September 13, 2005 1 OpenRules, Inc.

September 13, 2005

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OpenRules, Inc.

with Business Rules and Constraint Engines

Presenter: Jacob Feldman, PhD

Developing Decision Support Systems

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Outline

Brief HistoryPractical Experience: applications and productsBR Market today Integrated Use of Constraint and Rules

ProgrammingEnterprise Decision SupportDemos Q&A

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Brief HistoryPeriod Company Notable Achievements

March, 2003 - current

OpenRules, Inc.Founder & CTO

Product: OpenRules™, the most popular Open Source business rules management system

2001 - 2003 Exigen GroupVP of Optimization Technology3 Approved Patents in Rules & Constraints area

Products: Exigen Rules™, Constrainer™. Projects: Auto Insurance Underwriting, Loan Origination, Calling Plan Configuration, Royalty Management

1997 - 2001 IntelEngine, Inc. Founder & CTOacquired by Exigen Group

ILOG consulting and training, IRS & LILCO contracts, Utility Scheduler, Financial Portfolio Optimizer

1994 - 1997 Solution DynamicsTechnical directoracquired by I2 Technologies

Product: Truck Load Optimizer, ILOG Consulting and Training

1990 - 1994 System Automation, Inc.Technical director

Airport Security System, COBOL to C++ Converter, E800 Routing

1976 - 1990 Former USSR Products: Nationwide Standard Document Management system, Gas Pipeline Optimizer

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Examples of Decision Support Applications

Financial Portfolio Management

1. Wealth management for a major Wall street institution

2. Mutual Fund management for a major mutual fund company

Lending Services 1. Rules for title chain verification2. Loan Verification and Origination

Insurance Services 1. Rules-based underwriting and premium calculation services

Licensing Services 1. Copyright and Royalty calculation Rules for online authorization and pricing

Workforce Management

1. Interactive Scheduling engines for maintenance and construction jobs (LILCO)

2. Strategic Compliance Planning Model (IRS)

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BR and CP Products

Business Rules (BR) products– ILOG JRules, JESS, BLAZE, Haley & more– Exigen Rules– OpenRules

Constraint Programming (CP) products– ILOG Solver/Scheduler

– One of the first ILOG’s US consultant– Taught advanced ILOG classes

– Java Constrainer– Constraint Satisfaction Environment for Java

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Business Rules MarketGartner has declared:

– BR continue to grow in importance– Tied to Business Process management and workflow

modeling– $500 million market to double by 2007

Also declared: The major driver is improved agility– “And customers are keen to move to service-oriented

architectures capable of rapidly implementing process change using rules-based engines”

– “Just as yesterday we separated client-server interface from process and from data, we are today separating rules from workflow and from services”

Newcomers: Oracle, MS

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From Oracle’s BR Introduction:

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From Oracle’s BR Introduction:

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From Oracle’s BR Introduction:

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ILOG’s Demonstrates a Trend

ILOG JRules™ became a flagship product in last 5 years: "Revenue growth combined with an

outstanding Business Rule Management System (BRMS) license growth rate of 60%, year over year, enabled us to deliver our best quarter ever“ Pierre Haren, ILOG Chairman and CEO, July 27, 2005

Focus shifts to BR: • BR growth rate: 60% • Compare with overall growth rate: 16%

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Adding Decision Support to Workflow

Business rules management frameworks have already proved their efficiency for rules representation, maintenance, and execution

At the same time, business rules are always attached to a business process such as:– Claims processing, loan origination, service configuration,

insurance policy management, end other complex document-intensive business processes

It is natural for business rules to be used to create decision support workflow nodes. Such nodes can control the workflow logic, generate and redirect workflow items

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Enterprise Application with Three Engines:Functional Scheme

Non-Technical User

Rules Instances

Business Application

Rule Engine(s)

Template Editor

Constraint Engine(s)

Executing Rules

Solving Optimization

Problems

Parameterized Business Rules

(Templates)

Rules Instances

Rules Representation and Semantics

Business

ObjectModel

Client/Problem specific Rules with template parameters

EnterpriseData

Rule Editor

Create, Modify, Delete,

Activate,Validate

Technical User

Workflow Engine

Representing Business Processes

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Adding Optimization Components

Rules themselves cannot describe ALL possible business situations and recommend the best solution

