A Smarter Approach to Processes and Decisions

1. A Smarter Approach to Processes and Decisions Proven patterns for successful process improvement Bill Hahn BPM Solution Architect IBM Software Group, North America Mike Huseman WW BPM and Decision Management IBM Software Group

2. Agenda • The Agility Challenge • Patterns for Success • Business Process Management • Decision Management • BPM & DM Together • Projects to Programs to Transformation

3. Business Growth & Complexity 3

4. CEOs Recognize the Challenges and Opportunities as the Business Network Becomes More Dynamic “In these uncertain times, effective and swift decision making is more important than ever.” Shuzo Sumi, President and CEO Tokio Marine Holdings, Inc. “Our products need to anticipate need, rather than respond to a request.” Michael D’Ascenzo, Commissioner of Taxation, Australian Taxation Office “The complexity over the next five years is off the charts – a 100 on your scale from 1 to 5” Edward Lonergan, President and CEODiversey, Inc. 4 IBM Global CEO Survey, Institute for Business Value, 2010

5. 240x Doing More with Less… Engagement & Self-Service Business Participants Developers Rest of IT Leveraging yourknowledge workers can be a huge opportunity

6. Agenda • The Agility Challenge • Patterns for Success • Business Process Management • Decision Management • BPM & DM Together • Projects to Programs to Transformation

7. Process is everywhere Solution Pattern 1: Business Process Management Campaign Management Account Opening Vendor On-boarding Regulatory Compliance Order Fulfillment Customer Problem Handling 8

8. 1 3 6 5 2 4 Typical process problems Customer Service Finance and Ops Account Administration • Unstructured Tasks and Communication (ex Paper or email) • Inefficient Working Environment Spans Systems • Inconsistent Prioritization • Incomplete or Inaccurate Data Flow Between Systems • Lack of Control Over System and Business Events (Exceptions) • Poor Visibility Into Process Performance 1 Executive Management 2 3 Invoice Reconciliation Teams 4 5 6 9

9. BPM brings order to the chaos • Automate workflow & decision making • Reduce errors and improve consistency • Standardize resolution across geographies • Leverage existing systems and data • Monitor for business events and initiate actions • Real-time visibility and process control • Business Benefits: • Huge Reduction in Manual Work, Errors • Faster, More Consistent Issue Resolution • Easier to Manage the Business • Consistent Case Handling 1 2 Finance and Ops Executive Management Account Administration 3 Risk ManagementTeams Customer Service 4 5 6 10

10. BPM Leverages a Service Oriented Architecture (SOA) BPM can abstract the “business process” from underlying systems and services. Over time, IT can consolidate those services into a common set of services within one SOA layer. Users of the process are not affected as services and systems are merged, replaced, or updated. Billing ERP CRM Imaging Finance & Ops Invoice Reconciliation Teams Executive Management Customer Service Account Administration BPM SOA Systems

11. 12 Customer Video 12

12. Process Improvement Requires A “Third Way” Flexibility BPM Process-improvement requirements are likely to be unique, which favors build rather than buy. And the timeframes and costs of both are often not compatible with process improvement, so a ‘third way’ is required. Build “Third Way” + + - - Customized Unique High TCO IT bandwidth Buy + + - - - Reduced time Initial Cost Standard Feature set Reliance on vendor Response to Change Low cost/time

13. Figure it out yourself Lock the team in a conference room for day(s) Sticky notes Whiteboard drawings Back and forth till you finally understand your process Scribe it all down Convert it to a diagram/drawing Let’s Start With Process Discovery and how is it done today? 14

14. Accelerate Change by Improving the Way You WorkStreamline, document, and run processes • Anyone can improve a process • Automate work run through email • Easily document processes • Gain control and insight • Instant dashboards for visibility • Reporting for improved governance • Collaborate for better results • Team up in secure private workspace • Leverage public expert community The best way to engage line of business users in process discovery, documentation, and simple process automation 15

