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October 05, 2010

The Knowledge Supply Chain

It was quite an honor giving a joint presentation yesterday with John Zachman & Leon Kappelman at SIMposium 2010 in Atlanta, GA.

I presented a case study on "Building Mobil's Knowledge Base and Knowledge Supply Chain." We talked about how Enterprise Architecture and Knowledge Engineering helped preserve, share, and automate The Knowledge of the corporation.

This was the right time to introduce new ideas we've been working on with customers for a while.

  • The Knowledge Wars™
  • The Knowledge Supply Chain™
  • BIZRULES® RuleMart™
  • BIZRULES® RuleMall™
  • BIZRULES® KARMA (sm)
  • Ruling The Cloud (sm)

You'll hear more about this at RulesFest next week

You can hear more about these ideas, plus get the technical version of this case study, next week at RulesFest 2010 in San Jose, CA. 

SLIDES:  http://www.bizrules.com/library/KnowledgeSupplyChain_forSIM2010_byRolandoHernandez.pdf
SLIDES SHORT LINK:  http://bit.ly/93t7kq
TWITTER:  @BizRulesInc  #BIZRULES | #simposium2010 | #rulesfest  www.Rulesfest.org

May 07, 2010

Terrorists are Coming To Town

Terrorists are coming to town.

 

We better watch out
We all might die
Stay home don't go out
I'm telling you why

Terrorists are coming to town.

 

TSA's making a list,
Airlines aren't checking it twice;
We'll never find out Who's naughty or nice.
Terrorists are coming to town.

 

Wall Street's closed when you're sleeping
Drops 1,000 points when you're awake;
Some rule fool trades 16 billion shares
instead of 16 million.
So be good for Goldman's Sake!

 

Rule Fools are running Wall Street.
Rule Fools are running this town.

 

No more need to worry
Cause Rules are coming to town.
Cause Principles are coming to town.

 

O! We better watch out!

BP is gonna try,
To stop the 5,000 feet underwater oil spout

By giving a containment dome a try.

 

I know their Experts have
The Knowledge to fix it.
One day we'll know

Why the Blowout Preventer blew it.

 

Rule Fools are running Wall Street.
Rule Fools are running this town.

Terrorists are coming to town.

Terrorists are coming to town.

 

BP Oil Containment Dome   Blowout Preventer (US OSHA)

 


© Rolando Hernandez 

Please use Twitter hashtag #RULEFOOL for this post
Follow me on Twitter username @BizRulesInc

 

Check out Ten Rules for Restoring Trust in Wall Street, BP, TSA, Airlines... and anyone else who wants to do business in this town!

 

March 12, 2009

Join the Federal Knowledge Management Initiative & Federal KM Working Group

Join the Federal Knowledge Management Initiative & Federal KM Working Group

America faces critical challenges today (information overload, brain drain in government, sharing knowledge, automating knowledge, making laws easier to understand, etc.) and enormous opportunities in the years ahead.

I truly believe KM is part of the solution that can help us overcome the challenges and seize the opportunities.

Government and private sector KM executives have united and formed the Federal Knowledge Management Initative to convince our leaders in Congress and the Obama Administration to coordinate, formalize, and centralize America's efforts around knowledge management.

This presentation by Neil Olonoff summarizes the "Federal Knowledge Management Initiative Roadmap." The initiative, begun several months ago by members of the Federal Knowledge Management Working Group, aims to establish an official center for knowledge management in the Federal Government. With this center of operations as a start, the Federal government can begin to foster knowledge sharing practices and culture, build innovation, and find solutions to the Knowledge Retention Crisis. And there is much more to the plan. Learn how you can become a part of this exciting, ambitious new direction for knowledge management in Government, by attending via phone and computer.

Download Federal Knowledge Management Initiative PPT

Join the Federal KM Working Group. No dues are involved. To join the listserv, send a blank e-mail to kmgov-subscribe@list.jpl.nasa.gov

Read the Roadmap on their Wiki page:

http://www.km.gov

February 04, 2009

WARNING: CEO's need to wise up and "bail out" of billion dollar IT projects right now

WARNING: CEO's need to wise up and "bail out" of billion dollar IT projects right now

Dear CEO: 

I am sick and tired of reading about billion dollar IT projects that we both know are never going to work, change, or last. It's time to stop the non-sense and use common-sense.

Here's just one example from InformationWeek. California is spending $3,600,000,000 (that's $3.6 BILLION) on these systems:

• Financial system: 11.8 years, $1.6B
• Strategic Offender System: 5.7 years, $416M
• Home Support Services: 10 years, $298M
• Automated Welfare System: 3.8 years, $263M
• Child Welfare System: 7.3 years, $254M
• Motor Vehicles IT Modernization: 6.8 years, $207M
• Consolidate IT Infrastructure: 2.9 years, $191M
• HR System: 6.1 years, $179M
• ERP for Prisons: 4.5 years, $176M 

Do you really want to cut your systems development budget?

Here's how:

Let's say you're planning an 18-month $18 million systems development project. Imagine that's the cost and time for analysis, design, programming, testing, and deployment.

Using business rules, rulebases, rulebased technology, and architecture and engineering principles, we can program that system in 12 months and $12 million. It's that easy.

We can save you 6 months and $6 million just by using rule-based programming languages instead of hard-coding your rules.

If you can tell us exactly what all your business requirements are, and how many business rules you have, well then we can bring your costs down even more.

We can find enough good qualifed experienced out of work programmers right now who are just as cost-effective and as productive as any programmer in any country who would love to work on your project. And they're ready to start as soon as you're ready to save $$$.

When do you want to start saving millions of dollars?

