Blaze Advisor provides a complete rules environment that allows complex business decisions to be abstracted from hard-coded applications, Web pages, straight-through processes, or composite applications. In doing so it increases the stability and code quality of the higher-level object, ensures the consistency of application of business policy across the enterprise, and enables greater responsiveness to change. It provides visibility and audit of automated decisions in a manner that is meaningful to business users and IT staff alike.
Reference Code: TA001511BPM Publication Date: October 2008 Author: Rob Hailstone Fair Isaac Fair Isaac Blaze Advisor 6.5 Published 10/2008 Butler Group. This Technology Audit is a licensed product and is not to be photocopied Page 1 TECHNOLOGY AUDIT FICOTM Blaze Advisor 6.5 FICO (Fair Isaac) BUTLER GROUP VIEW ABSTRACT Blaze Advisor provides a complete rules environment that allows complex business decisions to be abstracted from hard-coded applications, Web pages, straight-through processes, or composite applications. In doing so it increases the stability and code quality of the higher-level object, ensures the consistency of application of business policy across the enterprise, and enables greater responsiveness to change. It provides visibility and audit of automated decisions in a manner that is meaningful to business users and IT staff alike. Blaze Advisor provides a high-performance runtime environment for .NET, Java, Service Oriented Architecture (SOA), or legacy applications and features strong change management through its rules repository. It can form part of a more comprehensive enterprise-level Decision Management (DM) strategy, or simply satisfy the tactical need for greater manageability of variable business logic. KEY FINDINGS Comprehensive business rules management system. High-performance runtime with deployment to heterogeneous application platforms. Alternative rules editing encourages direct business user contribution. Testing and lifecycle management suited to large-scale iterative deployments. Less cost-effective for simple, low volume rules automation. Out-of-the-box preconfigured applications available for some common requirements. Decision making extended to rich client forms applications. LOOK AHEAD Planned enhancements will extend the platforms supported to include Eclipse; integrate with Business Activity Monitoring; enhance business user interfaces; and provide greater capabilities for business user authoring. Untitled DocumentTECHNOLOGY AUDIT Fair Isaac Fair Isaac Blaze Advisor 6.5 Published 10/2008 Butler Group. This Technology Audit is a licensed product and is not to be photocopied Page 2 FUNCTIONALITY Product Analysis The traditional approach to application architecture is to embed all the decision-making logic within hard-coded applications. At face value this provides the simplest and lowest-overhead architecture, but in fact leads to a number of serious disadvantages: " Changes to the logic can only be carried out by a programmer, and the consequent new version of the application has to pass through all of the testing and acceptance procedures before it can be deployed, owing to a greatly prolonged change cycle. " Where the same logic is required in multiple applications there is a real danger that changes will not be made consistently, leading to variations on the anticipated system behaviour. This is a particular concern where the same decision logic is required to be implemented within different application styles e.g., .NET, Java, and COBOL. " It is very complex to audit the decision-making process to determine why any particular transaction took the course it did. " The code cannot be presented to business decision makers in a form that enables them to check the logic is as required. " Very complex decisions are notoriously difficult to code in an efficient manner, and the actual runtime performance may be inadequate. Organisations often resort to manual decision making even though it would be possible to define the rules. The solution increasingly being adopted is to deploy a Business Rules Management System (BRMS) as a single point for managing all decision logic. Blaze Advisor 6.5 is the current version of Fair Isaac s BRMS product. Blaze Advisor provides two distinct approaches to creating, visualising, and editing rules: one aimed at technical IT staff and one at business analysts. Rules defined by either approach can be viewed and maintained in the other. Rules are grouped together into rule sets that determine the outcome of a particular decision, with the possibility for a single rule to belong to multiple rule sets. By providing effective visualisation tools and the ability to construct complex rule sets from simple rules, Blaze Advisor aims to increase the complexity of decision making that an organisation might choose to manage automatically before having to revert to human decision makers. Rules and rule sets are all stored in Blaze Advisor s repository, where full version management and change control can be applied. A high-performance runtime engine is provided for .NET and Java environments. Rule sets can be deployed directly to this runtime engine, and the