Business Rules Management SystemsManaging Complex Decisions in your Organisation - Simply

Richard J.D. CollardSenior Industry LeadWW Business DevelopmentSME - Transactional Fraud, AML & Riskrichard.collard@uk.ibm.com+44 7917 612896

Business Rules Management System - What Is It????!!!!!!

• BRMS - more than a Rules Engine• Enabling & Complementary Component & Technology• In SOA, BPM or Stand-alone• Empowers Business-users• Provides Ability to make Complex Decisions

– Consistently, Simply and Quickly • Externalises & Makes Business Logic Available to

Business-users• Hard-coded Business Logic becomes redundant • Benefits for IT and Lines of Business

Validation

Pricing

EligibilityValidation Rules

Eligibility Rules

Pricing Rules

Why use Business Rules with BPM?

Business Rules

• Automate key decisions in Business Processes by Externalising Business Logic

• Simplify the Business Process structure

• Are invoked from the Business Process as standards-based Services

• Are quicker to modify than the Business Process orchestration

Engage and Support Separate Life Cycles

BPM and BRMS do not typically share the same velocity of change. Business rules typically require more frequent and more rapid

change cycles than a process.

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BPM Alone BPM + BRMSDecision Support

Business Decision Making

Human Automated / Assisted

Decision Maintenance

Process re-engineering Rules updates

Decision change cycle

Months Days

Decision Ownership IT IT + Business

Decision Sharing Cut and Paste Central Repository / TDS

Scalability < 50 Rules (when rules enable)

Thousands

Supported decisions Routing •Business Decisions•Task allocation•Dynamic routing

Combining BPM & BRMS

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Issues

• Rules are hidden in code or isolated within the organization

• Changes are hard to track and maintain over time

• Rules used by systems have to be programmed and require IT resources

• Duplication and multiple versions of the same rules

• Lack of auditability, traceability

• Decision changes cannot be easily tested or simulated

• Rules are hidden in code or isolated within the organization

• Changes are hard to track and maintain over time

• Rules used by systems have to be programmed and require IT resources

• Duplication and multiple versions of the same rules

• Lack of auditability, traceability

• Decision changes cannot be easily tested or simulated

Business rules are crucial to operational systems, and they change over time. The

traditional (ad hoc) approach of dealing with rule changes leads to…

Traditional Approach for Managing Decision Change

Reduced organizational agility Reduced employee productivity Increased load on IT

Where Business Rules Typically Exist

Applications

ProcessesPeople

Documents

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Where Business Rules Typically Exist

Applications

ProcessesPeople

Documents

Business Rule Management System

Rules are Defined, Analyzed

and MaintainedUser Tools

Rules are Stored and

Shared

Rule Repository

Rules are Deployed, Executed

and MonitoredRule Server

Manage and Automate Decision Logic with BRMS Eliminate decision silos Make decision logic

accessible to Business and IT Implement fine-grained,

context-specific logic

Business Rules Made Simple Customizable vocabulary specific to

your organization, industry, application etc….

Supports language localization Integrates with external data

sources e.g. list of countries Drop-down lists for customized

domain data Templates facilitate new rule

creation

Flexible Rule Management for Business Users

Rule Solutions for Office

Text-based (point-and-click + guided

editing)

Graphical representations

Technical Environment Business Environment

Production Environment

Deployrules

Deployrules

Web-based console to monitor & control rule execution

Rule Execution ServerSingle node or cluster(J2SE & J2EE compliant)

SystemAdministrator

Decision Validation ServiceTesting & Simulation framework

Rule Team ServerWeb-based Application for Rule Maintenance

RuleManager

Rule StudioEclipse-based Rule IDERule Service design & development

RuleDeveloper

Rule

Repository

IBM ILOG JRules BRMS Product Components

Benefits of a BRMS Approach

• Reduce time and resources required to deploy changes

• Author and maintain rules using non-technical language

• Express decision logic with increased precision

• Make decisions based on specific context

• Increase decision automation

• Improve visibility and understanding of how decisions control systems

Lower maintenance costs; respond quickly to change

Business experts can manage and validate decision logic

Increase profitability of product, pricing and promotional offerings

Customize decisions when possible, standardize if needed

Improve process efficiency

Ensure compliance; enable sharing/re-use of decision logic

What does it enable? What is the value?

