Enterprise Decision Management - a Weblog

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January 31, 2007

Categories...

I got a request today to create a specific feed for a specific category. If you could like to request a category feed or feeds, let me know here.

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Posted by James Taylor at 3:20 PM | Comments (0)

EDM Could Be a Fix for the Aging Insurer Population

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Posted by James Taylor at 10:13 AM | Comments (0)

January 30, 2007

New white paper on heatlhcare fraud

Montgomery Research just published the new Healthcare Technology Report and it includes a white paper by me - Eliminating Healthcare Fraud Through Technology. You may need to register to read it.

Don't forget there is a Fraud section and a Healthcare section on this blog.

Technorati Tags: fraud, healthcare, montgomery research

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Posted by James Taylor at 12:34 PM | Comments (0)

January 29, 2007

Two more podcasts

Ian has been recording podcasts with some of the folks speaking at InterACT next month and two more have been posted.

The first and explores how banks can share and deepen customer insight, and how Fair Isaac's evolving products for financial services will improve banks' ability to build their institutions around the customer. The second discusses how some Fair Isaac Insurance customer who have decided to be "among the best" †those that are gaining share at the expense of their competitors while maintaining high levels of profitability - have gone about it.

To sign up to attend InterACT, please click here, and remember our special discount for blog readers.

You can subscribe to the Decisions Podcast Feed at this URL.

Or download the files here:

• 21st Century Banking and the Fair Isaac Product Roadmap (10.5MB, mp3)
• Deciding to the Best (6.6MB, mp3)

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Posted by James Taylor at 2:46 PM | Comments (0)

Does everyone even WANT to write software?

Like many of you, I suspect, I found Awaiting the Day When Everyone Writes Software (you may need to register) in the New York Times interesting. While I hate to criticize someone like Charles Simonyi (who has brought to market much more successful software than I have), I find the thrust of his argument disturbing.

The article describes programmers bluntly:

Programmers don’t know what a computer user wants because they spend their days interacting with machines. They hunch over keyboards, pecking out individual lines of code in esoteric programming languages, like medieval monks laboring over illustrated manuscripts

I think this is a little harsh, though I agree there is a problem with programmers, or more accurately with our expectations of them. Why should we assume they know how to make the computer do what we need and that they can understand our business? Is this even a reasonable expectation? Simonyi's idea of intentional programming "in which programmers would talk to machines as little as possible. Instead, they would concentrate on capturing the intentions of computer users" does not, to my mind, alter this core problem. No matter how good the abstractions, the assumption that programmers should implement the logic that represents the business seems to me to be flawed - programmers and business people have a different perspective and this should be exploited not bridged. You want programmers to apply their unique skills (abstraction, technology know-how etc) while allowing business users to manage how the system implements their business. Now perhaps his software will be so good that "everyone writes software". But that assumes that business people want to write software when, in fact, most business users don't want to write code (or maintain rules for that matter).

So if business users do not want to write code, and programmers are challenged to write the code that embodies the way the business "thinks", what's the answer?

I saw an article on SandHill.com recently (Unraveling the Mystery of Software Development Success) that showed the project failure trend graph that I have reproduced above. As you can see, the rate of failures due to all causes is declining steadily and converging on the failures due only to problems with requirements. Pretty soon, it appears, all the problems with be with requirements. The problem then is not that programmers cannot write bug-free code in the general case but that it is hard to write code that correctly implements requirements.

My own experience is that it is not requirements like "complete transactions in n ms" or "support a thin client" that cause problems but those like "ensure transactions are compliant with federal law" or "apply current marketing promotions correctly". The reason these cause problems is that they are not really requirements! They are rules and using business rules can fix this requirements mess. In addition, it seems to me that an issue that must be addressed is that of application maintenance - the ongoing changes that are needed to the logic in a system as the business (and the world) changes. It is this constant editing and patching that destabilizes code but the proper use of existing technology allows much more effective management of application maintenance.

Back to the article. It goes on to say:

Intentional programming has three great advantages: The people who design a program are the ones who understand the task that needs to be automated; that design can be manipulated simply and directly, rather than by rewriting arcane computer code; and human programmers do not generate the final software code, thus reducing bugs and other errors.

