In this episode of Accelerate Business Transformation, we are joined by Jay Birchmeier. He explains what Decision Management software is, and how it can be leveraged to give your business an advantage over the competition.
Continuing with the theme of empowering your own business experts, Decision Management utilizes the rules and regulations of your industry and speeds up the decision points in your company's processes. The tools are simple enough that non-technical team members can be taught to manage the business rules.
If you have questions about Decision Management after listening to our show, you can contact Jay at his email address (jay.birchmeier@apexbpm.com) or give him a call at (517)490-3303.
Take a listen to the podcast here - http://apexbpm.libsyn.com/002-decision-management
Blake Smith:
Accelerate Business Transformation by Apex Process Consultants.
Blake Smith:
Welcome to Accelerate Business Transformation by Apex Process Consultants. I'm Blake Smith. Despite the ubiquity of computing in every aspect of life these days, there are still entire categories of computer-based tools that most people don't even know exist, even as the same tools are quietly transforming their field of business. At Apex Process Consultants, we work with a suite of tools that are designed to help transform traditional business environments and let them tap into the mini advancements that can speed up service delivery, provide unique insights, reduce errors, and uncover novel paths to increased efficiency. That may sound like marketing Tourette's, but this is not buzzword bingo. In today's episode, we're going to dive into one of these categories of tools that you may not have even heard of, but which could very well change the way your company does business and give you an edge over the competition. I'm going to be talking about decision management software with Jay Birchmeier. And I hope you'll decide to come along with us
Blake Smith:
Today. We're welcoming Jay Birchmeier, an Apex Process Consultants employee of three years, but you've been with the industry a long time. But who is Jay Birchmeier?
Jay Birchmeier:
I won't bore you with a lot of details, but I started my career about 30 years ago. My first job was doing COBOL Programming. So, really, the way all of us started in the IT industry. And now you went from various jobs, but maybe what's appropriate here is, I was introduced to a digital transformation about 19 years ago, and we didn't call it that then, but I remember a specific project that made an impact on the direction of my career. Looking back at it it's quite a simple project. It was right after Y2K, we focused a lot of time on making sure our dates would handle four digits instead of two digits, but after that we had a project to improve our user experience for our users of our mainframe system. Maybe what's appropriate here is the transformation and probably more importantly, the user adoption that we achieved on that project was quite enlightening to our team and to me personally.
Jay Birchmeier:
And so, if I summarize, what we were trying to do was take an archaic user experience into the 21st century and web-enable it. And that is what digital transformation means to Jay, to myself, today. It's really about leveraging today's technology to improve user and customer experience and to also work at the world's pace today. So, part of this is the ability to visualize a future solution and part is to leverage the latest technologies. And so, what I focus on is digital transformation. In that bundle or bucket is things like business process management, case management, decision management, task with RPA, and other things like data capture and artificial intelligence. But Blake, as you know, Apex, we cover the full gamut of digital transformation. But me personally, I'm super passionate about decision management, that piece of being able to make really intelligent decisions and enable those for companies.
Blake Smith:
I don't know how much our audience will understand or know about business processes, and process workflows, and decision management tools fits into that context really nicely, but you need to know what a process workflow looks like. Could you describe that a little bit and then we'll get into how decision management fits into that?
Jay Birchmeier:
Sure. So, a process workflow, think of it as being able to work on a process. So, I like to use loan origination where someone applies for a loan, we then have to determine whether they're eligible for a loan, and that might go to an underwriting department and then we might, if do we approve them for a loan, we might send that to the pricing team to be able to figure out what the price, the APR, or interest rate's going to be on that loan. So, we have a process that's going to touch many pieces or many different teams within an organization and many systems within an organization. A business process is mapping that through and in many cases, automating some of those things for execution.
Blake Smith:
It's interesting to me because when I first started with Apex, and I just hit my six year anniversary, a lot of this was new to me even though I'd been working in IT for more than 20 years. And figuring out where within businesses these process workflows would be applicable for automation was really an interesting challenge because I could see how almost any company could benefit from having those flows built into a system that was automatic, but I could also see there would be challenges around processes that changed. My personal experience and belief is that most of these processes form organically, that unless you're coming into an industry that's really already really, really mature, if you're building from scratch, you sort of have to figure out what you're trying to accomplish and then you develop the processes to make that happen and then they're open for all kinds of improvement. But then some industries are subject to regulatory changes and other kinds of oversight and modifications that change the way they have to do business. So, in that sense it's been really fascinating to me because even though the work of implementing these systems is kind of the same again and again, the way that they're being implemented and the kind of industries that we work with has been wildly varied over time. Has that been your experience as well?
