operational decision management - top 10 use cases
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Operational Decision Management - Top 10 Use Cases. Bálint Tóth IBM Hungary. Common Themes that Signal a good fit for ODM. Frequency of rule changes. Frequency of rule changes. Frequency of rule changes. Frequency of rule changes. Frequency of rule changes. - PowerPoint PPT PresentationTRANSCRIPT
Operational Decision Management- Top 10 Use Cases
Bálint TóthIBM Hungary
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Rules are hard to manage/buried in applicationsRules are hard to manage/buried in applications
Common Themes that Signal a good fit for ODM
Frequency of rule changesFrequency of rule changes
Need for increased business user involvementNeed for increased business user involvement
Need to boost straight-through processingNeed to boost straight-through processing
Lack of traceability / auditabilityLack of traceability / auditability
Frequency of rule changesFrequency of rule changes
Need for increased business user involvementNeed for increased business user involvement
Frequency of rule changesFrequency of rule changes
Need to boost straight-through processingNeed to boost straight-through processing
Need for increased business user involvementNeed for increased business user involvement
Frequency of rule changesFrequency of rule changes
Need to boost straight-through processingNeed to boost straight-through processing
Need for increased business user involvementNeed for increased business user involvement
Frequency of rule changesFrequency of rule changes
Lack of traceability / auditabilityLack of traceability / auditability
Lack of consistency of rules across applications and channels
Lack of consistency of rules across applications and channels
Need to boost straight-through processingNeed to boost straight-through processing
Need for increased business user involvementNeed for increased business user involvement
Frequency of rule changesFrequency of rule changes
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Top Ten ODM Scenarios …
1. Credit & Loan Approvals
2. Claims Processing
3. Underwriting
4. Compliance & Reporting
5. Dynamic Pricing & Bundling
6. Fraud Detection
7. Eligibility Determination
8. Cross-sell, Up-sell & Product Recommendations
9. Customer Insight & Loyalty Programs
10.Customs & Border Control
Credit and Loan Approvals
IBM Operational Decision ManagementUse Case
Key Challenges in Credit and Loan ApprovalsLenders face numerous obstacles to grow revenue profitably
Changing regulatory requirements
Changing regulatory requirements
Error-prone processes
Error-prone processes
Challenging system integration
Challenging system integration
Slow manual processes for loan approval
Slow manual processes for loan approval
Low customer satisfaction
Low customer satisfaction
Credit & Loan Approvals
Credit & Loan Approvals
Areas for Improving Competitiveness in Credit & Loan Approvals
Key credit approval challenges addressed by operationalizing business decisions
Loan Origination
Reduce time and cost by increasing straight-through processing
Provide customers immediate visibility into the current state of their loan application
Mortgage Refinancing
Predict a borrower’s willingness and capacity to repay
Assess value of collateral quickly and accurately using common standards
Discerning Credit Quality
Ensure complex credit criteria are consistently applied
Continuously evaluate the type of credit and the limit extended to existing customers
Category Business Benefits
Externalize Decisions
Enable flexible management of eligibility and credit decisioning rules
Ensure consistency across all products and channels
Focus IT on strategic work and not tedious rule maintenance across multiple legacy systems
Frequency of Change
Improve response times to rapidly changing business conditions through consolidated rules across multiple legacy systems
New products can be taken to market within weeks not months
Empower Business Users
Enable business users to manage updates to policies directly with limited involved from IT
Improved user friendliness for maintaining business rules allows business users to respond more effectively to dynamic business conditions
Reduce Operating Costs
Limit manual work in the decisioning process to make best use of human resources
Using validation methods that show which business rules were used to make a decision, considerably reducing the effort required to develop and maintain applications
Benefits of Using Operational Decision Management
Sample Credit & Loan Approval DecisionsExamples of Business Rules, Rule Flows and Decision Tables
Novagalicia Bank Improve product processing through automation of routing rules
ChallengesChallenges
Routing of product requests to decision-makers required over 173 different business rules
Rules changed daily, and maintaining the routing systems to keep up with these changes was taking too much time
BenefitsBenefits
Time to implement changes to routing rules went from days to hours
Overnight processing of 200,000 non-payments completes in only 14 minutes vs hours previously
Business users are able to manage the business rules themselves
Business rules were implemented within the BRMS system as a group of reusable services
Systems leveraged the new services, executing each request in under 30 milliseconds
Various channels were supported including Web and branch systems
Solution
Software Offerings:
IBM Operational Decision Management
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Claims Processing
IBM Operational Decision ManagementUse Case
