Business Rules Management

Business Perspective

A business rule is a directive, which is intended to influence or guide business behaviour, in support of business policy that is formulated in response to an opportunity or threat.

Information System Perspective

A business rule is a statement that defines or constrains some aspect of the business. It is intended to assert business structure, or to control or influence the behaviour of the business.

Capturing Business Rules

“Unfortunately, today many of the company's business rules are "lost" for all practical purposes. Either they are embedded in programming code and dispersed across an unending array of legacy applications, or they are implicit in mindless habits and procedures. Finding them is hard, understanding their business meaning is harder, and changing them is often almost impossible.”

Ronald G. Ross & Gladys S.W. Lam
Business Rules Solutions

Business Rules

An organisation’s success is very much determined by its ability to make consistent, timely and effective decisions. This decision-making process is driven by an organisation’s business rules, the day-to-day policies that determine the interactions it has with customers, suppliers, employees and partners.

Business rules determine how insurance companies calculate premiums, how banks assess risk, how finance companies balance portfolios, and how retailers set pricing levels. They allow pathologists to identify abnormalities, engineers to control processes, logistics companies to generate schedules and financial advisors to recommend investment strategies. Business rules are one of an organisation’s most valuable assets, yet for most organisations they are difficult to locate, cannot be measured, are applied inconsistently and are very costly to change.

In a world with ever increasing levels of competition, customer expectations, compliance demands and technology adoption, the strategic control and application of business rules is essential.

Just as organisations depend on sophisticated technologies such as relational databases to manage corporate data, organisations should adopt similarly sophisticated technologies to strategically and intelligently manage their corporate business rules.

Common Knowledge Process Diagram

Sample Business Rules

1. If a persons taxable income exceeds $50000 and they do not have private health insurance then apply a 1% health care levy

2. Purchase stocks that have a low debt to equity ratio and are close to the lowest price for the year

3. Salary = 60000 + YearsOfService * 500 + Sales * 0.24

4. Product that is greater than 12m long cannot be stacked higher than 1m

5. Project estimates exceeding $500000 require at least a 10% risk factor

Business Rule Formats

Decision Tables - allow a set of rules to be represented in a tabular format where each row represents a rule. The columns represent conditions and actions. A rule is satisfied when all of its conditions are true, causing its actions to be performed.

Decision Trees - allow a set of rules to be represented in a hierarchical tree format where each branch in the tree represents a different decision path. The final (or leaf) nodes of the tree typically represent an outcome or action.

Production System Rules – rules are represented in IF/THEN formats that specify the conditions and actions for each rule. Rules designers can represent constraints at their most atomic level. An inferencing engine handles complex inter-rule dependencies and results speedy execution of the rules.

Rule Flows – allows for the definition of rules with considerations for time, sequence and rule dependencies. Declarative rules can be incorporated into the business processes in which they properly belong.

Decision Grids – enables the definition of a multidimensional table for the results of combinations of multiple variable values.

Business Rules Management

For an organisation to establish an effective business rules management strategy, the following basic needs must be met:

Need: Organisations must be able to clearly and unambiguously capture and represent their business rules.They must be able to represent their rules and company policies in ways that are familiar and intuitive to those people most responsible for the creation and management of those policies. Doing so will provide a number of immediate benefits including:

  • Improved quality and effectiveness through a more consistent, accurate and timely application of best practice business policy across the organisation.
  • A reduction in the cost and time required to educate employees in best-practice business policy.
  • Opportunities to establish formal and ongoing processes of business policy review and improvement.
  • Enables a more dynamic, forward-planning approach to the creation and management of business policy.

Need: Organisations must be able to respond rapidly to change. As the Greek philosopher Heraclitus (500BC) once said "panta rhei" which translates to "everything flows" or "nothing endures but change". Constant organisational change is driven by a need to remain relevant and successful in a global market. Typical time frames for change have reduced from months to days and for some organisations change must be implemented on an hourly if not real-time basis.

Rapid response to change can enable organisations for:

  • Early capture of dynamic market opportunities.
  • Quick response to changing market needs, improving levels of customer satisfaction and retention.
  • Reduced costs and time-to-market when implementing changes to strategy, compliance requirements, and product configuration.

Need: Business rules must be highly visible throughout the organisation and should be clearly and concisely documented. Organisational documentation must convey the purpose of the business rules and should be easy to maintain. This will provide the following benefits:

  • Reduced maintenance and more effective operations through increased levels of understanding and awareness.
  • Improved relationships between employees, customers, suppliers and partners.

