Enabling The Service-Oriented Enterprise

1 May 22-24, 2007

Washington Dulles HiltonThe Business Transformation Conference

Dr. Setrag KhoshafianVP of BPM TechnologyPegasystems Inc.

Session Title:Enabling The Service Oriented Enterprise

WelcomeWelcome

to Transformation and Innovation 2007 The Business Transformation Conference

2 May 22-24, 2007


BPM and SOA: Service Oriented Enterprises

You have a technology perspective:• Loosely couple applications,

trading partners, and organizations • Invoke via service calls.

• Services involved in processes with human participants

• Provides even greater value than the sum of component services.

3 May 22-24, 2007


You also have a cultural perspective:

• Each party sees herself as a service provider as well as a service consumer

• Focus on serving various communities: • Customers• Shareholders• Trading Partners• Employees• Government

BPM and SOA: Service Oriented Enterprises

4 May 22-24, 2007


SOE Goal

Align Business and IT

IT Business

SOA Technology Alone Will Not Do It

5 May 22-24, 2007


Business Changes Worsen Execution Gaps

Business Changes Worsen Execution Gaps

SalesSales ServiceService OperationsOperations ComplianceCompliance PartnersPartners

Management GoalsManagement Goals

SalesSales ServiceService OperationsOperations ComplianceCompliance PartnersPartners

SystemsSystems

The SOE Challenge…Execution Gaps!

6 May 22-24, 2007


The Service Oriented Enterprise

IT Service Infrastructure

Service Oriented ArchitectureIT Service InfrastructureIT

7 May 22-24, 2007


Service Infrastructure • Loose Coupling

• Standards Based (WS-*)

• Discovery

• Service Composition

• Enterprise Service Bus

8 May 22-24, 2007


Loose Couplingisolated from the details of the service’s

implementation language, platform, location, or other details

InternetInternet

GET/POST Request

HTML Response

Server (s)

InternetInternet

SOAP Request

SOAP Response

Server (s)

Client

9 May 22-24, 2007

Washington Dulles HiltonThe Business Transformation ConferenceService Transport: HTTP/HTTPS

Remote Service Request/Response: SOAP

Service Description: WSDL

Service Transactions: WS-Transaction/WS-Coordination

Quality of Service: WS-Security, WS-ReliableMessaging

Business Processes and Rules: BPMN, WS-BPEL, WS-CDL

Service Management: WSDM

Service Content and Portals: WSRP

10 May 22-24, 2007


ESB – Overview

Messaging Backbone

JMSWS-* XML Services …

EnterpriseService

JCA

Management Monitoring Deployment …

EnterpriseService

EnterpriseService

BaseServices

ExtendedServices

11 May 22-24, 2007


Capabilities and Features of an ESB

Message Transformation

Protocol Transformation

Message Routing

Security

Transaction

Orchestration

Registry

Consumer Services requests use a transportprotocol (e.g. JMS) different from theprotocol (e.g. HTTP) of the Provider

Transform Provider message format toConsumer message format and vice versa

(XML to ASCII, XML to XML, etc.)

Content based routing of Consumer messages to appropriate Provider & Vice

Versa. Support for rules based routingSupport for WS-Security, SAML, encryption,

Authentication and Authorization

Support for WS-AtomicTransaction,WS-Coordination, WS-BusinessActivity

Support for Orchestration & Choreography

12 May 22-24, 2007



Enterprise Performance ManagementService Performance

Bu

sin

ess

13 May 22-24, 2007


Strategic MethodologyFinancial

Internal

Learning

CustomerVision

Enterprise Performance Management

Business Activity Monitoring

Business Intelligence

Business Process Management System

Enterprise Service Bus

CI Methodology

14 May 22-24, 2007


Enterprise Business PerformanceBusiness Intelligence:

– Focus on Historic Data– Data Warehouse or Data Mart:

• Populated from operational applications/DBMSs, especially the BPM Suite

– Rich reporting and analytics tools– Strategic Methodologies

Business Activity Monitoring– Real time monitoring of operational BPM Work data– Drill Down to executing processes– Real Time Management Control– Rich Reporting capabilities of BPM Work DBs

