Knowledge Management and Knowledge Automation Systems

Transcription

1 Knowledge Management and Knowledge Automation Systems Gallagher Financial System, Inc.

2 Knowledge Management and Knowledge Automation Systems A White Paper prepared by Gallagher Financial System, Inc. From material provided by Paul Haley, President and CEO of The Haley Enterprise, Inc. and Peter D. LeFebvre, Vice President of Product Development for Gallagher Financial Systems, Inc. Introduction In 1876, the English novelist, George Eliot, wrote that, Of a truth, Knowledge is power. Now, over a century later, that observation still holds true. Knowledge gives us, as individuals, the power to grow, to better ourselves, and to succeed in our endeavors. In the business world, knowledge is power as well. As with individuals, knowledge is what enables businesses to grow and to succeed. Contained within every business is a wealth of knowledge about its policies and practices, and about the industry that it serves. A business uses this knowledge to sell and support the products and services that it offers. However, knowledge is not held within a business itself, but rather by the various individuals that make up the organization. Without the knowledge possessed by the people within it, a business cannot survive. To a business, therefore, knowledge can be considered an asset perhaps the most important asset that it has. The primary concern, then, that must be addressed, if a business is to grow and prosper, is how this knowledge can best be captured and harnessed. How can companies preserve their existing knowledge assets, encourage the dissemination of that knowledge across the organization, and use that knowledge to identify the best business practices and to refine and improve those practices? The answers to all of these questions lie in the application of Knowledge Management to the business s operations and the adoption of Knowledge Management Systems within the business s infrastructure. The purpose of this white paper is to introduce the principles of the discipline of Knowledge Management, to explore the benefits of Knowledge Automation Systems over traditional IT models, and to examine the real-world application of Knowledge Management to business specifically, to the mortgage-lending industry through the combined efforts of Gallagher Financial Systems, Inc. and The Haley Enterprise. What is Knowledge Management? Any discussion of Knowledge Management should, logically, begin with a definition of knowledge, itself. Unfortunately, there are numerous and varied opinions on this subject, each of which is valid in its own right. For our purposes, however, we ll attempt to provide a working definition of knowledge and an explanation of how it differs from data and information, all of which are essential components of Knowledge Management. Data can be broadly defined as a collection of facts facts about specific events and about an industry in general. These facts can originate from a variety of sources and includes such items as raw statistics, demographic and marketing information, and so forth. Data can form the basis of knowledge, as it is gathered, analyzed, and synthesized by individuals within an organization. Information, which is sometimes referred to as explicit knowledge, results from the collection and communication of ideas and experiences. Gallagher Financial System, Inc San Remo Suite 251 Coral Gables, FL 33146

3 Information is usually codified into documents, , voice mail, and other forms of communication, which can be easily shared between individuals. It is explicit precisely because it has been written down in some format, and it is useful because it can be stored and reused to avoid the duplication of work and the repetition of mistakes. Knowledge, however, transcends both data and information in that it comprises ideas, experiences, and insights themselves. For this reason, true knowledge is often referred to as tacit knowledge. Knowledge also represents the intelligence that individuals apply to data and information to draw conclusions and to make decisions without intelligence, information cannot become knowledge. Therefore, it is the possession of knowledge, along with intelligence and the ability to create new knowledge, which determines an individual s value to a business. Returning to our original question, then, we can define Knowledge Management as a business discipline that attempts to identify and capture knowledge, to promote the sharing of knowledge between individuals, to leverage existing knowledge in the creation of new knowledge, and to use knowledge to define and improve business practices. While this may seem to be a broad definition, it is necessarily so, as Knowledge Management incorporates and enhances many other business disciplines, including Change Management, Business Process Reengineering, and Risk Management. A shorter definition might be that Knowledge Management is the practice of treating knowledge like any other business asset as something to be used, maintained, and expanded to the benefit of the organization. Benefits of Knowledge Management The potential benefits of adopting a Knowledge Management strategy are numerous and have farreaching implications for any business. The proper use of Knowledge Management techniques and technology makes a company more agile and better able to respond to changes in the industry. The sharing of knowledge between knowledge workers increases performance and reduces the amount of training that is required for new employees. And the implementation of knowledge assets in the company s Information Technology infrastructure maximizes return on investment, both in equipment and personnel. All of these factors contribute to render businesses more competitive and profitable. Knowledge Automation Systems In the past, computers, specifically mainframes, mainly performed algorithmic bookkeeping operations, rather than decision support. Now that networked terminals and personal computers are a fixture on every front-office desktop, computers are mainly being used directly by knowledge workers themselves. The proliferation of computer technology makes a company s Information Technology infrastructure the ideal place to adopt Knowledge Management principles. This means that businesses need to implement systems and applications whose behavior is determined primarily by the company s knowledge assets, to assist, augment, and support workers decision-making efforts. Unfortunately, most applications are not Knowledge Automation Systems. Traditional applications are created using procedural coding techniques, wherein knowledge is hard-coded into the application as a series of step-by-step procedures. In this model, although knowledge is being managed and utilized, it is contained in an Gallagher Financial System, Inc San Remo Suite 251 Coral Gables, FL 33146