Jay Birchmeier:
Yeah, absolutely. As this industry matures with an understanding of how to build agility into these processes and decisions to meet business requirements, different technologies have emerged, and what we did five years ago is definitely different than what we do today. And if we take those back to 10 years ago, it's even more drastic of a difference. So, one of the things though that I think you're hitting on is the ability to adapt and change, and I think we've talked about this in another podcast a little bit about how some of these other components can adapt. Decision management, I think, is a vital piece of the solution to be able to allow us to adapt quickly.
Blake Smith:
So, let's hop in on that, what is decision management? Because I think the words themselves make obvious sense, but within this context, it's talking about a very specific narrow thing.
Jay Birchmeier:
If I tried to summarize the academic definition, it goes something like decision management entails all aspects of designing, building and managing the business rules used to automate decisions in our computer systems. That definition is pretty generic. It's not much different than programming. We still design, build, and manage rules when we embed them within programs. So, to me, decision management, I'll describe it as four things, and it's more than that, but I'll lower it down to four things.
Jay Birchmeier:
First and foremost, what we want to do is take the business rules... And business rules, make up business policies, and our business policies is what makes us unique as a company. It differentiates us in the marketplace from our competition, it helps us improve efficiency on automating things, and being able to meet regulations and compliance or do fraud detection. So, those are all business policies of how we do that. But number one, we bring them together as a corporate asset. So, we bring them into a central repository, what we call our rule repository. Decision management then allows these corporate assets, the business policies to be understood by both business and IT. So, this is the second thing. And the way we do that is a business rule management system or decision management system allows these policies to be written, authored in a natural language so, you don't have to be a programmer to understand what the rules are doing.
Jay Birchmeier:
So, in addition to corporate asset number one, and being able to visualize or see rules in a natural language, number two, the third thing is the business rules come together to automate a decision. So, if I think about underwriting a loan and I have to decide if someone's eligible for a loan, there might be thousands of business rules that make up that policy or that decision. So, executing that decision is the third piece.
Jay Birchmeier:
And then the final piece is the ability to manage those decisions independent of the applications and process that execute them. So, think of your applications and processes, calling a decision management system to execute a decision. And in loan underwriting, if we go back to this simple example, if I apply for a loan and I have to determine if I'm eligible for the loan and I price that loan, that's a very simplified process of loan underwriting. But that process itself doesn't typically change. What really changes is inside that eligibility box, the policies, the rules that we apply and change all the time. And so, we abstract that away from the process into a decision management, and that truly gives us the agility to change those business policies. And that's what a decision management system provides in this context.
Blake Smith:
It's fascinating to me how this tool can be used to automatically make decisions that a human would normally be able to make, but it's keeping track of all these variables is a lot of work. And so, it's not just that it takes the labor off of the people who are having to make the decisions, but that it's able to comprehensively keep track of as many variables as you need to make those decisions. And then also, that it's adaptable such that when regulatory changes kick in, you can change things really quickly.
Blake Smith:
There's so, many industries where a new law comes into effect and it's going to affect everybody, and being able to respond quickly and know that you can bring your business into compliance with, 30 minutes of rewriting. I mean, that's powerful versus having to train every person to be able to remember those changes.
Jay Birchmeier:
Yeah. We have a New York based insurance company, I'll just add in here, that was exactly their motivation. What was unique about that situation is that in the state of New York, they have regulations that govern the insurance company. So, when someone files a claim, they have to adjudicate and pay that claim within a certain time period. And there's a lot of business rules in there that have to be applied for that. If they don't meet the date, they get huge penalties from the state. And so, they've implemented their decision management system to do just that, when the state changes its regulations, they can change them quickly and avoid some very high-cost penalties of not meeting those regulation timings. So, pretty interesting use case.
Blake Smith:
This reminds me, our previous episode we talked a little bit about how Apex as a company really likes to help our clients be able to be self-sufficient, and this particular application, this decision management tool is very much around that topic. We want people who implement this to be able to do their own decision management offering. And I think part of that means that every time we do this as an offering ourselves, that we include training people up on how to do the business rules notation as part of the actual implementation itself for a solution. And how has that been received? Would you like to talk a little bit about how you teach people to use the decision management toolset?