same rules can be deployed unchanged to both Java and .NET. Blaze Advisor also supports COBOL, but in this event the rule sets are compiled into COBOL code. The higher-level application that needs to use the decision service calls the rules engine using the native language construct, or alternatively as a Web service. Monitoring capabilities provide an insight into the execution of rule sets and permit a degree of tuning of the way the rules are executed. Audit capabilities are also provided. Untitled DocumentTECHNOLOGY AUDIT Fair Isaac Fair Isaac Blaze Advisor 6.5 Published 10/2008 Butler Group. This Technology Audit is a licensed product and is not to be photocopied Page 3 A recently available SmartForms option permits rules to be deployed to client-side Ajax rich Web applications, where a typical use is the application of complex form-filling rules without the need for constant time-consuming interactions with the server. Figure 1 shows the high-level architecture of Blaze Advisor 6.5. Figure 1: Blaze Advisor Architecture Blaze Advisor Builder(for IT staff)Rule Maintenance Applications(for business analysts) Source: Fair Isaac Corporation D A T A M O N I T O RBlaze Advisor is often deployed as a tactical solution to a specific requirement for complex decision making, particularly in circumstances where the rules are subject to frequent change. However, it is more than capable of delivering strategic centralised management of decisions both for server-based applications and front-end client applications, and is a particularly good fit with the strategic adoption of Service Oriented Architecture (SOA). Product Operation The operation of Blaze Advisor is best described broken down into the three layers of authoring, structuring, and deploying as shown in Figure 1. Authoring In most complex decision scenarios there will be activities that can only be carried out by IT staff, such as the integration of the rules environment with information sources. However, the logical definition of how a decision is to be made has to involve a business analyst or business executive, and Blaze Advisor provides capabilities to give these business-focused staff as much autonomy as possible in the creation and maintenance of rules. Untitled DocumentTECHNOLOGY AUDIT Fair Isaac Fair Isaac Blaze Advisor 6.5 Published 10/2008 Butler Group. This Technology Audit is a licensed product and is not to be photocopied Page 4 The initial definition of a decision is best accomplished by graphical modelling, and Fair Isaac provides a simple flow-charting capability where the logical steps in the decision can be entered and prioritised. Figure 2 shows a simple example of a decision model for a loan application. Figure 2: High level model of a simple loan application decision Source: Fair Isaac Corporation D A T A M O N I T O REach of the steps can then be expanded into rules, writing them in a pseudo-English syntax that is easily understood without technical expertise. The rules related to a particular decision are grouped into a rule set. These steps are achieved using the Blaze Advisor Builder, intended for use by IT staff. Interestingly, although the initial model implies a natural sequence of decision steps, Blaze Advisor will use inference technology within each rule set to calculate the optimum sequence of evaluation to minimise the response time and system overhead. If a particular decision requires additional information in order to be evaluated, Blaze Advisor can use backward chaining to proactively gather the needed information from source systems, but will only commit to this additional work if the decision cannot be fulfilled using the information available. Blaze Advisor provides multiple views of rules and rule sets aimed at presenting the information in a manner that is easy to comprehend by business users. This clarity and ease of comprehension is an important differentiator for Blaze Advisor. These views include decision tables, graphical decision trees, scorecards, and templates. Templates can be created to show the relevant attributes and allow the business user to directly enter the values and results required. This could include time-related rules, for example, the creation of different price calculation rules for a limited-period special offer. Although it is most likely that templates will be used to allow business users to maintain existing rules, they can also be used to permit rule creation by non-IT staff. In addition to Blaze Advisor, Fair Isaac also offers preconfigured applications based on this technology for certain common industry problems such as fraud detection, payments optimisation, and debt management. These are delivered with the rules and rule sets already populated (but user customisable). Untitled DocumentTECHNOLOGY AUDIT Fair Isaac Fair Isaac Blaze Advisor 6.5 Published 10/2008 Butler Group. This Technology Audit is a licensed product and is not to be photocopied Page 5 Structuring Rules and rule sets are stored in the repository with full version control. Before deployment of a new or altered rule set, organisations will wish to establish procedures to control the quality of the resulting logic. Blaze Advisor provides two quality