If these are the things that worry you, don't wait for Mr Simonyi.

1. Business rules technology allows those who understand the business to write and, more importantly, manage the rules within their information systems.
2. Business rules can be manipulated simply and directly, especially when templates are used to control the interact and make it fit the business user's mindset, and no arcane code is required.
3. As someone once said, "there is only one kind of error and it's a human error" - humans will write the software that generates the final code so it too will have bugs.
   As noted above, most of the problems in systems are now caused by issues of implementing rules and these are not solved by generation of code.

The systems you have today have problems but plenty of technology exists that already works and is ideal for building systems that are "smart enough". Maybe I should write a book on this...

Technorati Tags: business agility, business rules, intentional software, maintenance, New York Times, requirements, Simonyi, software development, programmers

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Posted by James Taylor at 12:30 PM | Comments (0)

January 26, 2007

Book Review: Smartsourcing

I just finished Tom Koulopoulos's book Smartsourcing - Driving Innovation and Growth Through Outsourcing. I first met Tom when he spoke at a conference I attended and I blogged about his sessions - The Road to Agra and Smartsourcing. He also writes a blog .

The book takes a slightly different tack on how outsourcing should be viewed and how companies should use it. The overall effect is a little like that described by Hagel and Seely-Brown in The Only Sustainable Edge, but Tom writes a very readable book covering three key trends, all described cogently and without too much MBA-speak. In particular he does a good job contrasting outsourcing and smartsourcing - there is a focus on differentiation over commoditization and on strategic excellence combined with agility (one of my favorite topics). Anyway, the book outlines three themes:

• Movement to external economies of scale
• Shift from ownership to strategy
• The evolution of the placeless job

The overall approach can best be summarized by one quote from the book where he says that an "organization's intellectual resources are maximized because they are not distracted by nonessential work". Now this quote resonates with me, of course, because a big part of Enterprise Decision Management or EDM is about avoiding distracting people with nonessential work through automation. But let's consider each area in turn.

Firstly, the movement to external economies of scale. Describing this as an economy of scope, the book outlines how this requires a shared service that performs many business functions and uses ADP as an example. Later in the book he talks about Business Service Providers as a class of company that this trend will cause to come into being. Clearly these kinds of companies need to expose decisioning so that their clients can be engaged. This ability of outsourcers to expose the decision points within their processes for their clients to customize is key to the kind of highly differentiated yet still economical services Tom foresees.

Secondly he describes this "shift from ownership to strategy" in which you control the strategy while lots of partners own the pieces. To impose a strategy on a diverse and complex ecosystem such as the one Tom describes requires EDM. I have blogged before about how EDM gives you strategic control while optimizing high-volume operational decisions. No matter how strong the bonds of trust are, something Tom discusses at length, the speed of modern business requires that many of the decisions that are needed day-to-day be automated. Only EDM gives you strategic control and real-time decisioning.

Thirdly he discusses he evolution of the placeless job and it is here that EDM seems particularly important. Tom says "The movement of work requires us to transport not only the raw materials, ..., but also the rules, judgments and intellect that are necessary". Well perhaps, but only if we assume that all the rules, judgment and intellect are peopleware. To the extent that we can make systems "smart enough" we may be able to move the decision-making rules around as easily as data. This idea of moving rules and knowledge is key. Indeed in one of the few places I disagree with Tom, he argues that absent a Star Trek-like transporter that let's us beam people around this moving of rules and knowledge will remain impossible. To the extent that this knowledge can be embedded in EDM systems, clearly this is not so.

The book also outlined a capability curve, dividing up processes into 5 categories:

• Dangerous Danglers
  Get rid of these processes at once
• Marginal Minority
  Often a problem as they require time to develop expertise. Staff turnover exacerbates this but decision automation can help.
• Mass of Mediocrity
  The majority of your processes
• Edge of Excellence
  The ones you are good at
• Peak Performance
  Core competencies (you hope)

I liked this and I believe that EDM can help with all but the first - even then it can help the companies you outsource your dangerous danglers to :-)

A number of other useful points came up as I read the book:

