Breaking
the Rules:
A
Closer Look into the
Business Rules
Management Systems
Chutchat Kidkul
Systems Analysis
Dr. Vicki Sauter
UM-St. Louis
Nov. 29, 2006
The concepts underlying business rules aren't new. Everyone knows
what they are - they are the rules by which you run your business. They
are business policies, goals, strategies and guidelines that include
declarative statements, constraints or predicated actions. They are what
guide your business in running its day-to-day operations. “Without business
rules, you'd always have to make decisions on the fly, choosing between
alternatives on a case-by-case basis. Doing things that way would be very
slow.”(1) In every organizations, business rules exist whether or
not they are ever written down, talked about or even part of the organizations
consciousness.(2) They can encompass any area,
from calculating the end of the year bonus for employees to devising
that new marketing strategy for the next hot thing. The authors of business rules are typically
business stakeholders. What most have
now come to realize is that the full potential of productivity and the agility
of business process management cannot be achieved without digitizing business
rules. While much can be gained by modeling and simulating different workflows,
without the dynamically executable specificity of business rules and their
ability to capture goals and adapt to constantly changing business conditions
and situations, the process models remain theoretical. What's missing
today in the business rules market is a tool that lets business executives
write their own rules, without IT, without programming, and maybe even
without automation. "Just a tool, like Word (for textual rules),
Excel (for decision tables), or even Visio (for decision trees) that simply
lets you document 'logical business rules', and then press File, Save
as, 'billing rules model 1.0', or 'audit
rules 1.0', etc."(4) The answer is a Business Rules
Management Systems or BRMS.
With the increasing popularity of BRMS, it only makes sense that these
rules engines become simpler to create and change.(5)
Many BRMS implementations started from the
integration angle. But the key benefits of a BRM solution can only be
harvested when full process automation is achieved insuring transactions are
streamlined from inception to settlement.
In order to attain a completely streamlined business process, companies
are integrating business rules with their BPM
platform to automate the decision making elements of their processes.
The concepts of business process management and
business rule management have been riding on somewhat of a parallel
track. And although developed at different times and seemingly for
different purposes, their individual functions have a very natural fit. The core principles of both BPM and BRMS lie
in modeling, automating and integrating. One looks at the process and the
other business rules and policies. Both
are the next generation of previously emerging technologies – Workflow and EAI
for BPM and rule
engines for BRMS. BPM looks at the interaction between and across
people and systems. BRMS looks how the people and systems are making
decisions and then affect further interaction.
Intuitively, it would seem that putting the two together would help to
create a more efficient process from start to finish.
As technology has evolved and become more
sophisticated, so have the requirements of its beneficiaries. Do you remember the processing speed of a
286? Everyone had the patience of a
saint when applications booted and documents loaded. And when your new
386 was placed on your desk? You
couldn’t believe that you lived with 286 speed… Then the 486 hit the market. What a huge difference that made. Today, we can barely wait for internet
explorer screens to refresh. Similarly,
with each new technology, companies are trying to increase the processing speed
of their everyday business. Whereas in
the past almost every document or transaction went through human hands, today’s
organization is moving toward complete automation.
Running
a business without BPM and BRM is like running a business back in the 286
days. There’s little or no automation
and most everything is done via human interactions and manual processes. Running a business with BPM and not BRMS is like the 386 days, where the
workflow is automated, but the people are still required for making
decisions. Incorporating business rule
management into this equation helps to move the business to the current age….
Where both the process AND the decisions are automated. But we are still a long way off from complete
decision automation. But we are moving
in the right direction. We are still
human, after all, and prone to make mistakes that a system may not be able to
rectify. It is in these instances that
humans need to enter back into the equation, but now only for handling
exceptions. The
adoption of a Business Rules Management System adds another tier to
the systems that automate business process. It creates some major
advantages,
·
Lowers the cost incurred in the modification of business
logic.
·
Shortens development time.
·
Rules are externalized and easily shared among multiple
applications.