Hurry, you must act now. Call 1-800-SAVE. The first 50 callers will save an additonal $1 million if you call in the next 30 days. You must call before shareholders find out how much you're really spending on systems development.

PS - By the way, for every $1 billion you spend on development, you're spending $5 billion on maintenance. It's time to stop IT non-sense. You must call now!

December 12, 2008

Agility Alliance - New open social network connects technology gurus and business masterminds

Agility Alliance - New open social network connects technology gurus and business masterminds

I’d like to reach out and invite all my IT/business friends to join the Agility Alliance, a free online network that helps bring together technology experts and business leaders:

http://www.agilityalliance.org     

The Agility Alliance network is an open social network, for experts, by experts. We’d like to keep it technical, friendly, open, fun, and non-commercial (i.e. no marketeering).

If you are into BRM, BRMS, BPM, BPMS, CRM, SCM, EDM, CEP, etc. there is a group for you. If not, create a group! It's flexbile so you can create your own group, blog, or forum to share with all of us.

If you're a programmer, analyst, designer, architect, engineer, business executive, VP, CTO, or CIO, and you are a leader in your field, or you want to hear what the leading minds in these fields have to say, join the network and become a member of your favorite group.

I hope this network becomes a place to share great ideas, learn from the best, and find "the best of" links to blogs, presentations, videos, and discussions in your favorite topics. Mine, as many of you know, are managing rules and knowledge.

What do you know? Share... Show and tell. This is not the place to sell.

It’s pretty open and flexible, so you can add groups, blogs, photos, slides, videos, chat, links, forums, tutorials, articles, etc. There are individual pages each member can customize, and each member gets his/her own blog (if you want it). You can post articles, templates, links, and add discussions to the forum. Invite your friends and colleagues to join. If you can’t figure out how it works, ask your kids!

Two months ago the idea of building a professional network for rulebase experts and knowledgebase exeprts was first proposed at ORF2008. I loved the idea. I started creating it, but it didn't feel right. Something was missing.

A big problem in our field is that business people talk dollars and IT people talk data. Alignment, or lack thereof is the biggest complaint CIO's have had for years.

Creating a closed network for just the top rule experts in the world was an awesome challenge, but I also wanted CIOs to have access and see what these genuises have to say. Business people need to hear what geeks have to say.

Geeks landed us on the moon; But business people paved the path and led the way.

We all need to bridge the gap between business and technology. I am extremely confident that the Agility Alliance network will help connect business and IT experts.

The time is right to create a network of IT experts and business leaders. The network is just a few days old, so this is just a start.

The rest is up to you.

 

September 25, 2008

Ten Rules for Wall Street

Ten Rules for Wall Street

What are the rules? Did people break the rules, bend the rules, or ignore the rules?

Confidence in Wall Street went down the drain last week. The credit crisis gave business a bad name, and it gave government a bad name for not doing anything about it. Trust disappeared. 

It's time to rebuild trust in business and government.

Here are ten rules for restoring trust in business and government. These rules apply to everything from the global financial system, to Wall Street; from federal governments to local jurisdictions; from global corporations, to organizations and small businesses.

Companies that learn to define transparent rules that are sensible, consistent, easy to understand, and easy to follow will be easy trust. On the other hand, companies that rely on opaque rules that are complicated, confusing, illogical, inconsistent, or deceptive will be hard to trust. They will go out of business.

Rule 10 - Have guiding principles. Act on principles, independent of influence by greed or friends.

Rule 9 - Follow policies and guidelines about what is permissible and what will not be tolerated.

Rule 8 - Establish rules of behavior concerning what is right and wrong. Success in business depends on understanding the rules. The rules of the business are the way the business really operates. Design transparent rules that are logical, sensible, easy to understand, and easy to follow.

Rule 7 - Leverage knowledge and judgment. Know what you know, and know what you don't know. Document and retain what your experts know and how they think so their knowledge can be shared with those who need to know. Use wise judgment. Know when to follow the rules, when to bend them, and when to forget them.

Rule 6 - Make smart decisions informed by facts, rules, knowledge, principles, and judgment. Decide using clear, logical, and unbiased rules that explain each decision clearly. Use sound reasoning to make rules-based, principles-based, and knowledge-based decisions.

Rule 5 - Create enterprise architecture to deal with change and complexity. Use architecture to simplify complexity, and to understand how the whole business and the whole system works; Understand who, what, when, where, why, and how. Design the architecture to ensure that all the parts fit (interoperability), connect (integration), work (quality), work as intended (alignment), last (reliability), and can be shared (reusability). Design the architecture so the business can handle increases in complexity and increases in the rate of change (flexibility). Design the architecture to reduce time-to-market and reduce operating costs. Design the architecture to support rules-based and principles-based compliance.

Rule 4 - Do the engineering, to design systems that work, change, and last. Apply architecture and engineering design principles to ensure alignment, flexibility, quality, interoperability, integration, reusability, reliability, compliance, reduced time-to-market, and reduced costs. Build in risk management safety factors so the business and the systems can handle extreme stresses and excessive loads.

Rule 3 - Have a clear vision. Stand for brand.

Rule 2 - Instill confidence. Improve the quality, consistency, and accuracy of decisions and actions.

Rule 1 - Build trust. Align actions, decisions, and transactions with management's intentions. Align execution to goals, strategy, and mission. Align systems to business. Align implementation to intention.

Sept. 25, 2008   Rolando Hernandez   BIZRULES

Principles are Coming

Principles are Coming

More judgment and knowledge needed

While the finance industry is moving toward more rules and exceptions, and rules-based regulation, financial accounting and reporting is moving in the opposite direction, towards fewer rules and exceptions. Accounting and tax is moving towards more principles-based regulation.