BRMS

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Precise, Automated Process Decisions with WebSphere ILOG BRMS

Horizontal: Best/appropriate price, Cross-sell/ up-sell recommendations, Loyalty promotions, Exception identification, Risk/fraud assessment, Straight-through processing approvals

Insurance Banking Healthcare Government Energy/Util./Telco

• Claim• Validation• STP approval• Exception routing

• Policy/Underwriting• Eligibility • Risk• Pricing

• Annuity• Recommendation• Commissioning• Payout calc.

• Loan• Eligibility• Risk• Pricing

• Account• Cross-sell • Fraud/Alerts

• Credit Card• Mktg Offers• Fraud• Credit limit

• Patient Care• Drug interaction

risk warnings• Follow-up alerts

• Member• Services

recommendation• Eligibility• Benefit

calculation• Provider

• Patient eligibility for services

• Benefits• Eligibility• Calculations

• Tax Payer• Classification• Audit flagging

• Citizen• Program(s)

recommendation

• Land/Permits• Conveyance

processing• Contract

compliance• Service Mgmt

• Service prioritization

• SLA alerts• Maintenance

alerts• Order

configuration

Selection of clearing channels –

Minimizing C&S costs

• Consistent selection of least-cost channel (by consolidating all routing decisions in a centralized decision service)

• Rapid adaptation to price changes (e.g. new pricing scheme of channels, “on us” settlement channel after acquisition)

Semantic validation of messages

• Increase straight-through processing• Separate valid messages that can be processed in STP from

messages that need exception handling

Use case Customer Description

ILOG BRMS customers in payments

Pricing

• JRules-based pricing engine for all payments products• Differentiated pricing and complex bundle pricing• Reduction of time-to-market for pricing policies from 6

months to 10 days• ING Belgium considers its business as unique and cannot

manage its pricing policies using a package

Validation of account numbers

• Increase straight-through processing (country-specific validation rules)

• Integration with EPP-based payments hub• Other use cases being analyzed: customer-specific

conditions for corporates

Use case Customer Description

ILOG BRMS customers in payments

Anti-Money Laundering Top-10 US Bank

• Rule service performing country-specific AML checks

• Integration with EPP-based payments hub• Standard-based (ISO20022) service definition

Card fraud detection

• Fraud patterns captured as business rules to react quickly to new fraudulent behaviors

Online fraud detection

Global e-Auction • Fraud patterns captured as business rules to react

quickly to new fraudulent behaviors

Merchant-level fraud detection

• Merchant-level fraud detection provided as a value-added service to banks

• Business rules as a way for TSYS to exploit value by extracting knowledge from huge volume of card transactions

Use case Customer Description

ILOG BRMS customers in card and online payments

Message validation, calculation of merchant fees & internal routing

• 150M transactions processed in a 8 hour time window• Shorter time-to-market for new products• Specific rules for various regions

Clearing and Settlement System

• Expose business policies for validation, interchange and pricing

• Speed of change; defect analysis, handling late change• Flexibility; ability to re-order rules or change flows

quickly• Quicker learning curve for new starters

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Using BPM and BRMS Together

Chose the claims process as the best target for Nordic-level unification and automation

Combination of WebSphere Process Server and WebSphere ILOG JRules was based on the positive results from a test project in Finland:

Decreased the cost of claims incurredIncreased of customer satisfaction through faster turnaroundSubstantial savings of employee work

Uses of BRMS in this solution: Claims submission validation Decision automation for liability and compensation Payment calculation Straight-through processing determination Manage and automate decision variation across countries,

processes and systems Accelerate implementation of decision changes

Case Study: European P&C Insurance Company

Société Générale – Customer Risk Management

• SG : Major French retail bank, 9M+ customers, 2500 Branches, 13,000 branch advisors

• Branch Advisors spend 1,5 hr each day to understand their customer’s account situation and make decisions on what to do next

• They apply their own knowledge to decide which customer situation to fix first and how to fix it

• There is a fairly high turnover of staff, so there is little control on this knowledge

• The Bank’s Management needs to understand how many and which situations are solved, handled, and which ones may become critical

• Management has identified there is a possibility to reduce risk, whilst improving the advisors’ productivity and support

Project High-level Specification

• Identify risky situations on customer groups• A risky situation is

– An non compliant situation that requires an action from the bank– It is generated, modified, closed upon reception of an event– It applies to an individual or to a service– It stays open until resolution

• Risky situations are presented to branch advisors on a daily basis to help them– analyze the level of customer risk– assess which decisions should be taken.