·
Changes can be made faster and with less risk. (18)
Through
the use of business rules, the agility of the business is enhanced and the
manageability of business processes also increases as the rules becomes more
accessible.(6) Barbara Von Halle, one of the
leading practitioners of the management discipline of business rules, describes
10 quality criteria that lead to rules that are clearly stated, easy to
understand, precise and consistent:
Capturing and organizing rules this
way is easily done with the help of BRMS. "It's important to
remember that a single business rule is typically reused in many decisions in
multiple applications and processes. In the BRMS, individual rules are
grouped into rule sets. The BRMS design environment typically provides a
variety of rule set types, including decision trees, decision tables and
scorecards. Decision logic determines which rule sets to evaluate under
what conditions in order to return the decision. A decision service lets
an application or business process executes a specific piece of decision logic
on command (increasingly over a Web service interface)."(7) Let’s say your business has a work flow. Someone sat down and modeled what the process
should look like. Every node is neatly
and properly accounts for the way the business runs, or at least the way it
runs at this particular time. This workflow, that was intricately designed, works
properly until there is a change to the status quo… Product Development now has the next best
thing, and new product becomes introduced.
The company goes through a merger and now there are new policies that
must be adhered to. New government
officials are elected and new regulations are instituted. Marketing wants to run a special promotion to
increase sales and creates new spiffs, so there need to be new pricing rules or
new scoring rules. A number of such
situations may arise at any time. The
result of these situations is that the status quo no longer exists and the
system needs to be updated to account for these changes. Of course, these changes must be done
immediately, if not sooner. And
typically, the people most affected by the changes are not the ones who can
implement it. This is not a situation
held in particularly high regard with anyone in any organization. And it is not as if this scenario is that
much out of the ordinary, it happens and none too often. As the cliché goes, the only thing that is
constant is change. Being prepared for
change is what will separate a successful company from the unsuccessful ones.
Now let’s look at the business rules in more detail. From a business perspective, business rules
are formal statements of business policy that define or constrain some aspect
of the business.(15)
From the IT perspective business rules are logic to be implemented in
one or more business application. The
major elements of a Business Rule Management System are User Tools, Rule
Repository and Rule Engine.(17) User Tools provide accessibility and rule
management. Rule Repository is where
rules are extracted and stored. And the
Rule Engine provides execution and deployment throughout the process. This is the Business Rules life cycle. Users are able to access and manage the rules
thru the User Tools. After that the
rules are stored in the Rule Repository till they are needed. Lastly, the Rule Engine executes and deploys
the rules. However, these stages of the
business rules life cycle - from staging, testing and approval to system
test, final approval and production - must be supervised. You must have
security and control steps so one person can't come in, hit a button and send
it off to production. Business rules
must be flexible, but not too flexible. Even with such technology
controls in place, putting business users in charge of rules demands a new way
of thinking. Most of the systems are really not built for explicit rules
management. And, although all the BPMS
vendors claim that it’s easy to have a business analyst change the process map
at any time, in reality I’ve never seen an organization that would allow that
to happen without (justifiable) layers of technical review and testing to
ensure that the new process logic doesn’t break something. "As
rules management systems have become more intuitive - with friendly GUIs,
features presented in familiar spreadsheet formats and natural-language rules
logic - companies have begun to question how much to let business users
control rules that affect the way processes work and systems interact. A
good BRMS should come with change management controls (the expected
development, testing, staging and production task
sequence) as well as role-based access to the rules repository, rules version
control, checks against rules redundancy or conflicts, and reporting
capabilities."(3)
The goals of implementing the new BPM and BRMS are to create
a new platform to support marketing and account management to enable
customer-level treatment strategies, for both marketing and non-marketing
interactions.
These
goals are multifold in nature:
At the macro level:
·
Improve CRM effectiveness. This
would entail significant improvement in service delivery quality. For instance,
o
Greatly improve the accuracy
of marketing execution.
o
Dramatically
decrease customers requiring remediation.
o
Enhance
clarity and consistency in business rules and policies.
·
Increased operating efficiencies. For instance,
o
Improve
marketing execution productivity.
o
Decrease
marketing execution operating expenses.
o
Gain
efficiencies in marketing/advertising spending.
·
Execution flexibility. For instance,
o
Increase
execution capacity.
o
Improve
execution timeliness and cycle time.
o
Improve
efficient execution of new marketing strategies.
o
Enable
reach of smaller populations with targeted offers (1-to-1).
o
Enable
increased customization of offers.
The
initiative was broken down into steps and key components, among them the Rules
Engine.
At
the Rules Engine level, goals were to move from Program and Account Management
to integrated Customer Management by
·
Using
consolidated 360º customer information to make better
business decisions.
o
Enabling coordinated and consistent strategies across all
customer interactions.
o
Delivering
optimum offers with objectives are set at the customer level. For instance,
this would entail assessing.
o
Optimal
or maximum credit line.
o
Share
of customer spending.
o
Share
of customer balances.
o
Total
profitability (NPV,
ROE).
