state farm executive briefing ibm confidential | april 2004 © 2004 ibm corporation business process...

State Farm Executive Briefing

IBM Confidential | April 2004 © 2004 IBM Corporation

Business Process Management Systems and SOA – Bridging the Business IT Gap

Edward CalusinskiConsulting IT Architect – FSS Americas


BPMS and SOA – Bridging the Business IT Gap © 2004 IBM Corporation

A peek into the crystal ball

You knew how many claims you turned around today?

Wouldn’t it be nice if:

You could build applications faster, with less resources and reduce the complexity of your systems?

You knew the number of policies processed today in real-time?How many policies are waiting on calls?

Who had the highest policy per employee at Noon and at 5:00PM?

You could see in real-time a trend in claims that indicated a new business challenge or opportunity?

You could change your business process without changing your core applications?

You could see the impact of a change to a business process without implementing the change?



Key Technologies

How to make the “Wouldn’t it be nice” questions a reality? A common approach to realizing a solution to these questions is through the blending of these key technologies:

Business Process Management Systems (BPMS) Component Business Models (CBM) Service Oriented Architecture (SOA)



Defining BPMS:

What is a Business Process Management System?

Business Process Management Systems (BPMS) is a system that is responsible for the design, deployment, monitoring and managing of key internal IT systems as well as key partner IT systems. BPMS are able to analyze, dissect and alter the behavior of an organizations key processes in such a way as to potentially reshape the way an organization does its business. By providing the tools, technologies and industry standards, BPMS will enable an organization to decompose every aspect of its key business processes and assess the value it provides to the organization, rip out inefficiencies in the process execution and if necessary, outsource the major pieces of the process to proven experts in an on-demand strategy”



The Business Process Management System StackBusiness Process

Discovery

Business Process Analysis

Business Process Testing

Business Process Design

Business Process Modeler

Business Process Monitor

Business Process Server

Business Process

Repository

Business Process

Deployment

Business Process

Execution

Business Process

Operations

Business Process

Optimization

Web Server SOAP Server

Workflow Engine

Business Process

Instrument

Distributed Computing Infrastructure

Business Process Management

Business Process Automation

Business Process Integration

Business Process Infrastructure

Application Module

Application Module

Process Aware

Application

Integration Adapters

Participant Application




Process Aware

Application



Modeling of your current business processes enables you to see how well you perform your process today. It also allows you to capture key performance metrics for process optimization or process change analysis



Simulating your current business processes allows you to see “hot spots” in the process. Simulating newly created or modified processes allows you to see the impact of change before the change is implemented.



Analysis of your processes “in action” enables you to visualize the your key performance metrics and allows you to make informed business decisions. These metrics could also be fed back into the simulation facility to support more accurate simulations.



Real time analysis of your business processes is essential for you to be proactive in instituting change, otherwise the damage has already been done before you can do anything about it.

Real Time Business Dashboard

Real Time Business Dashboard



A managers view to the business and the processes allows for closer control of the environment. Who is efficient? What are the pressing problems of the day?



A customer example leveraging BPMS

Solution

Technology Benefits: Modeling and automation of business

processes Rapid deployment of new processes Clear return on investment

Business Benefits: Implemented a Business Process

Nervous System in three months' time, including modeling and automation of first processes

Able to implement medium to-complex integrations at a rate of one per week.

Met the January 1, 2003 deadline specified by the Belgian government.

Business Challenge

Maintain leadership in an increasingly competitive European energy market by implementing a Business Process Management System (BPMS) that enables Electrabel to change existing and implement new business processes quickly and efficiently .

Airbus anticipatesAirbus anticipates

A BPMS system that included:• Business Process Integration• Business Process Automation• Business Process Management



To address business issues, an approach that effectively links business and technology is necessary.

