Monday, April 26, 2010

Business Rules OK!

Performance Management Systems collect the data to make decisions but they do not make decisions, they do not ensure that decisions get made or even track the results of the decision so made. James Taylor (no relation) called this the "over-instrumented" enterprise when he spoke to the the April meeting of the SDForum Business Intelligence SIG on "Performance Management and Agility". James is CEO of Decision Management Solutions where he consults on using technology to better effect decision making.

James divides the decisions that an organization makes into three levels: strategic, tactical and operational. He is interested in the operation decisions, the little decisions that are taken all the time. An example of an operational decision is what offer to make to a customer that has called a call center. Every enterprise has their own set of operational decisions, however they have the characteristic that is a large number of them that in aggregate they represent a lot of value, so they are well worth managing.

Many operational decisions are or should be automated, and there are a set of principles that need to be recognized when decision making is automated. The first principle is that no decision is going to be forever, so the logic for making the decision should not be locked up into something inflexible such as program code. Much better to use a rules based decision engine which allows everybody to see the rules in a language that they can understand. Another principle is that making a decision is a business process and as such should be managed. A good business rules engine allows rules to be tested, measured and perhaps even simulated in action to understand what they are doing and how they can be optimized.

According to James, the purpose of the information gathered for a Performance Management Systems is to make decisions, so it should be used to make decisions. Too many enterprises are over-instrumented. They have spent all their effort to get and present the data, however they have no measurable ability to turn that data into actions. You can read more about these ideas in the book Smart Enough Systems: How to Deliver Competitive Advantage by Automating Hidden Decisions by James Taylor and Neil Raden. You can also read my co-chair Paul O'Rorke's take on the meeting in his blog.

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