Operational Decision Management
- Top 10 Use Cases
Bálint Tóth
IBM Hungary
Common Themes that Signal a good fit for ODM
Frequency
of rule
Frequency
ofchanges
rule changes
Rules are hard to manage/buried in applications
Need
increased
businessbusiness
user involvement
Needforfor
increased
user
involvement
Need to to
boost
straight-through
processing processing
Need
boost
straight-through
Lack of consistency of rules across applications
and channels
Lack of of
traceability
/ auditability
Lack
traceability
/ auditability
2
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
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Credit and Loan Approvals
IBM Operational Decision Management
Use Case
Key Challenges in Credit and Loan Approvals
Lenders face numerous obstacles to grow revenue profitably
Slow manual processes
for loan approval
Low customer
satisfaction
Credit & Loan
Approvals
Changing regulatory
requirements
Error-prone
processes
Challenging
system integration
Areas for Improving Competitiveness in Credit & Loan Approvals
Loan
Origination
 Reduce time and cost
by increasing straightthrough 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
Key credit approval challenges addressed by
operationalizing business decisions
Benefits of Using Operational Decision Management
Category
Business Benefits
 Enable flexible management of eligibility and credit decisioning rules
Externalize
Decisions
Frequency
of Change
Empower
Business Users
 Ensure consistency across all products and channels
 Focus IT on strategic work and not tedious rule maintenance across multiple legacy
systems
 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
 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
 Limit manual work in the decisioning process to make best use of human resources
Reduce
Operating Costs
 Using validation methods that show which business rules were used to make a
decision, considerably reducing the effort required to develop and maintain
applications
Sample Credit & Loan Approval Decisions
Examples of Business Rules, Rule Flows and Decision Tables
Novagalicia Bank
Improve product processing through automation of routing rules
Challenges
 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
Benefits
 Time to implement changes to routing rules went
from days to hours
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Solution
 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
 Overnight processing of 200,000 non-payments
completes in only 14 minutes vs hours previously
 Various channels were
supported including Web and
branch systems
 Business users are able to manage the business
rules themselves
Software Offerings:
IBM Operational Decision Management
Claims Processing
IBM Operational Decision Management
Use Case
Key Challenges in Claims Processing
Insurance providers face numerous obstacles to grow revenue profitably
High claim processing costs
including claims leakage
Lengthy claims processing cycle
with manual practices
Claims
Processing
Lack of transparency throughout
the claims process and need
to show compliance
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Inaccurate claims assessment
& delayed settlements
Inability to align adjuster skill set
with claim complexity
Improving Competitiveness in Claims Processing
Healthcare
Claims
Resource
Efficiency
Health care reform is
leading to retail
purchasing models which
demand error-free, realtime processing of claims
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.
Key trends driving decision management solutions
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Benefits of Using Operational Decision Management
Category
Externalize
Decisions
Frequency
of Change
Empower
Business Users
Reduce
Operating Costs
Business Benefits
 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
 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
 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
 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
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Sample Claims Processing Decisions
Examples of Business Rules and Decision Tables
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Worksafe Victoria
Improves efficiencies and productivity in their agents
Challenges
 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
Benefits
 Improved processing throughput by 300%
Solution
 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
 Reduced payment cycle time from 30 days to 1 day
 Increased straight-through-processing rates from
40% to over 80%
Software Offerings:
IBM Operational Decision Management
“[Agents] have been given the ability to do the higher valued work that they've wanted to do in the
15
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..”
Underwritting
IBM Operational Decision Management
Use Case
Key Challenges in Underwriting
Insurance providers face numerous obstacles to grow revenue profitably
Inability to assess risk accurately
leading to mispriced rates
Low straight-through-processing
leading to higher costs
Underwritting
Inability to create flexible risk
tiers to match customer
segmentation
Inability to roll out new
insurance products
quickly
Aging pool of experienced
underwriters
Improving Competitiveness in Underwriting
Process
Automation
Automated underwriting
solutions are expanding
to deliver policies in a
cost-effective manner
Microsegmentation
Focus on
Higher Value
Add
Many insurers are
moving towards microsegmentation:
Finding the 18-year-old
male drivers who aren’t
bad drivers then selling
to them at a better price
The next generation of
underwriters are
focusing on the valueadded activities of
analyzing, selling,
negotiating and
managing relationships
Key trends driving decision management solutions
Sample Underwriting Decisions
Examples of Business Rules, Rule Flows and Decision Tables
A Canadian Property & Casualty Insurance Group
Improves speed to market and transparency across lines of business
Challenges
 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
Solution
 Lack of consistency across processes in different
lines of business
 Implemented an e-commerce
foundation for common service
delivery.