For an organisation to fully realise the benefits of a business rules management strategy, the application of the business rules must be fully automated and tightly integrated with an organisations computer systems.
Integration and automation will allow an organisation to:

  • Reduce costs as the same business rules are reused across an organisation’s computer systems.
  • Improve levels of customer satisfaction and retention through more consistent, reliable and personal interactions across all business interfaces.
  • Reduce losses through the consistent and accurate application of business rules across an organisation.
  • Increase employee availability through the automation of costly and error prone manual processes.

Applications

Risk Assessment
Insurance Underwriting
Policy Customisation
Product Suitability
Legislation Compliance
Salary Packaging
Diagnostics
Monitoring and Alerting
Customer Profiling
Credit Worthiness
Routing and Distribution
Scheduling & Logistics
Pricing
Fraud Detection
Portfolio Management
Process Control
Billing
Simulation
Operator Guidance
Software Configuration
Tax Assessment
Call Routing
Cross-selling
Capacity Planning
Bill Determination
B2B Commerce
WEB Personalisation
Filtering
Content Management
Financial Planning
Data Mapping
Agricultural Management
Quality Control
Resource Planning
Decision Support
Network Management
Classificatio

The Solution

For a business rules product to be successful in this area it must address each of these basic requirements. However, many such products do not provide the intuitive rules representations that are needed. They tend to dictate the way business rules are represented, often using complex rules languages targeted specifically at technical users. In addition, they tend to be expensive and difficult to use.

Common Knowledge Designer Screenshot

To address these business needs, Object Connections has released a second-generation business rules management and automation product called Common Knowledge. Common Knowledge redefines the way organisations can manage and automate their business rules. It allows technical and non-technical staff to closely cooperate in the analysis, construction, delivery and management of responsive and intelligent computer systems.

The remainder of this paper discusses how the Common Knowledge approach to business rules management and automation addresses these needs in order to improve the way your organisation interacts with its customers, suppliers, employees and partners.

Common Knowledge

Capture and Represent

There is no silver bullet, no singularly optimal solution to an entire set of problems. For this reason, Common Knowledge does not attempt to dictate the way in which business rules must be represented. It provides a flexible approach, supporting many common rule formats and follows an evolutionary development approach that continually adds new rule formats in order to better capture needs of business.

Each rule format provided Common Knowledge is a powerful rules representation in its own right. However, the full power of Common Knowledge is achieved by creating combinations of these formats which can be powerful, hybrid rule representations that model complex business logic. This enables a rules designer to always choose the most appropriate rule representation for any given scenario without neglecting the need to construct the business rule set as an integrated whole. In order to simplify the process of capturing and representing business rules, Common Knowledge provides a powerful set of visual editors that allow business rules to be represented and maintained in a way that is familiar to both technical and non-technical people.

Rapidly Modify

To remain competitive, organisations must be able to respond to change in a timely and cost effective manner. It must be possible to quickly locate and modify the relevant business rules whilst minimising modifications to any business systems that depend on them.

By maximising the amount of business logic that is able to be represented in business rule formats, and by providing great ease-of-deployment, Common Knowledge streamlines the process of making changes to an organisation’s business systems. This vastly reduces the dependency on IT resources, thus dramatically reducing the cost of change.

Clearly and Concisely Documented

Business rules should be clearly and concisely documented and should always accurately reflect those rules being executed by the automated systems. Documented business rules definitions should be easily published to allow both local and remote stakeholders to actively participate in a process of ongoing improvement.

Common Knowledge allows documentation to be generated directly from the business rules as a set of WEB pages that may be immediately deployed across a corporate intranet or the Internet. The generated documentation is augmented by additional contextual information that may be added into any part of the rule structure. This information may include the origin, purpose and history of the business rules as well as support for links to external references such as WEB pages, business documents and diagrams.

Integration and Automation

A business rules management tool must support the seamless integration of rules across a broad range of computer systems and technologies. With high levels of integration and automation, organisations can ensure the accurate and consistent delivery of policy across all business interfaces.

Common Knowledge provides robust, cross-platform support for the integration of business rules into an organisation’s client, server and WEB based business systems. The business rules themselves, within Common Knowledge, are represented using industry standard, XML.

Summary

Business rules are one of an organisation’s most valuable assets. The strategic management of an organisation’s business rules can improve competitiveness, increase efficiency, reduce costs and lead to faster response to external demands. It can also enable more consistent interactions and higher levels of customer retention.

Using a highly visual and intuitive approach, Common Knowledge allows business rules to be under the control of those people within an organisation most responsible for policy decisions.

If your organisation's business rules currently exist in policy manuals, computer programs, employees’ heads and assorted documents, then perhaps its time you started making your business rules your business with Common Knowledge.