Decision Services A Pattern for Smarter Service-Oriented Systems James Taylor Principal Smart (enough) Systems LLC

Why Smarter Systems? Decision-Making Well-Defined Increasingly Complex Timeliness Days Real-time Objectives Local and clear Complex Trade-Offs Regulations National and simple Complex and global Changes to Strategy Every 3-5 Years Constant Operational Volume Low High

So What IS A Smarter System Operational Real-Time Rapidly evolving - agile Learning Demonstrably Compliant Cost-Effective Business-Driven

Operational

Real-Time

Rapidly evolving - agile

Learning

Demonstrably Compliant

Cost-Effective

Business-Driven

Smarter Systems Make More Decisions People Not Made Embedded People Embedded Not Made New Before After Larger boxes represent more decisions, by volume

Different kinds of decisions Low High High ECONOMIC IMPACT OF INDIVIDUAL DECISION Low DECISION VOLUME High-value, low-volume decisions Medium-value, medium-volume decisions Low-value, high-volume decisions

Decisions, Decisions, Decisions

Decision Services – A Pattern Automated decision systems have been a common element of Financial Services application portfolios for some time With the advent of SOA and component architectures, the idea of a separate Decision Service has become widely accepted As the cost of technology has fallen and awareness increased, the approach has been validated

Automated decision systems have been a common element of Financial Services application portfolios for some time

With the advent of SOA and component architectures, the idea of a separate Decision Service has become widely accepted

As the cost of technology has fallen and awareness increased, the approach has been validated

Applications have evolved Data Process Logic User Interface Browser BPM Services

Evolution Completed A self-contained, callable service with a view of all the conditions and actions that need to be considered to make an operational business decision. Decision Services A service that answers a business question for other services and processes. What is a decision service? Services

Problem Some business services implement decisions These services must follow policies and regulations These services must be easy to change These services must be driven “by the numbers” These services simplify business processes These services often replace high-change elements of legacy applications

Some business services implement decisions

These services must follow policies and regulations

These services must be easy to change

These services must be driven “by the numbers”

These services simplify business processes

These services often replace high-change elements of legacy applications

Many Forces At Work

The Solution ENTERPRISE DECISION MANAGEMENT is an approach for automating and improving high-volume operational decisions. Focusing on operational decisions, it develops decision services using business rules to automate those decisions, adds analytic insight to these services using predictive analytics and allows for the ongoing improvement of decision-making through adaptive control and optimization .

ENTERPRISE DECISION MANAGEMENT is an approach for automating and improving high-volume operational decisions.

Focusing on operational decisions,

it develops decision services

using business rules to automate those decisions,

adds analytic insight to these services using predictive analytics

and allows for the ongoing improvement of decision-making through adaptive control and optimization .

Process Management Standardizes processes How should a process be carried out? Facilitates collaboration and workflow Process automation around decision-making Workflow definition and management Integration broker Decision Management Standardizes decision-making What should the decision be based on? Facilitates decision automation and maintenance Replaces manual decision-making within processes Business rules definition and management Decision broker Decisions and Processes Complementary but not the same

Process Management

Standardizes processes How should a process be carried out?

Facilitates collaboration and workflow

Process automation around decision-making

Workflow definition and management

Integration broker

Decision Management

Standardizes decision-making What should the decision be based on?

Facilitates decision automation and maintenance

Replaces manual decision-making within processes

Business rules definition and management

Decision broker

Applicability Large numbers of policies or regulations apply Policies and regulations that change a lot Decisions that require business domain knowledge to understand Decisions that are complex or have complex interactions Decisions that the business insists on owning Decisions requiring analytic insight Some Combination

Large numbers of policies or regulations apply

Policies and regulations that change a lot

Decisions that require business domain knowledge to understand

Decisions that are complex or have complex interactions

Decisions that the business insists on owning

Decisions requiring analytic insight

Some Combination

Consequences Isolation of Decisions Control and Agility in Business Processes Business Control of Decisions Integration Points for Advanced Analytics Externalization from Legacy Applications

Decision Services in BPM Processes become complex when decision making is mismanaged Explicit decision services simplify processes dramatically

Processes become complex when decision making is mismanaged

Explicit decision services simplify processes dramatically

Context

Delivering Decision Management

The Evolution Of An Interaction Automate Decision Apply rules Segment customers Predict risk, value Optimize decision Web http://www.f Email Call Center Mobile

Automate Decision

Apply rules

Segment customers

Predict risk, value

Optimize decision

Business Rules Are Everywhere Experienced Personnel Regulations Policy Manuals Legacy Systems Historical Data Managed Business Rules

Manageable Business Rules Smart (Enough) Systems, Prentice Hall June 2007. Fig 4.3 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”

Data Mining - Improve Rules * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Low-moderate income, young High Income High income, low-moderate education Moderate-high education low-moderate income High Moderate education, low income, middle-aged Low education, low income Education Age High

Predictive Analytics – Add Insight 10 20 30 40 Member renews Member fails to renew

Business Rules and Decision Services

Impact May Take Time to Play Out

Use Adaptive Control to Continuously Improve

Adaptive Control Inside a Decision Service

Building Decision Services Smart (Enough) Systems, Prentice Hall June 2007. Fig 5.1 Production Process Enterprise IT Infrastructure Data Warehouse Operational Data Store Business Rules Predictive Analytics Decision Service Adaptive Control

Known Uses Recommendations Next Best Action Underwriting Fraud Detection Eligibility Scheduling Accounting Allocation Billing Dynamic Pricing …

Recommendations

Next Best Action

Underwriting

Fraud Detection

Eligibility

Scheduling

Accounting Allocation

Billing

Dynamic Pricing

…

Wrap Up Smarter Systems are Needed Systems must make more decisions In an SOA world this means Decision Services Decision Services are a pattern Well proven Built on existing technology Compatible with Rules Centralization Ready for analytics

Smarter Systems are Needed

Systems must make more decisions

In an SOA world this means Decision Services

Decision Services are a pattern

Well proven

Built on existing technology

Compatible with Rules Centralization

Ready for analytics

Smart (Enough) Systems – The Book How key business trends impact the decision-making process Why organizations need systems smart enough to cope with these trends How decision automation can make their systems smart enough How to translate decisions into a corporate asset and competitive advantage The ROI and business impact of better decisions and smarter systems The core concepts and technologies needed and how they work together The book is full of insightful examples of problems solved by applying Enterprise Decision Management across various industries and outlines a practical and incremental method for implementing the technology.

How key business trends impact the decision-making process

Why organizations need systems smart enough to cope with these trends

How decision automation can make their systems smart enough

How to translate decisions into a corporate asset and competitive advantage

The ROI and business impact of better decisions and smarter systems

The core concepts and technologies needed and how they work together

Thank You James Taylor [email_address] http://www.smartenoughsystems.com Blog : www.smartenoughsystems.com/wp