assessment tools: rule verification and rule validation. Rule verification establishes that rules are unique to avoid the problems associated with redundancy, and checks to see if all combinations of conditions have been tested. It identifies errors that result in always true or always false results, as well as infinite loops and other logical errors. Rule verification is a static test performed on the information in the repository. Rule validation provides regression testing and dynamic validation by executing the rules and rule sets against test data to ensure the anticipated results are delivered. Both of these types of tests can be initiated by business users as well as IT staff. Blaze Advisor provides full change-management controls including authorisation checking, version promotion, and reversion. It supports an intermediate staging system between the development and production environments, with different levels of approval for moving versions between stages. Once ready for deployment rules can be implemented without suspending the rules service. In-flight transactions will continue to use the old version until they complete, while new transactions will dynamically pick up the new version. Additionally, rules can be time-limited and expire automatically at the end of the valid period. Deploying Blaze Advisor provides several execution algorithms that can be selected according to the dynamics of a particular decision. The default uses the Rete algorithm, a public algorithm that has been recognised for nearly three decades as providing efficient management of very large rule sets by organising the rules into networks instead of sequential execution. Derived from this original algorithm, Blaze Advisor also offers Rete III, which is proprietary to Fair Isaac. Because Rete is memory-constrained when used with large datasets there are limits to its general applicability, with the execution time increasing disproportionately with the size of the data set. The Rete III algorithm has been designed to provide linear execution-time increases with both increasing data set and increasing rule set sizes. It therefore represents the most effective option where both large rule sets and large data sets are required. Where the rule sets are less complex, the sequential execution option can be more efficient. This executes rules in their priority sequence. Finally, a cost option provides compiled sequential execution. This provides just-in-time compilation of the rules, which execute in priority sequence. The compiled sequential option provides the fastest performance for small rule sets against very large data sets. The runtime environment executes on either .NET or Java Enterprise Edition (JEE) application servers, and uses the underlying infrastructure to provide distribution and fault-tolerance features. Product Emphasis The aim of Blaze Advisor is to provide a single point of decision management at the enterprise level. The primary features that enable this strategy are: " High-performance runtime environment with a choice of decision algorithms. " The ability to create rules and rule sets to resolve complex decisions, while presenting the logic in an intuitive manner that can be understood and modified by business or IT staff. " Deployment across a heterogeneous environment, including deployment to client-side Web forms. Untitled DocumentTECHNOLOGY AUDIT Fair Isaac Fair Isaac Blaze Advisor 6.5 Published 10/2008 Butler Group. This Technology Audit is a licensed product and is not to be photocopied Page 6 " Direct integration of analytics through scorecards and other visualisation mechanisms. " Testing and change management capabilities. Although most effectively deployed at the enterprise level, the same features make Blaze Advisor appropriate to tactical requirements where it is required to manage complex decisions in discrete projects. DEPLOYMENT The runtime environment for Blaze Advisor supports Windows and Java on major Unix and Linux environments (including mainframe Java). While it can execute within a simple Java Virtual Machine (JVM), it is best deployed on a JEE application server, where it can use the distribution and fault-tolerance features provided. For legacy COBOL applications, Blaze Advisor can generate compiled code instead of using a runtime rules execution engine. A single rule set can be deployed to any number of runtime environments to place the intelligence physically close to the point at which it is needed. Because Blaze Advisor executes on the same platform as the calling application (or process) the communication costs and performance overheads are minimised. The development environment requires either Windows or Solaris. The repository can be deployed on the host file system, in which case it has no third-party prerequisites, or alternatively on a Relational Database, or hosted within a change management system or Lightweight Directory Access Protocol (LDAP) directory. Most organisations implement Blaze Advisor initially as a single-project tactical deployment, and subsequently expand the scope towards an enterprise deployment. The initial implementation of rules management will usually form part of a larger project, and