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Key Challenges in Claims ProcessingInsurance providers face numerous obstacles to grow revenue profitably
Lack of transparency throughout the claims process and need
to show compliance
Lack of transparency throughout the claims process and need
to show compliance
Inaccurate claims assessment & delayed settlements
Inaccurate claims assessment & delayed settlements
Inability to align adjuster skill set with claim complexity
Inability to align adjuster skill set with claim complexity
High claim processing costsincluding claims leakage
High claim processing costsincluding claims leakage
Lengthy claims processing cycle with manual practices
Lengthy claims processing cycle with manual practices
Claims Processing
Claims Processing
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Improving Competitiveness in Claims Processing
Key trends driving decision management solutions
Healthcare Claims
Health care reform is leading to retail purchasing models which demand error-free, real-time processing of claims
Resource Efficiency
Use business rules to quickly identify straightforward claims to be routed for immediate settlement with little or no human intervention
Customer Retention
Use rules systems to consistently handle all customer touch-points consistently for increased customer satisfaction.
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Category Business Benefits
Externalize Decisions
Enable simple expansion of business into new geographic regions through simple addition of local business rules
Rule logic changes no longer create bottlenecks and impact productivity of IT personnel
Frequency of Change
Increase processing efficiencies and ability to implement rapid changes to claims validation decisions
Achieve an extensible platform that can be re-used to address anticipated future code and policy transformation initiatives mandated by Federal and State governments or other regulatory bodies
Empower Business Users
Give the power back to the business...without the need for IT all the time
Provide systems to enable the business as a key pillar in an IT transformation strategy
Reduce Operating Costs
Provide a platform for innovation, keeping costs down, increasing process agility and visibility, and significantly improving the efficiency of each of the company’s key processes
Process 1 million claims per month while significantly reducing claims costs annually
Benefits of Using Operational Decision Management
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Sample Claims Processing DecisionsExamples of Business Rules and Decision Tables
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Worksafe VictoriaImproves efficiencies and productivity in their agents
ChallengesChallenges
Too many manual processes led to long settlement cycles
Needed to improve accuracy and timeliness of payments to treatment providers
Must ensure the correct outcome for the organizations and providers served
BenefitsBenefits
Improved processing throughput by 300%
Reduced payment cycle time from 30 days to 1 day
Increased straight-through-processing rates from 40% to over 80%
Over 2000 complex business rules automate the invoice processing from validation, adjudication, payment and settlement
Business users manage the rules themselves in collaboration with IT
Solution
Software Offerings:
“[Agents] have been given the ability to do the higher valued work that they've wanted to do in the past. Now, we can actually get them to actively manage claims, actively manage our clients to ensure that they get the best outcome as well as us..”
IBM Operational Decision Management
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Underwritting
IBM Operational Decision ManagementUse Case
Key Challenges in UnderwritingInsurance providers face numerous obstacles to grow revenue profitably
Inability to create flexible risk tiers to match customer
segmentation
Inability to create flexible risk tiers to match customer
segmentation
Inability to roll out new insurance products
quickly
Inability to roll out new insurance products
quickly
Aging pool of experienced underwriters
Aging pool of experienced underwriters
Inability to assess risk accurately leading to mispriced rates
Inability to assess risk accurately leading to mispriced rates
Low straight-through-processing leading to higher costs
Low straight-through-processing leading to higher costs
UnderwrittingUnderwritting
Improving Competitiveness in Underwriting
Key trends driving decision management solutions
Process Automation
Automated underwriting solutions are expanding to deliver policies in a cost-effective manner
Micro-segmentation
Many insurers are moving towards micro-segmentation:Finding the 18-year-old male drivers who aren’t bad drivers then selling to them at a better price
Focus on Higher Value
Add
The next generation of underwriters are focusing on the value-added activities of analyzing, selling, negotiating and managing relationships
Sample Underwriting DecisionsExamples of Business Rules, Rule Flows and Decision Tables
A Canadian Property & Casualty Insurance GroupImproves speed to market and transparency across lines of business
ChallengesChallenges
Many manual practices and hard coding of rules created inflexible processes
Performance issues in existing systems due to use of a rating engine for underwriting
Lack of consistency across processes in different lines of business
BenefitsBenefits
Reduced time-to-market of new products and services by over 50%
Improved automated pass-through rates by 80%
Greater consistency, control and auditability of how business rules are being enforced and their impact
Implemented an e-commerce foundation for common service delivery.