• Tom talked about the flattening of the world (global communications, bandwidth, economic infrastructure) and how this means that an integrated value chain is not so useful. Tom talked about a more dynamic, digital value network.
• Tom discussed the importance of uncertainty especially as the economics of speed replace the economics of scale. He points out that uncertainty chews up bandwidth and slows decision-making. Indeed, in the face of uncertainty people want to slow down but they cannot - in fact they likely must decide faster. One of the key values of predictive analytics is to resolve uncertainty into probabilities and so make decisioning more systematic without causing this kind of delay.
• Smartsoucring requires much closer bonds, esp for accountability. This reminded me that decisions made by the companies you smartsource to will come back to haunt you if they are illegal, annoy customers etc. EDM gives you more control over this.
• Transparency is important so don't just automate, automate in a transparent way where the business and IT can share understanding of what is going on.
• "For any given process it is likely that 90 percent of the time it takes to perform is attributable to either queue time (wait time) or transfer time"
  Wow. Think how much faster your processes would go if they did not have to wait for manual decisions...
• Tom asserts that less than 2% of companies said they have "a complete and up-to-date ...description of your organization's...process rules". Like Tom I find this terrifying. How can you improve or guarantee compliance of stuff you don't understand and cannot document? While his GE story illustrates the importance of defining process and rules it was no clear to me why I would then transfer these to other people - why not use a BPMS and BRMS to automate this stuff?
• Newly agile supply chains make possible mass customization "creating an expectation in consdumers that they can have nearly endless variety and products customized to their every need" While this is complicated it is finding its way into lots of consumer products - these products contain high levels of information and content and so are malleable (see my post on Hits and Niches and read "The Long Tail" if this interests you).
• Tom talks about imagining a world with no response gap that is predictive and on-demand/real-time. This is not easy but increasingly it is doable for information products and services and EDM is part of how you make it work.
• As the world generates more and more data, his comment that "Uncertainty increases as the volume of information increases" struck home. That said, I am not sure I buy that "Uncertainty requires that we have rapid access to tacit rather than explicit knowledge". As I have said before, lots of tacit knowledge is only considered tacit because no-one has made a proper effort to make it explicit.

I really liked his analogy of a modern fighter for a modern business - "the more nimble it is in its maneuverability, the more unpredictable it comes". EDM is the control systems of this kind of business. Or, to use one of his other analogies, if "Most automation is the equivalent of a published paper road map. Orchestration is the equivalent of real-time, always up-to-date GPS" and EDM combines traffic predictions and obstacle avoidance/routing rules to drive the car for you.

Finally a great Mark Twain quote "It ain't what you don't know that gets you in trouble. It's what you know for sure that just ain't so". Remember, many analytically-driven decisions are counter-intuitive. Your data tells what "ain't so".

You can buy the book here.

Technorati Tags: analytics, BPMS, BRMS, business agility, Business Intelligence, business process management, business rules, EDM, Enterprise Decision Management, outsourcing, predictive analytics, smartsourcing, BPO

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Posted by James Taylor at 2:06 PM | Comments (0)

Doug Henschen and Intelligent Enterprise

I had a chat with Doug Henschen over at Intelligent Enterprise the other day and today he blogged about turning insight into action. If you are interested in this you will find lots on this blog (and my other one) but check out particularly this post from Gartner and this article on Putting Performance Management into Action. Like Doug I think a combination of BPM and Rules works well for this, especially when combined with analytics.

Technorati Tags: analytics, BPMS, BRMS, business process management, business rules, CPM, performance management, Intelligent Enterprise

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Posted by James Taylor at 8:45 AM | Comments (0)

January 25, 2007

Mysteries, puzzles and analytics

My friends over at Juice Analytics had a post a little while ago that discussed customer analysis in the context of a recent article by Malcolm Gladwell (the author of Blink) in the New Yorker comparing puzzles (where more data is the key to finding a solution) and mysteries (where the data is available but drawing the right conclusions from it is the challenge). The Juice folks say that customer analysis is a mystery (needing understanding and analysis) and not a puzzle (that needs data) and I have to say I agree with them. Most organizations have lots of data, what they lack is insight or, if as Dave McComb says "Information is data that changes you" then one could say they lack information. Add to this the fact that many of the folks trying to solve the mystery of how to treat a customer are under time pressure and in high turnover positions, and the need to turn the data you have into actionable insight - to solve the mystery of how to treat this customer - becomes even clearer.