May 22-24, 2007


BPM DB

Data Integration/ETL

Data Warehouse

DB

ERP/CRM

ETL Process

IntegratedData

Business Intelligence

16 May 22-24, 2007


Business Activity Monitoring

May 22-24, 2007


BPM Process Instance DB

Data Mining

Predictive Models

Other Operational DBs

BPM Suite

Data Warehouse

ETLs

Higher Business VALUE

18 May 22-24, 2007



The Service Oriented EnterpriseIT

Bu

sin

ess

Service Oriented Enterprises, Dr. Khoshafian

Service Oriented ArchitectureIT Service Infrastructure

Business Process Management SuiteService Integration

19 May 22-24, 2007


BPMSuite

Workflow

BPMBPM Suite

• Modeling and simulation

• Business rules

• Business activity monitoring

• Solution frameworks

• SOA support

• Alignment of business & IT

• Integration:

• System participants

• Trading partner participants

• Process portals

• Organizational model

• Rich process data model

• Human participants

• Flow automation

• Flow status management

• Document and content centric

• Workflow reference architecture

20 May 22-24, 2007


Where are your Policies and Procedures ?

• Policy and Procedure Manuals

• People

• Code

• Models

• Automation

PoliciesProcedure

21 May 22-24, 2007


Enterprise Policies and ProceduresEnterprise Policies and Procedures

PoliciesProcedure

PoliciesProcedure

Modeled Policies and ProceduresModeled Policies and Procedures

Strategy and Vision ModelsStrategy and Vision Models

Process ModelsProcess Models Business Policy ModelsBusiness Policy Models(business rules)(business rules)

Information & Integration Information & Integration ModelModelOrganization ModelOrganization Model Modeled

AndAutomated

Policies and Procedures

ModeledAnd

AutomatedPolicies and Procedures

22 May 22-24, 2007


Use Cases InformationModel

Strategy & Vision

OrganizationalModel

ProcessModels

BusinessRules

Integration

BrowseCatalog

CheckShipment

Status

Place Order

ProcessInvoice

Ship Order

23 May 22-24, 2007


Operations

Declarative Rules

Process Flows

GUI

Integrators

BPMBPM

Process Class

Attributes

BPMS Models

Class

Attributes

Operations

Conventional Conventional

24 May 22-24, 2007


Human Resource Example: New HireAutomate processing of new employees, contractors interns

Process Data:– Date Hired– ID – Type– Status– Job Title– Department– Location Policies:

– Security– Legal Status– Training – NDA– HR & IT check list

Process Flows

25 May 22-24, 2007


Process Flows

Procedural: specify sequence of tasks/interactions

Involves – Human and System (internal, partner)

participants– Decisioning – Parallel tasks

26 May 22-24, 2007


What are “Business Rules?”

“Business rules are abstractions of the policies and practices of a business

organization”

Wikipedia

Business Rules are Declarative

27 May 22-24, 2007


What do we mean by “Declarative”?

• Execution time independenceo Do not worry when it is executed

• Execution method independenceo Do not worry how it is executed

• Execution order independenceo Do not worry what is being executed

Focus on the business logic

28 May 22-24, 2007


What is the Relationship Between Business Rules and BPM?

Source: Ron Ross

Processes are the “muscles”

Business Rules are the Nerves: Controlling the processes

29 May 22-24, 2007


Rules drive or control the process flows:– Decision Rules

What is the Relationship Between Business Rules and BPM?

DecisionDecisionDecision

PolicyPolicy

PartnerPreference

BestPractice

CustomerPreference

30 May 22-24, 2007


BPMSuite

BusinessProcess

Monitoring &Analytics

BusinessRules

WorkflowSolution

Frameworks

EnterpriseApplicationIntegration

Business ToBusiness

Integration

31 May 22-24, 2007


System/Partner and Human Participants

OrchestrateOrchestrateOrchestrate

Buyer Seller Shipper

ChoreographySellerBuyer Shipper

32 May 22-24, 2007


Remitter BeneficiaryBeneficiary Bank Remitting Bank

Parse message Check for duplicate cases Create case & route Attach message Locate & attach payment transaction Evaluate transaction

Status=Complete? STP?