Integrated Response

Business ModelBusiness Model

TechnologyTechnology

Business ProcessBusiness ProcessBusiness

Issue

BusinessIssue

Component Business Model (CBM)

Architecture Views

Component Business Model (CBM)

Architecture Views

CBM + Architecture Views



A Business Component Map is a is a tabular view of the business components in the scope of interest.

controlling

executing

directing Business Planning

Business Unit Tracking Sales

ManagementCredit

AssessmentReconciliation

Compliance

Staff Appraisals

Relationship Management

Sector Management

Product Management

Production Administration

Product Fulfillment

Sales

Marketing Campaigns

Product Directory

Credit Administration

Customer Accounts

GeneralLedger

Document Management

Customer Dialogue

Contact Routing

StaffAdministration

BusinessAdministration

New Business Development


Servicing & Sales

Product Fulfillment

Financial Control and Accounting

Sector Planning

Portfolio Planning

Account Planning

Sales Planning

Fulfillment Planning


A Business Component is a part of an enterprise that has the potential to operate independently, in the extreme as a separate company, or as part of another company.

Columns are Business Competencies, defined as large business areas with characteristic skills and capabilities, for example, product development or supply chain.

An Accountability Level characterizes the scope and intent of activity and decision-making. The three levels used in CBM are Directing, Controlling and Executing.

Directing is about strategy, overall direction and policy.

Controlling is about monitoring, managing exceptions and tactical decision making

Executing is about doing the work



For example, we can use evaluation criteria to produce a ‘heat map’ to help select and prioritise improvement projects.

D = Differentiated

C = Competitive

Target Competency

B = Base

Revenue / Cost

Revenue

Cost

(H, M, or L)

“Hot” Component

controlling

executing

directing Business Planning

Business Unit Tracking

Sales Management

Credit Assessment

Reconciliation

Compliance

Staff Appraisals


Sector Management

Product Management

Production Administration

Product Fulfillment

Sales

Marketing Campaigns

Product Directory

Credit Administration

Customer Accounts

GeneralLedger

Document Management

Customer Dialogue

Contact Routing

StaffAdministration

BusinessAdministration

New Business Development


Servicing & Sales Product FulfillmentFinancial Control and Accounting

Sector Planning Portfolio PlanningAccount Planning Sales PlanningFulfillment Planning


M

M L M L M L M L L M L M

M L

M L M L

M L

L M

M L

M L

L L

M L M L

M L

Revenue/Profit improvement opportunity

M L

L L M L

H L

M L M L L M

Cost control opportunity

L H

M L



At the enterprise level it is important to determine the key “Services” provided by a business component that is leveraged by multiple business processes that cut across the enterprise.

In this example, Loan Underwriting business component, provides two Business Services namely Accept_Loan_Application & Check_Loan_ Application_Status.

Both of these Services can be leveraged by multiple variations of Loan_Application_Submission process executed by various channels including Call Center Operators, Customers who are performing Self-Service on the Web, or Data entry professionals who scans the loan applications submitted by postal mail.

Cus

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Acc

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and

Aud

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ttlem

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Fina

nce

Planning &

Analysis

Monitor & Control

Operations & Execution

Regulatory & Compliance

Budgeting & Forecasting

Portfolio Management and

Hedging

Customer Relationship

Trade Execution

Credit Analysis

Loan Underwriting

Bank Policies and Procedures

Credit Risk Management

Pipeline Management

Collateral Analysis

Marketing and Syndication

Collateral Management

Portfolio Risk Management

Trading Management

Loan Portfolio Acquisition

Market Risk Management

Research Analytics

Loan Funding & Setup

Loan Servicing & Administration

Pricing

Document Management

Reconciliation and Control

Cash Control

Treasury Management

Compliance Guidelines &

Control

ManagementReporting

Financial Reporting

GL & Accounting

Operational Control

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Fina

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Planning &

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Monitor & Control


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Fina

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and

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Fina

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Planning &

Analysis

Monitor & Control





Hedging


Trade Execution

Credit Analysis

Loan Underwriting



Pipeline Management

Collateral Analysis




Trading Management



Research Analytics



Pricing

Document Management


Cash Control

Treasury Management


Control

ManagementReporting

Financial Reporting

GL & Accounting

Operational Control




Hedging


Trade Execution

Credit Analysis

Loan Underwriting



Pipeline Management

Collateral Analysis




Trading Management



Research Analytics



Pricing

Document Management


Cash Control

Treasury Management


Control

ManagementReporting

Financial Reporting

GL & Accounting

Operational Control Loan Underwriting

Accept Loan Application

Check Loan Application Status



The end to end Business Process such as “Submit Loan Application” itself may be exposed as a Business Service if it needs be invoked by another internal or external system