hence actual times to a live deployment will vary widely, with six to nine months being typical. Most initial projects will be carried out with the on-site assistance of staff from Fair Isaac or one of its partners. Fair Isaac provides a full set of on-site or classroom training classes. Customer support is provided by Web, e-mail, and telephone. A small number of users consume Blaze Advisor as a hosted service; currently none of these are small organisations, but this Software as a Service (SaaS) delivery is likely to be popular with smaller companies if Fair Isaac chooses to position it this way. PRODUCT STRATEGY Fair Isaac s overall strategy extends beyond Blaze Advisor to encompass the whole of the decision management market. In addition to Blaze Advisor described here, Fair Isaac provides a number of preconfigured applications built around common industry decision-making problems (such as fraud analysis) and mathematical modelling for optimised decision making. In addition to the base product, the compiled sequential access and COBOL compiled runtime are cost options, as is the SmartForms capability for deploying to rich client forms. An additional cost option for release shortly is Decision Simulator, which will add the ability to run what-if scenarios. New product releases occur twice a year, and plans for the next two releases 6.6 (due at the end of September 2008) and 6.7 will focus on additional lifecycle management including IP protection for increased security and the ability to compare projects across different repositories, adding a plug-in for Eclipse deployment and enhanced usability for business users. Further in the future there will be extended decision management support, including the integration of Business Activity Monitoring (BAM), and Eclipse-based development. Untitled DocumentTECHNOLOGY AUDIT Fair Isaac Fair Isaac Blaze Advisor 6.5 Published 10/2008 Butler Group. This Technology Audit is a licensed product and is not to be photocopied Page 7 Fair Isaac s primary target consists of Fortune 1000 companies and large government organisations, but extends to encompass any vertical and any size company that requires a high-performance automated decision-making solution. Although Blaze Advisor technology is appropriate to any vertical industry where there is a need to manage decisions, the financial industry has been the leading adopter of BRMS, and accounts for some 65% of Blaze Advisor revenue (across all the financial industries). Outside of this there is a healthy distribution of revenue across several industry sectors. The sales model is primarily direct. Business partners provide the direct sales model in geographical areas where Fair Isaac does not have a direct presence. Fair Isaac has strategic partnerships with IBM, Oracle, Microsoft, HP, and Teradata. In 2006 Fair Isaac restructured its sales model to sell complete multi-product solutions in place of its previous product-oriented sales model. The historic dependence on the financial services industry for much of its revenue and the difficulties faced by this sector in 2007-2008 have impacted Fair Isaac s revenue overall. However the revenue from Blaze Advisor has seen modest growth and Fair Isaac believes that its solution-focused sales model will broaden its market appeal. Development and deployment licences are perpetual, with a renewable annual maintenance charge. The licence cost depends on the size and scope of the deployment, but is typically around US 245,000. This reflects Fair Isaac s target market of Fortune 1000 companies, although it does also have a number of successful implementations in mid-sized organisations. There is likely to be a revised pricing scheme to make the product more attractive to organisations smaller than the targeted very large enterprises. The emphasis on ease of use and the availability of Blaze Advisor through SaaS schemes should also broaden the appeal to include smaller organisations. The rules management market has undergone significant change in recent years, with a number of platform vendors acquiring smaller BRMS vendors and integrating the products into their product lines. In particular, a number of Enterprise Service Bus (ESB) products now include a simple rules engine within the product set. While this might dampen the market for entry-level rules management, this is not the market targeted by Fair Isaac with its high performance and ability to manage very complex rule sets. Because of this we believe that Fair Isaac should be able to grow its current market share. Major competitors in the BRMS marketplace include ILOG (now owned by IBM) and Pegasystems, with Pegasystems significantly smaller than either but ILOG reporting strong growth. Having a foundation in computing systems based on mathematical algorithms, Butler Group believes that Fair Isaac has transformed its products by the efforts it has made to include non-technical business users in the role of designing and maintaining complex rule sets. We believe that equivalent consideration to business users should be made in several other aspects of IT. COMPANY PROFILE Fair Isaac s long history predates the digital age, being founded in 1956. It was an innovator of