Look up customer record Issue notification of assignment Contact remitting bank Schedule chasers Assign SLA

Parse message Check for duplicate cases Create case & route Attach message Locate & attach payment transaction Evaluate transaction

Status=Complete? STP?

Look up customer record Issue notification of assignment Contact remitting bank Schedule chasers Assign SLA

Unable to Apply11

Notification ofAssignment 33

Unable to Apply22Unable to Apply44

Notification ofAssignment55 Update case

Attach message Issue notification of assignment

Update case Attach message Issue notification of assignment

Notification ofAssignment 66

Send chaser Send chaserCase Status

Request77

Case StatusCase StatusResponseResponse88 Update case

Attach message Update case Attach messageResolution of

Investigation99

Resolution ofInvestigation1010 Resolve case

Attach message Send resolution message Levy service fee

Resolve case Attach message Send resolution message Levy service fee

Resolution ofInvestigation 1111

ST

PS

TP

Unable to ApplyExample of SWIFTNet E&I Straight-Through Process

33 May 22-24, 2007


BPMSuite

BusinessProcess


BusinessRules

WorkflowSolution

Frameworks


Business ToBusiness

Integration

34 May 22-24, 2007


Rule Types

Correlation

35 May 22-24, 2007


Tasks

Par

tici

pan

ts

Rules

Pro

vid

er

Req

uesto

r

h

Req

uesto

r M

an

ag

er

Pro

cu

rem

en

t D

ep

art

men

tS

hip

pin

g

Approve

Yes

Review Request and

Assign

Receive

Ship to Requestor

ApprovedBudget

Yes

Process

Order

Ask

For

Revisition

Check

Budget

Revise

Request

No

Request

Procurement

No

Yes

Send

Order

Accept

Order

36 May 22-24, 2007


Example

IF

Dispute Amount is less than $51; AND Transaction is not disputed as a fraudulent transaction;

AND The customer has disputed less than 2 transactions this year;

DecisionDecisionWrite-Off?

YesNo

Situation: World Master CardVIP Customer

THEN Fully credit the customer without even initiating the dispute i.e. Write-off the transaction.

37 May 22-24, 2007


Situational Selection

There are two uses of inferencing for BPMS solutions:

1. Situational Selection of the most appropriate process, UI, decision logic, integration, etc.

2. Rules to capture core business logic:• Decision Rule• Expressions• Event rules• Constraints

38 May 22-24, 2007


BPM Suite

USAOffices

CanadaOffices

Pilot

Canada v2US version 2

West East

Canada UKUS

Add Differencesto Specialize

French

CommonPractices

North America Europe

BPM Application

Building AssetsB

uild

As

set

s

39 May 22-24, 2007


BPMSuite

BusinessProcess


BusinessRules

WorkflowSolution

Frameworks


Business ToBusiness

Integration

40 May 22-24, 2007


Process Instance Data

ProcurementProcess

Jill’s Procurement(Computer)

John’s Procurement(Desk)

Mary’s Procurement(Printer)

41 May 22-24, 2007


BPMSuite

BusinessProcess


BusinessRules

WorkflowSolution

Frameworks


Business ToBusiness

Integration

42 May 22-24, 2007


Solution Frameworks

Solution Framework

Op

erat

ion

s

Dec

lara

tive

Ru

les

Pro

cess

Flo

ws

GU

I

Inte

gra

tors

So

luti

on

Fra

mew

ork

Cla

ss 1

Att

rib

ute

s

SF Class 2

SF Class 2


Business ToBusiness

Integration

BusinessProcess


BusinessRules

WorkflowSolution

Frameworks

BPM Suite

Extension 1 Extension 2 Extension 3

43 May 22-24, 2007


Healthcare CustomerRelationship Extensions

Customer Process Management Framework BPM Solution Development

Customer Processes and Rules Customer Profile Customer Entitlement Cross Sell

Customer Dispute Agreement Renewals Customer Interaction

Insurance CustomerRelationship

Telco CustomerRelationship


Business ToBusiness

Integration

BusinessProcess


BusinessRules

WorkflowSolution

Frameworks

BPM Suite

Greater speed to market and use of best practices enable faster achievement of competitive advantage

44 May 22-24, 2007


Enterprise Service Bus

AnalyticMeasures

Business ActivityMonitoring

BusinessIntelligence

StrategicMethodology

Example:BalancedScorecard


BusinessTo

BusinessIntegration

BusinessProcess


BusinessRules

Workflow SolutionFrameworks

BP

MS

uit

e

Application Server


45 May 22-24, 2007


What Should You Look for in a BPMS Methodology?