The US is moving away from GAAP (Generally Accepted Accounting Principles) and towards IFRS (International Financial Reporting Standards). IFRS is the reporting framework used by most of the world today, and it has growing support in the US. IFRS relies on professional judgment rather than detailed rules. Under this principle-based approach, management will have a mandate and obligation to exercise its own best judgment when making decisions.

Companies will need to implement systems that use knowledge and judgment to make principle-based decisions.

It is time to adopt knowledgebase technology and knowledge management. It's time to build knowledge bases and embed knowledgebased technology into operations and existing systems.

Knowledgebased systems that are engineered and architected properly can

  • follow principles and guidelines
  • automate management's best judgment
  • ensure compliance
  • and deliver trust. These expert systems can be trusted because they use expert judgment to make the same decisions top experts would make, thus improving the quality, accuracy, and consistency of decision-making.

I don't believe there is any other practical or proven way of automating human judgment, other than building intelligent, knowledge-based systems.

Knowledgebased systems are the solution for principle-based compliance.

Rules are Coming

Rules are Coming 

More rules and regulations are coming

To restore trust in the financial system, the government is moving towards more rules and exceptions, and more rules-based regulation. The trend towards de-regulation is over. Regulatory reform is coming back. That means more rules and regulations than ever before.
 
Management will have an obligation to follow the rules and laws when making decisions. These decisions better be consistent, correct, complete, and compliant if you really want to stay in business. 

Companies will need to implement systems that follow the rules and make rule-based decisions.

It's time to adopt the business rules approach and business rules management. It's time to build rulebases and embed rulebase technology into operations and existing systems.

Rulebased systems that are engineered and architected properly:

  • follow the rules
  • automate management's decisions
  • ensure compliance
  • and deliver trust. Rule engines can be trusted because they implement the decisions management intended.

Rulebased systems and business rules management are the solution for rule-based-compliance.

Sept. 2008 credit crisis

On Sept. 10, the world's largest particle collider and atom smasher was turned on for the first time. Skeptics warned that the Large Hadron Collider, a 17-mile circular tunnel under the Swiss-French border designed to smash protons so they shatter and recreate the Big Bang, would create a black hole inside the Earth. 

In a world where homes could go down the drain and disappear into a black hole, the mortgage mess and global credit crisis seemed trivial in comparison.

Four days later, on Monday Sept. 15, the credit collider smashed Lehman Brothers to bits. Lehman filed for bankruptcy and instantly disappeared into the credit black hole. 

By Thursday Sept. 18, the black hole threatened to collide and smash U.S. financial markets and the entire global financial system. Then the federal government stepped in and turned off the collider with a $700 billion proposal for the largest bailout plan in U.S. history. 

One week later, on Thursday Sept. 25, the plan is still up in the air. Congress is debating the plan. President Bush just met with Sen. McCain and Sen. Obama. The world is rapidly losing trust in the U.S. German Finance Minister Peer Steinbrueck said "The United States will lose its superpower status in the world financial system. The world financial system will become more multipolar," he said.

Thursday night, Washington Mutual disappeared into the black hole, becoming the biggest bank failure in U.S. history. The government seized WaMu, took it over, and sold Wamu's $307 billion of assets to J.P. Morgan Chase for $1.9 billion.

"A crisis of confidence without precedent is shaking the global economy," French President Nicolas Sarkozy said in a speech in Toulon, France.

Toulon is close to the Large Hedron Collider, where this whole thing started. Could someone forward this message to President Sarkozy: Please shut down the collider!

 

Here are some photos inside the LHC tunnel, and in the control room on LHC First Beam Day:

LHC mission control  LHC atom smasher

LHC operators  LHC monitors

Images by Maximilien Brice    copyright CERN

 

September 12, 2008

Bosch drives into the rule engine market

Bosch has joined the club. On September 8, 2008 The Bosch Group acquired Innovations Software Technology. Both companies are based in Germany. This move heats up the BRE/BRMS market consolidation that was already sizzling:

Sep. 2008 –The Bosch Group acquired Innovations Software Technology
Jul. 2008 - IBM announced their intent to buy ILOG
Nov. 2007 – RuleBurst acquired Haley Rules
Oct. 2007 – SAP acquired Yasu
Aug. 2007 – Trilogy acquired Gensym
Oct. 2006 – Planet Group acquired ACI Worldwide
Jan. 2006 – Trilogy acquired Versata
Jan. 2006 – MDA acquired Mindbox
Sep. 2005 – Fair Isaac acquired RulesPower

(click to see the new BRE Family Tree

Oracle and Microsoft entered the business rule engine (BRE) market by building their own rule engine technology. Competitors, however, took a different approach. Global technology leaders IBM and SAP acquired BRE vendors ILOG and Yasu. Insurance software vendor MDA acquired BRE vendor Mindbox. And rule engine vendors Fair Isaac and Trilogy acquired smaller BRE vendors RulesPower, Versata, and Gensym.

I asked David S. Kim, Managing Director and CEO of Innovations Software Technology, to share his thoughts and tell us what this means to customers, end-users, and to the rules market. Here’s what he had to say in our email discussion.

How does the Bosch acquisition of Innovations compare to the other acquisitions and consolidation in the rules industry?

“The big difference is that we were not acquired to have our product line integrated into a stack of other software. We were acquired to be the core of a new software and systems company within The Bosch Group. We will be creating new technologies and value chains within Bosch and open the door to new lines of business,” Kim said.

