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

© 2010 Knowledge Partners International LLC ●www.kpiusa.com ● www.thedecisionmodel.com

Introducing The Decision Model

Barbara von [email protected]

© 2010 Knowledge Partners International LLC ●www.kpiusa.com ● www.thedecisionmodel.com 3

Who is KPI?

Publications

Thought LeaderThe Decision Model

Business Logic Framework linking Business with Technology

Business Process ManagementBusiness Decision Management

Business Rule ManagementEnterprise Architecture

Business AnalysisRequirements

Testing

ServicesFirstSTEP

Service to create unambiguous, and complete

Requirements

KPISTEPService to perceive, organize

and manage Business Processes and Rules with

Decision Models

STEPmentMentoring of clients to

achieve self-reliance with Center of Excellence

Training & Certification

ExperienceFinancial Services

Insurance

Healthcare

Government

Utilities

Transportation

Telecommunication

Energy


Agenda

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


“Big Ball of Mud”Foote & Yoder

Software Application


Separation of ConcernsComponent Based Application Architecture

Ken Orr

Security Component

Workflow Component

Transaction Component

Presentation Component

Base Application

Reporting/BI Component

Database Component

BusinessLogic

What happens tobusiness logic today?

Business rules

© 2010 Knowledge Partners International LLC ●www.kpiusa.com ● www.thedecisionmodel.com© 2010 Knowledge Partners International LLC ●www.kpiusa.com ● www.thedecisionmodel.com 7

BusinessLogic

Business Rule Documentation

Business Process Model

All Too Familiar? Is this Acceptable?


BusinessLogic

Business Process ModelDecision Shape

How

Does this look better?


BusinessLogic

Where did the business rules go?

What

Decision Model

Rule Family

Rule Family Table

Atomic Logic Statement


Agenda



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


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!)


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


The Rule Family is a Two Dimensional Table

Conditions ConclusionPerson’s Credit Score Person’s

Employment History

Person’s Miscellaneous Loans Amount

Person’s Likelihood of Defaulting on a Loan

< 500 Is Unstable Is High Is High

> 600 Is Low

< 500 Is Unstable Is Low Is Medium

Person’sCredit Score

< 500 Person’sEmployment History

Is Unstable Person’sMisc Loan Amount

Is HighAND

AND

Person’sLikelihood 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


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?

Conditions ConclusionPerson’s Credit Score

Person’s Employment History



< 500 Is Unstable Is High is High


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”

Conditions ConclusionRule Pattern

Person’s Credit Score




1 is Poor Is Poor is High is High

Conditions ConclusionRule Pattern

Person’s Years at Current Employer

Person’s Number of Jobs in Past Five Years



Agenda



Determine Policy

Renewal Method Decision Model

Notation


Determine Policy


NotationPolicy Renewal Method

Policy Pricing Within BoundsPolicy Underwriting Risk

Manual Underwriting Indicator


Policy Renewal MethodPolicy Pricing Within Bounds

Policy Underwriting RiskManual Underwriting Indicator

Determine Policy


Notation

Conditions Conclusion

PatternPolicy Underwriting

RiskPolicy Pricing Within

BoundsManual Underwriting

Indicator Policy Renewal Method 1 Is Unacceptable Is Manual Renewal Process2 Is No Is Manual Renewal Process3 Is On Is Manual Renewal Process4 Is Acceptable Is Yes is Off Is Automatic Renewal Process




Policy Pricing Within BoundsPolicy Discount

Policy Tier

Determine Policy


Notation





Policy Tier

Determine Policy


Notation


Pattern Policy Tier Policy Discount

Policy Pricing Within Bounds

1 ≤ 1 Is No2 ≤ 1.5 > 10% Is No2 ≤ 2 > 20% Is No2 ≤ 2.6 > 22% Is No2 > 1 ≤ 0% Is Yes2 > 1.5 ≤ 20% Is Yes2 > 2 ≤ 22 Is Yes1 > 2.6 Is Yes


PatternPolicy Underwriting

RiskPolicy Pricing Within

BoundsManual Underwriting

Indicator Policy Renewal Method 1 Is Unacceptable Is Manual Renewal Process2 Is No Is Manual Renewal Process3 Is On Is Manual Renewal Process4 Is Acceptable Is Yes is Off Is Automatic Renewal Process


Policy Underwriting RiskInsured 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 ChangeInsured 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 Tier

Determine Policy

Renewal Method


Agenda


Option 1

Option 2

Option 3:Rule Pattern

1 is Low is Good = "A"1 is Low is Bad = ?1 is High is Good = ?1 is High is Bad = ?


Person's DebtPerson's Employment

HistoryPerson's Credit

Rating

Process ModelDecision Rule Family TableDecision Model Diagram

The Decision Model Difference in Process Models

Person’sDebt

Person’sEmployment History

Person’sCredit Rating


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 ModelLogical Data ModelObject Model

Enterprise

Business Unit

Function Function

Business Unit

Function

Organization Model


Agenda



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


Three Ways We Can Help

Fixed priceTime boxed

Project n(3 Months)


Pilot /Scope

(3 weeks)

Training

Off-Site5 weeks

On-1 week

Certification

Off-Site5 weeks

On-1 week

Project 1(3 Months)


Project 2(3 Months)


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


How to Learn MoreVisit www.kpiusa.com

• 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 [email protected] +1 973 543-1339

http://www.kpiusa.com/

mailto:[email protected]

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