1. The methodology starts with the business case and identifies a best choice opportunity (quick-win opportunity)

2. The methodology reflects the new BPMS paradigm:1. Processes and business rules are captured, represented,

and implemented directly

3. The methodology leverages the BPMS platform

4. Methodology is driven by continuous improvement measures

5. Methodology helps build re-usable corporate assets

46 May 22-24, 2007


FinancialPerspective

CustomerPerspective

Internal Process Perspective

Innovation& LearningPerspective

BSCVision

How: Strategic Methodology

47 May 22-24, 2007


D

M

A

I

C

• CTQs• Business Case• Process Maps

Define

• CTQ (‘Y’, ‘X’) Measures• Measurement: Upper/Lower bounds• Information/Data Collection Plan

Measure

• Analyze Z-scores• Analyze Performance Objectives• Analyze Variations

Analyze

• Examine potential causes • Discover relationships• Improve process maps

Improve

• Detailed measurements and validation• Check attainment of envisioned improvements• Implement controls

Control

How: CI Methodology

48 May 22-24, 2007


Continuous Improvement LifeCycle

Agents

Six SigmaBlack Belt

ProcessArchitect

Analyst

49 May 22-24, 2007


Business Performance Methodology

Business Process Management Suite

Business Activity Monitoring(Real-Time and Historic)

May 22-24, 2007


Initial Level 1

ManagedLevel 2

DefinedLevel 3

Quantitatively Managed Level 4

OptimizingLevel 5

Capability Maturity Model development Process

51 May 22-24, 2007


Maturity StagesClassification

Level 1 Level 2 Level 3 Level 4 Level 5

CMMI Stage Initial Managed Defined Quantitatively Managed

Optimizing

BI equivalent No business intelligence services are being utilized

Individual process metrics are collected through manual probes

A business intelligence information architecture is defined

A business intelligence platform is in place

Forward-looking and outside information is integrated into the BI infrastructure

BPM equivalent Processes are performed manually

Processes are modeled using a formal modeling notation

Processes are modeled and automated using BPMS technology

Process metrics are automatically obtained and processes are managed on a day-to-day basis

Processes are continually optimized

SOA equivalent No services are defined

Individual services are defined

A comprehensive services architecture is defined

An enterprise service bus is in place

Continual optimization of QoS parameters, services architecture

May 22-24, 2007


BPM COE

Best PracticesRoles

Governance

Best PracticesRoles

Governance

Best PracticesRoles

Governance







53 May 22-24, 2007


ServiceService OperationsOperations ComplianceCompliance


ServiceService OperationsOperations ComplianceCompliance

SystemsSystems

SalesSales ServiceService OperationsOperations ComplianceCompliance PartnersPartnersSalesSales ServiceService OperationsOperations ComplianceCompliance PartnersPartners

BPM Suites for the SOE Challenge…


SystemsSystems


54 May 22-24, 2007


LocalCommunity

Customers

Shareholders

Partners

Government

Employees

SOE

Competitive Advantages for all Communities

55 May 22-24, 2007


Conclusion

SOE can serve their communities through:– Truly bridging the GAP between IT and Business: Model, Digitize

and Automate policies and procedures

– Tying KPIs to modeled and executing business processes and policies : • Executable predictive models

• CTQs as process properties

– Continuously monitoring and improving the implementation to meet the needs of the communities

… while leveraging the underlying IT SOA infrastructure and business performance management tools

56 May 22-24, 2007


Thank YouThank YDr. Setrag KhoshafianVP of BPM TechnologyPegasystems Inc.www.pega.com

Contact Information:[email protected]

ou