credit scoring systems and other scoring-based models such as application processing. The Fair Isaac Credit Organization (FICO) score is now very widely used to determine the credit-worthiness of an applicant (primarily in fields such as mortgage loans and credit cards), and Fair Isaac s technology is behind much of the credit card fraud detection in use around the world. Major customers of Blaze Advisor include Bank of America, JPMorgan Chase, Wells Fargo, Siemens Medical Solutions, Northrop Grumman, US Internal Revenue Service, Sun, Toyota, and Dell. There are over 400 customers of Blaze Advisor in total. Untitled DocumentTECHNOLOGY AUDIT Fair Isaac Fair Isaac Blaze Advisor 6.5 Published 10/2008 Butler Group. This Technology Audit is a licensed product and is not to be photocopied Page 8 In 2005 the company acquired RulesPower, Inc., and through this acquisition took Dr. Charles L. Forgy into the organisation. Dr. Forgy was the originator of the Rete algorithm while at Carnegie Mellon University, and his continuing expertise and enhancements to the original algorithm are a significant benefit to the development of Blaze Advisor. The company employs nearly 2,500 staff, with 71% in North America, 16% in Asia Pacific, 12% in EMEA, and 1% in Latin America. Fair Isaac s major offices are located in Minneapolis, San Diego, San Rafael, Toronto, London, Birmingham, Madrid, Beijing, Hong Kong, Bangalore, Tokyo, Singapore, and Sao Paulo. 38% of staff are engaged in customer service and support, 32% in research and development, 19% in administration, and 11% in sales, account management, and marketing. Fair Isaac is a public company (NYSE: FIC) and the last three full years results are summarised in Table 1 below. This revenue stems mostly from North America (71%) with international revenue of 29%. The slight downturn in 2007 is probably the result of the recently adopted solution selling sales model, and guidance for 2008 shows a further reduction is likely. However, Butler Group believes that the product line remains strong and focused on a genuine business need. Table 1: Financial Details Year ending 30 September 20072006 2005Revenue (US Million) 822.236825.365 798.671Change on Previous Year (%) -3.793.34 Total Net Income/(Loss) (US Million) 104.650103.486 134.508 Source: Fair Isaac Corporation D A T A M O N I T O RSUMMARY Blaze Advisor offers a very strong solution for organisations that have a requirement to automate complex decisions in a performance-sensitive environment. Fair Isaac has taken great care to target the product at business users as well as IT staff, providing an adaptable interface that can present complex decisions in a comprehensible manner. It provides a high-performance runtime environment and strong lifecycle management of rules. The stated direction for future releases will further strengthen each of these. The absorption of many independent BRMS vendors into larger software infrastructure vendors has left Fair Isaac exposed as the largest of the few remaining independent vendors. It is important, therefore, that it not only gets the product evolution right (at which Fair Isaac is extremely competent), but also correctly positions itself in the market to attract a customer base that is broad not just in vertical industry terms, but also in terms of the size of the company. Fair Isaac will need to demonstrate that its new solution-based sales model will allow it to broaden its customer base to make it less sensitive to downturns in a particular industry sector. Untitled DocumentTECHNOLOGY AUDIT Fair Isaac Fair Isaac Blaze Advisor 6.5 Published 10/2008 Butler Group. This Technology Audit is a licensed product and is not to be photocopied Page 9 Table 2: Contact Details Fair Isaac Corporation Corporate Headquarters 901 Marquette Avenue Suite 3200, Minneapolis Minnesota 55402 USA Tel: +1 (612) 758 5200 Fax: +1 (612) 758 5201 E-mail: firstname.lastname@example.org www.fairisaac.com Fair Isaac Corporation International Main Office 5th Floor Cottons Centre, Hays Lane London, SE1 2QP UK Tel: +44 (0)207 403 1333 Fax: +44 (0)207 403 8981 E-mail: email@example.com Source: Fair Isaac Corporation D A T A M O N I T O R Headquarters Shirethorn House, 37/43 Prospect Street, Kingston upon Hull, HU2 8PX, UK Tel: +44 (0)1482 586149 Butler Direct Pty Ltd. Level 46, Citigroup Building, 2 Park Street, Sydney, NSW, 2000, Australia Tel: + 61 (02) 8705 6960 Fax: + 61 (02) 8705 6961 Butler Group 245 Fifth Avenue, 4th Floor, New York, NY 10016, USA Tel: +1 212 652 5302 Fax: +1 212 202 4684 Important Notice This report contains data and information up-to-date and correct to the best of our knowledge at the time of preparation. The data and information comes from a variety of sources outside our direct control, therefore Butler Direct Limited cannot give any guarantees relating to the content of this report. Ultimate responsibility for all interpretations of, and use of, data, information and commentary in this report remains with you. Butler Direct Limited will not be liable for any interpretations or decisions made by you. Fax: +44 (0)1482 323577 For more information on Butler Group s Subscription Services please contact one of the local offices above.