The second interesting consideration here, suggested to me by a colleague (thanks Dave) is whether this article argues against automated modeling driving decisions.There is a fair amount of interest in automated model building and adaptive models (like Siebel Real Time Decisions). While there are various pro and con arguments that can be made, the article prompted this one: Without understanding the context of the problem, and the context of the data as it changes, the likelihood of arriving at spurious results increases.

The young journalists in the Watergate story could solve a puzzle but not, perhaps, a mystery. Automated analytics can solve puzzles, but customer treatment is a mystery and for that you still need someone with deep expertise.

Technorati Tags: analytics, BI, Blink, Business Intelligence, CRM, customer service, customer treatment, predictive analytics, Juice

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Posted by James Taylor at 8:37 PM | Comments (0)

New Blog features

As the week comes to an end a few new features for you to enjoy:

• The EDM Library, and all my book reviews, now has its own page so it no longer loads every time you load a page
• There is a new comment feed for those who wish to "listen" to the comments others post on the blog
• The right hand column has two new lists at the bottom - one for the comments I post elsewhere in the bloosphere (thanks to cocomment) so you can see what I am reading and what provokes me to respond and another for the list of sites that link to the blog (thanks to wholinked)
• All the monthly archives and category pages now display the title and an excerpt only to make it easier to scan the list of posts. Click on any one and you can see the whole post.
• Meanwhile Typepad added a feature that links each post's title to the full post page.

Let me know if you like/hate these features and thanks to Cath for helping me get them working.

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Posted by James Taylor at 6:24 PM | Comments (0)

Insurers: Capture The Expertise Now

(Posted by Guest Blogger and Friend of Underwriters Everywhere, Ian Turvill.)

The results of a survey conducted by the CPCU Society (the society for Pamp;C insurance underwriters), in which its 26,000 members were asked for their views on the industry's future, were released today.

The survey focused on what any impending changes might mean for their careers. One of the largest concerns that emerged was the "double whammy" effect of many thousands of baby boomers retiring over the next decade or so, combined with slowing rates of new recruits into the underwriting profession. As many as 66% of the survey respondents foresaw an "experience gap" as very likely to form in the next five years if nothing is done.

Among the solutions recommended were:

"More aggressive recruiting efforts; improved training; retaining retiree capital via consulting, mentoring, and flexible scheduling; more competitive compensation and benefits; and enhanced positive visibility for the industry and its career options."

I have another suggestion: Start an aggressive process of discovering the rules and analytics that govern the underwriting process and automating their execution through the use of Enterprise Decision Management.

The industry can see the impact of such an effort in microcosm by looking at the outcomes at individual companies that have applied this approach. For example, The Auto Club Group of Michigan automated its underwriting process, and switched from a situation where 100% of its policies were underwritten manually to a point where 99% of all policies automatically. As a result, they were able to dramatically increase the size of their distribution network and able to increase the number of policies processed annually by 35% WITHOUT adding to the underwriting staff.

I think it stands to reason that if the industry as a whole adopted similar EDM-based techniques that they could enjoy similar benefits. Perhaps the industry could even sustain a loss of 20% to 30% of its underwriting capacity without truly seeing a dramatic impact on overall output! And now is the time to do it, because all the expertise still resides in these firms.

It's certainly worth thinking about, and we'd be delighted to share more information with the CPCU Society. In fact, I believe that we plan to do exactly that: I will be speaking at the upcoming Annual Meeting of the CPCU Society in Honolulu in September, together with several leading industry representatives. Do join us!

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Posted by James Taylor at 3:15 PM | Comments (0)

Insurance Technology Blog Started

(Posted by Guest Blogger, and Explorer in the Blogosphere, Ian Turvill.)

I see that CastleBay Consulting Corp., a consulting services firm to the Pamp;C insurance market, has launched and will facilitate a new "Pamp;C technology" blog to offer the industry "an open forum for opinion, conversation and experience-sharing". The Pamp;C technology blog is intended to: "Coalesce and share perspectives from a broad group of technology minds in insurance for the benefit of the entire industry."