Business rules automate the underwriting process (P&C, Auto), quoting, product selection and application flow
Rule execution performance is in mili-seconds
Solution
Software Offerings:
“We selected IBM because of its ease-of-use, advanced rule management capabilities for business and IT users, and tight integration in a service-oriented architecture.”
IBM Operational Decision Management
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Compliance and Reporting
IBM Operational Decision ManagementUse Case
Key Challenges in Compliance and ReportingBusinesses face numerous challenges to comply with regulations and internal policies
Inability to show why specific transactions were authorized
Inability to show why specific transactions were authorized
Need to reduce workload and manual touch points
Need to reduce workload and manual touch points
Need for common compliance enforcement across lines of business
Need for common compliance enforcement across lines of business
Inability to quickly implementcomplex regulatory changes
Inability to quickly implementcomplex regulatory changes
Need for transparency and reporting with audit trails
Need for transparency and reporting with audit trails
Compliance and Reporting
Compliance and Reporting
Improving Competitiveness in Compliance & Reporting
Key trends driving decision management solutions
RiskAwareness
Companies integrate
risk and compliance
considerations into
all decision-making
Regulations
Regulatory pressures force financial firms to re-think the value of technologies used to operate effectively and manage risk
TimelyActions
Firms make actionable, optimized and timely decisions to comply by keeping risks at anticipated and acceptable levels
Technology
Technology brings a new economic system that redefines relationships between bankers, customers, partners and regulators
Sample Compliance and Reporting DecisionsExamples of Business Rules, Rule Flows and Decision Tables
A UK Pharmaceutical CompanyAccelerating compliance with the Sunshine Act of 2010
ChallengesChallenges
Sunshine Act mandates disclosure of financial payments to physicians and teaching hospitals
Requires manipulation of multiple complex rule sets in a rapidly changing regulatory climate.
Since preexisting state laws remain, companies must deal with various standards of reporting concurrently
BenefitsBenefits
Compliance managers can define and maintain the decisions and rules that apply to the Act, reducing the amount of time and effort required to update systems
The sales force has the ability to proactively manage its promotional spending so that it does not exceed its limits and risk noncompliance.