• Assist Branch Advisors by recommending a course of action– Explanations– Integrated rule based pre built customer letters, « click and send » – Integrated interview management– Notification of actions to other applications

• Build an history of actions taken by the advisor for each customer• Provide a synthetic presentation of all open situations, by level of urgency/priority• Provide a synthetic view of open situations at the Branch level

Business case & targeted ROI

• “High risk customer profile” process:

• Benefits:– Manage 200 risk management profiles in 7 categories– Allow business users to manage & understand the risk profiles– Gain 1 hour/day/advisor

Get High Risk ProfilesWhen logging in

4,000,000 events on9,000,000 accounts4,000,000 events on9,000,000 accounts

NightNight

400,000 High Risk profiles about 5% of customers400,000 High Risk profiles about 5% of customers

Advisor’s working dayAdvisor’s working day

Get explanationsAnd actions plan

13,000 advisors2,500 branches13,000 advisors2,500 branches

50,000 letters per day

50,000 letters per day

Get list of lettersFor a customer

Update actions plan

Société Générale – Risk Management

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Situation

Long time spent each day by branch officers to assess customer and account situations requiring actions

Complexity of cases and related actions Inconsistent operations leading to unmanaged situations

Goals

Solution

Service Oriented Architecture sharing 400 business rules 7 rule services ( Batch and Transaction processing programs) detecting and managing

400,000 high risk customer cases Determine status and priority of the risky situations Recommend and explain client actions to branch financial advisors Generate personalized mails as actions ( 100,000 to 200,000 mails per day)

Benefits

Manage 200 risk management profiles in 7 categories Allow business users to manage and understand the risk profiles Gain 1 hr/day/advisor (13,000 advisors in 2,500 branches)

Improve risk detection and management Increase branch financial advisor efficiency managing risk profiles Automate action recommendations

Improve risk detection and management Increase branch financial advisor efficiency managing risk profiles Automate action recommendations

BNP Paribas - Project OPRA Business Requirements

• Offer and Product Repository Applications• BNPP wanted to improve its understanding and management

of the multiple banking offers that were being made to customers

• A - Flexible solution to allow definition of banking offers with• B - Ability to understand relationship between offers and• C - Determine conditions for appropriate, ethical sale• Requirement to allow Client Advisors to look into the product

catalogue and filter by customer eligibility and profile with differential pricing tariffs applied

• Need to distribute offers to operational systems – mainframe and distributed

BNP Paribas - Project OPRA Implementation

• OPRA is based on IBM InfoSphere MDM Server for Product Information Management and……..

• …….IBM WebSphere ILOG JRules / BRMS• InfoSphere MDM Server provides offer authoring and relationship

management…….• ….thereby ensuring offer package compatibility, base tariff

enforcement and conditional eligibility• ILOG BRMS provides the capability for BNPP to model eligibility

and pricing rules• The SOLUTION allows BNPP to build / maintain a catalogue of of

product / offer packages while managing collaborative processes associated with implementation / deployment of Business Rules

BNP Paribas - Project OPRA Benefits

• OPRA is based on IBM InfoSphere MDM Server for Product Information Management and……..

• …….IBM WebSphere ILOG JRules / BRMS• Together providing:• Improved Time-To-Market for new products and services• Ability for non-technical users to generate and manage offers• Accurate and complete view of offer / product information• Multi-channel servicing initiatives• Personalised offerings• Evolution of offers according to market dynamics• Reduced likelihood of mis-selling

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Automating decisions along a payments flow

RoutingProduct

configurationValidation

Fee calculation

• Validation & auto-repair

• Validation of account numbers (country-specific rules)

• Determine product and configure payment attributes based on instructions and customer profile

• Least-cost routing in CSM selection

• Customer preferences

• CSM operational constraints, e.g. type of payments supported, cutoff times …

• Real-time charge calculation

• Monthly discount calculation

• Payment bundles• Agreement and customer-specific conditions

SLA-based exception mgt

Approval rules

SEPA DD

• Customer-specific and SLA-based limits

• Determine what to do next upon an exception

• Automate SLA conditions

• Mandate management

Accounting & reconciliation

• Example: How to reverse a cancelled payment that is part of a batch

Customer Success – Simplifying the Process

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Customer Process Pains BPM - Decision Service

Results

Loan Origination

• Highly manual process

• Delays arose as applications were routed through approvals via interoffice mail

• Lengthy approval turnaround time

• WebSphere ILOG BRMS to handle a variety of business logic for a IBM BPM-orchestrated process:

