Computerworld banking-on-the-mainframe

2/23/2012
1
© 2012 IBM Corporation
IBM Business Process Management
1
2012 … Key trends we are seeing in banking IT solution architecture
 Limited success in re-hosting mainframe applications due to risk and cost (versus “claims”)
 Banks are tired of “open system” banter – many vendors are not “open” (nor close to it)
 Banks pursuing replacement with ISV solutions and/or enhancing existing applications
– Interoperability with existing assets and extensibility (mobile, social, multi-channel)
– Transformation of existing solutions to support flexible, extensible and manageable solutions
 Focus on layered architectures to support adaptable functions balancing cost and risk
– Use of Business Process Management to support orchestration of existing solutions
– Use of Business Rules and Decision Management to externalize decision points from applications
2
 70% of corporate data
 75% of the business logic that corporations run
on today
 30 billion transactions/day valued at over $1
trillion/week
 213 million messages per day on z/OS in the
banking industry alone
 $5 trillion of core System Z applications with
estimated replacement costs of $20 trillion
Contrary to “popular” belief –
The mainframe continues to be the foundation for banking worldwide ….

2/23/2012
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3
Evolution of Banking Applications
“Green screen”
3270/VT
Time
Functionality
Monolithic/”Legacy”
Hybrid
COBOL/PL1 application
“Green Screen” and
custom interfaces
Messaging (MQ)
Multichannel Interfaces
(Java, Social, Mobile)
Business Services
(BPM/BRMS/Other)
COBOL/PL1 application
Middleware
(ESB, JMS,JEE, WMQ)
COBOL/PL1/Java
application
DBMS
IMS/DB2/VSAM
DBMS
IMS/DB2/VSAM
DBMS
IMS/DB2/Other
Layered Architecture
1980 1990 2000 2010
4
A Representative Banking Environment

2/23/2012
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5
CICSCICSCICSCICS
IMSIMSIMSIMS
WASWASWASWAS
Executive
Management
Customer
Service
Risk Management
& Fraud Detection
Teams
Finance
and Ops
Account
Administration
2
5
4
CustomerCustomer
CareCare
CustomerCustomer
CareCare
DepositsDeposits
LoansLoans
CreditCardsCreditCards
DepositsDeposits
LoansLoans
CreditCardsCreditCards
CoreSystemsCoreSystemsCoreSystemsCoreSystems
Campaign&Campaign&
CaseCase
ManagementManagement
Campaign&Campaign&
CaseCase
ManagementManagement
1
3
6
1) “Customer initiates Account
Opening“
2) “Account Opening Service
retrieves customer/product
data from repositories”
3) “Assess financial risk
associated with the
customer for this account”
4) “Customer Care process is
triggered so that the bank
staff can make the right
decisions”
5) “Account is created in the
Product Processor”
6) “Account information
returned to the customer”
Traditional Process Management in Banking
6
CICSCICSCICSCICS
IMSIMSIMSIMS
WASWASWASWAS
Executive
Management
Customer
Service
Risk Management
Teams
Finance
and Ops
Account
Administration
Customer Benefits:
 Ease of z/OS assets reuse
 Reduction in manual work & errors
 Optimization of z/OS resources
 Faster/consistent issue resolution
 Enhanced usage of process
 Easier to manage the business
 Process integrity & stability
1) Automated workflow/decision making
2) Reduce errors/improve consistency
3) Leverage existing systems/data
4) Monitor for events/initiate actions
5) Real-time visibility/process control
BPM Enables Asset Reuse and Future Adaptability of Solutions

2/23/2012
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Enhancing/Extending Mainframe Assets with BPM
Design and deploy business
processes that interact with CICS,
IMS, VSAM and DB2 zOS resources:
 Long-running workflow processes with DB2 z/OS
 Straight-thru (integration-centric) processes with
CICS, IMS, DB2
 New Web-based UI for business users front-ending
WPS for z/OS and CICS
 High Availability, Global Operations, Disaster
Recovery and Backup
 Significant workloads - 100 – 10,000 users
BPM on
System z
Reports /
Analytics
Business
Modeler
Graphical
Implementation
User Portal
/ Forms
8
 Unified BPM platform for Windows, AIX, Linux
and zEnterprise
 zOS version leverages co-location with IBM
System Z programs for superior performance,
scalability, and access to data
 zOS version enables high volume process
automation with greater availability and
qualities of service
IBM Business Process Manager V7.5 for z/OS highlights
 Built-in SOA components for extensive enterprise-wide service integration and orchestration
 Full compatibility with the latest version of IBM WebSphere Process Server for z/OS
 Flexible deployment of process applications originally created with IBM WebSphere Lombardi Edition for Linux on
System Z or other platforms
 In-process rules authoring based-on WebSphere ILOG JRules technology
 Streamlined installation and configuration of BPM within IBM WebSphereApplication Server on z/OS
IBM Business Process Manager

