Large companies rely on their Enterprise Resource Planning (ERP) and other supply chain systems to manufacture, distribute and manage the products their customers need. The behavior of these operational systems is critical to how a company treats, and is perceived by, its customers, its partners and its suppliers. Yet these systems are often plaqued by manual interventions that delay processes, by hard to change constraints and thresholds and by problems with local exceptions to global processes. This session will show how using Decision Management to apply business rules and analytic technology can upgrade your ERP to be smarter and more agile. Illustrated with case studies. Webinar recording available https://decisionmanagement.omnovia.com/archives/73655

1. Smarter ERP with
Decision
Management
James Taylor,
CEO

2. 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

3. AGENDA
1 2
The challenges
of enterprise
applications
Decisions in
Enterprise
Applications
3
Introducing
Decision
Management
4 5 6
The power of The role of Wrap and next
business rules anlaytics steps
management
systems

4. The one slide you need
Enterprise Applications are too dumb
You need Enterprise Applications that
Are agile and transparent
Empower a flat organization
Use data to act an analytically
So
Externalize decisions
Use a business rules management system
Apply analytics
©2011 Decision Management Solutions 4

5. The challenges of
enterprise applications

6. “Onceto getpour electronic concrete, it’s
you
hard
Shell
out.
”
“ There is no such thing as a
temporary solution. Don’t put in
things you don’t want to keep.
Unilever ”

7. Enterprise Applications
Wait Report
rather than act but don’t learn
Built to last,
BOSS not to change
Escalate rather Local exceptions
than empower Global standards
©2011 Decision Management Solutions 7

8. They must make more decisions
Manual Not Made
Before Managed
After Not Made
Manual
Managed
New
Larger boxes represent more decisions, by volume
©2011 Decision Management Solutions 8

9. Decisions in
Enterprise
Applications

10. What is a decision?
Data is gathered, considered
A choice or selection is made
That results in a commitment to action
©2011 Decision Management Solutions 10

11. Different kinds of decisions
Type
Strategy
Tactics
Operations
Low Economic impact High
©2010 Decision Management Solutions 11

12. Decisions in Enterprise Applications
Handled inconsistently
Different channels, different outcomes
Handled manually
Worklists and escalation
Policy manuals and “cheat sheets”
More inconsistency
Handled only at a macro level
Everyone treated the same
Ignored
©2011 Decision Management Solutions 12

13. What decisions could they make?
They could
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
©2011 Decision Management Solutions 13

14. Case: Materials Master
Single worldwide SAP instance to standardize processes,
ensure consistent customer treatment
Some products are dangerous, some are complicated, some
can’t be sold in some places
300,000 material masters with 50 supply chains
“Validate material master”
Results
Eliminated need for detailed knowledge in operations
Cycle time dropped from 6 weeks to 1.6 days
Rework down by 98%, waste down by 95%
Customer sat up 90%, on-time delivery up 90%
©2011 Decision Management Solutions 14

15. Introducing
Decision
Management

16. 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
©2011 Decision Management Solutions 16

17. Builds on Enterprise Applications by
Increasing agility and transparency
Giving the business more control
Reducing complexity and manual intervention
Putting your data to work
Managing uncertainty and risk
©2011 Decision Management Solutions 17

18. 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
©2011 Decision Management Solutions 18

19. 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
©2011 Decision Management Solutions 19

20. Why manage decisions independently?
Faster, easier, independent changes
Coordination of decisions across channels
Simpler more customer-centric processes
Higher employee productivity
Apply analytic insights everywhere
Continuous improvement
Create systems that handle uncertainty
©2011 Decision Management Solutions 20

21. Case: Country specific Exceptions
Major manufacturer had a single process
design for supplier onboarding
Many country-specific variations in required
data, allowed values and formats for suppliers
Externalized “Validate supplier” decision and
used rules to manage logic
Results:
Common process
Reduced time to onboard a supplier by 50%
Still supported local variations.
©2011 Decision Management Solutions 21

22. The power of
business
rules
management
systems
©2011 Decision Management Solutions
22

23. What are business rules?
“… statements of the actions you
should take when certain
business conditions are true.”
©2011 Decision Management Solutions 23

24. 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
©2011 Decision Management Solutions 24

25. Business rules drive decisions
Decision Regulations
Policy
History
Experience
Legacy
Applications
©2011 Decision Management Solutions 25

26. 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);
}
}
}
©2011 Decision Management Solutions 26

27. 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
©2011 Decision Management Solutions 27

28. 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”
©2011 Decision Management Solutions 29