4 inflexible, static structure. The behavior of the system is driven by the procedural code, while the decision-making efforts of knowledge workers are guided externally, resulting in a fundamental separation between the knowledge worker and the system. This relationship is illustrated in the following diagram. Static Knowledge Management System System Behavior Business Design (Software Engineering Cycle) DBMS Parameterized Data In this type of application, the separation between the knowledge worker and the system means that a company s business model is applied inconsistently. Also, because the behavior of the system is determined by procedural source code, changing that behavior requires changing the code, which is an error-prone, time-consuming, and expensive process. Finally, since industry change occurs more rapidly than applications can be updated, the software engineering cycle cannot keep up with the evolution of the marketplace. In a true Knowledge Automation System, knowledge assets drive an application s behavior, rather than procedural code. Knowledge Automation Systems incorporate expert system technology, which replaces procedural code in an application with a knowledge base, to contain knowledge, and an Artificial Intelligence (AI) engine, to drive decisions. This model allows the knowledge base to be updated and maintained by knowledge workers, closing the gap between the knowledge worker and the system, as illustrated in the following diagram. Knowledge Automation System Procedural Code (Software Engineering Cycle) Business Design (BA) Knowledge Base System Behavior DBMS Parameterized Data With Knowledge Automation Systems, the business design defines the behavior of the system, allowing changing business needs to be implemented directly through the knowledge base, rather than through the software engineering cycle. This means that the system s behavior can change dynamically with the business, resulting in a dramatic reduction in turnaround times for meeting new business objectives. This, in turn, results in a more responsive organization that is able to maximize the use of its knowledge assets for tangible benefits. Implementing a Knowledge Automation System requires a change in mindset IT departments must learn and embrace rules-based programming in order to provide a Knowledge Automation System s infrastructure. This requires the adoption of expert system technology, to enable the creation of a knowledge base and the use of an AI engine. Just as people apply intelligence to knowledge to make decisions, so does the Knowledge Automation System apply Artificial Intelligence to the knowledge base to determine the system s behavior. Once these components are in place, the system can be easily maintained and updated through the combined efforts of both knowledge workers and IT personnel. Gallagher Financial System, Inc San Remo Suite 251 Coral Gables, FL 33146

