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Business Process Outsourcing and Business Rules

At Fair Isaac's recent InterACT Budapest I presented on "Preserving Agility: How Rules Management Improves Business Processes – internally and with BPOs" with a colleague from Microsoft - Sanjay Katyal from Emerging Ecosystems Development, Platform Strategy Group. he and I discussed how business rules are essential in a process-oriented approach that mixes Business Process Management (BPM) and Business Process Outsourcing (BPO). Here's a summary.

One of the potential problems with Business Process Outsourcing is that it tends to ossify processes - attempts to guarantee performance contractually at a detailed level can force a BPO to stick to the old process while some BPOs run a very standard, and very fixed, process to deliver cost efficiencies. Even when BPOs use more software and less people it can be hard for their customers to manage changes resulting in overly static processes.

Business Process Management software, used to automate a process internally, can fail the 80/20 rule - the technology can reduce costs by eliminating the 80% of tasks that took 20% of the effort. Complex tasks, requiring expensive people or lots of time, are often the hardest to automate using BPM. Lastly BPM approaches sometimes assume that any change is a process change, making change more expensive than necessary.

So:

  • If I automate a process, how do I control it?
  • If I outsource a process, how do I customize it?
  • When do I really need manual intervention and when can I get Straight Through Processing?
  • If I run a process for many customers, internal or external, how can I make it efficient for all and yet custom for all?
  • If I automate a process, how do I automate the decisions within it?

We called this "The Decision-Maker's Dilemma"

The Challenges of BPO and BPM within what Microsoft calls a "Connected Enterprise" are:

  • Standardization - both good (repeatability) and bad (one size fits no-one)
  • Straight Through Processing v manual review - how confident can you be?
  • How will you show compliance?
  • Control of a process, not just visibility into it - dashboards tell you what’s going on but so what?
  • Continuous improvement - where’s the feedback loop? How fast can you improve?

Our prescription for addressing this involves both Microsoft's work on a connected enterprise and Fair Isaac's work on decision automation. Here goes:

  • Begin with getting a 360 degree view of your customers
  • Use Business Intelligence and Analytics to increase visibility and understanding
  • Introduce control and decision automation to provide “hands-free” operation
  • Extend the approach to supports needs in all parts of the business and/or with business partners (BPO)
  • Focus on business consequences through intelligent workflow
  • Add decision automation to your process automation projects to reduce time/resources to complete critical business processes

The addition of decision automation to your business process automation/outsourcing efforts gives you:

  • Ability to automate both data-driven and human-controlled work process tasks.
  • Business rules reduce the number of required BPM tasks.
  • Reduced costs/time in management of business systems by letting business owners control business components, freeing IT for higher-value activities.
  • Improved competitive marketplace response through faster reaction to changing business conditions.
  • Increased profitability through use of detailed customer segmentation and consistent policy enforcement.
  • Ability to drive exception-handling processes directly from the rules that detect the exception.

We believe that in the future companies will want the flexibility to automate and outsource processes differently over time and that control of the decision points in the processes, using decision automation technology like business rules, will give companies unique competitive advantages by solving the decision-maker's dilemma.

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