Simplifying over complex processes with decision management

Simplifying over-complex processes
James Taylor,
CEO

Your instructor
Independent consultant working with clients to help automate and improve decisions
Spent the last 8 years developing the concept of Decision Management
20 years experience in all aspects of software including time in FICO, PeopleSoft R&D, Ernst & Young
Blogger, speaker, writer
james@decisionmanagementsolutions.com
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©2010 Decision Management Solutions

The challenge of over complex processes
Case studies in process complexity
Simplifying processes with decision management
Finding decisions in your processes
Not just simpler, smarter too
Wrap and next steps

The one slide you need
Complex processes are costly and not agile
Unmanaged decisions cause process complexity
Managing decisions makes processes more agile
Managing decisions makes processes smarter
Business rules drive decisions
Processes and decisions are complementary
… but not the same
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The challenge of complex processes

The benefits of BPM
Improves process quality
Improves the customer experience
Engenders continuous process improvement
Reduces costs
Improves business agility
Gartner survey reported by Jim Sinur, 2009
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Complexity is the enemy
Harder to assure process quality
Customers don’t like long processes
Hard to find places to apply learning
More expensive
Hard to make changes safely, reducing agility

Case studies in process complexity

Making the right decision at the start of the call turns long, costly processes into straightforward, customer-pleasing
interactions.
Fortune 20 Call Center
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Immediately identifying which claims should be fast tracked, which referred for fraud investigation and which reviewed by a claims adjudicator results in clear, simple sub-processes
North American Life Insurer
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Cross-channel coordination ensures that all relevant offers, including loyalty programs, are combined at the point of sale, with consistent pricing rules applied.
International retailer
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A graphical example
“before”
“after”
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Complexity from multiple processes
30 similar processes or just one?

Simplifying processes with decision management

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Identifying decisions
A choice, a selection
Made after consideration
Results in action not just knowledge

Should we decline or approve
this application?
Decisions can be choices
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What price, terms and conditions
should we offer this customer?
… or combinations of possibilities
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Decision Management
A business discipline that builds on existing enterprise applications to
put data to work
manage uncertainty
increase transparency
give the business control
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Steps to decision management
3 stages to better operational decisions
Create a “closed loop” between operations and analytics to measure results and drive improvement
Design and build independent decision processes to replace decision points embedded in processes
Identify the decisions (usually about customers) that are critical to your operational processes

BEFORE
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A simple example without decisions

AFTER
Decision:
What type
of applicant is this?
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The same example with a decision

Clarity and transparency are needed
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Separation adds agility
Matched change cycle
Variable change cycle
Stable business process

Finding decisions in your processes
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Finding decisions
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Decisioning words
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Choose
Select
Calculate
Determine
Assess
Validate
Find the question…

Eligibility decisions
Is this customer/prospect/citizen eligible for this product/service?
They are made over and over again
They should be made consistently every time.
They are rules-based
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Calculations
What is the correct price/rate for this product/service?
Calculations are usually operational
They are overwhelmingly rules-based
The rules are generally fixed and repeatable
Calculations are often embedded in code
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Risk-based operational decisions
How risky is this customer and what should we do about it?
Risk is acquired one customer, one transaction at a time
A big gap between the value of a good decision and the value of a bad one
To assess risk in these decisions requires analytics to predict the risk
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Opportunity-based operational decisions
How profitable might this customer be?
Customer-centric.
Cross-sell and up-sell decisions for example
Little difference between good and bad decisions
Analytics predict response, opportunity, potential
These must change rapidly to take advantage of competitive and market circumstances
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Micro decisions
How many decisions are involved in sending a letter to 10,000 customers?
Just a few design decisions
Or 10,000 one micro decision per customer
Many strategic decisions can only be implemented if many supporting micro decisions are also made
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Gather policy application data
Validate application
Eliminate
unqualified applicants
Conduct physical inspection
Underwrite policy
Complete new business processing
Vessel underwriting example
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Eliminate
Underwrite policy
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Decision:
Is this application complete and correct?
Eliminate
Underwrite policy
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Decision:
Is this the type of vessel we insure?
Eliminate
Decision:
Is this application
a high fraud risk?
Underwrite policy
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Eliminate
Underwrite policy
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Decision:
How risky?
Eliminate
Decision:
What coverage?
Decision:
What price?
Underwrite policy
Decision:
What exclusions?
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Eliminate
Underwrite policy
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Not just simpler, smarter too

Analytics simplify data
to amplify its value
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Analytics have real power
CustomerRetention
CampaignResponse
AcquisitionRates
Online
Conversion
Fraud
Crime
WastedSpend
Risk
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HighIncome
High income,low-moderate education
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Moderate-high educationlow-moderate income
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Low-moderateincome, young
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Education
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Moderate education,low income, middle-aged
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High
Low education,low income
Rules address what might happen
Analytics help you understand why and when
Analytics drive better decisions
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Closed-loop decisioning
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Closed-loop decisioning
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Wrap up and next steps

Why manage decisions independently
Faster, easier, independent decision logic changes
Coordination across channels, products
Simpler processes that are easier to manage
Higher productivity and resource utilization
Analytic insights for making better decisions
Continuous improvement of decisions and results
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Risks and benefits
With Decisions
Without Decisions
Decisions an afterthought
Decisions buried in process
Process becomes complex
Inconsistency of rules likely
Decisions only evolve with process
Hard to share decisions
Decisions first class object
Decisions linked not buried
New process is simplified
One version of rules
Independent process & decision changes
Decisions (and Decision Services) are reusable
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Action Plan
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The one slide you need
Complex processes are costly and not agile
Unmanaged decisions cause process complexity
Managing decisions makes processes more agile
Managing decisions makes processes smarter
Business rules drive decisions
Processes and decisions are complementary
… but not the same
49

Decision Management Solutions
Decision Management Solutions can help you
Focus on the right decisions
Implement a blueprint
Define a strategy
For assistance, to find out more or if you have questions
decisionmanagementsolutions.com/learnmore
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Simplifying over complex processes with decision management

by Decision Management Solutions on Dec 14, 2010

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