I'm sure that the blog will offer some very interesting perspectives, some of relevance to EDM-related issues, such as rules, analytics, and decision strategies, as well as many other issues outside our standard EDM realm. Users can access the blog at http://insurancetechnology.typepad.com.

We welcome the Insurance Technology Blog to the Blogosphere! And if the blogger-in-chief George Grieve would like to post here, we certainly encourage him to make contributions!

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Posted by James Taylor at 1:51 PM | Comments (0)

January 24, 2007

Speed (of decision-making) matters to customers

1:1 magazine had a piece about the importance of speed in winning customer loyalty. I was struck by one comment from their survey in particular:

Seventy percent of respondents want knowledgeable and personalized service, and nearly 70 percent say that first-contact resolution, whether by phone, email, or the Web is also a primary driver of customer satisfaction

I have blogged before about how improved decision-making can make your staff seem more knowledgeable and how it can personalize service. Indeed, speed is one of the dimensions of decision yield for this reason (although the emphasis in Decision Yield is on precision, consistency, agility, speed and cost as a set). First-contact resolution also requires decision automation - only decision automation gives you the control you need while still empowering front-line staff with decision-making power. You get strategic alignment along with front-line automation and speed while ensuring consistency and precision across all your touchpoints.

Good CRM and good self-service need EDM.

Technorati Tags: analytics, customer centricity, customer experience, customer service, EDM, Enterprise Decision Management, predictive analytics, self-service, CRM

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Posted by James Taylor at 10:03 PM | Comments (0)

business process and business rules

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Posted by James Taylor at 8:48 AM | Comments (0)

January 23, 2007

Banks, customers and decisioning

This article came up on bank customers. It talked about how banks need to address new competitors by looking for novel ways to retain and attract customers.

"But cosmetic enhancements and branch renovations can only go so far. Financial-services providers have to make extensive changes in how they sell to customers. The key to these changes will be upgrading information technology systems. In fact, if banks don't transform these systems, they stand to lose customers and substantial revenue. "

I could not agree more. I have blogged before about using decisioning to build the bank of the future and written a banking story showing how things can improve. In addition, self-service is a growing trend that requires systems to change. As the article said:

"However, it's the behind-the-scenes elements that banks truly need to change in order to be successful retail banking organizations in the future"

Another area identified by the article is that of customer segmentation:

"identify their target customer segments and offer service packages that directly speak to the financial situations of those groups"

I have written about how customer segmentation can dramatically improve profitability as noted by McKinsey among others and it can improve customer service also. Finally there was a note about maintenance burdens:

"Research from Celent shows that banks continue to invest in maintenance rather than in new systems, with almost three-quarters [74.5%], or $236.7 billion in real dollars, of I.T. investment going to maintaining old I.T. systems."

Reducing the maintenance burden is a must for banks and I have blogged before about using decision technologies to improve the application enhancement process, to renovate old applications and about modernizing COBOL with business rules.

In the end, banks need to treat decisions as a corporate asset.

If you are interested in banking topics, check out Bankwatch.

Technorati Tags: analytics, bank, BRMS, business rules, customer service, decision service, EDM, Enterprise Decision Management, predictive analytics, segmentation, self-service, financial services

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Posted by James Taylor at 9:50 AM | Comments (0)

January 22, 2007

Congratulations (again)

Congratulations for the second time to the Blaze Advisor team for winning Readers' Choice from Intelligent Enterprise. Second year in a row.

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Posted by James Taylor at 3:22 PM | Comments (0)

Change your thinking about BI

An article on the upcoming Gartner BI conference caught my eye. The article said "Gartner research vice president Nigel Rayner will tell delegates at its Business Intelligence Summit at the end of the month, that traditional thinking around BI needs to change if businesses want to reap any benefits.
Rayner is quoted as saying:

‘BI has been around a long time and people do get returns out of it, but it has been technology and infrastructure driven and is not addressing the needs of senior management,’

Now it seems to me that not only does it not address the needs of senior management, it does not support the needs of operational staff either. Not management, not analysts, but people working on the front lines helping customers. It also does not help the software that support customers. Neither BI nor Performance Management will make these high-volume transaction-focused systems better. The systems cannot read reports or look at dashboards. The front-line staff have neither the time nor expertise to draw conclusions from data presented to them. Both front-line staff and front-line systems need decisions - actions to take - about customer treatment. Enterprise Decision Management or EDM is about applying your data to these front-line customer treatment decisions to improve them. BI needs to do more on Performance Management for sure, but you also need EDM to put your performance management into action and give you strategic alignment from your KPIs and dashboards to your front lines. EDM is not BI but it builds on it.