Continue reading "Bosch drives into the rule engine market" »

August 22, 2008

Army mandates 12 knowledge management principles

"Connecting those who know with those who need to know." That is a great definition of knowledge management. And it's right out of the Army manual. The US Army recently released a knowledge management memo outlining 12 principles to encourage and reward sharing knowledge throughout the organization.

"Knowledge management is about connecting those who know (know-why, know-what, know-who, and know-how) with those who need to know and leveraging that knowledge across the institutional Army and to contractors, nongovernmental organizations, the other military services and coalition partners,” states the memo.

A few months ago I wrote about classifying knowledge as either critical knowledge or common knowledge.  Common knowledge is about your experience and what you know.  Critical knowledge is about your expertise and how you think.

Continue reading "Army mandates 12 knowledge management principles" »

March 27, 2008

Breaking the Rules: Suspicious bank transaction rules led to Spitzer resignation

Business rules triggered by Eliot Spitzer's suspicious money transfers led to his resignation as Governor of New York..

Spitzer broke these rules

The Justice Department says Spitzer is likely to be charged with a relativley obscure statute or rule called "structuring". Even people who know the rules break the rules. It all started a few months ago when a bank in New York followed the rules for filing a Suspicious Activity Report. It ended with his resignation last week.

To help understand the rules that "fired" Spitzer, we created an interactive business rule model of SAR rules. The rules are on www.RuleMap.com. This is a new website we created for demonstrating our interactive BIZRULES® RuleMap™ rulebooks and business rule models.

A picture is worth a thousand words. We beleive this RuleMap makes it easy to understand the rules that Spitzer broke.

March 13, 2008

Visible Knowledge LLC helps companies prevent Brain Drain

10,000 baby boomers are retiring today.

10,000 more will retire next Monday. And Tuesday. And so on. That's the way it's going to be for the next 20 years. Key personnel and subject matter experts with 20 to 30 years of experience are going to clear their desk and head down to Florida. As they walk out the door, invaluable corporate knowledge will simply disappear.

Intellectual capital, a vital corporate asset, will melt away unless companies do something to stop the brain drain and to retain critical knowledge.

Visible Knowledge LLC (www.visibleknowledge.com) has a solution:

  • An interactive RuleMap™ that models business rules & simulates business logic
  • An interactive Expertise Blueprint™ that transforms knowledge into Visible Knowledge™
  • A Legacy Interview(sm) 

Visible Knowledge helps companies retain vital corporate knowledge before it melts away. They focus on documenting invaluable critical knowledge from your top domain experts and key personnel, before they retire. It can take companies years and millions of dollars to recover from losing this type of knowledge.

A traditional exit interview is just not enough when you're dealing with subject matter experts or super experts. So Visible Knowledge has developed a Legacy Interview(sm) process that extracts and documents critical knowledge before experts leave or retire. They use a rapid knowledge acquisition process to extract maximum amount of knowledge in a minimum amount of time. Visible Knowledge focuses on capturing critical knowledge.

If Know It All Ken just gave you two weeks notice, and he's the only one who knows how to fix the $5 million widget making machine, Visible Knowledge can help. They can spend a few days with Ken and document the crucial knowledge you need to keep the business running.  

If Super Expert Sally is retiring in a few months, Visible Knowledge can spend a few weeks with her to elicit as much vital and critical knowledge as possible before she leaves.

If your entire Dept of Super Experts is retiring next year, Visible Knowledge can work with your team over the next few months or years to document the critical knowledge you need to retain.

Later, if you need to automate the knowledge that was captured and retained, companies like BIZRULES can help you do that. BIZRULES works with leading knowledge software vendors to design and build knowledge-based and rule-based solutions.

November 14, 2007

Haley Rule Bursts into the business rules market

Business Rules Management and Business Rule Engines at a tipping point

Haley Rules was acquired yesterday by RuleBurst. Previously, RuleBurst seemed to position itself as an up-front rule modeling tool or rule management tool, especially for government applications, that integrated with the Microsoft Business Rule Engine for rule execution. With this acquisition, RuleBurst acquires one of the fastest rule engines on the block. Now they don't need the MSFT rules engine because they have their own! And instead of taking a few more years to build a stronger presence in the U.S., they established a strong presence in the US market overnight.

RuleBurst is a natural fit for legislative rules. As a matter of fact, they used to market their tool as Legislative Rulebase Technology years ago, when the company was called SoftLaw. They talked about the idea of Electronic Legislation. E-Government is a great niche, because government is good business.

Now it seems clear that RuleBurst is ready to go after the corporate / private-sector market just as hard. Ruleburst is very serious and methodical. They plan ahead strategies like international expansion (done), government rules market leadership (done - can you spell I R S?), and long-term expansion into the corporate rules market as well (well underway with Haley acquisition).

Adding the Haley Rules Engine could improve performance for deployment. Not sure what they would do with Haley Authority - that is very impressive natural language technology that is like nothing else on the market. There's a good reason Haley is based in Sewickley, PA: Carnegie Mellon University and A.I. expertise. Softlaw was one of the first companies to get into the rules market, and they are among the few who are still around today (under the name RuleBurst of course).

The new BRE Family Tree 2008 (as of yesterday) shows a quick summary of that history:BRE Family Tree 2008

Here's the official press release about the acquisition.

Here's the rest of the story:

In September 2001 I met with a SoftLaw executive (not sure if he was CEO at the time or if he became their CEO later) in Orlando, FL to brief him on the U.S. rules market and advise them on their expansion plans and strategies. We talked about challenges faced by government agencies such as the IRS, and their search for business rule engines and business rules management solutions. At that time I was working for IBM on the IRS Modernization project. Back then the IRS was looking at CA AION, Sapiens, etc. It took a few years, but SoftLaw (RuleBurst) finally broke through and is now one of the tools used on the IRS project.

