a few key points: Two of the top 5 issues of importance for CxOs are improving productivity and building a responsive organization. Flexibility is in fact the number 1 issue for CEO-level executives in larger organizations Half of all CEO-level executives identified changing their underlying IT systems as a problem in getting strategic projects completed. The velocity of business is increasing with Gartner estimating windows of opportunities below 6 months in the next 5 years. It will be more important to change strategies quickly than to pick the single best one So what does this all means for IT? Clearly if it is to survive as a core component of a successful organization it must radically restructure itself, and its systems, to focus more energy on innovation and it must improve...

I saw an interesting article in CIO Insight the other day: Health IT Must Target Fraud, Group Says. The report - from the Foundation of Research and Education (FORE) of the American Health Information Management Association (AHIMA) - says that it is essential that fraud management programs be built into the new National Health Information Network (NHIN) to significantly reduce health care fraud losses. The report calls for interoperable Electronic Health Records as a major enabler - integrated data being no less important for healthcare than it is for CRM - and goes on to say that major strides can be made in reducing health care fraud by applying advanced analytics like those used so  successfully in the financial services industry.  The best results will be driven by both prospective and retrospective approaches, the report said, and made a fairly dramatic prediction of the value:“By 2007, healthcare payer organizations that adopt automated systems for fraud and abuse detection will see a return on investment of at least 5 to 1,”The report was...

An article on Microsoft's new Business Scorecard Manager in the Wall Street Journal was brought to my attention this morning. Titled "Microsoft Unveils Tool to Analyze Business Data" it discussed another extension to Microsoft's range of Business Intelligence tools. Happy as I am to see this broadening of the target for business intelligence tools, I think the comment made by Lewis Levin is particularly noteworthy:"Our view is that decisions are made at all levels of the organization"Now I completely agree with Lewis.  I also agree that more access to simple to understand summaries of progress to date, the state of the business etc would be useful for almost anyone (assuming you build a scorecard that makes sense to them). I do think, however, that the power of analysis or analytics to a front-line person or to a customer in a self-service model, comes from improving the decisions made at the point of contact. This means being able to embed both the analysis and the actions to take as a result in operational systems and websites. This is...

In this blog entry - From ESB to ESP: action-oriented SOA - Joe McKendrick - discusses the SOA Maturity Model being promoted by some SOA vendors. The first time this 5 level model mentions rules is in level 5Level 5: The SOA information systems becomes the "enterprise nervous system" and takes action automatically according to events occurring at the business level according to rules optimizing business goals. So does this mean that business rules is a technology suitable only for the last level of maturity? I don't believe so. When getting started at level 1 business rules can be a huge boon. Not only are decision services an obvious first service - the desire to decide consistently across channels and across systems is often a key driver for SOA - but they also represent a great way to take part of an existing system and expose it as a service. I wrote about that approach here. When an organization reaches level 3 and starts to try and manage responsiveness then the use of business rules will start to show a strong return. Business rules are ideal...

This article in ComputerWorld - No Pause to Refresh: More Robust Web Apps - Heather Havenstein talks about the new world of richer web applications. She says:The new tools essentially eliminate the need to refresh a Web page every time a user enters or receives new data... Companies are using the tools for e-commerce and call center applications that require complex interactions with users. So why do these new, complex interactions require a different kind of development approach. Well:Traditional HTML-based applications are built as static, page-based applications that require an HTTP request to a server every time data needs to be refreshed. However, applications on the Web often require heavy interaction with users. For example, a customer service application could require a call center representative to enter information from a customer while also accessing a technician's service schedule. These types of applications can't work efficiently with the latency that comes with constant page refreshes.What strikes me as interesting about this situation is the extent...