Legacy modernization with decision management and business rules

Legacy
modernization with
Decision
James Taylor,
Management and
CEO
Business Rules

Your presenter – James Taylor
CEO of Decision Management Solutions
Works with clients to improve their
business by applying analytics and
analytic
technology to 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
©2011 Decision Management Solutions 2

AGENDA

1 2
The challenge of
legacy systems
The role of
decisions in
legacy
3
Modernizing with
Decision
Management
challenges

4 5 6
The power of Improving Wrap and next
business rules alignment and steps
management agility
systems

The one slide you need
Legacy systems have negative business
impacts
Not all parts of a legacy system are equal
Focus on extracting and modernizing
decisions
Use a business rules management system
Externalizing decisions with business rules
Improves alignment
Improves agility
Manages risk

The challenge of legacy
systems

The business impact of legacy systems
Fines and legal issues
Regulations and rulings cannot be implemented
Competitive weakness
Lack of agility slows competitive response
Policies are buried in code with a long change
cycle
The business has no real idea how the system
works
No learning going on
Test and learn is not an option
What you learn cannot be applied

Every option for change has issues
Rip and replace Cost!
Risk!

Re-platform or To what?
modernize Next generation legacy?

Service-enable Better but
Services as black
boxes?


Case: State Agency
Critical state budget component
Legacy systems modified for 30 years
On-line application and batch COBOL
Minor changes required extensive programming
Inconsistent interpretation of legislation
Needed
Rapid response to changing legislation
Non-technical business experts engaged


The role of
decisions in legacy
challenges

What is a decision?
Data is gathered, considered
A choice or selection is made
That results in a commitment to action


Legacy systems make decisions
They
Determine if a customer is eligible for a benefit
Validate the completeness of an invoice
Calculate the discount for an order
Assess the risk of a transaction
Select the terms for a loan
Choose which claims to Fast Track
These are decision words
The system must answer a question each
time

Decisions are high change components
Regulations change Change to keep eligibility
decisions compliant
Policies change Change validation to track
new data requirements
Competitors change Change the discount to
remain competitive
Markets change Change the assessment to
manage risk
Consumer behavior changes Change to keep selecting the
right deal terms
Fraudsters adapt
Change the routing to focus
on new fraud

Case: State Agency
Key objectives
Don’t require complete rewrite of legacy
Usable by non-technical analysts
Comprehensive business control
It must run quickly and scale on all platforms
Identified key decision – “What is correct fee”
Externalized just that decision


Modernizing with
Decision
Management

Decision Management
An approach or business discipline for
automating and improving decision-making
It improves day to day business results by
Supporting
Automating and
Improving operational decisions
It builds on existing enterprise applications to
put data to work
manage uncertainty
increase transparency
give the business control

Delivering Decision Management

3 stages to better operational decisions
Create a “closed
loop” between
operations and
Design and build analytics to
independent measure results
decision processes and drive
to replace decision improvement
Identify the points embedded in
decisions (usually operational systems
about customers)
that are most
important to your
operational
success


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
sor t ed=1:
sor t ed=1: f or I y = I–I= y > 11; y –I t
f or I y = I–I= y > 11; y –I t p ri n t ( y –Id ,y) :
p ri n t ( y –Id ,y) : if [1a r r ayI y] < 1a rr ayI y -1]) t
if [1a r r ayI y] < 1a rr ayI y -1]) t holder - [a rr a y[ y -1] |
holder - [a rr a y[ y -1] | Iar ra yl y -1]) = 1 [y])
Iar ra yl y -1]) = 1 [y]) 1 a rr a y = holder
1 a rr a y = holder

Programmers Programmers

Frequent policy changes
Policy Changes

Business users Business users
Smart (Enough) Systems, Prentice Hall June 2007 Fig 211


Separation adds agility
Decision making logic is most changeable
Typical legacy system forces a complete
release
System v1 System v2
Decision v1 Decision v2

But only the decision needs to change
And it needs to change more often
v1
v1 v2 V3 V4 v5

The power of
business
rules
management
systems

©2011 Decision Management Solutions
19

Clarity and transparency are needed
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”


What are business rules?
“… a directive intended to influence
behavior.”
“… a formal expression of knowledge or
preference, a guidance system for steering
behavior (a transaction) in a desired
direction.”
“… statements of the actions you should
take when certain business conditions are
true.”


Business rules drive decisions

Decision Regulations
Policy

History

Experience
Legacy
Applications

Unmanageable business rules

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);
}
}
}


Manageable business rules
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”

Smart (Enough) Systems, Prentice Hall June 2007. Fig 4.3


A Business Rules Management System

Validation Testing
and
Verification

Decision
Deployment
Production
Rule Service Application
Repository
Rule
Engine

Design Rule
Tools Management
Applications

Operational
Database

After Smart (Enough) Systems, Prentice Hall June 2007. Fig 6.6


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 participation

Business Agility
• More rapid response to business threats
• Fewer missed opportunities
• Faster time to market

Case: State Agency
Business Sources
Separated fee-specific rules from existing
legislation
Found inconsistent interpretation of rules
Translation of documentation into rules
Technical Sources
Business rules embedded within code
Multiple platforms / multiple interpretations
Program documentation not current


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
}


Improving alignment and
agility

The business agility cycle

Act/
Detect
Respond

Communicate Decide
Decision Response

After Gartner Inc


Decision Management drives agility

Explain what happened
Automated yet agile response
Rapidly add new checks
Business control
Act/
Detect
Respond

Communicate Decide
Decision Response

Communicate new rules effectively
Help business and IT collaborate
Manage change
Analyze and test approaches


Case: State Agency
Outcome
2,000+ rules stored in central repository
60,000+ transactions/day across batch and online
Rules easily updated by non-technical business people

Benefits
Managed, demonstrable compliance
Rapid response to policy changes

ROI example
First day there was an error
Fix took 15 minutes v 2-8 hours: 87%-97% reduction

Analytics drive better decisions
Rules address what might happen

Analytics help you understand why and when
* *
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* * * * *
* * * * ** *
*
*** * * * *
* * * *** ** *
*
*
**
*
* * * ** * *
* * ** * *
*


Continuous improvement in decisions


Action Plan

1 Analyze code to find decisions

2 Rework to isolate decision components

3 Analyze policies and regulations for rules

4 Use legacy code to verify rules

5 Redeploy rules as Decision Services

6 Retire the replaced code

The one slide you need
Legacy systems have negative business
impacts
Not all parts of a legacy system are equal
Focus on extracting and modernizing
decisions
Use a business rules management system
Externalizing decisions with business rules
Improves alignment
Improves agility
Manages risk

Decision Management Solutions
Decision Management Solutions can help you
Focus on the right decisions
Implement a technology blueprint
Build decisioning systems

For assistance, to find out more or if you have
questions
james@decisionmanagementsolutions.com
http://www.decisionmanagementsolutions.com
http://jtonedm.com
@jamet123 or @decisionmgt

Thank you!

James Taylor, CEO
james@decisionmanagementsolutions.com
www.decisionmangementsolutions.com/learnmo
re

Legacy modernization with decision management and business rules

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