Benefits
 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
 Business rules automate the
underwriting process (P&C,
Auto), quoting, product
selection and application flow
 Rule execution performance is
in mili-seconds
Software Offerings:
IBM Operational Decision Management
“We selected IBM because of its ease-of-use, advanced rule management capabilities for business
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and IT users, and tight integration in a service-oriented architecture.”
Compliance and Reporting
IBM Operational Decision Management
Use Case
Key Challenges in Compliance and Reporting
Businesses face numerous challenges to comply with regulations and internal policies
Inability to quickly implement
complex regulatory changes
Need for transparency and
reporting with audit trails
Compliance
and Reporting
Inability to show why specific
transactions were authorized
Need for common compliance enforcement
across lines of business
Need to reduce workload
and manual touch points
Improving Competitiveness in Compliance & Reporting
Risk
Awareness
Companies integrate
risk and compliance
considerations into
all decision-making
Regulations
Timely
Actions
Regulatory pressures
force financial firms to
re-think the value of
technologies used to
operate effectively
and manage risk
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
Key trends driving decision management solutions
Sample Compliance and Reporting Decisions
Examples of Business Rules, Rule Flows and Decision Tables
A UK Pharmaceutical Company
Accelerating compliance with the Sunshine Act of 2010
Challenges
 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
Benefits
 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.
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Solution
 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
Software Offerings:
IBM Operational Decision Management
Dynamic Pricing and Bundling
IBM Operational Decision Management
Use Case
Key Challenges with Dynamic Pricing and Bundling
Businesses face numerous obstacles to growing revenue profitably
Inability to use customer data to create
the right bundle for each customer
Inability to roll out new pricing
plays quickly
Dynamic
Pricing and
Bundling
Inability to accurately calculate price
for complex product bundles
Inability to assess the impact of new
product bundles on profitability
Streamline and scale pricing systems to
improve consistency of quotes
Improving Competitiveness in Dynamic Pricing and Bundling
Dynamic
Packaging has
Perceived Value
Dynamic
Pricing Creates
Opportunities
Nearly one-fourth of all online
travel buyers have bought travel
combinations with nearly 80%
creating the package themselves
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
Key trends driving decision management solutions
Sample Dynamic Pricing and Bundling Decisions
Examples of Business Rules, Rule Flows and Decision Tables
Accovia Inc.
Enables dynamic packaging and pricing for travel industry customers
Challenges
 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
 Booking engines can now
calculate pricing in real-time as
customers design their
individualized packages
Benefits
 Specialists develop strategically
important seasonal offerings
using complex rules
 Enhances customer satisfaction by enabling booking
engines to meet traveler demand for real-time
dynamic packaging and booking
 Business users deploy tactical
responses to daily fluctuations
in pricing
 Speeds time to market, reducing the time required to
build new products from months to weeks
Software Offerings:
 Increases pricing competitiveness
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Solution
IBM Operational Decision Management
Fraud Detection
IBM Operational Decision Management
Use Case
Key Challenges in Fraud Detection
Financial institutions & insurance providers face numerous challenges to handle fraud
Need a systematic approach to
handle fraud
Increased fraud costs due to
undetected fraud activity
Fraud
Detection
Inability to quickly adapt
to new fraud patterns
Reduce workload on fraud
investigators
Inability to effectively prioritize
potential fraudulent activity
Improving Competitiveness in Fraud Detection
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.
Key trends driving decision management solutions
Sample Fraud Detection Decisions
Examples of Business Rules
A Large Korean Insurance Company
Boost profitability by identifying fraudulent claims quickly and accurately
Challenges
 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
Benefits
 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
weeks to 1 day
2
Solution
 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.