During those meetings we also talked about marketing opportunities in the US. I told them about the Business Rules Forum and other rules conferences that they should attend and exhibit at. They started attending, and are now regular exhibitors.

This year at the Business Rules Forum it was a little odd that Haley Software did not have a booth. Now we know why.

 

March 16, 2007

Best Buy, Bogus Prices: Confusion about pricing rules reveals need for business rules management

If employees don’t know, don’t understand, or don’t care what the rules are, you have a business rules problem.

If customers get different answers depending on who they talk to, you have a business rules problem.

If salespeople can decide whether to charge the right price or a bogus price, you have a business rules problem.

Best Buy, the nation's largest electronics retailer, has a business rules problem.

It's also dealing with a public relations nightmare, and an investigation by the Connecticut Attorney General's Office.

Pricing rules used by salespeople in Best Buy stores are inconsistent and contrary to Best Buy pricing policies established in the boardroom. “What we've learned very quickly is we have not been clear enough in communicating to our employees the policy, and how to execute it in our stores,” said Dawn Bryant, spokeswoman for Best Buy.

Success in the world of business depends on understanding the rules,” I said recently during a panel discussion on Sarbanes-Oxley compliance.

“You need to know the internal rules and policies of your business. You have to comply with the external rules and regulations that govern your business, industry, and function. Your company must ensure that rules are followed. Your company must enforce the rules. Your company must give staff tools to help them follow the rules, make legal decisions, and prevent them from making illegal decisions. Business rule management systems (BRMS) and business rule engines (BRE) help companies comply with rules and regulations like SOX.

If you don’t have a rule engine that automatically prevents employees from breaking the rules and instantly detects and prevents fraud, you’re out of the game. You’ll end up watching your stock go from $30 to $3 during lunch. You lose. You’re out of business.

Smart companies are using business rules to ensure compliance with rules, to enforce rules, to increase agility so they can change faster, to prevent business mistakes, and to reduce IT system development costs by changing rules in days not months.

Business rules technology helps business comply with rules and regulations, helps employees follow the rules, and prevents employees from breaking the rules (either accidentally or on purpose).”

Business rules management is the prescription for business rules problems. Business rules management entails everything from the business rules approach to business rules technology. 

The business rules approach helps companies transform complex policies into easy to understand business rules. What better way is there to clearly describe and communicate policies and business rules to employees?

Business rules technology helps companies execute the right business rules at the right time every time. What better technology is there to automate business rules?

What happened at Best Buy is a great example of what can go wrong when business rules are not designed and engineered properly.

Business rules are like the glue that holds together all the parts of the corporation. Business rules integrate and align all the moving parts of the corporation. With business rules management, Best Buy can ensure that rules and processes used in the stores are aligned with Best Buy pricing policies defined in the boardroom.

Without business rules management to connect the elements of the corporation, the only way to ensure the corporation works as intended is to "hope and pray," as John Zachman likes to say. With weak or wrong business rules, the corporation falls down like a house of cards.

This is why business rules management is vital to the corporation.

Business rules management is not just about documenting business rules, defining who the owners are, and deciding who is authorized to change them. It’s not just about using rule-based languages to speed up system development instead of hard-wiring rules in legacy code. It’s not just about selecting a business rules engine. It’s not just about understanding the company’s strategies, policies and business practices, and then transforming those objectives into rulebooks, descriptive business rule models, IT specifications, and finally into automated systems.

Business rules management is also concerned with architecting and engineering the business rules so they are integrated with the rest of the business. This helps ensure that the implemented business rules that are in actual use, whether automated or manual, align with the governing rules and strategies of the business.

What happened at Best Buy?

At first, I thought the Best Buy pricing problem was complicated and hard to explain. Then I wondered how can business rules help solve this problem? What would BIZRULES do if Best Buy came to us for help?

That’s easy. I like to draw pictures to simplify complex ideas. By removing the complexity, pictures help me make even the most complex concepts easy to understand:

BIZRULES Analysis of Best Buy Pricing Rules 

(Click to see medium or large slide)

This is an example of three business rules that were apparently in operation at Best Buy when this story broke. Of course, we really don't know the rules were, so this is just a good guess based on published news accounts of what really happened.

Along with a picture of the rules, this slide shows how the rules affect the rest of the company. It also shows how the rules satisfy business rules management objectives, and business rule engineering design objectives:

Rule #1 is a conceptual explanation of the pricing policy to honor the lowest price.

  • This rule tells us what management means and what their intentions are.

Rule #2 is a logical description of the corporate policy to honor the lowest price:

  • This business rule clearly shows alignment to corporate strategy.

  • This is the high quality rule prescribed by the pricing strategy.

  • This rule shows integration between online and retail stores.

  • This rule offers reusability – the same rule can be implemented online and in the store.

  • This rule shows transparency.

  • This rule reduces operations costs because it’s easy to follow.

  • This rule demonstrates regulatory compliance.

  • This picture is worth a thousand words.

  • This rule builds Customer Trust Management.

  • This is a “Best Buy” type of rule.

  • This rule is easy to approve, assess, test, and certify.

  • This rule improves governance and controllership.

Rule #3 is used (i.e. prescribed) by some salesman to mislead customers into paying higher prices:

  • This business rule is clearly not aligned to corporate strategy.

  • This poor quality rule is operational and being used in stores.

  • This rule shows discontinuity and inconsistency between online and retail stores.

  • This store rule cannot be reused online because it lacks transparency.

