We have a number of speaking engagements in the next few months and I thought I would highlight them on the blog today. Arranged in date order…

• August 6th, 10am Pacific Time, “How to leverage scorecards for accurate risk management”
  Webinar, multiple speakers including James, sponsored by ILOG
• August 19th, 8:30am Pacific Time, Reinventing BI with Real-Time Analytics: Embedding Analytics into Business Processes
  Presentation, Neil, part of the TDWI Executive Summit
• September 21st-23rd, InfoCentricity Xeno User Conference
  James will be speaking, details TBD
• October 8th, 3pm European Time, “Decision Services: A pattern for smarter service-oriented systems”
  Presentation, James, part of the SOA Symposium, Amersterdam.
• October 12th-16th, Teradata Partner Conference
  Neil will be participating in a panel discussion and/or speaking, details TBD
• October 26th, 2:30 Eastern Time, “Succeeding as a Decision-Centric Organization”
  Tutorial, James and Neil, part of the EDM Summit
• October 29th, 9:00 Eastern Time, “Competing on Decisions”
  Keynote, James and Neil, part of the EDM Summit

Drop us a line if you are going to be attending any of these and want to meet.

Frank posted some great comments on Here’s how to get started with decision management the other day and made me think about this, often very severe, problem. As Frank put it:

How do you overcome the moral fear some organizations have when they realize 40-80 percent performance improvements come at 40-60 percent less personnel; so if operational budgets and manager salaries are dependent on the number of subordinate employees, then it is in the best interest for some to resist EDM; especially in state public health organization.

This is a real problem with adopting EDM for sure and one I have seen personally in collections organizations, for instance, where the size of the department is a key measure of the power/success/income of managers. In these kinds of circumstances there really is little chance of success without changing these measures. As in all things, the act of measuring something changes it. Measuring managers on the difference between their spend and their income or output is essential if you are to get them on board with the changes that EDM will bring.

Often it is not worth tackling this kind of problem first. Instead I often recommend that decisions currently not being taken at all or ones that are already being automated poorly be targeted first rather than the replacement of manual decision making. These decisions may not have the bang for the buck that replacing manual decisions do but they help establish that the approach works without having to deal with the whole empire thing.

Frank goes on to make another good point:

Public health activities are driven by funding and politics.  A great example is Bio-Terror; there is only one difference between a bio-terror event and any other outbreak or chemical spill — bio-terror is intentional and except for criminal issues, responses are the same: quarantine, clean up, etc.; but states get lots of additional money for bio-terror and create whole sub-organizations with their own information systems…all existing to collect their OWN specific data and report those data by their OWN standards (if such standards exist at all). [It] may be impossible to introduce EDM in these organizations since information sharing is loss of power

Here the problem is not just one of empire size but of the number of little empires involved and the threat to those silos of information sharing. Tackling this problem is also beyond the scope of introducing EDM but it need not be tackled first. While shared information is clearly more useful and more likely to result in better decisions and analytics, it is not essential. Plenty of effective decision management solutions do not use cross-silo data. Indeed connecting decisions across silos is one of the later stages of adopting EDM. The “E” is not meant to imply a need to do enterprise-wide decision management so much as to imply enterprise ownership of decisions - making them explicit (Explicit Decision Management). So the decisions within each silo can be attacked using EDM and can show good results, even if some decisions would require integration of the silos.

EDM is a great approach but it needs the same kind of organizational readiness and flexibility that any new development approach does and it can be limited by the politics and performance measurement systems that are in place. You can, and should, “think global, act local” and get started with a focused EDM project because success will make the necessary organizational change easier.

Mike Ferguson posted on his blog a few weeks ago - Operational BI - Extended BI System Or Brand New Architecture? - and this prompted me to write an article for b-eye network - From Operational Business Intelligence to Competing on Decisions. This article is my second on my b-eye-network channel and there will be more there over time so check it (and the rest of the channels) when you get a chance.

I got a chance to speak with ILOG today and do some thinking so it’s time to write more about the IBM and ILOG announcement. As it is an acquisition of one publicly traded company by another neither company can legally say very much. As a result I, like everyone else, have a bunch of questions that will just have to wait - probably to the end of the year when they hope to have the acquisition done. So, given the little we know, what can we say?