2/23/2012
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9
Real Results
zEnterprise allows multi-tier application integration
Automatically prioritizes and routes work
Monitors critical business events and initiates actions
Unmatched scalability and 85%-100% utilization
Client Pains
 Inflexible systems inhibit responsiveness
 Difficult to reuse existing business logic
 Development backlog with change management
 Siloed resources prevent sharing
 Lack of integration
 Platform/language specific skill sets
 Limited sharing and reuse of assets
BPM and the Mainframe – A Client Example
US-based multi-national bank turned to IBM to implement a new IT
solution to automate and integrate data-driven processes
10
Traditional Decision Management (DM) in Banking
Challenges for a Change Request
• Changes are costly, resource & time-
intensive
• Rules and events are hidden in code
(COBOL/PL1)
• Most changes require programming costly
• Lack of consistency
• No central management of rules/events
• No reuse of rules/events
• Limited ability to audit and govern assets
• Gap between business analysts & IT
administrators
• Lack of business-oriented vocabulary
• Limited tools to support business users
• Rules/event knowledge fades over time
• Limited ability to test and simulate
• Difficult to localize for different geos
Spreadsheets
Databases
Manual
Processes Monolithic
Applications
Mainframe
Can get quite large
Are scattered
everywhere
Are subject to change
01 TRANSACTION-MSTR-FLE.
03 TRNS-CNBR-ASGND PIC 9(10).
03 TRNS-CACCT-CD PIC 9(5).
03 TRNS-AGE PIC 999.
03 TRNS-ST PIC XX.
03 CUST-STATUS PIC XX.
03 CUST-AVAIL-CRSC PIC 9999.
03 CUST-ASK-AMT PIC 9(8)V99.
03 TRNS-ADDR.
05 LINE1 PIC X(25)
05 LINE2 PIC X(25).
05 LINE3 PIC X(25).
03 CUST-INFO OCCURS 5 TIMES.
05 MSG-LINE1 PIC X(30).
05 MSG-LINE2 PIC X(30).

2/23/2012
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11
Decision Management System
Rules/Events
are
monitored &
managed
Rules/Events
are deployed
& executed
Rules/Events
are extracted
& stored
Decision Management (DM) Enables Adaptable Solutions
Spreadsheets
Databases
Manual
Processes Monolithic
Applications
Mainframe
Repository
User Tools
Engine
12
WebSphere
Decision Server
BusinessDecisions
Versioning & Governance of Decision Logic
@
Call Center
Internet
Agency
Decide Act
IBM WebSphere Operational Decision Manager
v 4.3v 4.3
----------
------
------
v 4.4v 4.4
----------
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v 4.5v 4.5
----------
------
------
v 1.0v 1.0
----------
------
------
v 1.1v 1.1
----------
------
------
v 1.2v 1.2
----------
------
------
Detect
Pattern Identification
2 web quote requests & 1
direct contact in 3 days:
Trigger agent call back to
assist in loan origination
Same name with different
addresses on call-in & web
request: Trigger inquiry
Has Mortgage
Propose new loan terms
Existing Customer:
Offer 5% discount
Add Zipcode:
Determine home value
Win
Linux AIX
zOS
WebSphere Decision Center
Decision Management (DM): Business Rules and Business Events

2/23/2012
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13
Rule Development and Management Rule Deployment
Rule Designer
Application Developer,
Architect
Business Analyst,
Business Manager
Development
Rule
Management
Decision Center
Rule Execution Server
on WAS for zOS
Decision Center
Repository
zRule Execution Server
for zOS
COBOL code
Generation
COBOL Management
WebSphere Decision Server for zOS: Execution Options
14
• Create an BRMS-based cross-sell/up-sell
solution to provide decision support throughout
generation of personalized & qualified offers
• Rules centralized and deployed Cross-channel
(branches, call centers, etc.) and cross-product
• Agile solution – business users implement and
deploy changes when required
Challenge
•Improved client relationship – acquisition,
retention & wallet-share
•Accelerated ROI
• Increased revenues - $14M in approved
bookings in 2.5 months
• Significantly increased cross-sell offers:
from 13% to 40%
• Significantly increased client offer
acceptance from 3% to 20%-30%
•Instant updates of rules fully managed by
business users – changes are implemented
with greater accuracy and speed
Solution
• The company was missing revenue by not
being able to present the right offer at the right
time when a customer was on-line
• Decision logic was scattered and inconsistent
across channels
• Poor customer experience: branch staff would
sometimes try to cross-sell to clients who did
not qualify for the additional credit, resulting in
negative client experience
One of the World’s Largest Financial
Service Providers Dramatically
Increases Revenue through effective
Cross-sell/Upsell
Business Benefits
Decision Management and the Mainframe – A Client Example

2/23/2012
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15
Collocated Applications on the Mainframe
 Reduced security overheads
eliminates need for
encryption/SSL
 Easier management of
workloads
 Enables multiple security
options
 Extremely high throughput as
RRS provides more efficient
transaction syncpoint
coordination over XA
 Reduced complexity with
fewer points of failure, fewer
monitoring points and reduce
overall time to resolution
$5.36
$3.15
NOW: $2.18
BEFORE: $8.82
-39%
-41%
-30%
zAAP/zIIP Sub-capacity
Pricing
Z196 and Integrated
Workload Pricing
WAS/DB2 in General
Purpose Engines
16
Summary
 Customers expect banks to innovate without compromising application resiliency/performance
 Banks continue to view mainframes as a key platform alternative for applications/middleware
 Banks are adopting layered architectures building on current IT solutions on mainframes to
provide cost management and to reduce the risk involved in system replacement/rehosting
 A layered approach enables rapid implementation in response to internal/external requirements
 BPM and DM layers enhance/augment existing solutions while preserving mainframe QoS
 Layered architectures enable multi-channel solutions which interact with business services

2/23/2012
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References
 Modernizing Core Banking Systems
http://www.ibm.com/developerworks/websphere/techjournal/0809_col_simmons/0809_col_simmons.html
 Evolving approaches for connectivity and core banking systems
 Core banking transformation worst practices and other scary stories
 IBM Smarter Banking
http://www-01.ibm.com/software/industry/banking/
 Combining Business Process Management and Enterprise Architecture for Better Business
Outcomes
http://www.redbooks.ibm.com/abstracts/sg247947.html

Computerworld banking-on-the-mainframe

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