Software Offerings:
IBM Operational Decision Management
“Moving forward, we anticipate that the solution will continue to help reduce the amount of fraud
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by millions of dollars on an annual basis
Eligibility Determination
IBM Operational Decision Management
Use Case
Key Challenges with Eligibility Determination
Social services providers face obstacles to deliver the right benefits to the right people
Inability to handle complex, changing
eligibility conditions
Inability to roll out new benefit
programs to citizens quickly
Eligibility
Determination
Inability to prove regulatory
compliance during enrollment
Need to streamline eligibility determination
to improve citizen experience
Reduce the cost of enrollment
into social programs
Improving Competitiveness in Eligibility Determination
Error-prone
Processes
Lower
Costs of
Maintenance
Aging
Population
Generating
Demand
For government
caseworkers, the
challenge of
administering numerous
benefit programs can be
daunting and error prone
Rules-based systems are
simpler to maintain than
custom-developed
systems and opens up
change maintenance by
business users
Social security agencies
worldwide are focusing
on streamlining eligibility
determination, case
management and
benefits delivery
Key trends driving decision management solutions
Sample Eligibility Determination Decisions
Examples of Business Rules, Scorecards and Rule Flows
Junta de Castilla y León
Improves administration of social services
Challenges
 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
Benefits
 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
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Solution
 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
Software Offerings:
IBM Operational Decision Management
Cross-sell, Up-sell, Product
Recommendations
IBM Operational Decision Management
Use Case
Cross-Sell, Up-Sell and Product Recommendations
Challenges to growing revenue profitably with complex products and services
Inability to connect offers to the right
customer segments
Self-service portals lack fidelity to make
good product recommendations
Cross-Sell, UpSell and Product
Recommendations
Inadequate training to cross-sell
complex financial products
Inability to cross-sell effectively without a
single view of the customer
Improve pre-qualification to
increase up-sell accuracy
Improving Competitiveness in Cross-sell, Up-sell, Product
Recommendations
Online
Technology
Spending
Increasing
Need
Comprehensive
Customer View
Know Your
Customer
Needs
Agents are given the
ability to push relevant,
timely, and personalized
offers to the right
customer at the right time
Need value-added metrics
and analytics around the
customer's risk,
profitability, preferences
and satisfaction level
Understanding what your
customers needs are,
before blindly sending
them emails and credit
card offers leads to
customers feeling valued
Key trends driving decision management solutions
Sample Product Recommendation Decision
Examples of Business Rules, Decision Tables and Rule Flows
BNP Paribas
Enables personalized offers to their customers through any channel
Challenges
 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
Benefits
 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
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Solution
 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
Software Offerings:
IBM Operational Decision Management
Customer Insight and Loyalty
IBM Operational Decision Management
Use Case
Key Challenges with Customer Insight and Loyalty Programs
Businesses face numerous obstacles to retain and gain new customers
Inability to quickly roll out
new promotions
Inability to gain customer insight from
disjointed loyalty programs
Customer Insight
and Loyalty
Programs
Inability to make selective and
personalized customer touches
Need to reduce the cost and workload
to run new promotions
Need to simplify administration
of loyalty programs
Improving Competitiveness in Customer Insight & Loyalty Programs
Campaign
Fatigue
Targeted
Promotions
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
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
Key trends driving decision management solutions
Customer Loyalty Decisions
Examples of Business Rules and Rule Flows
A Beauty Care Retailer
Meets customer’s expectations by better understanding their needs
Challenges
 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
Benefits
 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
50
Solution
 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
Software Offerings:
IBM Operational Decision Management
Customs and Control
IBM Operational Decision Management
Use Case
Key Challenges with Customs and Border Control
Governments face the need to protect their borders while facilitating trade
Pre-validate customs declarations
before goods arrive at borders
Pre-screen travelers for red flags
before date of travel
Compliance
and Reporting
Deploy border control resources efficiently
and prioritize security threats
Provide e-file customs checks for
large exporters and importers
Apply new border crossing procedures into
operation quickly
Improving Competitiveness in Customs & Border Control
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
Key trends driving decision management solutions
Sample Customs and Border Control Decisions
Examples of Business Rules, Decision Tables and Rule Flows
Swiss Customs
Automates plausibility analysis for customs declarations
Challenges
 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
Benefits
 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
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Solution
 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
Software Offerings:
IBM Operational Decision Management
Why Operational Decision Management?
Agility
Efficiency and
Productivity
 Improve straight-through-processing
 Involve business users for change requests with built-in governance
Decision
Quality and
Precision
 Implement more fine-grained, targeted decisions
 Perform what-if and impact analyses prior to deployment
Consistency
 Automate and consistently enforce decision policies
 Ensure policies and associated semantics are consistent across channels
Transparency,
Auditability,
Compliance
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 Operationalize policy changes in days versus months
 Decrease cost of implementing business practices, policies & regulations
 Track what decisions were made and why (runtime)
 Track what policies were changed and by whom (rule management)
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