The new Rule Engine, would prove to
·
Increased
performance and scalability. Since
qualification of all customers can be determined overnight, the business
doesn't lose a day of marketing their products to the qualified persons.
·
Lower maintenance cost with flexible, rapid and business
users friendly rule definition and maintenance.
Business users are now accountable and in charge of business rules.
·
Allows
for testing and simulation of new strategies.(13)
Before
the BRMS was implemented, the creation of a consolidated 360 customer
information database would probably have to be done manually. This database would provide a rich, robust
set of data across the household-customer-account hierarchy levels and is the
foundation of CRM activities. A rule engine and management platform was
identified as a key complement to this database to help the business reach out
to more customers. The functional scope
of the new BRMS is to ensure increase targeting by automating many processes
·
Credit qualification
o
Campaign/program eligibility rules based on credit
worthiness
o
Target
the clients based on credit history and qualification
·
Tagging
o
Segmentation
rules
o
Tagging possible customers for future promotions
·
Program qualification
o
Campaign/program
eligibility rules (start date, end date, customer portfolio requirements…)
At
first, the system can be deployed on an email campaign and then gradually to
other campaigns such as partner or other financial product offers. From the benefit standpoint, the business has
improved margin and revenue by enabling more accurate and fine grained
segmentation along with better risk based pricing. On the IT side, the team is
now convinced that their new IT infrastructure will lower Total Cost of
Ownership, will support growth and support new CRM functionalities such as new
marketing campaigns.(14)
In Conclusion, business rule and business process management
technologies were segregated by information architects. If and when a business
rule engine was used, it was considered a “black box,” something that generated
complex results required for highly variable decisions with multiple
contingencies. But, thanks to the ever increasing demands of business owners
for smart and more intelligent process workflow and technological advances by
select vendors, this segregation is now over. Business rules are important, if
not critical for a wide range of business processes, and therefore, it is now
commonplace to see rules engines included in business process management
systems. "Executives used to
have secretaries. Now they have Word. Companies used to have
IT/Finance modelers to do "what if" analysis. Now they have
Excel. Newspapers used to have strippers (no not that kind!) that
did page layout by hand. Now they have PageMaker. In the early days
of the Web, you needed a Webmaster to create your website. Now you have
FrontPage."(4) And with the new options in BRMS, there will be a day
when Rule Engines can be edited on the fly by a Word or Excel like application.
References
1. http://www.computerworld.com/databasetopics/data/story/0,10801,84500,00.html,
Business Rules Come First.
2. http://en.wikipedia.org/wiki/Business_rules,
Business rules.
4. http://www.bizrules.info/blog/2006/02/rules-10.html, Rules 1.0.
6. http://en.wikipedia.org/wiki/Business_rules_approach, Business
Rules Approach.
9. http://blog.kemsleydesign.com/?p=66, BPM and
Business Rules.
10. http://www.businessrulesgroup.org/home-brg.shtml, Business Rules Group.
11. Amghar,
Y., Meziane, M., Flory, A. (2000), “Using business
rules within a design process of active databases”, Idea Group Publishing, Vol.
11 No.3, pp.3-15.
12. Assche,
F.V., Layzell, P., Loucoupoulos,
P., Speltincx, G. (1988), “Information systems
development: a rule-based approach”, Knowledge-Based Systems, Vol. 1 No.4.
13. Debevoise,
N.T., (2005), Business Process Management with a Business Rules Approach. Business Knowledge Architechs.
14. Gottesdiener,
E. (1997), “Business rules show power, promise”, Application Development
Trends, Vol. 4 No.3.
15. Hay, D., Healy, K.A. (1997),
“Business rules: What are they really?”, Guide (The
IBM User Group), available at: http://www.BusinessRulesGroup.org.
16. Loucopoulos,
P., Katsouli, E. (1992), “Modelling
business rules in an office environment”, SIGOIS Bulletin, Vol. 13 No.2,
pp.28-37.
17. Morgan, Tony (2002), Business Rules
and Information Systems: Aligning IT with Business Goals. Addison-Wesley.
18. Ross, R.G. (2003), Principles of
Business rule Approach. Addison-Wesley.
19. Von Halle, B.,(2001),
Business Rules Applied. Wiley.
20. Von Halle, B., Goldberg, Larry (2006), The Business Rule Revolution.