- Routing - Compliance - Scoring & rating

• Cost savings – $1.5M over 5 years

• 15 days to 1 approval time reduction

• Improved staff focus and satisfaction

Social benefits eligibility

• Fragmented systems with inconsistent data meant decisions to grant benefits were not consistent from one center to another

• Several departments

but no clear “interface” for the citizens

• IBM BPM to manage the application process end-to-end

• ILOG JRules to determine the eligibility of applicants to social benefits

• Better service delivered to the citizens: fewer interactions required, clear and fair application process

• Consistency of eligibility decisions: same criteria and rules applied across all agencies and centers

• Transparency and auditability: eligibility rules can be reviewed and validated by non-technical users

Capital Markets

Insurance T & T etc..Banking

e-Gov

IBM ILOG Customers.........................

The Value of Simplification

Five Ways to Fast ROI With BRMS

Cost reduction1. Reduced application

development and maintenance2. improve payments margins3. Improved regulatory

compliance

Revenue generation4. Provide value-added services5. Faster time-to-market

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Using the Right Tools for Different Types of RulesIntegration with other Components & Services

Rules Types Rule ExamplesWhere are

Rules Defined?

Right Tool

Business Event Stream Pattern-Match

Event pattern: person on the CIA watch list, purchases chemicals , purchases a one-way plane ticket, uses cash.

Event-stream specific

Business Events(CEP)

Process Flow / Task Assignment

Assign loan review task to the Underwriter with the lowest number of tasks-in-queue.

Process specific BPM

Process Monitoring (SLAs)

Trigger notification / process when “Response Time” KPI for Final Approval task exceeds maximum threshold value.

Process specific BPM-BAM

Variable, Complex Business Decisions

and Policies

Best Offer (pricing and promotions), Eligibility Determination, Risk Assessment and Mitigation, Straight-through Processing Determination

Decoupled from

applicationsBRMS

Business Event Processing/BRMS Combined Use Case - Retail

Promotional Offers• Use BEP to detect opportunity

– Customer with regular history of book purchases visits website after 3 months absence

– Customer browses to 2 successive book categories with no shopping cart activity Raise opportunity alert

• Use BRMS to determine/decide whether to offer a targeted special, and if so, for what– Apply customer information against promotions rule-set– Determine best offer (e.g., no shipping charges for any

purchases in the next 1 hour)

Anti-Money Laundering• Use BEP to detect situation at risk

– Successive near net-zero cash deposits/transfers– Absence of previous history of this pattern, or special

circumstances • Use BRMS to determine if a genuine violation, no problem, or a

“watch”– Evaluate customer history and events data against fraud score

and regulatory policies– Evaluate overriding factors– If not an actual violation, determine likelihood that activity is

suspicious set watch or investigate status

Business Processing & BRMS Combined Use Case - AML

BRMS for Legacy Applications

Rules are generated as

COBOL copybook for execution in

IMS, CICS, batch

Business Rule Management System

Rules are Defined, Analyzed

and MaintainedUser Tools

Rules are Stored and

Shared

Rule Repository

New in v7.0• Simplified creation of Business Object Model for

COBOL applications• Enhanced ability to import, verbalize and

manage the business model for the COBOL project

• Additional JRules rule authoring capabilities for generation of enhanced COBOL code

• Increased agility for management of automated business decisions in COBOL applications

• Improved visibility of decision logic• Enables progressive application modernization strategy

• Increased agility for management of automated business decisions in COBOL applications

• Improved visibility of decision logic• Enables progressive application modernization strategy

Business Initiative Presentation to Agricorp

DEPLOY

JRules and Lombardi Teamworks: Standards-based Integration

Windows/Unix/Linux Server

Communication Interface / ESB

Rule Execution

Server

Interface Flexibility: Web Services Messaging Java APIs

Teamworks Process

Map to JRules Rule Services via standard Teamworks Integration Services

Rule

Management

User Tools

Rule Repository

FileNet BPM/ECM & WebSphere ILOG BRMS

Windows/Unix/Linux Server or Mainframe

Web Services / APIsMessaging Queues

FileNet Business Process

Rule Studio

Rule Execution

Server

Business Rule

Management

Rule Repository

Multi Platform Support:

• Java/J2EE• z/OS•.NET

Integration Flexibility

• Web Services• Messaging• Java/.NET APIs

Rule Team Server

Deploy

FileNet Content Management

ContentRepository

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