Rules, Rules, Everywhere Rules

Rules, Rules, Everywhere Rules

Some very good reasons to leverage the pragmatism of enterprise business rules management.

The chorus of the classic 1970s rock song "Signs," by the Five Man Electrical Band, lamented "signs, signs, everywhere signs, blocking out the scenery, breaking my mind." Perhaps if this song were written today by some musically inclined insurance IT professional, the words would have been "business rules, rules, everywhere rules, buried in minds, drawers, and system tools."

With this in mind, today's fast-paced, hypercompetitive, cost-conscious, and regulation-sensitive environment creates the need for insurers to inventory, document, rationalize, and more effectively manage simple and complex business rules across the enterprise. These snippets of logic serve as the DNA of most organizations, and with the urgency to deal with numerous tactical and strategic business initiatives, companies need to think through the many issues pertaining to how to tackle more effectively enterprise business rules management (EBRM). Some specific drivers include:

o An aging work force and organizational downsizing--some corporate functions have disproportionately experienced work forces with deep institutional knowledge. As these employees reach retirement age or are impacted by downsizing actions, companies risk losing valuable intellectual property and the logic for specific decision-making. Effective EBRM can help with the capture and organization of this "tribal wisdom" and know-how.

o Enterprise cost reduction--companies can benefit by streamlining processes and procedures to modernize workflows with the assistance of EBRM tools.

o Administrative systems modernization--modern insurance systems provide mechanisms to capture, rationalize, and streamline the maintenance of business process rules more seamlessly and to connect to separate business rules engine repositories. As systems are updated through build or buy efforts, effective EBRM can provide significant benefits to helping ensure operational currency and consistency.

o Central repository for institutional knowledge--effective EBRM can provide companies with a mechanism to consolidate corporate processes and learning. A single version of the truth is a well-accepted and efficient end-state, and effective EBRM can help the business become more empowered by actually being more involved in the management and maintenance of the logic of the business, with much less IT involvement.

o Reduction of outdated and conflicting logic--beyond systems initiatives, people and organizations often do the same things differently for varying reasons, depending on the person and where the work is done.

o Reduce and eliminate hard coding of business logic--too many processes use business logic that is hard coded deep inside numerous systems. Effective EBRM can help an organization lift that logic out of administrative systems and relocate it to enterprise rules engines that are a more efficient, centralized management paradigm for business rules.

o Improve compliance and regulatory consistency--conducting the company's business in an objective and consistent manner is core to sound enterprise risk management and regulatory compliance. Effective EBRM can help ensure business activities are performed as required by centralized and well-understood logic with improved audit and workflow monitoring.

To help understand some key components of any EBRM journey, keep these pragmatic concepts in mind.

Appoint a Business Rules Czar and build a team that's on a mission: EBRM is not a "here today, gone tomorrow" fad but rather is becoming more central to the way successful companies are run. To champion the effort, the company should consider appointing a "Business Rules Czar" (chief business rules officer) to lead and shepherd the EBRM team. Working with the leader, the EBRM team should consist of professionals with broad institutional knowledge and a natural investigative curiosity; they should be organized and results oriented. You should abandon any expectation this effort can be accomplished by many loosely coupled people throughout the business. It is important to recognize not everyone has the aptitude or patience for work that is, by its nature, very complex and detailed. The objective should be to identify these people and structure a career path for them to create passionate EBRM missionaries for the company.

Plan the EBRM project journey: There is considerable industry thought about how to create a phased EBRM organizational maturity model. The key objectives of this process are to assess holistically the company's current state; visualize and specify the end-state; determine a pathway with objectives, milestones, and progress measurement mechanisms for getting results; and lastly to define the long-term management of the end-state to prevent stagnation and maintain continuous improvement.

Be sure the difference between a rule and a non-rule is well understood: The objective of EBRM is not to move basic programmatic flow into some new system, so it's important to understand what makes a rule a rule. Business rules establish a logical connection or relationship between data or control in a varying way the flow of a process from outside, within, or to an external destination. Non-rules tend to be processes that happen identically, time and again, via some algorithm or workflow that occurs without transient or evolving business logic. This differentiation is inherently the difference between documenting workflow vs. capturing business logic.