Overall I am cautiously optimistic about the future of ILOG’s products and the markets and customers they serve. IBM has long shown an interest in both business rules and optimization and their willingness to put real money behind these two decision-making technologies is very encouraging. IBM is also a distributed multi-national company with developers in lots of countries so they should be able to integrate the critical development know-how without too much pain. I don’t expect to see ILOG’s Rules products or its CPLEX optimization technology suffer any lack of investment or support from their new owners once they become part of the IBM family nor do I see much reason to worry that developers, product managers, consultants or architects will feel a sudden urge to be working elsewhere. All of this bodes well for existing and future customers.

Part of the challenge for IBM will be deciding how to integrate ILOG’s products into the IBM organization. While the WebSphere BPM/SOA offerings clearly need to be tightly integrated with business rules, so does FileNet (currently in the Information Management group) and so should the data mining and analytics aspects of the Information Management group. Business rules are, for instance, a perfect way to deliver “information on demand”, one of IBM’s core strategies. IBM also has a long standing optimization specialty group and, while their extensive use of ILOG’s CPLEX will clearly continue, the potential for that group moving into rules-based delivery of optimization is potentially very interesting. Business rules has always been challenged by the very breadth of potential uses and IBM will need to organize the new acquisition to make sure that business rules can be fully leveraged across the company’s product lines.

Indeed, several of the comments from the press release hints at this potentially very broad use of the ILOG rules products. Like this one:

…strengthen IBM’s BPM and SOA position by providing customers a full set of rule management tools for complete information and application lifecycle management across a comprehensive platform including IBM’s leading WebSphere application development and management platform

and this one:

ILOG technology has the potential to add significant capability across IBM’s entire software platform and bolster its existing rules management offerings. This includes improved rules and business optimization capabilities for Information Management offerings, better visualization for Lotus products, enhanced optimization within Tivoli solutions, and efficient supply chain management assets for planning and scheduling.

One of the questions this acquisition does leave hanging is what impact it has on both the rules and optimization markets. The optimization market was always a little odd, given the hugely dominant position CPLEX had. Dash Optimization, a distant second and now part of Fair Isaac, never really challenged its hegemony and IBM taking ownership of it will not change that. So no change there.

The business rules market is more complex. There has been a lot of discussion recently as to whether there even is such a thing as a business rules market. Business rules can be used for so many things - from decision management to process management, data quality to customer treatment - that defining it as a market is difficult. Personally I think this acquisition means the end of the discussion - there is not going to be a long term business rules software market. With major platform vendors like SAP (Yasu) and now IBM (ILOG) buying rules products to bolster their platforms it seems only a matter of time before Oracle and Microsoft do likewise. With business rules in the platform we will see two potential independent markets where business rules plays a significant part - Business Process Management and Decision Management - but no real independent business rules market.

The Business Process Management market, to the extent it remains independent from the platform business, will continue to come under pressure to do a better job of managing business rules. The power of business rules to make process management easier, more agile and more business-friendly means that the technology will continue to play a key role. Either companies will build their own (as Pegasystems has done), buy a smaller rule vendor or use the rules in the platform(s) on which it runs. It is possible an OEM business for business rules engines will continue, just not a real business rules management system market. The event processing market seems likely to move in a similar direction.

The emerging enterprise decision management market will also need robust business rules. This market does not need all the features of a traditional business rules management system but it does need deep analytic integration and real decision-centric performance management as well as adaptive control and adaptive analytics. I believe this market has a potential for independence because business decisions cut across systems, platforms and channels. Business rules vendors who don’t wish to become part of a platform should take this route and do so quickly.

To wrap up I thought I would pose some questions:

• To Business Process vendors like EMC or Software AG relying on ILOG’s rules product - do you want to rely on IBM for this component of your offering? If not, what are you going to do?
• To platform vendors like Oracle, Microsoft, Salesforce.com - what’s YOUR rules strategy? If IBM and SAP have one, you probably should also.
• To Business Rules vendors like InRule, Corticon and Fair Isaac - do you want to be part of someone’s platform (if so, who) or do you want to be a decision management product? Decide quickly…
• To vendors building on IBM’s platform but not using ILOG’s rules - do you think WebSphere customers will expect to have all their rules in the ILOG product once it is integrated? I do.
• To customers using anyone’s rules product - are you clear on the difference between business rules in business process management, business rules in an SOA platform and business rules as the basis for true decision management? If you aren’t, maybe you should call me….

May you live in interesting times…

Just heard that ILOG is going to be acquired by IBM! I don’t have any more detail yet but hopefully the folks at ILOG and IBM will brief me sometime soon…..

