Enabling The Service-Oriented Enterprise

Dr. Setrag Khoshafian

VP of BPM Technology

Pegasystems Inc.

Session Title:

Enabling The Service Oriented Enterprise

Welcome to Transformation and Innovation 2007 The Business Transformation Conference Welcome

BPM and SOA: Service Oriented Enterprises

You have a technology perspective:

Loosely couple applications, trading partners, and organizations

Invoke via service calls.

Services involved in processes with human participants

Provides even greater value than the sum of component services.

You also have a cultural perspective:

Each party sees herself as a service provider as well as a service consumer

Focus on serving various communities:

Customers

Shareholders

Trading Partners

Employees

Government

BPM and SOA: Service Oriented Enterprises

SOE Goal

Align Business and IT

IT Business SOA Technology Alone Will Not Do It

The SOE Challenge …Execution Gaps! Business Changes Worsen Execution Gaps Sales Service Operations Compliance Partners Management Goals Sales Service Operations Compliance Partners Systems

The Service Oriented Enterprise IT Service Infrastructure Service Oriented Architecture IT Service Infrastructure IT

Service Infrastructure

Loose Coupling

Standards Based (WS-*)

Discovery

Service Composition

Enterprise Service Bus

Loose Coupling isolated from the details of the service’s implementation language, platform, location, or other details Internet GET/POST Request HTML Response Server (s) Internet SOAP Request SOAP Response Server (s) Client

Service Transport: HTTP/HTTPS Remote Service Request/Response: SOAP Service Description: WSDL Service Transactions: WS-Transaction/WS-Coordination Quality of Service: WS-Security, WS-ReliableMessaging Business Processes and Rules: BPMN, WS-BPEL, WS-CDL Service Management: WSDM Service Content and Portals: WSRP

ESB – Overview Messaging Backbone JMS WS-* XML Services … Enterprise Service JCA Management Monitoring Deployment … Enterprise Service Enterprise Service Base Services Extended Services

Capabilities and Features of an ESB

Message Transformation

Protocol Transformation

Message Routing

Security

Transaction

Orchestration

Registry

Consumer Services requests use a transport protocol (e.g. JMS) different from the protocol (e.g. HTTP) of the Provider Transform Provider message format to Consumer message format and vice versa (XML to ASCII, XML to XML, etc.) Content based routing of Consumer messages to appropriate Provider & Vice Versa. Support for rules based routing Support for WS-Security, SAML, encryption, Authentication and Authorization Support for WS-AtomicTransaction, WS-Coordination, WS-BusinessActivity Support for Orchestration & Choreography

The Service Oriented Enterprise Enterprise Performance Management Service Performance Business

Strategic Methodology Financial Internal Learning Customer Vision Business Process Management System Enterprise Service Bus CI Methodology Enterprise Performance Management Business Activity Monitoring Business Intelligence

Enterprise Business Performance

Business Intelligence:

Focus on Historic Data

Data Warehouse or Data Mart:

Populated from operational applications/DBMSs, especially the BPM Suite

Rich reporting and analytics tools

Strategic Methodologies

Business Activity Monitoring

Real time monitoring of operational BPM Work data

Drill Down to executing processes

Real Time Management Control

Rich Reporting capabilities of BPM Work DBs

Business Intelligence BPM DB Data Integration/ETL Data Warehouse DB ERP/CRM ETL Process Integrated Data

Business Activity Monitoring

BPM Process Instance DB Data Mining Predictive Models Other Operational DBs BPM Suite Data Warehouse ETLs Higher Business VALUE

The Service Oriented Enterprise Enterprise Performance Management Service Performance IT Business Service Oriented Enterprises, Dr. Khoshafian Service Oriented Architecture IT Service Infrastructure Business Process Management Suite Service Integration

BPM Suite Workflow BPM BPM Suite

Modeling and simulation

Business rules

Business activity monitoring

Solution frameworks

SOA support

Alignment of business & IT

Integration:

System participants

Trading partner participants

Process portals

Organizational model

Rich process data model

Human participants

Flow automation

Flow status management

Document and content centric

Workflow reference architecture

Where are your Policies and Procedures ?

Policy and Procedure Manuals

People

Code

Models

Automation

Policies Procedure

Enterprise Policies and Procedures Policies Procedure Policies Procedure Modeled Policies and Procedures Strategy and Vision Models Process Models Business Policy Models (business rules) Information & Integration Model Organization Model Modeled And Automated Policies and Procedures

Use Cases Information Model Strategy & Vision Organizational Model Process Models Business Rules Integration Browse Catalog Check Shipment Status Place Order Process Invoice Ship Order

BPMS Models Operations Declarative Rules Process Flows GUI Integrators BPM Process Class Attributes Class Attributes Operations Conventional

Human Resource Example: New Hire Automate processing of new employees, contractors interns

Process Data :

Date Hired

ID

Type

Status

Job Title

Department

Location

Policies :

Security

Legal Status

Training

NDA

HR & IT check list

Process Flows

Procedural: specify sequence of tasks/interactions

Involves

Human and System (internal, partner) participants

Decisioning

Parallel tasks

What are “Business Rules?”

“ Business rules are abstractions of the policies and practices of a business organization”

Wikipedia

Business Rules are Declarative

What do we mean by “Declarative”?