Integrates multiple reporting systems for logging promotional expenses and then verifies and transforms them into a single database
BRMS extracts the data for state reporting, determines what data is appropriate and uploads that data for report generation
Solution
Software Offerings:IBM Operational Decision Management
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Dynamic Pricing and Bundling
IBM Operational Decision ManagementUse Case
Key Challenges with Dynamic Pricing and BundlingBusinesses face numerous obstacles to growing revenue profitably
Inability to accurately calculate price for complex product bundles
Inability to accurately calculate price for complex product bundles
Inability to assess the impact of new product bundles on profitability
Inability to assess the impact of new product bundles on profitability
Streamline and scale pricing systems to improve consistency of quotes
Streamline and scale pricing systems to improve consistency of quotes
Inability to use customer data to create the right bundle for each customer
Inability to use customer data to create the right bundle for each customer
Inability to roll out new pricing plays quickly
Inability to roll out new pricing plays quickly
Dynamic Pricing and Bundling
Dynamic Pricing and Bundling
Improving Competitiveness in Dynamic Pricing and Bundling
Key trends driving decision management solutions
Dynamic Packaging has
Perceived Value
Nearly one-fourth of all online travel buyers have bought travel combinations with nearly 80% creating the package themselves
Dynamic Pricing Creates Opportunities
Using the richest information possible – what they buy; how much they spend, how competitors book – dynamic pricing allows online companies to tailor prices to an individual’s spending inclination
Sample Dynamic Pricing and Bundling DecisionsExamples of Business Rules, Rule Flows and Decision Tables
Accovia Inc.Enables dynamic packaging and pricing for travel industry customers
ChallengesChallenges
Consumers are demanding more options and control over their travel choices
Pre-packaged and pre-priced products are waning
Tour planning, pricing and booking take place in an increasingly dynamic environment where travellers package and manage their own tours
BenefitsBenefits
Enhances customer satisfaction by enabling booking engines to meet traveler demand for real-time dynamic packaging and booking
Speeds time to market, reducing the time required to build new products from months to weeks
Increases pricing competitiveness
Booking engines can now calculate pricing in real-time as customers design their individualized packages
Specialists develop strategically important seasonal offerings using complex rules
Business users deploy tactical responses to daily fluctuations in pricing
Solution
Software Offerings:IBM Operational Decision Management
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Fraud Detection
IBM Operational Decision ManagementUse Case
Key Challenges in Fraud DetectionFinancial institutions & insurance providers face numerous challenges to handle fraud
Inability to quickly adapt to new fraud patterns
Inability to quickly adapt to new fraud patterns
Reduce workload on fraud investigators
Reduce workload on fraud investigators
Inability to effectively prioritize potential fraudulent activity
Inability to effectively prioritize potential fraudulent activity
Need a systematic approach to handle fraud
Need a systematic approach to handle fraud
Increased fraud costs due to undetected fraud activity
Increased fraud costs due to undetected fraud activity
Fraud Detection
Fraud Detection
Improving Competitiveness in Fraud Detection
Key trends driving decision management solutions
Growing Incidence of
Fraud
An estimated 10 percent of all U.S. P&C claims are fraudulent, so reducing fraud by as little as one or two percentage points can push millions of dollars to a carrier's bottom line
Automation Critical
Technology solutions can help avoid the time and labor-intensive processes associated with manual fraud detection
More Technology Investments
Required
Business Rules technology will help notify legitimate customers of fraud and taking immediate action to prevent fraudsters from succeeding.
Sample Fraud Detection DecisionsExamples of Business Rules
A Large Korean Insurance Company Boost profitability by identifying fraudulent claims quickly and accurately
ChallengesChallenges
No effective and expeditious method of detecting and preventing fraud across over one million policyholders
Company profits were eroding with the rapid growth in policies due to costs of manual processes
BenefitsBenefits
Realize $1.4 billion in additional profits, while reducing liability fees by nearly 12 percent
Accelerate fraud detection process by 50 percent using automated claims processing
Reduce inspection time for 10,000 cases from 2 weeks to 1 day
Scans thousands of claims in real-time, assessing them for legitimacy or fraud based on 800 different factors
Applies business rules, predictive analytics and knowledge models against historical data, detecting patterns and ranking them in order of likely fraudulence.
