Business Process Management with a Competitive Edge. Implementing Transparent, Agile and Consistent Business Process Management

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1 Business Process Management January 2008 Business Process Management with a Competitive Edge Implementing Transparent, Agile and Consistent Business Process Management

2 2 Automating business processes is not the current IT trend or marketing buzz in the software industry. Rather, it is a fundamental strategy employed by those who plan to stay in the game in the long run. It is what allows companies to remain competitive by reducing cycle time in business value development, delivery and support. According to Forrester, The confluence of several strategic business issues is accelerating the high level of interest in BPMS software. Specifically: Forrester believes the shift from functional alignment to business process ownership will increase corporate performance, and the adoption of BPMS will drive a fundamental and positive change in the relationship between business and IT. Forrester A growing number of companies are realigning functional managers to become cross-functional process owners, implementing Six Sigma and lean manufacturing quality initiatives to improve business processes and shifting their focus from applications to business processes supported by composite applications. Compliance mandates such as Sarbanes-Oxley, Basel II, and the Health Insurance Portability and Accountability Act (HIPAA), where BPMS tools provide the framework to ensure required procedures are adhered to. Advanced BPMS tools empower authorized business users and managers to model and monitor business processes and modify business rules. In the pursuit of business process improvement, companies face important challenges such as being able to better understand the behavior of their business processes, being able to adapt business processes in a timely fashion, and ensure the consistency across the enterprise. Total business insight Total business agility Total business process consistency The benefits of implementing Business Process Management, or BPM, with IBM Enterprise Content Management are significant, quantifiable and reach across the entire organization touching on all elements of the business. The reduced cycle times and enhanced visibility into what stage of the process is in play, who is taking action, the status of approvals and what hurdles must be overcome result in: Reduced operational cost Reduced risk in regulatory compliance Improved management oversight capabilities

3 Until now, business process improvement practices have either removed human-intervention as much as possible and focused resources on exception processing or simply automated as many business decisions as possible. While both approaches are valid, the outcome can vary substantially based on how you automate the decisions in your processes. If you don t pay attention to the how, you are likely to significantly limit your improvement options, resulting in reduced visibility, limited agility and a lack of consistency. Businesses can approach automating the decision logic of their business processes a number of ways. Let s review the different options on how to automate decisions and how they impact overall process efficiency. Traditional Software Coding This process allows the decisions made in the automation process to become part of the actual software code. While there is likely to be some consultation with the end users of how the process works, as a matter of practice decisions are often made in the IT department as they create the workflows and develop the software program. Once the process is launched, any changes that are needed require IT effort to revise the software code. Obviously, this becomes a labor intensive and costly ongoing exercise for any process that operates in a highly dynamic environment. This approach will also limit your business insight and ability to improve your processes since decisions coded in a programming language will prevent business users from understanding how and why business decisions have been made. Standard Business Rule Engine (BRE) Employing a standard business rules engine (BRE) is a step in the right direction when it comes to building in efficiencies into the business process automation effort. A rules engine utilizes business rules expressed as if then statements in a fairly technical language for decision points that can be updated only by IT when changes in the process need to be made. However, the same issues of decision points being determined in the IT department and a need for IT intervention every time a change needs to be made still prevails. While process maintenance is less labor intensive and costly than traditional software coding, IT time required to update the rules engine will be a built-in bottleneck in realizing the desired speed and efficiency from automation in a dynamic environment.

4 ILOG Business Rule Management System (BRMS) Employing the ILOG JRules Business Rule Management System (BRMS) with IBM FileNet Business Process Manager, companies find themselves in a whole different efficiency league where they have the power of automation and decision making at the control of the person who understands the process and issues best. We took a lesson from nature and designed our rules engine with a lead bird efficiency strategy. Have you ever watched a flock of birds in flight and marveled at how they moved so quickly, effortlessly and synergistically time and again? It is because the whole team of birds is following the lead bird, the one out in front who has the best view of conditions and knows where and when to dip, dart and duck. The same is true in process management. It is that front line person that knows the challenges of their process that is in the best position to lead the automation decision making and keep it up to date as the process environment changes. With ILOG JRules BRMS, business process automation is easier to understand, maintain and manage. Decision logic is presented in business terms instead of programming language. The power of change specific to particular workflow segments is put in the hands of the business manager with a user-friendly web portal. A view into what is going on in the workflow finally becomes visible to management through the business level reporting and the ability to test a change before implementation is available through business process simulation. As a result organizations: Increase throughput with the flexibility to customize individual processes for different situations, you can eliminate unnecessary steps required in less robust rules engines. Leverage dynamic environment for competitive advantage instead of being challenged by living in a dynamic marketplace, you can use the constant change to your advantage by building agility and flexibility into your rules engine maintenance by putting it at the fingertips of your front line managers. Reduce costs extending control out to the front line managers minimizes the number of people that need to be involved in making process changes, improving organizational productivity and lowering IT maintenance costs. Reduce risk in regulatory compliance with the flexibility to implement decision point changes quickly, you can improve adherence to new regulations as they develop and improve consistency, traceability and auditing of decisions.

