BPIS2006.ppt

Delphi Group’s

BPIS2006Business &Process Innovation Summit

October 17-18, 2006

Hotel del Coronado,

San Diego, CA

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James TaylorVice PresidentFair Isaac Corporation

Driving Business Agility with Decision Services

WelcomeWelcome

to Delphi Group’s BPIS2006 Business & Process Innovation Summit

Delphi Group’s


October 17-18, 2006

Hotel del Coronado,

San Diego, CA

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Agenda

• The California DMV’s Challenge• Business Agility and Innovation• What is a Decision Service• Decision services and BPM/SOA• The Vehicle Licensing project• Results• Actions

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October 17-18, 2006

Hotel del Coronado,

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Agenda


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California DMV Background

• $4Bn annual vehicle registration fees• Nation’s largest population of autos,

trucks, motorcycles, vessels…– Over 20 million registered drivers– Over 25 million registered vehicles– About 1 million registered vessels

• Two processes – batch and at offices• 167 local offices

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The Need

• In 2000 DMV assessed existing systems• Needed single consolidated fee system

– Allowed rapid response to changing legislation and business policies

– Engaged non-technical business experts– Supported multiple processing platforms– Scalable for high loads / many rules– Modern system for realignment towards

eGovernment

• The Vehicle Registration Fee Computation Project

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October 17-18, 2006

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The Risk

• Critical state budget component• Complex - 300+ codes used in fees• Inconsistent interpretation of legislation,

policies• Legacy systems modified for 30 years

– On-line application in Event Driven Language (EDL) running on a Series/1 emulator on AIX

– Batch application written in COBOL on MVS– Even minor changes required extensive

programming by development staff– Systems had hit their physical limitations

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What did DMV need to do?

• This is not a process agility problem as the process isn’t changing

• But it is an agility problem – a problem of decision agility

• To solve it we need to see it as a decisioning problem

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San Diego, CA

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Agenda


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San Diego, CA

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What is business agility?

The ability to detect and respond to opportunities and challenges in a turbulent and quickly changing environment

Decide Response

Communicate Decision

Act/Respond

Detect

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Agility comes in different forms

Decision Agility

Organizational Agility

Process Agility

Changing core processes means organizational and

decision change

Decisions can change frequently even in stable

processes

Many process changes require decision changes

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Why is decision agility starting to matter more?

• Legacy systems need agility too• Decision Services are critical in SOA• BPMS reaching core processes• Regulation and compliance• Self-service• Multi-channel reality

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October 17-18, 2006

Hotel del Coronado,

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Agenda


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What is a decision service?

• A self-contained, callable service with a view of all the conditions and actions that need to be considered to make an operational business decision

• A service that answers a business question for other services

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CustomersEmployees

PartnersSuppliers

How do I build a decision service?

IT Staff Business Expert

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If (vehicle’s age is between 0 years and 8 years) and (policyholder’s age is between 21 years and 60 years) and (policyholder’s number_of_claims does not exceed 3) Then set policyholder’s case to “STANDARD”

If order’s purchaseDate is earlier than January 1, 2004 then print(“Your purchase is no longer eligible for return”).

If customer's debt exceeds customer’s assets then set the approval_status of customer’s application to Declined

What are business rules?… The way you conduct business• Logical statements of

what to do (what actions to take) in different distinct situations

• All companies have rules about how to do business– In lines of computer code– In manuals and memos– In the employees’ heads– In external regulations– …

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Business rules are spread all over …but they can be managed

Experienced Personnel

RegulationsPolicy Manuals

Legacy Systems

Managed Business

Rules

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San Diego, CA

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How does this drive agility?

Explain what happened Rapidly add new checks

Automated yet agile responseBusiness control

Help business and IT collaborateAnalyze and test approaches

Communicate new rules effectivelyManage change

Decide Response

Communicate Decision

Act/Respond

Detect

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Calculating ROI from Agility

The degree of change over time. – The number of times over a particular period

that the business reinvents itself to adapt to a market or that the regulations with which it must comply are changed

The ability to adapt to change. – A number that states the company’s ability to

react to the need for change over timeRelative value of change.

– The amount of money made as a direct result of changing the business or lost as a result of failing to change.