5 Gallagher MillenniumÑKnowledge Automation at Work In 1995, Gallagher Financial Systems, Inc. set out to create a software solution for the mortgagelending industry that incorporated the principles of Knowledge Management. Gallagher s goal was to provide lenders with a system that would allow them to keep up with the changes in the mortgagelending industry. Such a system would allow lenders to modify the behavior of the system dynamically to support new lending scenarios, allow for the implementation of more efficient business practices, and meet new regulatory requirements. Further, these modifications would need to be performed by business analysts who possessed the necessary industry knowledge. To reflect the forward-thinking design of this new product, the system was christened Gallagher Millennium. It quickly became apparent that traditional application models and methods of development would not support such a system. In the past, Gallagher programmers worked with business analysts to develop source code that would analyze the particulars of each lending scenario. All of the critical aspects of each scenario, such as loan amount, loan-to-value ratios, debt ratios, property state, and so forth, had to be identified and embedded in the procedural code. This meant that the business analyst had to teach essential mortgage-lending knowledge to the developer, which was unnecessarily time-consuming, and required thousands of IF-THEN statements to be written for each point in the lending process where a decision was needed, which resulted in the repeated duplication of each scenario throughout the code. According to Doug Gallagher, President and CEO of Gallagher Financial Systems, When we began coding Gallagher Millennium, we realized that we needed an Artificial Intelligence engine in order to give the lenders what they needed without slowing down the application. Rather than build their own AI engine, Gallagher Financial Systems partnered with The Haley Enterprise, the leader in Knowledge Management and Knowledge Automation technology, to obtain the necessary expert system components namely the Eclipse inference engine and Rete++, the C++ encapsulation of that engine. By integrating Rete++ into the foundation of Gallagher Millennium, the application inherited all of the power and flexibility of the Eclipse engine. Gallagher s developers were able to write compact procedural objects that were separated from the business logic of the application. This enabled them to concentrate solely on the potential behavior of the system, without having to worry about the logic of that behavior. That logic would be provided by the knowledge base, which could contain an infinite number of business rules. In the mortgage-lending industry, business rules can be based on virtually any combination of loan parameters that constitute a particular lending scenario. Gallagher wanted to allow these rules to be created and maintained by the business analysts who actually possessed the necessary mortgage-lending knowledge. To that end, they created the Gallagher System Administrator Tool, an interface to Gallagher Millennium s knowledge base that enables business analysts to define the criteria for each lending scenario in an intuitive, database environment. With the Gallagher System Administrator Tool, business analysts simply select the appropriate application options for each scenario, and the actual business rules are created behind the scenes. To tap into these business rules, Gallagher s developers created procedural objects that inherit the rules-based functionality of Rete++ components. This functionality allows the Eclipse engine to control the behavior of Gallagher Millennium s objects by evaluating the current values of relevant data fields and comparing them Gallagher Financial System, Inc San Remo Suite 251 Coral Gables, FL 33146

6 to the corresponding rules in the knowledge base. Further, the Eclipse engine only compares business rules to the values in a particular loan record that have changed, allowing system performance to remain constant, regardless of the number of rules in the knowledge base. By integrating expert system technology into Gallagher Millennium, Gallagher Financial Systems, Inc. and The Haley Enterprise have fulfilled the promise of Knowledge Management for the mortgage-lending industry. With Gallagher Millennium, Gallagher Financial Systems provides its clients with the level of flexibility and control they need to do business in the manner that best suits their needs and to adapt quickly to new developments in an ever-changing marketplace. Gallagher Millennium s rules-based approach places About The Haley Enterprise The Haley Enterprise, Inc. is the leader in commercial knowledge management and knowledge automation technology. Rules-based programming and case-based reasoning software from The Haley Enterprise is embedded in a variety of commercial software packages and Web applications from many of the world's largest companies, including IBM, Adobe, AT&T, and NCR. The Haley Enterprise is a privately-held corporation headquartered in Pittsburgh, PA. the power of knowledge back in the hands of those who can make the best use of it, which is the goal of every Knowledge Automation System. Conclusion If, as Eliot suggested, knowledge is indeed power, then Knowledge Management and Knowledge Automation Systems are the best means of tapping into that power. Knowledge Management and Knowledge Automation Systems enable businesses to put their knowledge assets to work as efficiently and cost-effectively as possible. Only through knowledge will businesses survive, and only through the cultivation, dissemination, and effective use of that knowledge can businesses thrive. About Gallagher Financial Systems Gallagher Financial Systems, Inc., a privately-held company founded in 1985 by President and CEO Doug Gallagher, is a leading provider of mortgage origination and secondary marketing software solutions. Gallagher Financial Systems is headquartered in Coral Gables, FL, with a development office in Nashville, TN. The Haley Enterprise, Inc Ohio River Boulevard Sewickley, PA Phone: (800) Fax: (412) Gallagher Financial Systems, Inc San Remo, Suite 251 Coral Gables, FL Phone: (800) Fax: (305) Gallagher Financial System, Inc San Remo Suite 251 Coral Gables, FL 33146