  • This rule increases operations costs because it’s hard to explain and justify.

  • This rule raises questions about regulatory compliance.

  • You need a thousand words to explain this picture.

  • This rule destroys customer confidence and trust.

  • This rule is public relations nightmare.

  • This rule may be illegal.

  • This is a “bait & switch” type of rule.

  • This rule should never have been approved.

  • This rule raises questions about whether proper rules, processes, and controls are in place.


Now that I understand what the current pricing situation at Best Buy is, it seems pretty straightforward:

  • Management intention is Rule #1. This is Best Buy’s pricing policy.
  • Marketing description is Rule #2. This is what marketing thinks is happening.
  • Sales prescription is Rule #3. This is what salespeople are actually doing.
  • IT specification is not applicable in this example because these rules have not been automated. If these rules were automated, an executable specification of the rule (i.e. pseudo code) may need to be developed for the programmer.


These four views of the business rules fit nicely into an Enterprise Rules Architecture.

The next step is to fit these rules into an enterprise architecture framework. I used John Zachman’s influential and compelling Framework for Enterprise Architecture as an example:

The Zachman Framework for Enterprise Architecture

(Click to see medium or large slide)

Next, I overlaid Best Buy Rules #1-3 on top of Zachman’s Enterprise Architecture Framework to add more clarity to the Best Buy pricing situation:

BIZRULES Analysis of Best Buy Pricing Rules (part 2)

 (Click to see medium or large slide)

The pricing problem at Best Buy is that the business rule used by salespeople in the stores contradicts the company’s pricing policy. Clearly Rule #3 is not aligned with Rule #1 or Rule #2.
Business rules confusion is what caused the problem.

Business rules management is the solution.

To get out of this sticky mess, Best Buy needs to:
  • establish or improve their business rules management.
  • prevent salespeople from using Rule #3 immediately
  • mandate use of Rule #2 immediately.
  • automate Rule #2 as soon as possible. Why let salespeople decide pricing at all? Let the computer figure out what the lowest price is.
  • use a business rule engine to automate this rule as quickly as possible. This rule change needs to happen overnight. But changing hard-wired rules in code takes take days or weeks. Often, companies that don’t use rule engines take months to change business rules as simple as these. This is one reason why companies buy rule engines: Changing rules in a rule engine takes minutes.
  • educate salespeople on the pricing rules. Of course, if Best Buy automated the rules using a rule engine, they wouldn’t need to train as much.
  • ensure compliance with these rules from now on.
What about the secret website?

Business rules can also help Best Buy get rid of the secret and duplicate website. It's hard enough to maintain and manage prices for thousands of products on one website, let alone two. There are costs associated with maintaining a duplicate site containing 250,000 pages; surely management and shareholders want to reduce redundant costs like these. One way is to use a business rule engine to eliminate the duplicate site and duplicate effort. Why not write a few rules to show different prices (if that really is management’s objective) depending on whether the salesman pulls up the web pages on the Internet or the "secret website" on the Intranet?

How else can business rules management and business rules technology help Best Buy? Please comment and let me know.

Rolando Hernandez

CEO & Chief Rules Architect, BIZRULES

 

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Best Buy + Secret Website = State Investigation of Best Buy Sales Rules

Best Buy uses a “secret website” in their stores to mislead customers and deny them discounts advertised on BestBuy.com  

On February 9, 2007 George Gombossy, Staff Writer/Consumer Watchdog reporter for The Hartford Courant, wrote this article on how Best Buy salesmen in the West Hartford, CT, and  Newington, CT, stores refused to honor $150 discounts offered on a Toshiba laptop advertised on Best Buy's public website - bestbuy.com.

The salesmen justified their refusal by showing the customer a secret website that appeared to be BestBuy.com. This secret website that they accessed in the store did not have the sales price.

Best Buy spokesman Justin Barber called the reporter back and said Best Buy's policy is to always honor the lowest advertised price, whether from its Internet site or from a competitor.  Barber insisted that "nothing improper was going on and that there was no secret website that virtually duplicates the public site so salesmen can dupe customers."

On February 10, 2007 the Connecticut Attorney General's office started an investigation into whether Best Buy maintains a secret intranet site that may have been used by some salesmen to deny customers discounts that appear on the company's public Internet site. The AG's office office informed Best Buy that he wants answers about its Internet policies and to disclose whether it has an intranet site that could be used to mislead customers. His office will also look into whether other chain stores may be using similar sales practices.

"The key question is whether consumers were advertised one price, and then denied that price when they got to the store," Connecticut Attorney General Richard Blumenthal said last week.  Under pressure from state investigators, Best Buy later confirmed that its stores indeed do have a "secret intranet site that has been used to block some consumers from getting cheaper prices advertised on BestBuy.com."

What happened at Best Buy is a great example of what can go wrong when business rules and processes are not managed properly. At a minimum, this is clearly an example of poor business rules management practices and poor process management practices. At a maximum, executives, employees and the company could be liable for damages.

This situation shows why business rules management is vital to the corporation.

See: Best Buy, Bogus Prices: Confusion about pricing rules reveals need for business rules management

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September 13, 2006

Knowledge Management is Key to Preventing Brain Drain. BP found out the hard way.

CEO’s finally got a wake up call about the true value of managing knowledge and the risks of losing intellectual capital. It is becoming painfully obvious that companies need to document and retain the knowledge of their key personnel and subject matter experts. They need to manage this intellectual capital and treat it like Intellectual Property (IP) before it simply walks out the door. Just ask British Petroleum. When BP senior corrosion engineer Richard C. Woollam left, BP lost valuable intellectual capital, namely his knowledge, experience, and expertise. That’s when the brain drain began.