15. Lowering Barriers to Collaboration creates Value Government Agency • Centralizing and Standardizing Processes • Document and standardize processes across 14 domestic and 5 international call centers • Able to centralize core workforce management functions due to large part of standardized process Worldwide Outsourcer • Incorporating Broad Participation • External business areas view and maintain their own processes within a centralized repository • Reduced resources to manage and administer process repository from 14 to 2 • Reduced change requests from 8 weeks to 2 minutes Global Insurer • Increasing Transparency through Documentation • Document and provide standard process across 8 regional offices • Simple processes from travel requests to complex processes like new traffic control tower setup 16

16. Change is inevitable. Adapt accordingly. Embrace complexity, adapt quickly and exceed expectations Simplicityfor deep business user engagement Powerto scale with transactional integrity Governance to manage change confidently Enable faster business-led change Visibility to empower business users to optimize processes 17

17. Now available in the Cloud Process Server BPMN Process Rules Monitoring BPEL ESB IBM Business Process Manager IBM Business Process Manager Management Process Center Versioned Assets Server Registry Shared Assets Process Center Console Repository Design Define Update Governance Visibility Deploy Measure Process Designer Optional Microsoft Add-ons Out-of-box Process Portal Configurable Business Space Widgets Integration Designer End User Interfaces

18. IBM Business Process Manager Leverages SOA Infrastructure Billing ERP CRM Imaging Finance & Ops Invoice Reconciliation Teams Executive Management Customer Service Account Administration IBM Business Process Manager Advanced Edition BPM SOA Systems

19. The Full Spectrum of BPM can be addressed Highly complex processes typically found in global enterprises Somewhat complex processes common to global & mid-market companies Simple processes common to all sizes of businesses IBM Business Process Manager Process Complexity IBM Blueworks Live Individual Processes 2.5% 22.5% 75.0% 20

20. Business Challenges at Lincoln Trust CompanyLeading independent provider of trust and custodial services • Paper overload • 100,000+ client requests per month each generating a paper-based process instance • Client complaints due to lost documents • Poor IT-business relationship • Paper problem was understood but limited IT/Business collaboration prevented improvement 21

21. Partnering for Process ImprovementLincoln Trust developed an aligned process focus across the company Joint LOB-IT executive steering committee and a small BPM team developed a 2-part strategy for process improvement: Quickly address key pain point Business-led automation for full business processes 2 1 • Common “shared process” for document imaging and automation using content management tools • Removed physical paper from 145 company processes • Business teams created “as-is” and “to-be” process models using IBM BPM Blueworks • IT teams implemented automated workflows for 15 processes including service requests, plan establishment, and distributions 22

22. Process Improvement Benefits at Lincoln Trust • Best Practices • Build a partnership between business and IT • Focus on business value – be willing to trade-off for an initial project • Include process analysis skills on BPM teams, but don’t over-analyze • Results • $2.2 millionin savings to date • 120%ROI in one year • 25%increase in employeeproductivity • 50% - 75%reduction in cycle times • 90% reduction in customer complaints 23

23. IBM Business Process Manager V7.5 Demo

24. Solution Pattern 2: Decision Management Decision Management is a business discipline that enables organizations to automate, optimize and govern repeatable business decisions. Business Processes, Applications & Solutions Decision Services Operational Decision Management Analytical Decision Management • Policy • Regulation • Best Practices • Know-how • Risk • Clustering • Segmentation • Propensity Business Rules & Events Predictive Analytics & Optimization Scenario Analysis & Simulation Internal & External Data 25

25. How Decision Management Works: Customer Acquisition Detect Decide Respond Multi-channel quote requests Event Pattern: Customer requests a series of quotes with increasing deductibles Make a personalized offer Business Rules: Customer good prospect, find best promotion Internet Event Pattern: 2 web quote requests and 1 direct contact in 3 days Trigger agent call back to assist Business Rules: Determine best product Call Center Event Correlations Event Pattern: Same vehicle ID with different addresses on phone & Web request: Seek clarification Business Rules: Is customer gaming the system? Agency Events Rules Decisions 26