Apply Optimization engine each time there are multiple alternatives and looking not for a solution, but for the best solution

Integrate Rule Engine with different Optimization Engines (constraint-based, linear, other)

Add sophisticated decision-support capabilities by applying the optimization engine against different optimization objectives defined in rules

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Rules Integrated with Constraints

Ability to define and solve constraint satisfaction problems. Automatic formulation of optimization problems in rules and solving them with a built-in constraint engine

Hard and Soft RulesMinimization of the total rule violationsRules Consistency and Coherence validation

– Diagnose rules overlapping and under-covering– This feature is particularly important for complex

classification rule tables that go far beyond simple if-then statements

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Rules as ConstraintsAbility to represent rules as constraintsUse of both rules and constraint

programming techniques inside the same framework to solve complex business problems that usually out of reach of regular rule engines

Real-world examples

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Rules and Constraints Working Together: Financial Services

Financial Portfolio Management– Use rules like “Technology Stocks should be within

20% and 35%” to define the target portfolio– Objective: keep all actual portfolios as close as possible

to the target portfolio

Integrated Engines:– Rule Engine warns about possible rule violations during

sell/buy transactions– Constraint Engine recommends the best combination of

trade orders to minimize the total rules violationLive Demo

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Rules and Constraints Working Together: Financial Services

Loan Origination– Applying for a loan, a customer usually provides a

desired loan amount, term, and a list of included borrowers with different credit scores

– Objective: to avoid rejection or lengthy “what-iffing”, a bank allows to “a little bit” violate the requested parameters to find a loan with the minimal interest rate

Integrated Engines:– Rule Engine defines all eligible loan products– Constraint Engine recommends the best combination

of the loan amount, term, and borrowers to select the most suitable loan product

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Rules and Constraints Working Together:

Telecom ExampleTelecom Service Configuration

– Personalized configuration of available calling plans and other wireless, local, long distance and Internet services

– Rules-based marketing campaigns

Integrated Engines:– Rule Engine determines cross/up selling opportunities

– Rule Engine warns about possible rule violations

– Optimization Engine recommends the best set of services that fit a customers’ preferences and actual calling pattern

– Rule and Optimization Engines work together with customer data to determine and deliver the best account management advice to the CSR desktop

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Rules and Constraints Working Together: Insurance Example

Insurance Pricing Discount Calculation– According to the specified business rules, the customer

is eligible to N different discounts– There is a rule/constraint that states that the total

discount cannot be more than x%.– Objective: find a combination of the discounts that

satisfies the “x%” constraint while maximizing/minimizing the premium

Integrated Engines:– Rule engine figures out all eligible discounts– Optimization engine finds the best alternative for

customer and company

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Recent example: a voice from the “trenches”

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Rules and Constraints Working Together

Hybrid use of rules and constraint technologies:

Rule Engine + Constraint Engine =

Online Decision Support

Use Rules – to define and modify a business problem

Use Constraints– to solve a optimization problem

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BR: What is really important “What” is more important than “How”:

Rules Organization and Management is more important than Rules Execution

Business people are in charge working in concert with developers

Rules harvesting and representationFlexible rules management facilities with an

authorized access and version controlTesting facilitiesConsistency checkingPlug-ability in any modern architecture

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Typical BRMS in Action

Add Constraint

Engine

Add CSP definition(s)

here

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OpenRules™ - the most popular Open Source Rule Engine

Business rules presented in the MS Excel – the most popular existing GUI

With pieces of a Java code – the most popular programming language

Integrated into Eclipse – the most powerful IDE

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OpenRules™Milestones

– December-2003: First Public Availability– September-2004: Became the most popular Open

Source BRE (see JavaRules.org)– May-2005: Rules-based Web Development introduced

Recent Statistics– Customers:

• Registered: > 1,000• All: > 5,000

– Statistics by Countries and Organizations: OpenRules.com Statistics

– Average number of downloads: 10 per day– Average number of visitors per month: 5,000

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OpenRules Functional Scheme

Adding Constraint

Enginehere

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Integrating BR and CPBRMS provides a business user interface

for Constraint-based ServicesCSP expressed in terms of rules

• “Drive.age < 17” as a regular and as a constrained expression

Different combinations of Rules- and Constraint-based services:– Constraints instead of 1000s rules to find an

optimal solution– Rules to validate CSP’s solutions

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OpenRules DemoQ & A