© 2010 Knowledge Partners International LLC ● ● Introducing The Decision Model Barbara von Halle

© 2010 Knowledge Partners International LLC ● ● 2 Value Proposition Business Decisions and their Logic are the key drivers of the success of an enterprise. The Decision Model adoption enables organizations to manage Business Decisions and their Logic. KPI provides convenient fixed-priced and time–boxed consulting engagements Benefits are: – Unambiguous, traceable and complete Requirements – Most rapid approach to capturing business logic – Straight through processing from requirements to automation enabling agility and governance in decision logic – Significant simplification of business process

© 2010 Knowledge Partners International LLC ● ● 3 Who is KPI? Publications Thought Leader The Decision Model Business Logic Framework linking Business with Technology Business Process Management Business Decision Management Business Rule Management Enterprise Architecture Business Analysis Requirements Testing Services FirstSTEP Service to create unambiguous, and complete Requirements KPISTEP Service to perceive, organize and manage Business Processes and Rules with Decision Models STEPment Mentoring of clients to achieve self-reliance with Center of Excellence Training & Certification Experience Financial Services Insurance Healthcare Government Utilities Transportation Telecommunication Energy

© 2010 Knowledge Partners International LLC ● ● 4 Agenda Current State: Business Rules The Decision Model Bottom Up The Decision Model Top Down Impact on Business Process Real World Testimony – Game Changing

© 2010 Knowledge Partners International LLC ● ● 5 “Big Ball of Mud” Foote & Yoder Software Application

© 2010 Knowledge Partners International LLC ● ● 6 Separation of Concerns Component Based Application Architecture Ken Orr Security Component Workflow Component Transaction Component Presentation Component Base Application Reporting/BI Component Database Component Business Logic Business Logic What happens to business logic today? Business rules

© 2010 Knowledge Partners International LLC ● ● Knowledge Partners International LLC ● ● 7 Business Logic Business Logic Business Rule Documentation Business Process Model All Too Familiar? Is this Acceptable?

© 2010 Knowledge Partners International LLC ● ● 8 Business Logic Business Logic Business Process Model Decision Shape How Does this look better?

© 2010 Knowledge Partners International LLC ● ● Knowledge Partners International LLC ● ● 9 Business Logic Business Logic Where did the business rules go? What Decision Model Rule Family Rule Family Table Atomic Logic Statement

© 2010 Knowledge Partners International LLC ● ● 10 Agenda Current State: Business Rules The Decision Model Bottom Up The Decision Model Top Down Impact on Business Process Real World Testimony – Game Changing

© 2010 Knowledge Partners International LLC ● ● 11 Definition of Business Logic Business Logic is the means by which the business derives conclusions from conditions. The simplest case is the evaluation of a single condition, leading to a single conclusion. Person’s likelihood of defaulting on a loan is “high” Person’s credit rating < 500 condition conclusion

© 2010 Knowledge Partners International LLC ● ● 12 What is an Atomic Business Logic Statement? One and only one conclusion fact type, such as: – Person’s likelihood of defaulting on a loan – Claim’s payment amount – Student’s eligibility for financial aid packages As many conditions as needed, even zero All conditions ANDed together No Ors, ELSEs, BUTs, OTHERWISEs (these have created the chaos in current systems!)

© 2010 Knowledge Partners International LLC ● ● 13 Why are Atomic Pieces Good? Ultimate simplicity Everyone reduces conditions and conclusions to exactly the same pieces Rigorous principles lead to assembling the pieces in one and only one way Easy to SEE errors and omissions Extremely easy to validate and maintain Extremely easy to implement in technology

© 2010 Knowledge Partners International LLC ● ● Knowledge Partners International LLC ● ● 14 The Rule Family is a Two Dimensional Table Person’s Credit Score Person’s Credit Score < < 500 Person’s Employment History Person’s Employment History Is Unstable Person’s Misc Loan Amount Person’s Misc Loan Amount Is High ANDAND ANDAND ANDAND ANDAND Person’s Likelihood of Defaulting on a Loan Person’s Likelihood of Defaulting on a Loan Is High Multiple Logic Statements that Look Like This: Become Two Dimensional Tables called Rule Families Like This: Rule Families are Tables that Conform to Rigorous Principles

© 2010 Knowledge Partners International LLC ● ● 15 Where Do We Get the Condition Values? Starting with the first condition, we ask where its values come from: a web page or a file? Is it raw, stored data? Is it the result of execution logic? Person’s Credit Score comes from an outside service, simply raw data. The value for Person’s Employment History is an internal judgment or decision. It comes from evaluating other conditions, such as: – Person’s Years at Current Employer – Person’s Number of Jobs in the Past Five Years. What to do? ConditionsConclusion Person’s Credit Score Person’s Employment History Person’s Miscellaneous Loans Amount Person’s Likelihood of Defaulting on a Loan <500IsUnstableIsHighisHigh