Around February 25, 2006, corrosion in the Prudhoe Bay pipeline caused a “small leak” in a quarter-inch hole in the pipe. BP discovered the leak five days later on March 2, after 250,000 gallons of crude oil spilled across 1.93 acres. The spill, the largest ever on Alaska’s North Slope, forced BP to shut down the pipeline and the Prudhoe Bay oilfield, the largest U.S. oilfield. Overnight, 8% of domestic oil production was shut down due to “extensive corrosion”.


“By the time a massive oil-pipeline spill was discovered in March on Alaska's North Slope, the job of BP's senior corrosion engineer had been left unfilled for more than a year, an internal BP audit found. This vacancy, and others, hindered BP's ability to maintain a ‘strategic view’ of its corrosion prevention activities, the audit found. A BP spokesman said Friday that a replacement for the senior corrosion engineer has yet to be found...”

"Alaska Gov. Frank Murkowski and other officials toured the Prudhoe Bay oil pipelines, which have been crippled by corrosion problems discovered this week. The threat of a stoppage also endangers Alaska's budget: Oil taxes account for more than 90 percent of its revenues...

On August 7, oil spilled in the Eastern Operating Area of BP's Prudhoe Bay oil field.

“Half of Prudhoe Bay oil field's production operations were shutdown Aug. 7 in its Eastern Operating Area after a leak was detected and about 630 gallons of crude oil leaked. Downgraded operations closed 16 miles of oil transit lines and halted 400,000 barrels of oil production a day in the Alaskan oil field, reducing 8 percent of U.S. domestic production…"
On September 6, Congress began hearings on BP’s corrosion problems in Alaska.

“U.S. lawmakers are launching an investigation into the August shutdown of BP's Prudhoe Bay operations after corrosion was detected in the 29-year-old pipeline...”

The House Energy and Commerce Committee holds a hearing ON September 7 on BP's corrosion problems in Alaska. A leak forced the shutdown of half the Prudhoe Bay oil field. Committee Chairman Joe Barton says evidence indicates the problem was caused by BP's poor maintenance of the pipeline..."

It was "truly beyond comprehension" that a profitable company such as BP would fail to maintain the infrastructure that was the basis for its earnings – Rep. Jan Schakowsky, D-Ill.

"BP's top U.S. executives told lawmakers Thursday that the company stumbled by failing to prevent a major Alaskan pipeline from becoming crippled by corrosion..."

"At the hearing, a former BP official responsible for monitoring pipeline corrosion invoked the Fifth Amendment in response to the panel's questions about the problems that led to the partial shutdown of the nation's largest oilfield..."

"BP's operating failures are unacceptable. They have fallen short of what the American people expect of BP and they have fallen short of what we expect of ourselves." – BP America Chairman Bob Malone told members of a House panel.

"I deeply regret this situation occurring on my watch," – Steve Marshall, president of BP exploration in Alaska

Hearings continued on Capital Hill on September 13.

"BP didn't fundamentally understand the conditions of their lines and did not maintain it properly," Thomas Barrett, administrator for the Pipeline and Hazardous Materials Safety Administration, testified Tuesday before the Senate Energy committee.

Clearly, BP did not document nor retain the knowledge of its senior corrosion engineer. Every company should, at a minimum, document and retain the knowledge of key individuals and subject matter experts if it wants to have any hope of not wasting time and money reinventing the wheel every time smart people leave.

But shareholders deserve better. So smart companies not only capture and retain knowledge, they also digitize, automate, and manage that knowledge so it can be shared and leveraged throughout the enterprise. Just ask great companies like ExxonMobil.

In the early 1990’s, Mobil Oil developed a bold strategy to transform the knowledge of their top lubrication experts around the world into digital assets that could be shared throughout the Mobil system. This global expert system strategy and global knowledge management strategy led to development of the Mobil Lube Knowledge Base.

Mobil Marketing executives first started understanding the value of capturing knowledge as a corporate asset in 1989, after the rollout of the ALFRED Rolling Oils Expert System. This expert advisor captured 50 years of Mobil's experience with rolling oils and metal rolling mills. The knowledge was represented in the system as a collection of business rules and expert decisioning rules.

Mobil's Lube Marketing Strategy in the 1980's was to provide value added services to customers. Executives started envisioning a global "Lube Knowledge Base" as a laptop sales tool to support every sales engineer worldwide. LKB goals were to:

  • Capture expertise from top marketers & engineers and make it available worldwide
  • Train field reps
  • Improve customer service & service quality
  • Provide consistent solutions
  • Minimize paperwork/looking through thick manuals

By 1991, business and IT executives agreed there was a need to develop a worldwide lube expert systems strategy. The IT strategy was aligned with Mobil’s longstanding lube marketing strategy to provide value added services to customers. IT and the US / Intl’l business units planned a strategic Knowledge Management Program with these goals:

  • Maintain Mobil’s competitive edge in the worldwide lube market
  • Provide current product and customer data to the field sales force
  • Capture individual expertise and share that knowledge throughout the Mobil system
  • Enable marketers to increase face to face selling time

The Mobil Lube Knowledge Base consisted of a suite of interoperable and integrated expert advisors and knowledgebases that retained and shared Mobil’s best knowledge on everything from Environmental Health & Safety (EH&S), grease marketing, compressor lubrication troubleshooting, to rolling oil program diagnosis. Expert advisors were also envisioned for hydraulics, cutting oils, and marine (cruise ship) diesel engine lubrication. Knowledge engineers interviewed Mobil experts from the U.S., Japan, England, France, Germany, New Zealand, The Netherlands, Austria and other countries to elicit their knowledge and build the global Lube Knowledge Base.