Perform a business rules inventory--be thorough but not complete: No one really knows how many business rules exist within a typical insurance company, but suffice it to say, there are likely many tens of thousands. To begin to get your organizational arms around this issue, a high-level inventory should be performed. It isn't necessary at first to drill down into great detail or to find every nook and cranny where rules may be hiding, but rather focus on documenting major areas where critical business rules exist. Pick a few strategic business functions such as claims, underwriting, distribution management, pricing, compliance, SIU, and the like. Focus on thinking through soft areas where rules are retained in people's heads, where employee attrition/recruiting have been problematic, or in hard-copy business documents where manual mining exercises are necessary to find how things are done. The focus on this discovery process should not be on absolute thoroughness but rather on practicality and expediency. The key at this point is not to find every rule anywhere but to identify where substantive blocks of logic exist that require periodic or frequent update or conflict with similar logic elsewhere. By finding areas where improvement to existing business rule maintenance can yield reduced cost and effort, ROI can be generated and leveraged to fund incremental improvements. This process should help create the EBRM project docket, an investment portfolio of sorts, where business rule rationalization opportunities are identified and value is generated.

Business rule rationalization--focus on what matters most: It is an exciting process to find inefficiencies and redundancies in business rules and to fix them. By looking for ways to simplify and improve the clarity of the logic, business users can own and maintain their own rules and be more nimble by self-monitoring and self-management. Recognize that historically business logic has evolved and been systematized in a way that is often inconsistent with a variant of the 80:20 rule (in this case 80 percent of what is designed and implemented is necessary, and 20 percent is less relevant or is ultimately unnecessary)--so, focus on the 80 percent that matters most. Strive to understand how and why business rules need to be managed and changed by business users and how to put these tasks in their hands. Look for ways to use whatever business rules engine software you ultimately choose as the vehicle to rationalize your rules, but the software should not be the means to the end. Too often companies are not successful with the EBRM effort because it is viewed as a software play vs. a business initiative.

Systems architecture must allow for EBRM across disparate environments and platforms: SOA often is used to connect business rules logic within rules engines to disparate administrative systems and control logic flow across the enterprise. SOA allows for the development of EBRM connections that are independent of programming language, operating system, and database management system. All components can be seamlessly joined together, like building blocks, into an integrated communication layer. When business rule logic needs to be executed, an SOA call is made via a standard protocol via a standard messaging layer, and the processing system interacts with the business rules for retrieval and execution of the logic flow.

Ready the organization--the soft side of the effort requires careful planning and execution: Once the EBRM team begins its work in earnest, word will spread through the organization about what is going on. It is important the project team controls the story and educates the relevant members of the company. An effective approach is to be forthcoming, transparent, and nonthreatening and recognize any large-scale change such as EBRM can be intimidating to those who are not directly involved. Special attention should go to those who may feel like they are getting their brain picked without understanding the benefits of the initiative. It is key to ensure cooperation and openness, otherwise it will be difficult to ensure all relevant business rules are being accurately captured from the numerous drawers, minds, and systems in which they reside. Later, EBRM will require people to manage the newly articulated rules for which they are responsible, so the project should be sensitive to the learning curve. If rules management ends up being too complex, the initiative has a higher chance of stumbling, so be sure to place great focus on education, organizational readiness, and change management.

While not a project for the faint of heart, EBRM is gaining significant momentum throughout the insurance industry and across all business functions. For too long companies have struggled to understand how their own processes and workflow are carried out and how to better manage and execute quickly the many changes necessary to keep a business successful and vibrant. In the past, ubiquitous rules present everywhere in the business have made changes overly challenging and risky. By gaining control over the plethora of rules throughout a company, a new order can be established that centralizes rules more rationally.

Investment in such innovations can better position a company to move faster and smarter and help differentiate the industry winners. Do what you can yourself and hire outside help when necessary to expedite the realization of results. Focus on achieving the business value possible from EBRM as rapidly and strategically as possible--there's a lot riding on efforts like it. Being able to say your business rules are not everywhere but are controlled and centralized, unlike those signs from the song, is clearly of high value.

John Lucker

John Lucker is a principal with Deloitte Consulting LLP. He can be reached at JLucker@deloitte.com.