Solution
Software Offerings:
“Moving forward, we anticipate that the solution will continue to help reduce the amount of fraud by millions of dollars on an annual basis
IBM Operational Decision Management
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Eligibility Determination
IBM Operational Decision ManagementUse Case
Key Challenges with Eligibility DeterminationSocial services providers face obstacles to deliver the right benefits to the right people
Inability to prove regulatory compliance during enrollment
Inability to prove regulatory compliance during enrollment
Reduce the cost of enrollment into social programs
Reduce the cost of enrollment into social programs
Need to streamline eligibility determination to improve citizen experience
Need to streamline eligibility determination to improve citizen experience
Inability to handle complex, changing eligibility conditions
Inability to handle complex, changing eligibility conditions
Inability to roll out new benefit programs to citizens quickly
Inability to roll out new benefit programs to citizens quickly
Eligibility Determination
Eligibility Determination
Improving Competitiveness in Eligibility Determination
Key trends driving decision management solutions
Error-prone Processes
For government caseworkers, the challenge of administering numerous benefit programs can be daunting and error prone
Lower Costs of
Maintenance
Rules-based systems are simpler to maintain than custom-developed systems and opens up change maintenance by business users
Aging Population Generating
Demand
Social security agencies worldwide are focusing on streamlining eligibility determination, case management and benefits delivery
Sample Eligibility Determination DecisionsExamples of Business Rules, Scorecards and Rule Flows
Junta de Castilla y León Improves administration of social services
ChallengesChallenges
New laws and regulations for dependent peoples were driving the need to re-engineer its IT systems for implementing programs
New social benefits needed to be offered with precisely defined eligibility criteria
Customer service was lacking
BenefitsBenefits
Faster delivery of social benefits requiring less interaction between citizens and the administration
Transparent decisions through consistent scoring of eligibility criteria across all the agency’s centers
Empowerment of policy managers that allows them to review, validate and maintain policies directly
External business rules are used to provide a decision service to score applications and assess eligibility
Automates the processing of most of the paperwork, while centrally managing rules associated with eligibility
Solution
Software Offerings:
IBM Operational Decision Management
40
Cross-sell, Up-sell, Product Recommendations
IBM Operational Decision ManagementUse Case
Cross-Sell, Up-Sell and Product RecommendationsChallenges to growing revenue profitably with complex products and services
Inadequate training to cross-sell complex financial products
Inadequate training to cross-sell complex financial products
Improve pre-qualification to increase up-sell accuracy
Improve pre-qualification to increase up-sell accuracy
Inability to cross-sell effectively without a single view of the customer
Inability to cross-sell effectively without a single view of the customer
Inability to connect offers to the right customer segments
Inability to connect offers to the right customer segments
Self-service portals lack fidelity to make good product recommendations
Self-service portals lack fidelity to make good product recommendations
Cross-Sell, Up-Sell and Product
Recommendations
Cross-Sell, Up-Sell and Product
Recommendations
Improving Competitiveness in Cross-sell, Up-sell, Product Recommendations
Key trends driving decision management solutions
Online Technology Spending Increasing
Agents are given the ability to push relevant, timely, and personalized offers to the right customer at the right time
Need Comprehensive Customer View
Need value-added metrics and analytics around the customer's risk, profitability, preferences and satisfaction level
Know Your Customer
Needs
Understanding what your customers needs are, before blindly sending them emails and credit card offers leads to customers feeling valued
Sample Product Recommendation DecisionExamples of Business Rules, Decision Tables and Rule Flows
BNP Paribas Enables personalized offers to their customers through any channel
ChallengesChallenges
Cross-sell and up-sell opportunities were not taken advantage of due to critical data in silos across departments
Customer loyalty was difficult to maintain due to inconsistencies in service across local branches, web or mobile phone
BenefitsBenefits
Enables bank to personalize offers through any channel based on each customer’s profile
Reduced time to market for new products from weeks to days
Improved competitiveness with the ability to flexibly and rapidly evolve offers based on market conditions and new regulatory requirements
Using business rules, the bank can precisely define highly variable decision logic with respect to eligibility and pricing
Business users are provided with comprehensive governance capabilities to effectively manage large numbers of interrelated rules
Solution
Software Offerings:
IBM Operational Decision Management
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Customer Insight and Loyalty
IBM Operational Decision ManagementUse Case
Key Challenges with Customer Insight and Loyalty ProgramsBusinesses face numerous obstacles to retain and gain new customers
Inability to make selective and personalized customer touches
Inability to make selective and personalized customer touches
Need to simplify administration of loyalty programs
Need to simplify administration of loyalty programs