26. Verizon Wireless increased customer service And achieved business agility Challenge: • The nation's most reliable and largest wireless voice and 3G data network, serving more than 93 million customers • Needed to increase self service, improve customer experience and be quickly adapt to meet pressures of the market • Decision Management Solution • Deployed a BRMS to automate its order system, eliminates invalid orders, shortens the fulfillment cycle, while saving the company manpower costs and reduces operational costs to comply with regulatory changes Benefits: • Keep invalid orders off the system • Shorten fulfillment cycle • Human resource savings • Reduced operational costs to comply with regulatory changes Verizon Wireless used the WebSphere ILOG JRules business rule management system (BRMS) to automate its order validation process. The JRules BRMS automates the verification of incoming orders and diagnoses errors. Verizon has been able to reduce invalid orders out of its systems, reduce operational costs and shorten fulfillment cycle time

27. WebSphere Operational Decision Management v7.5Combined business rules and business events management platform Business Rules Real-time BEP (CEP) Situational Awareness Contextual Decisions WebSphere Operational Decision Management WebSphere Operational Decision Management 7.5 highlights • The most complete platform for building decision management solutions that can use both event-based and knowledge-based decision logic • The most extensive capabilities for LOB subject matter experts to directly participate in the definition and maintenance of decision logic • The most powerful governance and management functionality (e.g. versioning and history, role-based security, team collaboration, multiple concurrent release management) 28

28. WebSphere Operational Decision ManagementProducts/Components Decision Center • Contains all the business user capabilities: repository, web environment, test and validation, Business Space components, Rule Solutions for Office Decision Server • Contains all the technical capabilities: runtimes for business rules and events, execution mgmt, integration connectors, developer tooling 29

29. Leverages Tools Familiar to the Business to Promote Collaboration Managing Decisions in Microsoft Word and Excel!

30. Customer Video 31 31

31. WorkSafe Victoria Improves Operational Efficiency Client Pains • Australian state social service agency dedicated to employee worker safety and compensation • Ensure timely workplace claims processing for citizens • Identified a specific project that would benefit from automated workflows and decision points Business Outcomes • Improved efficiencies, higher levels of customer service and worker safety • Significant improvement in fraud detection • Estimated payback of 6 months • Save more than $100 million dollars Delivering outstanding workplace safety together with quality insurance protection to workers and employers Process automation and business rules software to increase efficiencies and cut costs while helping Victorian workers return home safe every day 32

32. Rules & Events Demo

33. Agenda • The Agility Challenge • Patterns for Success • Business Process Management • Decision Management • BPM & DM Together • Projects to Programs to Transformation

34. Distinct technologies but Complementary Solutions Defines and orchestrates the end-to-end process Combines automatable and human elements Is fundamentally concerned with operational efficiency of the organization Defines and executes specific decision points in processes and applications Is focused on automating and improving decisions Is fundamentally concerned with the operational intelligence of the organization Solution Pattern 3: Combining BPM and Decision Management Operational Decision Management Process Management How they collaborate…. Starts Notifies Invokes Responds 35

35. Process and Decision Life-Cycles can be Managed Independently Business Process Updates (Months) Online Sales Process June 1st Web channel online sales process October 1st Online Sales process including business partners offerings July October May June August April September June 1st: Summer Pricing June 15th: Gold customer discounts added September 1st: Fall Pricing October 2nd Partner pricing adjustments August 1st : Summer promotions Product Pricing Decisions Business Decisions Updates (Days, Weeks)

36. Why IBM for BPM and Decision Management? Unparalleled Expertise and Investment • Expert consulting and implementation services for fast realization of business value • Industry expertise to customize solutions for your specific industry Largest Customer Base • #1 in Business Rule Management Systems (BRMS) market share according to all leading analysts • #1 in Business Process Management (BPM) market share according to all leading analysts Strongest Ecosystem and Partner Network • 800+ Business Partners authorized and certified to support customers • Strongest global ecosystem including major global and regional system integrators skilled to provide comprehensive solutions 37

37. 38