CreditAnalysis

Check Credit History

Loan Underwriting

Accept Loan Application

Check Loan Application Status


Setup Loan Account

Notify the Customer

Submit Loan Application



Service Oriented Architecture (SOA)

Service Oriented Architecture

In order to fully understand what is meant by service oriented architecture, a common understanding of key terms becomes necessary:

Architecture Service Service Oriented



Defining Service:

Defining Architecture:

Source: Dictionary.com

Defining the terms of Service Oriented Architecture

“A service is a function that is well defined, self contained and independent of any other service” [1].

A service can be a business function like an account open. A service can be an IT function like logging. A service can be a user interface function like a graphical weather map

display.

[1] D. Barry, Web Services and Service Oriented Architectures. Morgan Kaufmann Publishers, San Francisco CA 2003.

Service Oriented is to design with the intent of expressing a feature or function as a consumable service

Defining Service Oriented:

The art and science of designing and erecting buildings. Buildings and other large structures: the low, brick-and-adobe architecture of the Southwest. A style and method of design and construction: Byzantine architecture. Orderly arrangement of parts; structure: the architecture of the federal bureaucracy; the

architecture of a novel. Computer Science. The overall design or structure of a computer system, including the

hardware and the software required to run it, especially the internal structure of the microprocessor.



Defining Service Oriented Architecture

Service Oriented Architecture is an architectural design style that expresses computing features as a collection of services. The services are described external from the service implementation, they are stored in a service repository and are consumable.

Definition:



The principles and values of the SOA style of design.

Modularity Encapsulation Loose Coupling Security

SOA Business Values: SOA IT Values:

Increased responsiveness Increased business agility Transcends organizational

boundaries Reduces product development

cycle times Exposes commodities in

business process

Build once, use often Services are built by contract Promotes process consistency Allows for localization of function

and standardization of cross cutting concerns

Standardized integration

Separation of Concerns Composable Single Implementation

SOA Principles:



Example of a Service Oriented Architecture

Mortgage Application

Service Requestor

Mortgage Application

Service Provider

ServiceRegistry

Find Mortgage

Application Service

Publish Mortgage

Application Service

Invoke Mortgage

Application Service

Validate Identity Service

Credit Report Service

Verify Employment

Service

Verify Insurance

Service

Property Appraisal Service

Approval Process Service

CreditBureau

EmploymentVerification

Agency

Call Center

AppraisalBrokerage

ApprovalWorkflow

Credit Bureau API

Credit Report

Employment Verification Request Email

Employment Verification Response Email

Call Center Work Order

Call Center Response

Appraisal Request Fax

Appraisal Response Fax

Initiate Workflow



Evolution of business solutions – from BPMS and SOA to the next generation of IT systems.

Process Modeling and Analysis

Invoke

Invoke

Invoke

Invoke Invoke

Business Process Workflows

Enterprise Services – Business FunctionsRouting Pub/Sub Transformation Mediation

Transport

Real-time Monitoring and Management

112

2

3

45

678

9

10

11

Distributed Resources: Modular Applications, Databases, Organizations, People



Summary

You knew how many claims you turned around today?

How does BPMS, CBM and SOA address the “Wouldn’t it be nice if” questions?

You could build applications faster, with less resources and reduce the complexity of your systems?

You knew the number of policies processed today in real-time?How many policies are waiting on calls?

Who had the highest policy per employee at Noon and at 5:00PM?

You could see in real-time a trend in claims that indicated a new business challenge or opportunity?

You could change your business process without changing your core applications?

You could see the impact of a change to a business process without implementing the change?

state farm executive briefing ibm confidential | april 2004 © 2004 ibm corporation business process...

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