Technorati Tags: BI, Business Intelligence, EDM, Enterprise Decision Management, Gartner, performance management, predictive analytics, CPM

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Posted by James Taylor at 1:13 PM | Comments (0)

January 18, 2007

Skiing

Back on Monday...

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Posted by James Taylor at 1:18 PM | Comments (0)

January 16, 2007

Nice presentation on rules and requirements

BPM Institute has a nice Case Study: Business Rules and Requirements Management at the IRS about the IRS' piloting of a new methodology for analyzing, documenting, and managing business rules in conjunction with requirements for system design. Has some good discussion of the differences between business rules and requirements as well as their similarities about which I have blogged before:

• Techniques for gathering rules and requirements
• Digging yourself out of the requirements tarpit
• Building better requirements - is it a false hope

And I reviewed a great book on use cases you might enjoy also.

Technorati Tags: BRMS, business rules, requirements, IRS

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Posted by James Taylor at 9:07 AM | Comments (0)

January 15, 2007

Legacy modernization, a comment

I saw this article over on IT-Analysis on converting legacy applications by Tel Hudson of Bloor. I tried to post it as a comment but their CAPTCHA system is broken so I kept getting errors. Hopefully they will fix it! Anyway, here's what I was going to say:

I think replacing a whole legacy systems, even in an automated fashion, is unlikely to solve the problems. Most legacy systems suffer from lots of changes because the business rules they implement change often. Replacing one form of legacy code with another is not terribly helpful.

I blogged on using rules to enhance legacy applications (http://www.edmblog.com/weblog/2006/01/enhancing_legac.html) and to improve application maintenance (http://www.ebizq.net/blogs/decision_management/2006/10/using_decision_technologies_to.php) on my blogs.

Technorati Tags: bloor, business rules, legacy modernization

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Posted by James Taylor at 10:02 AM | Comments (0)

CRM, Customer Experience, gethuman and decisioning

Curiously I came across two references to gethuman.com in my browsing this morning. First Sandy Kemsley had included a link in one of her link posts and then Colin over at Bankwatch posted this nice summary - ‘gethuman’ standard and some thoughts on customer service.

Now I have posted about gethuman before and on how I think banks can build a better customer experience with decisioning (as well as a couple of general posts on how decisioning can improve customer experience). Seeing these posts though made me want to ask some specific questions of those out there using IVR (interactive voice response) and other self-service systems:

• Do you decide what options to offer each customer based on what you know about them or do all customers get the same options?
• When a prospect calls, do you prioritize the options for a prospect or are they the same as they are for a customer?
• Do you make any attempt to predict what your customer might be about to do based on what you know about them so you can prioritize those options?
• When you add an option to your IVR, ATM or other self-service channel do you think about each customer (or at least each micro segment) and decide if they will want to see or hear that option?
• When your automated systems refer a caller to a person to make a decision does that person do anything to make the decision that the system could not do?

Most companies would have rotten answers to these questions. Why? Because they are not thinking about these decisions at a granular level - they are thinking about them only at a macro level. The trouble is that each customer assumes, consciously or unconsciously, that these decisions were taken specifically for them. If you make them listen to the same 5 options every time, even though they always pick one of two, then they assume you don't know them or don't care. Every time you or one of your systems interact with a customer you make a decision about that interaction. If you choose to make it the same way every time then that's your choice but you are still making that decision. I call these "hidden decisions" in that most companies don't even think about making them.

How many of the folks who really want to talk to someone human want that because the systems feel so useless? Do they really want to speak to a person (some do) or do they really just want to be treated like an individual and helped as quickly and effectively as possible (more, I think). Make your systems respond to your customers as though every decision matters. And then see how many still press "0" for a person.

Technorati Tags: CRM, financial services, gethuman, interaction, customer experience