Take a Smarter Approach to Processes and Decisions

1. Take a Smarter Approach to Processes and Decisions Proven patterns for successful process improvement Pablo Irassar Director, BPM Development IBM Software Group

2. Agenda • The Agility Challenge • Patterns for Success • Business Process Management • Decision Management • BPM & DM Together • Agility in Action

3. 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. 3 IBM Global CEO Survey, Institute for Business Value, 2010

4. Transformation and Growth Require Better Decisions and Processes Based on interviews with over 3,000 CIOs of CIOs with mandates to transform the business are looking to “drive better real time decisions.” 95% of CIOs with mandates to transform the business are looking to “drive better internal collaboration processes.” 99% Source: IBM Global CIO Study 2011 4

5. Flexibility Process Improvement Requires A “Third Way” 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 Reduced time Initial Cost Standard Feature set Reliance on vendor Response to Change + + - - - Buy Low cost/time 5

6. Agenda • The Agility Challenge • Patterns for Success • Business Process Management • Decision Management • BPM & DM Together • Agility in Action

7. Key Technologies for Process Improvement

8. Solution Pattern 1: Business Process Management Through robust and flexible software capabilities and industry expertise, BPM enables customers to discover, model, execute, rapidly change, govern, and gain end-to-end visibility on their business processes Achieve better business outcomes with BPM BPM capabilities enable: BPM delivers business value: • Visibility • Productivity • Collaboration • Efficiency • Business User Engagement • Faster response to change • Governance 8

9. 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 How is Process Discovery done today? 9

10. 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 10

11. 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 11

12. Blueworks Live Demo

13. 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 13

14. 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

15. 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 15

16. 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 16

17. 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 17

18. Why Better Processes are Critical to Success Automated and streamlined processes help drive greater productivity and faster response to change Automate and streamline tasks toincrease productivity Eliminate manual entry and redundancies to drive down costs Visibility and control toachieve better business outcomes “ Our business process transformation has differentiated Lincoln Trust in the marketplace. Through automation and process simplification, we’ve leapfrogged larger competitors in terms of our superior ability to on-board and service customers.” —Helen Z. Cousins, executive vice president and CIO, Lincoln Trust Company 18

19. IBM Business Process Manager Demo

20. 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 20

21. WebSphere Operational Decision Management v7.5Combined business rules and business events management platform WebSphere ILOG BRMS WebSphere Business Events 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) 21

22. 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 Both Decision Center and Decision Server include WAS ND + DB2 WSE entitlements (supporting program limited use) Simplified product structure vs. previous business offerings 22

23. 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 23

24. Benefits of WebSphere Operational Decision ManagementAutomating repeatable decisions for use across processes & applications Business User Empowerment Enable business experts to author, improve and maintain decision logic in partnership with IT • Business experts are directly involved in their required solutions • Reduce turnaround time for business changes • Ensure changes meet business requirements • Improve visibility for the business • Increase consistency of application of corporate policies and best practices • Increase flexibility at lower cost Decision Externalization Separate decisions from processes and applications to simplify visibility and reuse • Make decision making more precise and informed • Increase revenue and reduce risk through more timely detection and response Real-time Decision Automation Execute real-time decisions precisely and reliably based on the context of specific interactions 24

25. 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 25

26. Combining BPM and Decision Management Increases Agility 2 1 300€ in France 500$ in USA 200Y in Japan 3 1 2 3 Classify risk based on locations and amounts Initiate a credit card fraud management process 3 ATM withdraws in the same day from different countries The best combination to support When / What / How kind of decisions from immediatetovery long term ones

27. 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)

28. Value of Combining BPM and Decision Management Increased Process and Decision Automation Automate processes and decisions & streamline exceptions Reuse of process and decision services Enhanced Business Interactions LOB are more involved in the processes Transparency on how decisions are made in the processes IT and LOB collaboration Reduced Cycle Times Streamlined processes for faster execution Decisions are managed in a shorten life cycle Change once, impact everywhere 28

29. Enabling Agile Processes & Applications Aligned Product Architectures Improves Collaboration WebSphere Operational Decision Management IBM Business Process Manager Process Center Decision Center Process Server Decision Server Unified management of all BPM components Unified management of business rules & events Work together to deliver effective solutions for business operation improvement

30. Rules & Events Demo

31. Agenda • The Agility Challenge • Patterns for Success • Business Process Management • Decision Management • BPM & DM Together • Agility in Action

32. IF Insurance Streamlines Claims Process Increases productivity and responsiveness with BPM and BRMS Challenge: • Claims process was too long, resulting in lost productivity and poor customer satisfaction • Increase efficiency by streamlining claims processes • BPM and Decision Management Solution • The automated claims processes are expected to increase revenue by between SEK85 million and SEK100 million each year. • More responsive to business and market changes, improving internal communication and productivity. Benefits: • Decreased the cost of claims • Increased of customer satisfaction through faster turnaround • Substantial savings of employee work • 3 out of 5 private claims are settled in the same day they are received! The SOA approach will enable it to reduce time to market for new processes and realize an easy migration to other base systems.

33. Verizon Wireless increased customer service And achieved business agility with BPM and BRMS 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 • BPM and Decision Management Solution • Deployed a BPM and BRMS automates 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

34. Customer Video 34 34

35. 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 35

36. 36