Jay Birchmeier:
I break the training into two conceptual buckets. One is how do you click all the buttons in the tool to make it do what you want? And that's really learning about the tool. But what's a much better training experience is when we've implemented a decision or a set of decisions for a company to work with their users. So, an example is I'm working right now with a healthcare company, and the owners of the medical policy that they are implementing within the decision management system, the business owners, non-IT people are the ones that own all of these rules. So, when we train, we're using their examples, and their examples include exactly their terminology. If they call a patient a patient or a member or a person, the terminology that they use in their organization is exactly what they see in the rules, and they're presented in a very business-friendly way. And so, when we mentor in that context with their implemented decision, everything really just comes together so, quickly from that perspective.
Blake Smith:
When I'm learning about a new technology, I like to know about where it comes from. Do you know much about the history of this product and how it became part of our digital business automation strategy?
Jay Birchmeier:
I know some. I worked, in my past, at a company called ILOG. It was a French company. It was founded back in 1987.
Blake Smith:
Wow.
Jay Birchmeier:
At least, I believe it was 1987. But in 2009, IBM bought ILOG. And so, really part of the point there is way back in the early '90s, there were commercial business rule management systems, at the time they're called business rule management systems, now in the broader category of decision management, but these products have been on the market for a long time. Now obviously, they've really matured, but it's not a new technology. It's a very proven approach. It's a very reliable set of products out there. IBM has what I think is the best one, but there's other ones out there.
Jay Birchmeier:
One thing I'll maybe note is there's some very IT-centric products that fall under the business rule engine category or business rule management system category, and they are only IT-centric. And what I have seen, I have an example right here in my backyard, I'm based in Michigan, where a company had used a very IT-centric business rule management system. It's open-source. And they had 40 developers maintaining the business rules. And what I saw in that implementation was all they did is, took this business logic that was hard to manage in the first place and they moved it to another tool, but it's still owned by IT, and they never achieved agility. And that's how I got involved there, trying to give them a view, a vision, and a solution so, that they could achieve the agility they originally intended to get to.
Jay Birchmeier:
And so, the key piece here and the history here is this started out as an IT-centric tool on how to execute computer statements really quickly. But what it really has emerged into is how to offload a lot of the management of these business policies to non-technical people so, that you can really achieve agility within your business you're working in.
Blake Smith:
Why would a company need something like this? What leads to a company needing decision management? And I think you've already hinted at that because some businesses have a tremendous amount of what you might call cognitive load around these decisions being made.
Jay Birchmeier:
Yeah, yeah, exactly. So, I think the thing that rings true across all of the customers I work with is business needs, business decisions, policies need to change much faster than the IT teams can accommodate. IT teams are overloaded, they have limited resources, they have less resources today than they did yesterday, but the business demands have not slowed down. And if anything, they've gotten more requirements and they want to be able to get to market with these changes much faster. So, the speed of change that's required in today's market is driving a lot of this.
Jay Birchmeier:
What a decision management system does is offload some of the management of the logic into the hands of the business owners. And this is really a win-win. And this is something that sometimes takes some understanding from a company, but it's a win-win for both business and IT. So, it allows the owners of the policy to be involved in accommodating those market changes, regulation changes, competition out there, or fraud, or whatever business policies they're implementing, be able to react to those much faster. But the win for the IT team is it offloads a lot of this work in a controlled way. So, it's not a free for all a wild West environment, but you can offload it to the business. And now the IT is really focused on building new capabilities, making enhancements, helping them get to the next generation of system, while the business is much more in a self-serve environment. So, that's what really drives these companies. And as I mentioned, there's a lot of areas that business rules apply. We can cover later some of the benefits I've seen at companies.
Blake Smith:
Why don't we talk a little bit about some specific examples of industries that really benefit from this. I can imagine that there's applicability for decision management in almost any kind of business, but not every business needs to have this stuff automated. But there are cases where entire industries really need this. And maybe you could talk a little bit about what are some of the industries that really could use this most effectively, where the cost is really worthwhile?
Jay Birchmeier:
I'm probably biased, I think every industry should be using this. But the early adopters, the adopters that have been using this technology for well over a decade is finance and insurance. I mean, those industries tend to be the early adopters for everything. So, I can talk to insurance and finance use case after use case. Telcos is another big one that were early adopters, but healthcare is a huge one. Healthcare is changing at such a fast pace. As you know, we have some very big healthcare clients we're working with around decision management right now, so, I think those are the primary industries that we talk to on a regular basis. Being here in Michigan, automotive, or manufacturing, or industrial type use cases are definitely applicable there. But I don't want to limit us in that for anyone listening almost any industry where you have business policy, business rules that need to change, take a look at a decision management platform because it really provides a tremendous amount of value. And we can help you find those use cases within your industry.