After David Linthicum

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San Diego, CA

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Agenda


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Decision Services are additive

• Enhance legacy applications• A class of Business Service in SOA• Simplify and enhance BPM• Resolve some multi-platform issues• Enhance multi-channel solutions

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Decision Services and SOA/BPM

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BPMS and Decision Services

• Risks without Decision Services– Business rules re-buried into the “new process”– “New process” becomes complex– Inconsistency of business rules is likely– Potential compliance issues

• Benefits of Decision Services for BPMS– “New process” is simplified– Rules are visible and managed– Decision Services re-use outside BPMS– Process & rule changes are independent

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Hotel del Coronado,

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Agenda


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The project

• Adopted Business Rules Software• Key objectives

– Don’t require complete rewrite of legacy– Usable by non-technical analysts – Comprehensive control and testing of rules– It must run quickly and scale on all platforms– Work with both systems

• Built a decision service

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October 17-18, 2006

Hotel del Coronado,

San Diego, CA

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The Phases

1. Vessels (i.e. boats and other watercraft)• Lower volume transaction• Released to production in March of 2003.

2. Vehicle Registration Penalties• Never implemented in legacy system due to limitations• 60,000-75,000 business transactions per day• Released to production in April of 2003

3. Autos, commercials, trailers, motorcycles, off-road vehicles• Over 2,000 rules • Several hundred thousand business transactions per day.• Released to production in February 2005

4. Vehicle Registration Fee Calculator on the Internet • The system went live on June 30, 2005• See how much it will cost to register in California• https://mv.dmv.ca.gov/FeeCalculatorWeb/index.jsp

https://mv.dmv.ca.gov/FeeCalculatorWeb/index.jsp

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San Diego, CA

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DMV Rule Mining

• Business Sources– Separation of fee-specific rules from existing

legislation and DMV business policies– Inconsistent interpretation of rules– Translation of documentation into rules

• Technical Sources– Business rules embedded within the technical

rules of the current fee programs– Multiple platforms / multiple interpretations– Program documentation not current – Translation of program code into rules

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Where are the rules - exampleVehicle CodeApplication for Number: Fees

9853. (a) The owner of each vessel requiring numbering by this state shall file an initial application for a number with the department or with an agent authorized by the department on forms approved by the department. Such forms shall be prepared in cooperation with the Department of Boating and Waterways. The application shall contain the true name and address of the owner and of the legal owner, if any, and the hull identification number of the vessel as may be required by the department. The application shall be signed by the owner of the vessel and shall be accompanied by a fee of nine dollars ($9), in addition to the fees required under subdivision (b), except that an owner of a vessel registered outside this state who is submitting an application for registration in this state shall pay a fee of thirty-seven dollars ($37), in addition to the fees required under subdivision (b).

(b) (1) Whenever the fee for original registration of a vessel becomes due between January 1 and December 31 of any even-numbered year, the application shall be accompanied by a fee of five dollars ($5), in addition to any other fees that are then due and payable.

(2) Whenever the fee for original registration of a vessel becomes due, or is filed with the department, between December 1 and December 31 of any odd-numbered year, the application shall be accompanied by a fee of ten dollars ($10) in addition to any other fees that are then due and payable.

Amended Ch. 951, Stats. 1990. Effective January 1, 1991. Operative July 1, 1991.Amended Sec. 3, Ch. 257, Stats. 1997. Effective August 11, 1997.

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Where are the rules - example 2Registration Manual

1.300 Fees

Vessel Fees

(VC §§9852.7, 9853, 9853.5, 9855. 9860-9863)

Original Application $ 9

· Penalty $ 4

Nonresident Application $37

· Penalty $18

Duplicate $15

Renewal (Biennial renewal) $10

· Penalty $ 5

Repossession $15

Transfer $15

· Penalty $ 7

Transfer on Death Beneficiary $10

1.310 Computation of Fees and Penalties (VC §9559)

No single fee or penalty shall be less than $1. When any registration fee, weight fee, or penalty computation results in a fraction of a dollar and the odd-cents amount is:

· $0.49 or less, round down the the full dollar (for example, $ 22.35 = $ 22).

· $0.50 to $0.99-the fee increases to the next full dollar (for example, $ 22.60 = $ 23).

1.325 Penalties (VC §§9552 - 9554.5, and 9561)

When the fees due are not paid as required, penalties are assessed on the registration, vehicle license (VLF), and weight fees. The exceptions are:

· The fees for an application for original California registration of a new vehicle may be paid within 20 days of the date fees become due without penalty.

· Effective January 1, 1999, a California dealer or lessor-retailer submitting an application for registration or transfer of a used vehicle has 30 days from the date of sale to submit the fees without penalty. (VC §9553c,1) This includes nonresident vehicles and vehicles on which the registration expires while in the dealer inventory. Refer to Registration Manual §1.331 for additional information.

