SOA Mainframe Decision Management

The Path To Business Agility And Lower Costs Mainframes, SOA and Decision Management June 2009

Presenters James Taylor CEO of Decision Management Solutions Independent consultant helping clients find the right decisions to apply business rules and analytics to maximize the value of existing technology investments Passionate advocate of decision management 20 years experience in all aspects of software Claye Greene Principal Consultant of Technology Blue Works with clients to transform and modernize using innovative technologies and approaches Specializes in the adoption of Decision Management and Service-Oriented Architectures Over 15 years experience implementing software solutions 2 © Decision Management Solutions, 2009

The One Slide You Need  In a rapidly changing business environment you must have business agility to survive  Bringing agility to mainframe-based core systems is hard  SOA, Service Oriented Architecture, is a critical building block for agility in these systems  Decision Management builds on SOA by externalizing decisions from core systems and managing them separately  Decision Management uses business rules, and business rules management systems, to deliver Decision Services that can be changed easily for maximum agility and minimum disruption 3 © Decision Management Solutions, 2009

Businesses Are Facing Complex Challenges Real-time Days Timeliness Complex Straightforward Objectives Trade-Offs Local and simple Regulations Complex and global Low Uncertainty Very High Every 3-5 Years Changes to Strategy Constant Increasingly Well-Defined Decision-Making Complex Low Operational Volume High 4 © Decision Management Solutions, 2009

Business Agility Is Critical Companies need the ability to detect and respond to opportunities and challenges in a turbulent and quickly changing environment Act/ Detect Respond Communicate Decide Decision Response After Gartner Inc 5 © Decision Management Solutions, 2009

Core systems are the DNA of an enterprise Their structure contains the historical evolution of an enterprise Modified and added-to for years Embodies the combination of data and business rules that differentiate an organization Provides the foundation for competitive advantage © 2009 Technology Blue, Inc 6

Most core systems run on mainframes Scalability, high performance, quality of service, security and efficiency 70% - 80% of the world’s data resides on mainframes 200 billion lines of COBOL code in existence today Despite strategic value, core systems are not “agility-friendly” © 2009 Technology Blue, Inc 7

Barriers To Agility – Slow Time To Change Strategic policies buried in code Inter-application dependencies Act/ Detect Respond Longer development cycle Communicate Decide Decision Response © 2009 Technology Blue, Inc 9

Barriers To Agility – Data Agility requires timely, informed decisions Timely, informed decisions require a Customer holistic view of enterprise data Name Address Core systems do not easily allow Account# sharing of data Status Claim history Financial “Easier to put data in, than get data out” © 2009 Technology Blue, Inc 10

Service-Oriented Architecture SOA provides the architectural approach for successful Application Modernization Mainframe Retrieve Update Process Process Account Billing Account Claims Claims History Service Service Service Service Service Service Service Service Service Interface Interface Interface Interface © 2009 Technology Blue, Inc 13

Despite Benefits, Challenges Still Exist Strategic processes and decisions still remain buried in code CALC-PARA IF IN-INCOME IS NOT > 150000 Maintenance still requires SUBTRACT 50000 FROM IN-INCOME , MULTIPLY 030 BY IN-INCOME GIVING TAX , specialized, higher-cost ADD 9000 TO TAX IF IN-INCOME IS NOT > 70000 resources SUBTRACT 50000 FROM IN-INCOME , MULTIPLY 020 BY IN-INCOME GIVING TAX , ADD 5000 TO TAX IF IN-INCOME IS NOT > 50000 Maintenance still has slower SUBTRACT 20000 FROM IN-INCOME , MULTIPLY 010 BY IN-INCOME GIVING TAX time to change IF IN-INCOME IS NOT > 20000 MOVE ZERO TO TAX © 2009 Technology Blue, Inc 14

Service-Oriented Architecture SOA helps us be more connected, more flexible, and more agile SOA aligns Business and IT Complete agility and flexibility needs more Decision Management is the missing piece © 2009 Technology Blue, Inc 15

Decision Management A business discipline that builds on existing systems and processes to create systems that: handle uncertainty support business objectives are flexible and business-led are compliant and easy to change are data-driven and constantly improve 16 © Decision Management Solutions, 2009

Five Keys To Decision Management Predictive Analytics Business Rules and Optimization Operational Decisions Adaptive Control Decision Analysis and Simulation 17 © Decision Management Solutions, 2009

What Is A Decision Anyway?  Decisions involve a choice, a selection of a course of action  Decisions are arrived at after some consideration  Decisions ends uncertainty or dispute about something  Decisions select from alternatives  Decisions result in an action being taken, not just knowledge being added to what’s known 18 © Decision Management Solutions, 2009

