Ron Ross kicked off the main sessions today with his keynote “From Business Rules to Enterprise Decisioning“. He opened by saying that it is easy to think that everything that can be automated, has been. Yet there is a clear gap between what our existing systems can do and what we need. Part of this gap comes from the lack of automation of operational decisions. For instance, in the book, we talk about a survey that showed that 80% of operational decisions are left un- or under-automated. Ron built on this to point out that operational decisions are critical to how “smart” a business process really is and asserted, correctly I think, that there is no realistic limit to how smart we want those decisions to be because we need smarter processes.
He identified three mega trends
- A shift from just business process management(BPM) to a balance between BPM and EDM
Business processes are important and all organizations should be thinking about how to manage and improve business processes. That said, it must be balanced with a focus on decisions within these processes so that these processes can react in a smarter way – we need smart responses. This takes business rules, a business strategy and business intelligence. This is critical because an automated process will not automatically be adaptive, compliant, personalized or changeable by business users. Injecting managed decisions into a process can and should be part of the solution to these limitations.
- A shift from data quality and accessibility to a balanced view of how we take insight and take better actions as a consequence – decision deployment
Improving and cleaning data is important but it is not really an end in itself. The whole point is to improve the way the organization makes decisions not just improve the data. One way to do this is to drive the analysis of this data into the operational decisions that drive your business processes.You must be able to turn this insight into more effective action to get value from this data. You need to consider the full value chain for this data and the decision cycle time – how long to get from data that shows insight through to a process that ACTS differently. A closed loop decisioning environment. Ron quoted Richard Hackathorn here and I have blogged before about Richard’s model of decision latency. He also referenced a great report IDC produced on policy hubs (see this article for more on this, for instance).
- A shift from just rules to a more balanced view of decisions and how to make smarter decisions
The ROI of business rules initiatives can be hard to prove, especially because many early adopters of business rules did so because they felt compelled- the business problems they saw were so bad that they had no alternative. However, Ron now feels that perhaps the question was the wrong one. Instead of saying what’s the ROI of business rules, ask what’s the ROI of improving the operational, high-volume business decisions. Business rules are how you can do this but the return comes from better decisions. Decisions like pricing of a specific transaction, who is assigned to this task right now, can we confirm this reservation, what’s the best cross-sell and so on. Measuring this requires something like Decision Yield – precision, consistency, agility, speed, cost. The total value of operational decisions is the often small incremental value of each times the often very LARGE number of them. Ron had some great suggestions for ROI including reducing manual intervention, more precise targeting, retaining know-how and many others.
Ron wrapped up by pointing at the decisions that will really show a return – focus on the business, focus on the systems you have that make bad decisions, that have lots of change requests, that generate compliance problems or constant customer service problems. He also pointed out that legacy modernization is one of the defining issues of the time and that focusing on decisions and improving decisions using business rules is perhaps the most effective, lowest risk way to approach this.
He had a couple of good closing comments:
- Legacy modernization using decision services and an SOA model is the best way to go. He calls this a phoenix strategy – new life rising from the ashes. He also pointed out that this sets you up for long term renewal of legacy applications.
- Compliance is always important, even when it is not a regulatory issue. You should never have to rebuild the rules you used, they should always be known and explicit. Thus the value of business rules. He had a great phrase – The Business Rules of Record – that matches the idea of a system of record or data of record.
- You should have a decision competency center (perhaps wrapping your BICC) and bring business users into this
- You are heading toward a complex, multi-channel world so externalize your rules now.
- De-couple your rules from your IT lifecycle so they can evolve in parallel
Ron made a reference to the Business Motivation Model, an interesting new OMG standard available on the Business Rules Group website.
Check out Sandy’s post here for another perspective!