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Nationwide Implements a Business Rules Solution to Improve Financial Processes Across the Enterprise

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Three folks from Nationwide Insurance introduced their ILOG business rules implementation. Nationwide is one of the largest insurance and financial services companies with multiple brands offering products in property and casualty, mortgages, lines of credit, retirement plans and more. They are 124 on the Fortune 500, 16M policies and 32,000 staff. This project focused on finance and the close processes – close sub ledgers,.gather and validate etc. Key challenges were four:

  • Timeliness – took too long and poor definitions of thresholds and expectations
  • Transparency – hard to trace and understand data across multiple general ledgers and localized reporting compounded by rules embedded in legacy source systems
  • Cost – inefficient process that had too many people spending too much time
  • Predictability – too hard to tell how long it would take and forecasts were not accurate

The program wanted to:

  • Improve timeliness
  • Improve analytical and reporting
  • Improve financial controls and transparency.

And a set of measures were developed against which to track success. The program contained many elements – a business rules management system, new reporting, re-written interfaces etc. The rules project specifically had to deal with the fact that Finance IT had volatile rules written in all sorts of technologies from Informatica to PeopleSoft and their rule management was all done by IT in very technical environments. The rules were not accessible to business users and were not easy to find even for IT.

Nationwide really like the Business Rules Manifesto – the focus on rules as “primary” deliberate artifacts, the separation of rules from processes, declarative, built into the architecture and, most importantly, focused on the business. I like manifesto too but I wish it focused on DECISIONS not just rules.

Organizational challenges – multiple departments claim control of rules and maintained local rules and there was no governing body accountable for rules communication or consistency. In addition there were inconsistent processes for the IT departments to make changes and the multiple sources of rules using different implementation technologies meant that coordination of these processes and changes was hard. Finally different release cycles made a single set of changes hard to synch.

One of the critical “ah has” for Nationwide was that governance was going to be essential in making the most of the ILOG business rules management system. A governance process was essential to take responsibility of managing the rules, educating people about the changes and more. Getting the business to take this one was hard, some people had to be pushed by management but others became supporters after a series of roadshows and outreach.

From a technical perspective conducted a number of Proof of Concepts that resulted in a selection of ILOG business rules management system based on its ease of use, flexibility, business focus etc. The project then had to take rules out of a whole series of source systems (where they were coded in COBOL for instance) as well as out of a 25-year old legacy “rule engine”. Today all the rules are managed in the ILOG repository and largely accessed through the Rule Team Server. Increasingly the business users are able to manage their own rule editing, testing and deployment. Nationwide use the Rule Solution for Office, allowing business users to use Excel linked to the repository.

To pull this together Nationwide built some custom solutions based on the ILOG BRMS. One was called Rule Runner and this replaced the typical ILOG testing environment with something that linked directly to the source files from the various systems. A second, CheckStyle, that helps business users avoid “bad” rule patterns that have failed before. Finally the third was a test data generator that would fire all the rules for a particular source system.

Their technical environment is J2EE based with 12JVMs (8 for rules) and the ability to run 64 rule engine instances at once. It all runs on the WebSphere application server, uses events to manage file detection and processing and XML based file structures. Implementation challenges included governance as mentioned, testing, test coverage, rule project organization (global v local rules for instance).

They found they really needed a standard vocabulary across the various business units and were fortunate in that people participated in building this – some push (management directives) and some pull (outrach and roadshows) to drive people to standardize. Making this standard and enforcing it throughout the data interfaces and the business and IT object models was critical.

Some (impressive) stats – 36,000 files with 2.8B input and 5.1B output records have been processes. 641M records are processed a month and the system handles 22,000 records/second. 125,000(!) rules are managed in the system.

Critical success factors include teamwork and communication (they built a combined business/IT team room for instance), executive support, continuous training for both business and IT, a focus on both the rules AND the application using the rules and a comprehensive testing and impact analysis approach.

Results – improved time to market, hit their 10 day close objective, created an ability to do real impact analysis and improved their business agility.

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