Delivering Decision Management Decision Discovery Decision Services Decision Analysis 19 © Decision Management Solutions, 2009

Delivering Decision Management Decision Discovery • Find and Prioritize • Link to business objectives and measures • Manage for reuse and consistency Decision Services • Define business rules for compliance • Empower business owners for agility • Analytically enhance for increased accuracy Decision Analysis • Measure then improve • Simulate, test and learn • Close the loop and optimize over time 20 © Decision Management Solutions, 2009

Different Kinds Of Decisions ECONOMIC IMPACT OF INDIVIDUAL DECISION High High-value, low-volume decisions Medium-value, medium-volume decisions Low-value, high- volume decisions Low Low DECISION VOLUME High After Smart (Enough) Systems, Prentice Hall 2007 21 © Decision Management Solutions, 2009

Types Of Operational Decisions  Eligibility  Risk “Is this person eligible for Risk is acquired one this product/service” transaction at a time Should be made A big gap between a consistently every time good decision and a bad They are rules-based Analytics and rules  Calculations  Opportunity Mostly rules-based Customer-centric The rules are generally A small gap between fixed and repeatable good and bad decisions Calculations are often Analytics predict embedded in code response and potential 22 © Decision Management Solutions, 2009

Applications have evolved User Interface Browser Process BPM Logic Services Data Enterprise Database 24 © Decision Management Solutions, 2009

Evolution Completed What is a decision service? A self-contained, callable service with a view of all Decision Services the conditions and actions that need to be considered to make an operational business decision Services A service that answers a business question for other services and processes 25 © Decision Management Solutions, 2009

Business Rules Drive Decisions Decision Regulations Policy History Experience Legacy Applications 26 © Decision Management Solutions, 2009

Manageable Business Rules If customer is GoldCustomer and Home_Equity_Loan_Value is more than $100,000 then college_loan_discount = 05% 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” Smart (Enough) Systems, Prentice Hall June 2007 Fig 43 27 © Decision Management Solutions, 2009

A Business Rules Management System The Platform For Decision Services Validation Testing and Verification Decision Deployment Rule Service Production Repository Application Rule Engine Design Rule Tools Management Applications Operational Database After Smart (Enough) Systems, Prentice Hall June 2007 Fig 66 28 © Decision Management Solutions, 2009

Help the Business to Manage Decisions I want to relax my underwriting policy I want to be able to promote a new product So you business- combination types want to be able to change your business rules? I need to add the new regulations No… 29 © Decision Management Solutions, 2009

An interface for business user rule management public class Application { private Customer customers[]; private Customer goldCustomers[]; ... public void checkOrder() { for (int i = 0; i < numCustomers; i++) { Customer aCustomer = customers[i]; if (aCustomer.checkIfGold()) { numGoldCustomers++; goldCustomers[numGoldCustomers] = aCustomer; if (aCustomer.getCurrentOrder().getAmount() > 100000) aCustomer.setSpecialDiscount (0.05); } } } If customer is GoldCustomer and Home_Equity_Loan_Value is more than $100,000 then college_loan_discount = 0.5% College Loan Discounts Current Discount = % Elig ibility: Gold Customer and HomeEquity Loan mor e than $100,000 30 © Decision Management Solutions, 2009 Smart (Enough) Systems, Prentice Hall June 2007. Fig 6.8

Decision Services Remain In Sync Conventional Approach Decision Management Other Systems CRM System CRM System Decision Service Frequent code changes Infrequent code changes Other Systems Programmers Programmers Frequent policy changes Policy Changes Businessusers Businessusers Smart (Enough) Systems, Prentice Hall June 2007 Fig 211 31 © Decision Management Solutions, 2009

Why Manage Business Rules Reduce Costs • Fewer resources, less time to change decisions • Lower fines, legal costs from bad decisions • Reduced IT costs to implement decisions Improve Decision Making • Clear policies and procedures • Consistently applied across channels, systems • Increased accuracy from business users control Business Agility • More rapid response to business threats • Fewer missed opportunities • Faster time to market 32 © Decision Management Solutions, 2009

Closing The Loops Information Evaluate Results Reaction Decision Update Refine Decision Rules Action Business & Analytic Experts What-If Test and Analysis Verify Customer 34 © Decision Management Solutions, 2009

Business Rules Drive Agility Automated yet agile response Explain what happened Business control Rapidly add new checks Act/ Detect Respond Communicate Decide Decision Response Communicate new rules effectively Help business and IT collaborate Manage change Analyze and test approaches 35 © Decision Management Solutions, 2009

Case Study – Healthcare Company • Business process: Claims processing • Mainframe-based, COBOL implementation on MVS • Claims processing driven by government and customer requirements and regulations © 2009 Technology Blue, Inc 36