Need to reduce the cost and workload to run new promotions
Need to reduce the cost and workload to run new promotions
Inability to quickly roll out new promotions
Inability to quickly roll out new promotions
Inability to gain customer insight from disjointed loyalty programs
Inability to gain customer insight from disjointed loyalty programs
Customer Insight and Loyalty Programs
Customer Insight and Loyalty Programs
Improving Competitiveness in Customer Insight & Loyalty Programs
Key trends driving decision management solutions
Campaign Fatigue
Fifty-four percent of consumers surveyed said they are thinking of leaving loyalty programs of brands that offer low-value incentives, impersonal engagements and a rash of irrelevant messages
Targeted Promotions
20% of consumers that belonged to a loyalty club had never received a personalized offer. 73% said they were targets of promotions for products that they already owned
Customer Centricity
Many organizations don’t apply customer data across all facets of their business - they have not committed to putting the customer at the center of their purpose
Customer Loyalty DecisionsExamples of Business Rules and Rule Flows
A Beauty Care Retailer Meets customer’s expectations by better understanding their needs
ChallengesChallenges
Paper-based loyalty program offered limited visibility into the buying activities of its customers
Manual processes were slow to capitalize on sales opportunities
Customers and store staff frequently found promotions confusing and difficult to use
BenefitsBenefits
Keeps decision makers better informed with real-time visibility into sales trends and customer buying patterns
Improves customer satisfaction with an automated targeted promotions system
Standardizes promotion efforts across 1500 retail locations
New loyalty program captures sales data in real-time enabling a rapid response to new trends
Using business rules this retailer automates rewards and promotion management to offer customers the best promotions at checkout
Promotions are uniquely targeted based on customers individual buying histories
Solution
Software Offerings:IBM Operational Decision Management
50
Customs and Control
IBM Operational Decision ManagementUse Case
Key Challenges with Customs and Border ControlGovernments face the need to protect their borders while facilitating trade
Deploy border control resources efficiently and prioritize security threats
Deploy border control resources efficiently and prioritize security threats
Provide e-file customs checks for large exporters and importers
Provide e-file customs checks for large exporters and importers
Apply new border crossing procedures into operation quickly
Apply new border crossing procedures into operation quickly
Pre-validate customs declarations before goods arrive at borders
Pre-validate customs declarations before goods arrive at borders
Pre-screen travelers for red flags before date of travel
Pre-screen travelers for red flags before date of travel
Compliance and Reporting
Compliance and Reporting
Improving Competitiveness in Customs & Border Control
Key trends driving decision management solutions
Security vs Privacy
Our privacy laws and our conceptions of privacy cannot withstand the technological change that is happening and the cyber conflict that is developing
Pre-Screened Traveler
Programs
There will be an increase of automated pre-screening of travelers – technology to determine membership and real-time verification will be required
Automated Traveler
Processing
Virtual Officers are an expanding trend to process trusted traveler applicants and they flag questionable interviews for a follow-up interview with human officers
Sample Customs and Border Control DecisionsExamples of Business Rules, Decision Tables and Rule Flows
Swiss Customs Automates plausibility analysis for customs declarations
ChallengesChallenges
Importers and exporters are constantly trying to cheat the customs system that uses 700 business rules to determine plausibility of a declaration
Over 1500 different systems are required to be interconnected to the automatic declarations system
System must process 200,000 declarations per day
BenefitsBenefits
Business rules used within the plausibility analysis are reused by several different clearance processes thus increasing the efficiency of administration
Customs professionals can administer the rules directly thus guaranteeing flexibility and speed in adaptation of the rules
The new E-dec system stores all business rules in a central repository allowing customs professionals to create and adapt plausibility rules.
Business rules also generates detailed reports available to clients on the web site to ensure clients understand what is required to make a correct declaration
Solution
Software Offerings:
IBM Operational Decision Management
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Why Operational Decision Management?
Operationalize policy changes in days versus months Decrease cost of implementing business practices, policies & regulations
Improve straight-through-processing Involve business users for change requests with built-in governance
Implement more fine-grained, targeted decisions Perform what-if and impact analyses prior to deployment
Automate and consistently enforce decision policies Ensure policies and associated semantics are consistent across channels
Track what decisions were made and why (runtime) Track what policies were changed and by whom (rule management)
Agility
Efficiency and Productivity
Decision Quality and Precision
Consistency
Transparency, Auditability, Compliance
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Merci
Grazie
Gracias
ObrigadoDanke
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