The Future of Home Lending


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  • * Another way to look at sizing…. * As we push forward with our customers, we’re adding functionality that older traditional systems, still installed, once provided. We call this our “carve out” strategy, but it adds another dimension to our market size. We offload former LOS functions, and front-end them, allowing the customers to preserve their LOS system of record…while we bring it into the next generation. * Own the account.
  • This is how our customers see us, a unique & powerful view. Describe channels on each side. Then GSE’s & key business partners. Rapid, flexible integration, loosely coupled. Then products, CM, PM, SM, .MOR. Then delivered through secure MS.
  • See 3 waves of tech innovation over the last 12 years in mortgage lending. We’re now in phase 3, web services. We lead this wave. Key tech you couldn’t do before. Like Wal-Mart, enables you to bring your demand chain up to the point of sale. Web services, workflow & decisioning are provided as apps through web services.
  • The Future of Home Lending

    1. 1. Business Process Management and the Service-oriented Architecture Dain Ehring, CEO Robert Carpenter, PhD, CTO MBAA’s National Technology in Mortgage Banking Conference & Expo March 16, 2004
    2. 2. Agenda <ul><li>Business Process Management </li></ul><ul><ul><li>Overview & history </li></ul></ul><ul><ul><li>Characteristics </li></ul></ul><ul><ul><li>Operating benefits </li></ul></ul><ul><li>Services-oriented Architecture </li></ul><ul><ul><li>Characteristics </li></ul></ul><ul><ul><li>Operating benefits </li></ul></ul><ul><ul><li>Technology view </li></ul></ul><ul><li>BPM + SOA = BPMS </li></ul><ul><ul><li>Mortgage drivers </li></ul></ul><ul><ul><li>Reference implementation </li></ul></ul><ul><li>Business Impact </li></ul><ul><ul><li>Moving from Good to Great </li></ul></ul><ul><li>Summary </li></ul>
    3. 3. Business Process Management <ul><li>Business processes define a company </li></ul><ul><ul><li>Critical source of competitive advantage and market differentiation </li></ul></ul><ul><ul><li>Very complex, constantly evolving </li></ul></ul><ul><ul><li>Aligns processes more directly with organizational objectives </li></ul></ul><ul><li>The “ideal” BPM solution </li></ul><ul><ul><li>Connects to any system associated with the process </li></ul></ul><ul><ul><li>Blurs organizational boundaries </li></ul></ul><ul><ul><li>Supports compliance </li></ul></ul><ul><ul><li>Monitors process status with eye toward continuous improvement </li></ul></ul>
    4. 4. Providers and Suppliers <ul><li>Come from four areas: </li></ul><ul><ul><li>Traditional workflow & content management vendors </li></ul></ul><ul><ul><li>Business process engine companies </li></ul></ul><ul><ul><li>Middleware providers extending application integration </li></ul></ul><ul><ul><li>Vertically focused software & service providers </li></ul></ul>
    5. 5. Business Process Management (BPM) Management Theory Modern Technologies + = BPM <ul><li>Total quality management </li></ul><ul><li>Six Sigma </li></ul><ul><li>Business engineering </li></ul><ul><li>General systems thinking </li></ul><ul><li>Application development </li></ul><ul><li>Systems integration </li></ul><ul><li>Vertical market focus </li></ul><ul><li>Service-oriented Architecture </li></ul><ul><li>Workflow </li></ul><ul><li>Transaction management </li></ul><ul><li>XML and Web services </li></ul>
    6. 6. Some BPM History… <ul><li>1980’s = Business Process Reengineering (BPR) </li></ul><ul><ul><li>Design a simpler process, implement through a one-time organizational change; re-do the factory flow </li></ul></ul><ul><ul><ul><li>Benefit </li></ul></ul></ul><ul><ul><ul><ul><li>Improved performance within the enterprise </li></ul></ul></ul></ul><ul><ul><ul><li>Problems </li></ul></ul></ul><ul><ul><ul><ul><li>Failed to provide agility, support ongoing change, or combine processes with partners </li></ul></ul></ul></ul><ul><li>1990’s = Enterprise Resource Planning (ERP) </li></ul><ul><ul><li>Ingrained best practices in huge software applications </li></ul></ul><ul><ul><ul><li>Emerged from MRP in late 80’s </li></ul></ul></ul><ul><ul><ul><li>More inflexible </li></ul></ul></ul><ul><ul><ul><li>Didn’t facilitate integration of business partners into processes </li></ul></ul></ul><ul><ul><ul><li>Focused mainly on manufacturing & finance only </li></ul></ul></ul><ul><ul><ul><li>Never really was “enterprise” </li></ul></ul></ul>