Case Study – Healthcare Company • Challenges – Compliance rules buried in mainframe COBOL code – Slow time to change • Against rigid cutoff dates for regulation compliance • Fines for non-compliance – Resource availability • Availability limited due to turnover and competing projects – Need to tie in process with the enterprise • Visibility of data limited for enterprise functions like Business Intelligence © 2009 Technology Blue, Inc 37

Case Study – Healthcare Company • Solution – Adopt a Service-Oriented Architecture – Adopt Decision Management • Objectives – Extend the ROI of deeply invested mainframe system – Enable incremental migration away from mainframe in the future – Enable sharing of data with other enterprise processes and functions – Enable faster reaction time to changing requirements and regulations – Enable business users to maintain strategic business policies © 2009 Technology Blue, Inc 38

Case Study – Healthcare Company • Step 1 – Establish SOA roadmap and governance policies – Identify key “pieces” of mainframe to be carved out and exposed as a service – Slow, incremental projects, minimizing risk – Implement SOA using web services © 2009 Technology Blue, Inc 39

Case Study – Healthcare Company • Step 2 – Establish Decision Management roadmap and governance guidelines – Identify key business decisions and document for extraction from mainframe code – Implement Blaze Advisor for maintaining and deploying business decisions as a Decision Service in the SOA © 2009 Technology Blue, Inc 40

Case Study – Healthcare Company • Results from the combined benefits of SOA and Decision Management – Reduced time-to-change from 30+ days to less than 5 – Reduction in non-compliance fees – Plus • SOA enables greater flexibility, agility, and the foundation to incrementally transform and modernize other core systems • Increased data availability • Decision Management enables smarter, more consistent decisions © 2009 Technology Blue, Inc 41

You Are A Good Candidate If…  You do business in a heavily regulated environment  You need to change business policies, procedures or products frequently  You have enterprise consistency concerns  Business people in your company want or need to make changes to business systems faster or more conveniently  You have a competitive strategy that calls for differentiated business decisions and practices  Your IT department has a significant application modification backlog 42 © Decision Management Solutions, 2009

Which would you rather maintain? ADD #2,+VCSDTFPD,RESULT=DTIN4A ADD #1,+ZW0DTFPD,RESULT=DTOUT4A CALL Z#SCMPDT,0,0,0,0,0,P2=DTIN4A,P3=DTOUT4A ADD #2,+VCSNEXPD,RESULT=DTIN5A ADD #1,+ZW0NEXPD,RESULT=DTOUT5A CALL Z#SCMPDT,0,0,0,0,0,P2=DTIN5A,P3=DTOUT5A SUB (ZW0NEXPD,#1),(ZW0DTFPD,#1),RESULT=ZW0#DAYS,PREC=DDD DO WHILE,(ZW0#DAYS,LT,ZL0DW090,DWORD) MOVE ZW0VALUE,2,WORD ADD #2,+VCSNEXPD,RESULT=ZC1DTIN CALL Z#SCMPDT,ZC1DTIN,(ZW0NXOUT),0,0,ZW0VALUE CALL Z#SCNVDT,(ZW0NXOUT),(ZW1NXDT) MOVE (VCSNEXPD,#2),ZW1NXDT,(4,BYTE) CONVTB ZW1NEXPD,(VCSNEXPD,#2),PREC=D,FORMAT=(6,0,I) CONVTD ZW0NEXYR,ZW1NEXPD+4,PREC=S,FORMAT=(2,0,I) IF (ZW0NEXYR,LE,ZL025,2) ADD ZW0NEXYR,ZL12000 ELSE ADD ZW0NEXYR,ZL01900 ENDIF while (the newExpirationDate of feeVehicle < the dateFeesReceived of feeVehicle + 90 days) do { the newExpirationDate of feeVehicle = the newExpirationDate of feeVehicle + 2 years } 43 © Decision Management Solutions, 2009

Action Plan  Adopt SOA Enterprise-wide Architectural Principle Apply to your core systems Better align IT with the Business Provides solid foundation for Decision Management adoption  Consider Decision Making Identify decisions hidden in mainframe code Especially decisions that matter to customers and transactional decisions Prioritize decisions - What drives changes in them - How fast you need to change them - What it costs to change them  Adopt Business Rules Both the approach and the technology Identify proof of concept / pilot if necessary Prioritize decisions with high rate of change/high maintenance cost Consider change readiness and organizational change implications 44 © Decision Management Solutions, 2009

More on Decision Management Jtonedm.com technologyblue.com clayegreene@technologyblue.com decisionmanagementsolutions.com james@decisionmanagementsolutions.com 45 © Decision Management Solutions, 2009

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SOA Mainframe Decision Management

by Decision Management Solutions on Jun 02, 2009

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