© 2010 Knowledge Partners International LLC ● ● 16 Two Rule Families We create another Rule Family, this one with conclusion column for Person’s Employment History This conclusion is known as an Interim Conclusion because it need not be stored, it is a conclusion-in-flight (during execution) This Rule Family comes to a conclusion about a Person’s Employment History based on two conditions: Person’s Years at Current Employer and Person’s Number of Jobs in Past Five Years. These two Rule Families are naturally linked together with an “inferential relationship” ConditionsConclusion Rule Pattern Person’s Credit Score Person’s Employment History Person’s Miscellaneous Loans Amount Person’s Likelihood of Defaulting on a Loan 1isPoorIsPoorisHighisHigh ConditionsConclusion Rule Pattern Person’s Years at Current Employer Person’s Number of Jobs in Past Five Years Person’s Employment History

© 2010 Knowledge Partners International LLC ● ● 17 Agenda Current State: Business Rules The Decision Model Bottom Up The Decision Model Top Down Impact on Business Process Real World Testimony – Game Changing

© 2010 Knowledge Partners International LLC ● ● Knowledge Partners International LLC ● ● 18 Determine Policy Renewal Method Decision Model Notation

© 2010 Knowledge Partners International LLC ● ● Knowledge Partners International LLC ● ● 19 Determine Policy Renewal Method Decision Model Notation Policy Renewal Method Policy Pricing Within Bounds Policy Underwriting Risk Manual Underwriting Indicator

© 2010 Knowledge Partners International LLC ● ● Knowledge Partners International LLC ● ● 20 Policy Renewal Method Policy Pricing Within Bounds Policy Underwriting Risk Manual Underwriting Indicator Determine Policy Renewal Method Decision Model Notation

© 2010 Knowledge Partners International LLC ● ● Knowledge Partners International LLC ● ● 21 Policy Renewal Method Policy Pricing Within Bounds Policy Underwriting Risk Manual Underwriting Indicator Policy Pricing Within Bounds Policy Discount Policy Tier Determine Policy Renewal Method Decision Model Notation

© 2010 Knowledge Partners International LLC ● ● Knowledge Partners International LLC ● ● 22 Policy Renewal Method Policy Pricing Within Bounds Policy Underwriting Risk Manual Underwriting Indicator Policy Pricing Within Bounds Policy Discount Policy Tier Determine Policy Renewal Method Decision Model Notation

© 2010 Knowledge Partners International LLC ● ● Knowledge Partners International LLC ● ● 23 Policy Underwriting Risk Insured Major Ownership Change Insured Major Location Change Policy Annual Premium Policy Discontinued Agent Insured Major Ownership Change Insured Minority Stockholder Insured Majority Stockholder Insured Board Change Insured CEO Change Insured Major Location Change Insured Location Zip-5 Insured Location Occupied Square Footage Insured Location Construction Policy Discount Policy Grade Package Grade Package Discount Location State Category When is it Finished? How Big Are They? Policy Renewal Method Policy Pricing Within Bounds Policy Underwriting Risk Manual Underwriting Indicator Policy Pricing Within Bounds Policy Discount Policy Tier Determine Policy Renewal Method

© 2010 Knowledge Partners International LLC ● ● 24 Agenda Current State: Business Rules The Decision Model Bottom Up The Decision Model Top Down Impact on Business Process Real World Testimony – Game Changing

Option 1 Option 2 Option 3: Process Model Decision Rule Family Table Decision Model Diagram The Decision Model Difference in Process Models Person’s Debt Person’s Employment History Person’s Credit Rating

© 2010 Knowledge Partners International LLC ● ● Knowledge Partners International LLC ● ● 26 Decision Business Motivation Model Decision Model: business rules and business logic Process Model Use Cases SOA Components Business Requirements & Test Cases Vocabulary Models: Glossary/Semantic Model Logical Data Model Object Model Enterprise Business Unit Function Business Unit Function Organization Model

© 2010 Knowledge Partners International LLC ● ● 27 Agenda Current State: Business Rules The Decision Model Bottom Up The Decision Model Top Down Impact on Business Process Real World Testimony – Game Changing

© 2010 Knowledge Partners International LLC ● ● 28 Real World Testimonial “The Decision Model’s principles and normalization rules give us confidence we can get repeatability and consistency amongst business analysts when performing rules analysis. In addition, the structural integrity of the Decision Model makes the technology implementation straightforward IT and Operations have agreed to use our decision model as business requirements for business logic changes – this will greatly speed up the change process” We reduced from policy change to automation by 30% in time, while delivering 66% more changes Mark Pettit, Freddie Mac, Operations Management Group, MIT IQIS, July 15, 2010

© 2010 Knowledge Partners International LLC ● ● 29 Three Ways We Can Help Fixed price Time boxed Pilot / Scope (3 weeks) Pilot / Scope (3 weeks) Training Off-Site 5 weeks Off-Site 5 weeks On- 1 week On- 1 week Certification Off-Site 5 weeks Off-Site 5 weeks On- 1 week On- 1 week 1. KPISTEP: We lead and mentor you in creating process models and Decision Models 2. FirstSTEP: We lead and mentor you in creating requirements with The Decision Model and Visualization 3. STEPment: We provide part-time offsite mentoring Benefits: Collaboration with the originators of The Decision Model Proven track record of implementing The Decision Model in multiple industries Technology and Methodology independent Fixed price and time boxed Efficient Knowledge Transfer

© 2010 Knowledge Partners International LLC ● ● 30 How to Learn More Visit FREE PRIMER Updated Events Download White Papers News Become a member of the OPEN Linkedin The Decision Model Group Read our articles and buy our books Join our presentations Contact us Phone