One of the systems in the Knowledge Base was the EH&S audit expert advisor. Jim W. was Mobil’s EH&S audit expert. Jim was also an expert on fighting oil refinery fires and cleaning up oil spills. As Jim neared retirement, Mobil did not want to lose his 30+ years of intellectual capital conducting EH&S audits. One of the nicest and smartest persons you will ever meet, Jim was a
super expert who reported on a dotted line to the CEO. Knowledge engineers collaborated with Jim to build the expert advisor. “Cloning” Jim was Mobil’s answer to retaining his knowledge and expert advice.

The Lube Knowledge Base was a big success. IT and Marketing worked together to develop a business strategy and computer systems to support it. When the Grease Expert System was launched in 1993, it marked the first time Mobil released an IT system to support a major marketing strategy at the same time the global marketing strategy was launched. Previously, IT would learn about new business strategies after they were in effect.

Today, 15 years later, it’s possible that someone at ExxonMobil could run the EH&S Expert System, answer a few of Jim’s questions, and get Jim’s expert advice, recommendations, and explanations. Despite the fact that Jim retired years ago.

How valuable is that to a corporation? What is the value of retaining 30 years of top-level corporate knowledge? What is the cost of capturing knowledge? What is the price of not capturing knowledge and having to deal with brain drain? How could you put a price on that?

Well, lawyers tell me that that’s relatively easy. What’s really hard is extracting, capturing, and retaining knowledge from people like Jim at Mobil and BP’s senior corrosion engineer Richard C. Woollam. There are
methodologies, however, that take the pain out of the knowledge acquisition process and minimize the amount of time experts need to dedicate to the process.

Before today few companies really cared about knowledge management (KM) or made it a priority. Great companies, on the other hand, figured out long ago how to manage knowledge and treat it as Intellectual Property.

Now it's the law.

From now on if the knowledge of the corporation’s top experts and key personnel is lost, the company risks having to explain to shareholders, Congress, and regulators how that Intellectual Property was lost, why it was not retained, why it will cost $10 million and 5 years to regain that knowledge, and why the stock price went from $20 to $2 during lunch.

Companies better start asking themselves what is the risk if key people leave, get hit by a truck, or retire. What is the risk of not retaining the knowledge of top experts so it can be passed on to the next generation?

BP is paying the price for not managing knowledge. They need to steal a page from Mobil’s playbook and figure out how to manage knowledge to mitigate the risk of brain drain.

Icebergs can sink the Corporation Knowledge management requires eliciting, capturing, retaining, digitizing, automating and managing what your smartest people know. And then sharing it with those who need to know.

Imagine knowledge as an iceberg:

"Its tangible, visible part that can be accessed by third persons, i.e. information, can be observed 'above the water.' Once it has been shared, it belongs to everybody.

A large, important part of it, i.e. tacit knowledge is intangible, invisible, as if hidden “under the water” and can be accessed on the first-person basis only."

Knowledge management is really about transforming intangible tacit knowledge in people’s heads into tangible visible knowledge that can be shared.



Businesses often claim that their most valuable asset is their people. From now on, businesses are going to have to pay more than lip service to that idea. Now they need to elicit the tacit knowledge of their top people, transform it into digital intellectual capital or Intellectual Property (IP) assets, and value it on the books.

The cost of managing knowledge is much less than the risk of brain drain.

Just ask BP. 

Note: BIZRULES CEO Rolando Hernandez was  one of the lead designers of the Mobil Lube Knowledge Base.

References:

Analysis: Lax regulations cause BP spill - By DONNA BORAKUPI Energy Correspondent Sep 13 2006 Analysis: Congress probes BP corrosion - By DONNA BORAK UPI Energy Correspondent Sep 6, 2006 BP audit: Key job vacant before spill - By BRAD FOSS, AP Business Writer, Fri Sep 8, 2006 Congress Investigates Alaska BP Pipeline Leak - by Scott Horsley, NPR Morning Edition, Sep 7, 2006 A Diminished Supply of Oil - NPR Understanding Knowledge Societies In twenty questions and answers with the Index of Knowledge Societies, Department of Economic and Social Affairs Division for Public Administration and Development Management, United Nations, New York, 2005

July 05, 2006

Productivity of the Mind

In a recent issue of Chief Executive* magazine, Editor in Chief J.P. Donlon had this to say about the value of knowledge management:
The single greatest challenge facing CEOs is to raise the productivity of knowledge throughout the enterprise. It is an economic truth that real earnings and real incomes cannot be higher than productivity for any length of time. And knowledge and insight into customer behavior—as opposed to mere information—is the fuel that propels innovativeness.
Wow! I am glad to see an influential business magazine make the point that knowledge, not "mere" information, is the key to productivity, earnings, and incomes. This is exactly what CEOs need to know, and chances are they've read this*. I'm not sure I would say that managing knowledge and raising the productivity of knowledge is the single greatest challenge facing CEOs, but I would certainly say that it is among the top challenges CEOs face. I've been making a similar point for years, that:

Real and lasting competitive edge comes from managing knowledge, not just managing information.

I also like J.P. Donlon's analogy, but I'd like to take it one step further:

If knowledge is the fuel that propels innovativeness, then inference engines and rule engines are the engines that burn the fuel, automate the knowledge, and fire the rules that drive the business.

Rule engines/inference engines are the most effective and most efficient ways to automate knowledge and business rules. Is there any doubt left that every enterprise that wants to compete and innovate and win in today's knowledge-based economy needs a rule engine/inference engine?

*
About Chief Executive

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