The folks at CustServ had a piece on The 3-Minute Promise to Avis Customers that made me think. If you wanted to make a similar promise - that some process of yours would be quick, efficient, flawless and seamless - would the systems you have help you or hurt you?

• Would your systems be able to handle approvals and eligibility? What percentage of your customers would be handled straight through?
• Would your system be able to be specific to each individual customer or would it treat them as an amorphous lump?
• Would your system be able to take account of each customer’s preferences and prior behavior?
• Would the systems make the same decisions about prioritizing good customers, about fraud risk and about pricing as your experienced staff would?
• Would you be able to demonstrate that your automated systems were compliant with all the relevant policies and regulations?

In other words, would your systems be able to handle the operational decisions that have to take place quickly and effectively in these kinds of situations? If you were using enterprise decision management they would.

ILOG is running a webinar titled “How to Leverage Scorecards for Accurate Risk Management” on Wednesday, August 6 at 10:00 a.m. Pacific / 1:00 p.m. Eastern. Anthony Garritano, editor of Mortgage Technology magazine, me (James) and Janet Wall from ILOG will share presentation duties and give you a quick look at the mortgage industry, how to use predictive analytics and scoring with rules and some trends that make this a great way to gain a competitive advantage. Hope to see you there.

I saw a post today on medical credit scoring that made me think I should post something about how credit scoring can be used in healthcare. Now saying that, of course, makes everyone nervous - are we talking about refusing people treatment because of their credit score? Why should financial questions like credit worthiness have a place in the delivery of healthcare.

Well as much as 30% of patient payments end up being written off as bad debt so whether you are a for-profit or a not-for-profit hospital this is a problem. Not only do you have to spend money on debt collection (money you could have spend on health care) you also have to borrow money to cover the short fall. Using a enterprise decision management (EDM) approach and taking advantage of credit scores is one way to address this.

During the admissions process, decision management applications can perform real-time validation of patient-supplied data against medical records and external data sources. By making certain patients are who they say they are and checking that address and other information is complete and correct, providers reduce their fraud risk. Using credit scores and other predictive analytics, an EDM solution can determine the optimal initial payment request for patients based on their particular financial situation. Treatment delivery is separate - this is just about how the patient is going to pay (bill them later, take their credit card, ask for cash or help them with a charitable application). Knowing which patients can and will eventually pay what helps financial counselors to work with patients who need help and minimize the number who go to collections, while also generating maximum revenue for the hospital.

Once a patient is discharged, an EDM approach can also be used with overdue accounts to improve collection results and minimize recovery costs. Instead of treating all overdue accounts with the same sequence of dunning letters and calls, providers may, in fact, be able to collect more money by doing less. Analytics can identify differences between accounts that affect payment behavior—dividing patients up into those likely to self-correct, those likely to be influenced by collections treatments and those unlikely to pay under any circumstances. Providers can use this segmentation to save money by making fewer outbound contacts and thereby also reducing the volume of inbound inquiries such contacts generate.

This is similar to the usual use of credit decisioning except that you don’t want to decline care because someone can’t pay so much as help them pay for the care they need.

The folks over at b-eye network have a video blog with answers to questions submitted by readers - the Ask an Expert Video Blog. This looks like a fun way to get an answer to any BI, data or analytic decision making question you might have. If you have something you want to discuss, go ahead and use the form on the right hand side of the page to submit them. They can be for me or for one of the other experts on the site.

Don’t forget I have a channel on the site - Competing on Decisions and you will find a growing number of articles over there.

Ronan Bradley had an interesting article on ebizQ this week - Fertile Ground for ROI in BPM: Three Unlikely Areas. In it he outlined some areas of banking where business process management (BPM) could deliver an ROI.

1. Keeping up with regulations
   In which he points out that “a feature of BPM systems (over custom coded solutions for instance) is that they are configurable through the use of rules”
2. Derivative Trade Cycle
3. Automation of back-office and support desk function
   In which he says that “All of this makes a good potential sweet spot for BPM: complex sets of rules to be followed and automated, and high cost associated with human error”

What struck me about this, and should strike you, is how decision-centric Ronan’s examples are. Regulation is often about what is allowed or not allowed - what decisions are appropriate in other words. Part of the derivative trade cycle is pricing - making an appropriate pricing decision - and part is about eligibility decisions. Automation of the back-office involves automating lots of know-how - the rules behind decisions.

Now I’ll be the first to admit I have a decision-centric point of view but I do find it interesting that three areas of ROI for BPM could have so much to do with decision automation and management.