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The end result

ruleset VesselOriginalFeesRS is{

vslOriginalFee is a money initially $0.vslOriginalPenalty is a money initially $0.

rule CheckOriginalRenewal isif feeResult.newExpirationDate.year > feeVehicle.currentExpirationDate.year then renewal = true .

rule AssignOriginalNonResidentPenaltyFee073 isif (vesselNonResident and dateFirstOperated > '07/01/1991') then {

vslOriginalFee = getFeeAmount ("073", currentExpirationDate), assignFeeAmount ("073", vslOriginalFee),

vslOriginalPenalty = vesselRounding (vslOriginalFee * 0.50)}

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Agenda


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Results

• Used Blaze Advisor to automate the vehicle fee calculation

• Rules are created for all types of vehicles, stored in central repository

• The application is available state-wide to 167 offices

• 2,100 rules for various vehicle types• 60,000 - 75,000 fees transactions per day• Fee calculation rules easily updated by

non-technical business people

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Key Benefits

• Organized documentation of fee rules• Separation of business rules from

technical requirements• Implementation in business language• Managed, demonstrable compliance• Rapid response to policy changes• Implemented expedited legislation for

Penalty fees• Better visibility into the rules that are in

effect

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ROI from Problem Resolution

• On first day of production, there was a transaction that caused an error. DMV could:– Identify the problem rule– Make a change to the rule application– Perform a benchmark re-test of the application– Assemble the deployment files– Deploy the application back into production

• In about 15 minutes v 2 to 8 hours• 87%-97% reduction• “The Fee Computation System is going to

be the easiest system to modify”

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Agenda


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What’s the basic value proposition?

• Reduce business costs– Reduce time/resources to complete critical processes – Reduce costs/time in maintenance of systems– Reduce risk and costs of fines or legal action

• Improve decision-making– Express policies, procedures, regulations clearly– Consistently apply business decisions– Let business users understand and control operations

• Minimize lost opportunity costs– Allow rapid business change– Introduce products faster

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Which would you rather maintain?ADD #2,+VCSDTFPD,RESULT=DTIN4AADD #1,+ZW0DTFPD,RESULT=DTOUT4ACALL Z#SCMPDT,0,0,0,0,0,P2=DTIN4A,P3=DTOUT4AADD #2,+VCSNEXPD,RESULT=DTIN5AADD #1,+ZW0NEXPD,RESULT=DTOUT5ACALL Z#SCMPDT,0,0,0,0,0,P2=DTIN5A,P3=DTOUT5ASUB (ZW0NEXPD,#1),(ZW0DTFPD,#1),RESULT=ZW0#DAYS,PREC=DDDDO 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,ZL12000ELSE ADD ZW0NEXYR,ZL01900ENDIF

while (the newExpirationDate of feeVehicle < the dateFeesReceived of feeVehicle + 90 days) do {

the newExpirationDate of feeVehicle = the newExpirationDate of feeVehicle + 2 years

}

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Lessons Learned

• Use business to create the rules NOT the current technical solution

• Define your terms diligently• Minimize your procedural logic• Have a clear business rules methodology• Don't underestimate change in apparently

"fixed" rules• Use templates to control rules editing• Consider how you might re-use rules

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Some Quotes

• “I’m not a programmer, and I wasn’t familiar at all with rules-based processing. But it’s been very easy to work with…much easier than conventional programming languages. I coded a fair number of the rules myself and it only took our five-person team a little over a week to code all the rules.”Senior Analyst

• “Replacing full systems is high risk, time-consuming and technically difficult. In this project we were able to isolate our highest ROI component and renovate it”Project Manager

• “We have always had rules, but they have been in written laws, procedure manuals and application code. Before, we would give our information systems group a concept and they would go off to analyze, design and code it. Sometimes we got what we wanted and sometimes it was not quite clear. But now we can go in and make changes ourselves.Project Leader

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Remember business people do not want to “change rules”• So rule maintenance must be:

– A business function– Familiar– Integrated– Secure & controlled

So you business-types want to be able to change your business rules?

No, I want to relax my underwriting policy

I want to be able to promote a new product combination

I need to add the new regulations

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More and more decisions can be automated

Complexity

Value

Automated

Decisions

Expert

Decisions

Manual Decisions

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You are a good candidate for decision services if…• You do business in a heavily regulated environment• You need to change business policies, procedures or

products frequently• You have enterprise consistency concerns• Business people in your company want or need to make

changes to business systems faster or more conveniently• You have a competitive strategy that calls for differentiated

business decisions and practices• Your IT department has a significant application

modification backlog• You need a platform to “operationalize” BI• You have processes with complex decisions

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Thank YouThank Y

James TaylorVice PresidentFair Isaac Corporation

Contact Information:(408) 535 [email protected]://www.edmblog.com

ou

mailto:[email protected]

http://www.edmblog.com/

BPIS2006.ppt

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