Introducing The Decision Model

1. Introducing The Decision Model Barbara von Halle bvonhalle@kpiusa.com

2. Who is KPI? Services Experience 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 Financial Services Insurance Healthcare Government Utilities Transportation Telecommunication Energy 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 Publications

3. Agenda • Current State: Business Rules • The Decision Model Bottom Up • The Decision Model Top Down • Impact on Business Process • Real World Testimony – Game Changing

4. “Big Ball of Mud”Foote & Yoder Software Application

5. Separation of ConcernsComponent Based Application ArchitectureKen Orr Security Component Workflow Component Transaction Component Business rules Presentation Component Base Application Business Logic Reporting/BI Component Database Component What happens to business logic today?

6. All Too Familiar? Is this Acceptable? Business Logic Business Rule Documentation Business Process Model

7. Does this look better? Business Logic Business Process Model Decision Shape How

8. Business Logic Where did the business rules go? Decision Model What Rule Family Rule Family Table Atomic Logic Statement

9. Agenda • Current State: Business Rules • The Decision Model Bottom Up • The Decision Model Top Down • Impact on Business Process • Real World Testimony – Game Changing

10. 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. conclusion condition Person’s credit rating < 500 Person’s likelihood of defaulting on a loan is “high”

11. 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!)

12. 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

13. The Rule Family is a Two Dimensional Table Multiple Logic Statements that Look Like This: 500 AND Person’s Employment History Is Person’s Credit Score < Unstable AND Person’s Misc Loan Amount Is High Become Two Dimensional Tables called Rule Families Like This: Is Person’s Likelihood of Defaulting on a Loan High Rule Families are Tables that Conform to Rigorous Principles

14. 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?

15. 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”

16. Agenda • Current State: Business Rules • The Decision Model Bottom Up • The Decision Model Top Down • Impact on Business Process • Real World Testimony – Game Changing

17. Decision Model Notation Determine Policy Renewal Method

18. Decision Model Notation Determine Policy Renewal Method Policy Renewal Method Policy Pricing Within Bounds Policy Underwriting Risk Manual Underwriting Indicator

19. Decision Model Notation Determine Policy Renewal Method Policy Renewal Method Policy Pricing Within Bounds Policy Underwriting Risk Manual Underwriting Indicator

20. Decision Model Notation Determine Policy Renewal Method Policy Renewal Method Policy Pricing Within Bounds Policy Underwriting Risk Manual Underwriting Indicator Policy Pricing Within Bounds Policy Discount Policy Tier

21. Decision Model Notation Determine Policy Renewal Method Policy Renewal Method Policy Pricing Within Bounds Policy Underwriting Risk Manual Underwriting Indicator Policy Pricing Within Bounds Policy Discount Policy Tier

22. When is it Finished? How Big Are They? Determine Policy Renewal Method Policy Underwriting Risk Insured Major Ownership Change Insured Major Location Change Policy Annual Premium Policy Discontinued Agent Policy Renewal Method Policy Pricing Within Bounds Policy Underwriting Risk Manual Underwriting Indicator Policy Pricing Within Bounds Policy Discount Policy Tier 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

23. Agenda • Current State: Business Rules • The Decision Model Bottom Up • The Decision Model Top Down • Impact on Business Process • Real World Testimony – Game Changing

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

25. Organization Model Business Motivation Model Vocabulary Models: Glossary/Semantic Model Logical Data Model Object Model Decision Use Cases Decision Model: business rules and business logic Process Model Business Requirements & Test Cases SOA Components

26. Agenda • Current State: Business Rules • The Decision Model Bottom Up • The Decision Model Top Down • Impact on Business Process • Real World Testimony – Game Changing

27. 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

28. Three Ways We Can Help 1. KPISTEP: We lead and mentor you in creating process models and Decision Models 3. STEPment: We provide part-time offsite mentoring Project 1 (3 Months) Project n (3 Months) Project 2 (3 Months) 2. FirstSTEP: We lead and mentor you in creating requirements with The Decision Model and Visualization Fixed price Time boxed Fixed price Time boxed On- 1 week Off-Site 5 weeks On- 1 week Off-Site 5 weeks Fixed price Time boxed Fixed price Time boxed Pilot / Scope (3 weeks) Training Certification • 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

29. How to Learn More Visit www.kpiusa.com • FREE PRIMER • Updated Events • Download White Papers • News Become a member of the OPEN Linkedin The Decision Model Group Join our presentations Read our articles and buy our books Contact us information@kpiusa.com Phone +1 973 543-1339