NEEDHAM, Mass. -
If so, you're not alone, as numerous consumer lending institutions are seeing the benefits of moving business rules out of legacy architectures and the sole control of IT departments into new systems that allow them to adapt more quickly to changing business conditions.
But analysis from TowerGroup is cautioning that when organizations implement these new systems, it is critical for them to adopt governance principles that put appropriate controls in place while allowing for flexibility.
Systems designed to help automate complex decision-making have developed into a natural fit for incorporating techniques of business- rules management.
In mortgage lending, good examples are in determining loan-product eligibility, setting base pricing and making pricing adjustments, and evaluating opportunities for workouts with customers in default.
"Part of the justification for adopting a BRMS is to gain speed and reduce cost by handing over more of the technology development cycle to professionals in the line of business rather than to IT specialists," TowerGroup said. "Yet with this shift comes a greater risk of errors. To reduce the likelihood of unwanted outcomes, institutions must put appropriate controls in place."
The author of the research is David Hamermesh, a senior analyst with TowerGroup Consumer Lending service, who said business rules management systems have the potential to give great power to business organizations trying to escape the constraints imposed by traditional technology architectures and processes.
"However, institutions must ensure that the move to a business-configured system is more streamlined than the traditional IT-driven development process and involves key people in the organization, Hamermesh said. "Ultimately, the balancing act a lender must perform is to figure out what controls are needed without bogging down the process of changing the business rules."
Among the findings in the research:
* Optimal use of a BRMS requires a comprehensive business-configuration methodology that differs radically from development processes fully managed by IT organizations.
* The controls that an institution puts in place for deploying a BRMS should be a blend of the appropriate people, process and technology. Success depends on following the right recipe. It starts with "people controls," adds process around those people, and then leverages the best technology available to get the most out of the mix.
* When controls combining people, process and technology are effectively implemented, they offer a solution to mitigate the possible risks to financial services institutions without significantly eroding the benefits of the new system.
FOR MORE DETAILS
The TowerGroup research report is titled "Business Rules Governance: Balancing Rules' Flexibility with Appropriate Development Controls."
For info: www.towergroup.com.
