As the slowing economy forces businesses to get the most out of every dollar spent, they may want to consider what in software-speak are known as "rules engines"–especially the newest ones that do not need a team of IT gurus to write new programs every time a company's playing field shifts slightly.
Rules engines, in general, allow companies to hand over to computers some decision-making power through customized analytical applications. The advantage: Decisions are made faster and more uniformly than when you have various employees making their own judgment calls. But some rules engines, such as those produced by San Mateo, Calif.-based Corticon Technologies and Greenbrae, Calif.-based MindBox, also make rules visible and capable of being changed by the non-techie. This frees up IT departments for bigger, more complicated jobs, while still keeping software up-to-date with the needs of the users. And that's where some real savings can be realized. Rules engines like those from Corticon and MindBox "will help you become more efficient," says Peter Urban, a senior analyst at AMR Research in Boston.
Keeping It Compliant
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For example, STW Fixed Income Management, a West Coast institutional investment manager with about $8 billion of assets, decided to automate its compliance procedure. The firm wanted to be able to check an account's guidelines automatically before allocating it any newly purchased securities, according to Tony Plasil, its head of technology. That way, if securities weren't suitable because of an account's limits on holdings in a certain industry sector or rating category, "you can reverse the allocation immediately," says Plasil. "That's the goal."
By being able to move the securities quickly, STW can avoid the loss it might suffer if it allocated securities incorrectly and had to sell them later in a less favorable market. The rules engine picked by STW: Corticon's Decision Management Software.
For STW clients, Plasil says, the software allows for frequent and expeditious changes in their investment guidelines–even though they don't usually ask for alterations that often. "Especially in changing markets," the flexibility of a rules engine comes in handy, Plasil says. To keep up with volatility, "you have to be able to change the rules without rewriting programs," every time.
In Birmingham, England, Severn Trent Water–with three million customers–is using a planning program, called Total Asset Planning System (TAPS), for its capital spending. Based on the ArtEnterprise software made by MindBox, TAPS allows the water company to pull together demand projections, regulatory standards and the service needs of its current infrastructure to map out the company's prospective expenditures. "By setting up TAPS, we've gotten a big win by being able to model assets straightforwardly," says Julian Schwarzenbach, the Severn Trent manager who oversees TAPS. The utility has assets at 9,000 sites spread over a large geographic area, he says.
Not For Everyone
Now TAPS users can see the rules, of which there are thousands, and how they relate to the business model, Schwarzenbach explains. But rules engines aren't for everyone, he cautions. In order to successfully employ such a system, companies and employees need to understand their business process inside and out, Schwarzenbach says. "This really separates the men from the boys."
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