Blake Smith:
So, that's interesting because it reminds me of how decision management works with other systems. So, you can get this piecemeal, but it really works best in conjunction, I think, with other process management tools, and I'm thinking here about when someone has to make decisions... You set up business policies as a company president, or as the board, or as management, whatever, internal policies, it's really difficult, especially if you have lots of these from various parts of the company to keep track of them. But by having it as part of an automated system, it removes the necessity for everyone to be intimately familiar with every part of it. And you can just make those rules system-wide that, if they're using the tools properly, the decision management is going to take into consideration all of those business rules and regulatory oversight without you having to worry about whether people are distracted or whether they're really paying attention to everything.
Blake Smith:
But I was also thinking about, you can also build in exceptions because, I'm sure there's better examples than this, but if the CEO of your company says, "I want to give this person a loan," but there's things about that person where they would be triggered to not get the loan normally, you can build in overrides where you know something's changed or there's other information and ultimately, there's ways to handle exceptions. Can you talk a little bit about exception handling?
Jay Birchmeier:
Absolutely. So, I mean, this is really common where we have a set of rules that apply or a policy that applies nationally, but then what we find is, "Oh, but it's unique in Ohio," or it's unique in California. Everything's unique in California by the way. But yeah, we have exceptions to the rule. In this case, we always do this, except in California or except if the dollar amounts over this, or except if many different combinations of conditions are there, they're a gold customer, they have five accounts, they've never been late with a payment, but their debt to income ratio is super high. Well, we still want to approve them because we want to keep this loyal customer. So, we can handle exceptions to the rule. And this is where putting it in a decision management system and having visibility into those exceptions, and that can become very powerful.
Jay Birchmeier:
The other piece of that is... When I'm first working with a customer, they may say, "Oh, well if I offload it to a computer and not have a human make a decision, we're going to have chaos." And one of the things we might do is use the computer to make the recommendation, and it's still in the hands of the business. They can see the recommendation. And then what we find is, okay, they're taking the recommendation 100% of the time, well we know we can just bypass them confirming that. Or if they're only taking the recommendation 50% of the time, well then let's improve the rules to figure out why they're not taking it at a much higher rate. So, there's different ways of leveraging how we plug in an automated decision into an environment.
Blake Smith:
How does the decision management tool fit into an overall digital transformation? Let me just give you an example. We have a company that has been around for 30 years, they've got a many well-defined policies, they're not automated, but they are ISO 9000 compliant, that sort of thing where everything's well documented, how do you digitally transform them and how does the decision management tool fit into that strategy?
Jay Birchmeier:
So, every customer is unique, so, this is why the digital business automation suite has under that umbrella, business process management, case management, decision management, robotic process automation task, and data capture, and artificial intelligence. So, what we really do is we look at what the pain point is, and it might involve several of these components, and that's the power of this automation suite, but it might just really be they need agility around their decisions.
Jay Birchmeier:
I want to maybe point out one of the things, the misconceptions out there is "I need to have business process management in place before I use decision management. I need to know where I fit into that process before I call an automated decision." And what I can say, having done this many years, is I've had customers start with decision management because they have a legacy system that's been around 30 years. They may need more agility, but that whole process is already in that legacy system. They just want to abstract out a decision point, have control over those rules, have flexibility to change those rules without implementing a whole other set of technologies. So, the thing I'd like to leave the audience with is you can start with any one of these pieces and decision management if you have an agility problem around your business policies. It's probably the one you want to start with.
Blake Smith:
That's a good point. And also, the thing that you mentioned there in passing was pain reduction. Reducing the pain in these processes is the same as making things better, but it's a really important reframing of the situation, I think. A lot of the times the things we have to do to succeed in business are painful, they are hard work, and we have to succeed in spite of these decisions and rules and efforts rather than because of them. So, I think that's a really great point that these tools, they don't just make things better, but they can make things stop being so, painful.
Jay Birchmeier:
Absolutely. It reminds me of a company I worked with, business and IT, the pain for them was working together. Everything was the business team's fault, everything was the IT team's fault, depending on the perspective you were looking from. With an implementation of, in that case it was IBM's ODM, Operational Decision Manager, the business and IT were able to collaborate to the level where when I asked the IT team how things are going and they said, "Well, I don't even know. I guess, it's going good. They don't even contact me because they have management of the business policies. About once a month they ask for something new and I give it to them, and then they're good to go." And so, the synergy between those two teams, there was no more animosity between the two. It was just a big turnaround in in that case.