29. Alternatives to business rules
Explicitly coded within application or database
Pros Cons
Familiar to IT IT department must be involved in
any change
Simplifies development and testing Little re-use of logic across multiple
processes decisions
Parameterized in tables or configuration files
Pros Cons
Decreases cost of change Use of parameters can decrease
readability
No business/IT collaboration Assumes kinds of changes can be
exhaustively specified
©2011 Decision Management Solutions 30

30. Or use business process management?
Age<21 No Class I or II sports
Accept low-risk
applicant
Class II sport
Previous Heart Attack, Decline high-
Existing Cancer risk applicant
21<=Age<50
Class I sport
Process
medium-risk
Good Medical Record applicant
Age>50 1 or fewer Claims Multiple Claims
New Customer
…
Long-standing Customer
©2011 Decision Management Solutions 31

31. Decisions make for simpler processes
Low risk
Process low-
risk applicant
Medium risk
Process
Determine
medium-risk
applicant type applicant
High risk
Process high-
risk applicant
Class I Class II New #
Age sports sports Heart Attack? Cancer? Customer? Claims Action
<21 N N Low Risk
<21 Y High Risk
<21 Y N Medium Risk
21 - 50 Y High Risk
21 - 50 Y High Risk
21 - 50 N N Medium Risk
>50 Y High Risk
>50 N <2 Medium Risk
>50 N >1 High Risk
©2011 Decision Management Solutions 32

32. When should you rules?
Decision is based on many policies or
regulations
The logic involved changes often
The logic is complex or has complex
interactions
You want business users to truly participate
and collaborate.
You need to apply analytics
©2011 Decision Management Solutions 33

33. 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
©2011 Decision Management Solutions 34

34. Case: Identifying failures
Industrial parts manufacturer
Lots of different models each with their own failures
and symptoms
Regular updates to models plus new symptoms
identified for failures
“What failure do these symptoms imply” decision
Results:
Captured expert knowledge
Improved leverage of experts
Dramatic decrease in time to add new models
©2011 Decision Management Solutions 35

35. The role of analytics

36. “ Analytics simplify
data to amplify its
meaning
”

37. Without analytics automation is limited
©2011 Decision Management Solutions 38

38. Analytics power operational decisions
How do I…
prevent this customer from churning?
convert this visitor?
acquire this prospect?
make this offer compelling to this person?
identify this claim as fraudulent?
correctly estimate the risk of this loan?
It’s about making better operational decisions
©2011 Decision Management Solutions 39

39. With analytics automation expands
©2011 Decision Management Solutions 40

40. Different kinds of analytics
Business Intelligence Data Mining Predictive Analytics
X X X
X X
X X X
X X X
X X X
X X X
X X X
X XX X
X X X XX X X X
X X X XX X
X X X
X X X XX XX X
X X X X X
X X
X X X XX X X
X
X X XX X
How do I use data to Who are my How are those
learn about my best/worst customers likely to
customers? What customers? How do behave in the
has been happening I turn my data into future? How do they
in my business? rules for better react to the myriad
decisions? ways I can “touch”
them?
Knowledge - Description Action - Prescription
©2011 Decision Management Solutions 41

41. Insights must drive action
*
*
** * ** *
* * *
Predictive models
* * * *
**** * * *
*
*
** * don’t DO anything,
* * * * ** *
*
*
* * * *
*
* * ** *
they just make
*
* * ** * *
* predictions.
©2010-2011 Decision Management Solutions 42

42. Insights must drive action
Business Rules
make analytics
actionable
*
** * ** *
* * * *
* * * * **
* * **
* * * ** * * * * * * *
* **
*
* *
*
* * ** *
* *
* * ** * *
*
Analytic insights are deployed
via a BRMS built in a Decision
Service, making them
actionable.
©2010-2011 Decision Management Solutions 43

43. Wrap up
and next steps

44. Enterprise Application 2.0
Agile and
transparent
Empower a flat
organization
Uses data to act
analytically
©2011 Decision Management Solutions 45

45. Action Plan
1 Adopt business rules management
2 Empower don’t escalate
3 Eliminate manual reviews
Standard processes, custom
4 decisions
5 Inject analytic insight into operations
©2011 Decision Management Solutions 46

46. The one slide you need
Enterprise Applications are too dumb
You need Enterprise Applications that
Are agile and transparent
Empower a flat organization
Use data to act an analytically
So
Externalize decisions
Use a business rules management system
Apply analytics
©2011 Decision Management Solutions 47

47. 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
©2011 Decision Management Solutions 48

48. Thank you!
James Taylor, CEO
james@decisionmanagementsolutions.com
www.decisionmangementsolutions.com/learnmore