    7. 7. Today <ul><li>BPM goals </li></ul><ul><ul><li>End-to-end multi-company business processes built to adapt and enable outcome-focused solutions to problems </li></ul></ul><ul><ul><li>Share business processes across the enterprise, and with partners, to bring ultimate value to customers </li></ul></ul>
    8. 8. BPM Characteristics <ul><li>Closed loop, changeable processes </li></ul><ul><ul><li>Companies can make changes based on the process, implement new workflow, analyze results, repeat </li></ul></ul><ul><ul><ul><li>Self-correcting processes resolve business issues </li></ul></ul></ul><ul><ul><ul><li>No “baton drop” </li></ul></ul></ul><ul><ul><ul><li>Change is built-in </li></ul></ul></ul><ul><ul><ul><li>Unites business & technology/people & systems </li></ul></ul></ul>
    9. 9. BPM Benefits <ul><li>Improves business agility </li></ul><ul><ul><li>Enables a clearer division between IT & LOB </li></ul></ul><ul><li>Clears up the sourcing “jigsaw puzzle” </li></ul><ul><ul><li>Whether or not to outsource…? </li></ul></ul><ul><ul><li>Leads to determining commodity v. value-add application development </li></ul></ul><ul><ul><li>BPM enables control over the process, wherever it resides </li></ul></ul><ul><li>Explodes technology stovepipes & silos </li></ul><ul><ul><li>Leads the way to end-to-end automation </li></ul></ul><ul><li>Creates reusable process patterns </li></ul><ul><ul><li>Once model the process, can implement change rapidly </li></ul></ul>
    10. 10. The BPMS <ul><li>BPM + services-oriented architecture = the BPMS </li></ul><ul><li>What the BPMS does </li></ul><ul><ul><li>Model, deploy, and manage business processes across applications, departments, business partners </li></ul></ul><ul><ul><li>Works behind the firewall and over the Internet </li></ul></ul><ul><li>BPMS requirements </li></ul><ul><ul><li>Extreme flexibility </li></ul></ul><ul><ul><li>Reliability </li></ul></ul><ul><ul><li>Security </li></ul></ul>
    11. 11. The Services-oriented Architecture <ul><li>Architectural foundation for BPM </li></ul><ul><ul><li>Extends processes beyond the company’s walls </li></ul></ul><ul><ul><li>Combines best of component application engineering and process engineering </li></ul></ul><ul><ul><li>Combines business and technical systems to make processes that flex and recombine </li></ul></ul><ul><ul><li>More control over internal processes and more interaction between internal processes and those of partners </li></ul></ul><ul><ul><li>“ Loosely coupled” approach enables dynamic changes to processes </li></ul></ul>
    12. 12. Market View “ Software-as-service providers are rapidly adopting XML-based Web services standards both to lower integration hurdles and to level the playing field against packaged software competitors” - Summit Strategies 12/2003 <ul><ul><li>“ Your BPM initiative will benefit from </li></ul></ul><ul><ul><li>an enterprise model built on </li></ul></ul><ul><li>service-oriented architecture and web services” </li></ul><ul><li>- Ovum Research </li></ul><ul><li> 3/2004 </li></ul>
    13. 13. Traditional View
    14. 14. Service-oriented Lending Architecture SOA Reference Implementation
    15. 15. Market Evolution Toward SOA
    16. 16. Before the Services-oriented Architecture
    17. 17. The Services-oriented Architecture in Lending
    18. 18. Business Impact
    19. 21. QuickTime™ and a TIFF (LZW) decompressor are needed to see this picture.
    20. 25. Summary <ul><ul><li>BPM is the future </li></ul></ul><ul><ul><li>Consider a services-oriented architecture </li></ul></ul><ul><ul><li>Adopt an evolutionary approach </li></ul></ul><ul><ul><li>Long term value of software as services </li></ul></ul><ul><ul><ul><li>Rapid time-to-market </li></ul></ul></ul><ul><ul><ul><li>Less risk </li></ul></ul></ul><ul><ul><ul><li>Easier growth/evolution </li></ul></ul></ul>
    21. 26. Business Process Management and the Service-oriented Architecture Dain Ehring, CEO, & Robert Carpenter, PhD, CTO Q & A