5 What approach is best for you? According to Forrester, there are four categories of processes: Category Definition Example People-intensive Decision-intensive Document-intensive Integration-intensive Strong focus on automating people intensive activities Strong focus on processes that require employees to make mission-critical decisions Strong focus on processes that involve extensive use of scanned images for back-office processes Strong focus on automating processes that integrate systems and applications Customer support Lending process Claim processing Order fulfillment While ILOG JRules BRMS can be instrumental in gaining efficiencies in all of the categories, your best value will be realized in process environments that are decision-intensive and people-intensive. As a further guide to what is the best fit for your organizational needs, we have compared the features and functionality of approaching BPM with traditional software coding, a standard rules engine and ILOG JRules BRMS. Capabilities Traditional software coding Standard Rules Engine ILOG BRMS Externalization of business rules from code Business rule metaphor support Business rule execution reports Enterprise business rule repository Business rule maintenance tools for business people (authoring, test and simulation) Very limited Yes Yes None If..then statements only If..then, decision tables, decision trees None Technical report only Full support for IT and business No No Yes No No Yes

6 ILOG JRules BRMS integrates rule management with your choice of platform and data storage, supporting every major runtime platform.

7 Reference: Social Affairs of Junta de Castilla y León Situation The Social Affairs agency of Junta de Castilla y León is responsible for administering the social health programs of one of Spain s 17 regional departments. The agency has more than 50,000 people in its program, each with specific healthcare needs. With rising healthcare costs, an aging population and increasingly complex regulations, calculating their social security benefits and managing their records has become very complex and time consuming since care must be taken to always apply the most recent regulations. Solution ILOG JRules Business Rule Management System IBM FileNet Business Process Manager Benefits Rapid delivery of social services Quick compliance with new laws Direct access to decision logic for business users

8 8 Welsh Assembly Government Situation The European Union Common Agricultural Policy provides annual subsidies of more than 250 million for the 19,000 farmers in Wales. As a major source of income for the Welsh economy, it is vital that Common Agricultural Policy (CAP) subsidies are processed as quickly and efficiently as possible. The Welsh Assembly Government was facing a lot of challenges with regards to the management of CAP. The previous process management was based on paper-based applications and a bespoke legacy computer system based on 3rd generation code. The legacy system was slow to change, difficult to use and each scheme was implemented separately, based on a different manual process. Solution IBM FileNet Platform + ILOG: Fully automated request capture and submission with standardized business processes throughout all line of subsidies Automated request capture and submission Standardized business processes throughout all subsidies Automated best practices Benefits Improved customer service--on the first day of payment, more than 75 percent of Single Payment Applicants had received their payments instead of waiting weeks with the previous system. In addition, Wales was one of the first (if not the first) country in Europe to make these payments in Greater flexibility and ability to modify business policies in hours rather than weeks Improved legacy systems integration Business process and business rules traceability and auditability

9 Reference: US Commercial Lender, Automated Credit Request Processing Situation This US Commercial Lender has grown rapidly through organic growth and acquisition over the past several years. As the bank has expanded, their method for handling the approval of commercial loans has remained mostly unchanged over the past ten years. As the bank has expanded its geographical reach, bank relationship managers were experiencing delays in routing and approving commercial loan requests. Ultimately, the bank needed to find a way to deploy a solution that could replace their current paper-based process while remaining highly flexible to accommodate planned future acquisitions and growth. Solution ILOG BRMS to handle core business logic across a number of functional areas including: routing, compliance, scoring & rating IBM FileNet Business Process Manager to handle core business processes across the enterprise Benefits Processing cost savings - estimated 10,000 man days the first year and 12,000 man days thereafter Improved staff focus and satisfaction Improved compliance - estimated 1,000 man days per year

10 Copyright IBM Corporation 2008 About ILOG ILOG delivers software and services that empower customers to make better decisions faster and manage change and complexity. Over 2,500 corporations and more than 465 leading software vendors rely on ILOG s market-leading business rule management system (BRMS), supply chain planning and scheduling applications, and optimization and visualization software components, to achieve dramatic returns on investment, create market-defining products and services, and sharpen their competitive edge. ILOG was founded in 1987 and employs more than 800 people worldwide. For more information, please visit About IBM ECM As the clear market leader in Enterprise Content Management (ECM), IBM s ECM solutions help organizations make better decisions, faster by managing content, optimizing business processes and enabling compliance through an integrated information infrastructure. IBM s ECM portfolio delivers a broad set of capabilities and solutions that integrate with existing information systems to help organizations drive greater value from their content to solve today s top business challenges. The world s leading organizations rely on IBM enterprise content management to manage their mission-critical business content and processes. IBM Corporation 3565 Harbor Boulevard Costa Mesa, CA USA Printed in the USA All Rights Reserved. IBM and the IBM logo are trademarks of IBM Corporation in the United States, other countries or both. All other company or product names are registered trademarks or trademarks of their respective companies. For more information, visit ibm.com/software/ecm

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