Blake Smith:
Pain reduction really is important. I was thinking about even if you had, after you invested your money into these products, it was a net zero. It didn't cost you a bunch, it didn't change your income, or it didn't change your revenue, but everybody liked working better. Everybody enjoyed going to work more. There's no cash value for that. But karmically speaking, it seems like a win.
Blake Smith:
No, I think in real life you do get return on investment, you do get benefits from this financially, but I don't think you can overstate how much better it is to have a company where people enjoy their work rather than hating it.
Jay Birchmeier:
Yeah, hard to measure, but super valuable.
Blake Smith:
So, let's talk about those case studies though or maybe a few examples. Can you think of some ways that people have used decision management, it's had a big impact on them financially or just with morale?
Jay Birchmeier:
So, I have three insurance companies. I use these because they span... Healthcare insurance, dental insurance, and PNC and life insurance. So, I pick those three insurance companies because they span different types of insurance. But in each and every one of them, leveraging a decision management system and automating a lot of their insurance operations, gave them a huge competitive advantage. And two out of the three that I know of started servicing the policy operations for their sister companies because they were so, efficient with the decision management processing of these that they really grew their operations by being able to offload some of their other sister companies, their processing.
Blake Smith:
Wow.
Jay Birchmeier:
If I talk about banking, I have some concrete examples. There's a bank that used this within their loan operations, and they're able to make changes in really the way they measure this as in hours and not days to be able to implement business world changes. They're able to get to market faster by 500%. So, one of the metrics they me is when they're processing their portfolio for non-payments across their loans, they do this in 14 minutes overnight for over 200,000 non payments. So, speed and performance are a huge piece. We haven't even touched on that, but the agility of being able to maintain that and then fast execution is all part of decision management.
Jay Birchmeier:
I'd like to share maybe one more banking use case because this is one I personally worked on really closely. A company, their problem was the inability when they're working with customers to present the right offer to the right customers. So, for example, they might offer, "Well, hey, we have a home equity loan to a 22-year-old." Well, we all know a 22-year-old has no home equity. More than likely, they might need an unsecured line of credit more than a home equity loan. Their offering software was very, very limited. And what we were able to do was implement decision management to be able to present the right offer to the right customer at the right time. And the payback on this was less than three months. So, the recommendations to customers happen in real time, whether they're on the phone or in a branch. They were able to capture $14 million worth of new business in the first two and a half months. Their preapproval of acceptance increased from 3% to between 20 and 30%, so, some truly measurable concrete ROI examples in a very short time. And they attributed this to the decision management platform they implemented.
Blake Smith:
That's fantastic. Well, I think this has been a really useful introduction to decision management and how we are able to use it at Apex to help our clients improve their business and also, improve their work life in a lot of ways. So, is there anything else that you'd like to say about decision management that I haven't covered in my insightful and probing questions?
Jay Birchmeier:
No, no, I appreciate getting the time to talk about it. I'm super passionate about this.
Blake Smith:
I know, it shows. It really does. I think we do so, many things at Apex, and when I sit down and talk to people who love the thing that they've chosen to specialize, it's really neat to hear people being so, passionate because ultimately it's not the technology, it's the way it changes lives. I think everybody at Apex seems to enjoy helping people be more effective and have a better experience with the way that they do business. So, I think that really has a lot of impact beyond just the bottom line, financially. I think it has a lot of impact. And I think this interview touched on that in really good ways. If somebody wants to learn more about decision management, where should they go?
Jay Birchmeier:
Well, I think maybe you can share a few links. I'm happy if people want to reach out to me directly, email and or phone. Yeah, if I don't get back to you right away, I will get back to you shortly, but yeah, have them reach out to me directly.
Blake Smith:
Okay. I'll put your contact information in the show notes. And we also have some of our offerings on our website described so, I can put a link to that as well. Thank you so, much for your time, Jay. I think this was a really great introduction to decision management tools and practice.
Jay Birchmeier:
Excellent. Thanks, Blake.
Blake Smith:
Thanks for listening to Accelerate Business Transformation by Apex Process Consultants. I'm Blake Smith.
Blake Smith:
Please check out our show notes for related links about today's topic, decision management software. There you will also find contact information for Jay Birchmeier in case you'd like to learn more about decision management or any of the other Apex Process Consultants' product and service offerings. If you enjoy this show, please take a moment and give us a positive review on iTunes or on your preferred podcast platform. Thank you so, much for listening.
