February 2005

New Rules For Better Customer Relationships (Sidebar)

By Alan Trefler, Pegasystems

Customer self-service Web applications built without regard for other contact channels have placed many companies in the position of showing customers internal inconsistencies and inefficiencies. One service channel often doesn’t synch with the other, and neither takes full advantage of data in back-room systems.

Companies trying to improve customer relationships through Web-based self-service and other channels should consider business rules management technology as a means to resolving their technical issues. Newer technology such as Web services can help integrate numerous applications to give business managers control of customer-facing information technology (IT). That control enables companies to respond nimbly to changing market demands. A layer of smart business rules can coordinate a customer self-service Web application with call center customer relationship management (CRM) applications and enterprise resource planning (ERP) systems to present a coherent face to customers and business partners. These abilities make business rules an intriguing possibility for improving customer service systems on the Web and within the enterprise.

What Are Business Rules?
Business rules are the practices, processes and procedures that define how a company does business. In many ways, rules are the essence of an organization and define its true value proposition. They could be best practices, procedures, policies, or even physical limitations. For example, a typical business rule is “our company will accept a product return and will refund the purchase price within seven days of the purchase.”

Process rules are business rules in action. Process rules or policies define how businesses execute rules, and in which order. For example, a business rule might be that customers have the ability to interact directly through the Web application to update a systemwide shipping address. A smart business practice rule might be something a little more complex: “If a customer is a valuable customer or engaged in an order fulfillment process using the Web application, then leverage the more expensive interactive address change; otherwise leverage the batch transaction.” This rule can be reused by the call center, ERP, order-processing fulfillment, shipping and other applications. All these systems have to do is call the address change process made available by the smart integration software and the appropriate back-office transaction is executed.

Advanced environments can delegate these practices, policies and decisions to business owners outside of IT. These environments enable the change, validation and deployment of these rules to enterprise systems in Internet time, not IT time.

Why Current Systems Need Help
The bloodletting in call centers, CRM and Web-based customer self-service has shown that a CTO can’t simply install a piece of software and expect it to start improving things; Web applications, call center automation, etc., will grow smart enough to improve a business’ value proposition only when they work in concert by accessing business rules backed by intelligence, in order to make nuanced decisions.

The first step in this process is to examine the business processes that govern internal and external interactions and to codify best practices. Best practices are the collective knowledge of a company’s best managers. Manageable business rules can add this collective intelligence to business process management (BPM) so that the Web self-service system, along with CRM, ERP and supply chain automation, amounts to more than simply another way to connect existing processes.

Organizations need to reach beyond “simple” BPM and extract their policies as rules that will allow for smarter process automation and for a new level of control over the business processes themselves. Recent rollouts of the Web self-service, ERP or CRM system may have made it easier to look at the data in the system; but when are these systems smart enough to go beyond guiding users through complicated tasks? When can they fully automate complex workflows between systems, enabling users to change them, if necessary, mid-stream?

Simple BPM systems are built to report the status of current processes and nothing more. Such systems will stretch only so far to accommodate rules without changing the Cobol or the ERP data model involved. Automating and resolving work with a smart rules-based BPM system can eliminate up to 80 percent of the manual steps in existing CRM, ERP and supply chain management (SCM) or billing systems. This would allow managers not only to identify problems but also to change workflows mid-stream to accommodate changing market forces.

Integrating rules into a company’s Web systems, as well into its IT architecture, makes all the systems smarter and more responsive. Rules-driven smart systems analyze facts in real time, understand if more information is needed, and drive processes consistent with management’s direction. Web services technologies, such as simple object access protocol (SOAP), are creating integrated portals and browser-based control that give a rules architecture consistency across an enterprise. A browser-based interface that places management outside of IT creates centralized management and distributed access to the rules of a business. This extends best practices and common processes beyond the self-service application, throughout the coordinated enterprise.

Customer Service In Internet Time
In the zero-training environment of the Web, it is critical to guide the interactions of people and company processes. A rules-oriented approach gives this guidance on the Web and everywhere else. Best practices embedded into a single, separate-rules layer extending across all channels, rather than in an individual application or database, enable a business to change dynamically and consistently based on the nature of the specific request, providing customers and staff with direction at the right time, all the time.
As previously mentioned, an enterprise might use Web services to extend address change transactions, depending on the circumstances. There are two methods for changing addresses: nightly batch operations and interactive transactions with an ERP system. Each has different throughput and cost. General address changes can probably be handled batch, but if a top-tier customer needs to make an immediate high-margin transaction using the new address, the company wants that transaction executed immediately. Here the business logic determines which method to use and when it must be coded in both applications. Rules would give the systems the intelligence to pick one process over another. The company could expose both of these transactions across departments using Web services to tie together its call center and customer self-service Web applications. A flexible rules engine will layer the business logic above the UDDI (universal description, discovery and integration) level, and afford business users the agility to change the engine’s rules in Internet time.

Business rules and process management technologies enable the application to leverage new transactions, policies and best practices as they become available, without having to initiate a development cycle. Adding a decision rule for when to use a new transaction puts best practices to work immediately without the application knowing anything has changed.

Combining rich process, integration and business rules engines can enable the agile business to build Web-based customer self-service systems that support fluid business practices and high-quality customer interactions. With the increased agility provided to the business users and the better efficiency awarded to IT organizations, enterprises can start reaping value on investment, as well as on their customer service, SCM and ERP applications’ forecasted ROI.

Alan Trefler is founder and CEO of Pegasystems Inc., in Cambridge, Massachusetts (www.pega.com). He can be reached at alan.trefler@ pega.com or 617-374-9600.

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