Execution time independence

Do not worry when it is executed

Execution method independence

Do not worry how it is executed

Execution order independence

Do not worry what is being executed

Focus on the business logic

What is the Relationship Between Business Rules and BPM? Source: Ron Ross Business Rules are the Nerves: Controlling the processes Processes are the “muscles”

Rules drive or control the process flows:

Decision Rules

What is the Relationship Between Business Rules and BPM? Decision Decision Decision Policy Policy Partner Preference Best Practice Customer Preference

BPM Suite Business Process Monitoring & Analytics Business Rules Solution Frameworks Enterprise Application Integration Business To Business Integration Workflow

System/Partner and Human Participants Orchestrate Orchestrate Orchestrate Buyer Seller Shipper Choreography Seller Buyer Shipper

Unable to Apply Example of SWIFTNet E&I Straight-Through Process Remitter Beneficiary Beneficiary Bank Remitting Bank

Parse message

Check for duplicate cases

Create case & route

Attach message

Locate & attach payment transaction

Evaluate transaction

Status=Complete?

STP?

Look up customer record

Issue notification of assignment

Contact remitting bank

Schedule chasers

Assign SLA

Update case

Attach message

Issue notification of assignment

Send chaser

Update case

Attach message

Resolve case

Attach message

Send resolution message

Levy service fee

STP Unable to Apply 1 Notification of Assignment 3 Unable to Apply 2 Unable to Apply 4 Notification of Assignment 5 Notification of Assignment 6 Case Status Request 7 Case Status Response 8 Resolution of Investigation 9 Resolution of Investigation 10 Resolution of Investigation 11

Rule Types Correlation

Tasks Participants Rules

Example

IF

Dispute Amount is less than $51; AND

Transaction is not disputed as a fraudulent transaction;

AND

The customer has disputed less than 2 transactions this year;

Decision Decision Write-Off? Yes No Situation : World Master Card VIP Customer

THEN

Fully credit the customer without even initiating the dispute i.e. Write-off the transaction.

Situational Selection

There are two uses of inferencing for BPMS solutions:

Situational Selection of the most appropriate process, UI, decision logic, integration, etc.

Rules to capture core business logic:

Decision Rule

Expressions

Event rules

Constraints

Building Assets BPM Suite Common Practices Build Assets USA Offices Canada Offices Pilot Canada v2 US version 2 West East Canada UK US Add Differences to Specialize French North America Europe BPM Application

Process Instance Data Procurement Process Jill’s Procurement (Computer) John’s Procurement (Desk) Mary’s Procurement (Printer)

Solution Frameworks Solution Framework SF Class 2 SF Class 2 Enterprise Application Integration Business To Business Integration Business Process Monitoring & Analytics Business Rules Workflow Solution Frameworks BPM Suite Operations Declarative Rules Process Flows GUI Integrators Solution Framework Class 1 Attributes Extension 1 Extension 2 Extension 3

Customer Process Management Framework BPM Solution Development Healthcare Customer Relationship Extensions Customer Processes and Rules

Customer Profile

Customer Entitlement

Cross Sell

Customer Dispute

Agreement Renewals

Customer Interaction

Insurance Customer Relationship Telco Customer Relationship Enterprise Application Integration Business To Business Integration Business Process Monitoring & Analytics Business Rules Workflow Solution Frameworks BPM Suite Greater speed to market and use of best practices enable faster achievement of competitive advantage

The Service Oriented Enterprise Enterprise Service Bus Application Server Analytic Measures Business Activity Monitoring Business Intelligence Strategic Methodology Example : Balanced Scorecard Enterprise Application Integration Business To Business Integration Business Process Monitoring & Analytics Business Rules Workflow Solution Frameworks BPM Suite

What Should You Look for in a BPMS Methodology?

The methodology starts with the business case and identifies a best choice opportunity (quick-win opportunity)

The methodology reflects the new BPMS paradigm:

Processes and business rules are captured, represented, and implemented directly

The methodology leverages the BPMS platform

Methodology is driven by continuous improvement measures

Methodology helps build re-usable corporate assets

How: Strategic Methodology Financial Perspective Customer Perspective Internal Process Perspective Innovation & Learning Perspective BSC Vision

How: CI Methodology D M A I C

CTQs

Business Case

Process Maps

Define

CTQ (‘Y’, ‘X’) Measures

Measurement: Upper/Lower bounds

Information/Data Collection Plan

Measure

Analyze Z-scores

Analyze Performance Objectives

Analyze Variations

Analyze

Examine potential causes

Discover relationships

Improve process maps

Improve

Detailed measurements and validation

Check attainment of envisioned improvements

Implement controls

Control

Continuous Improvement LifeCycle Agents Six Sigma Black Belt Process Architect Analyst

Business Performance Methodology Business Process Management Suite Business Activity Monitoring (Real-Time and Historic)

Capability Maturity Model development Process Defined Quantitatively Managed Optimizing Initial Level 1 Managed Level 2 Level 3 Level 4 Level 5

Maturity Stages Classification Level 1 Level 2 Level 3 Level 4 Level 5 CMMI Stage Initial Managed Defined Quantitatively Managed Optimizing BI equivalent No business intelligence services are being utilized Individual process metrics are collected through manual probes A business intelligence information architecture is defined A business intelligence platform is in place Forward-looking and outside information is integrated into the BI infrastructure BPM equivalent Processes are performed manually Processes are modeled using a formal modeling notation Processes are modeled and automated using BPMS technology Process metrics are automatically obtained and processes are managed on a day-to-day basis Processes are continually optimized SOA equivalent No services are defined Individual services are defined A comprehensive services architecture is defined An enterprise service bus is in place Continual optimization of QoS parameters, services architecture

BPM COE Best Practices Roles Governance Best Practices Roles Governance Best Practices Roles Governance Service Oriented Architecture IT Service Infrastructure Enterprise Performance Management Service Performance Business Process Management Suite Service Integration

BPM Suites for the SOE Challenge… Service Operations Compliance Service Operations Compliance Systems Business Process Management Suite Service Integration Management Goals Systems Sales Service Operations Compliance Partners Sales Service Operations Compliance Partners Management Goals

Competitive Advantages for all Communities SOE Local Community Customers Shareholders Partners Government Employees

Conclusion