Breaking the Rules:
A Closer Look into the
Business Rules Management Systems
Dr. Vicki Sauter
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.
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
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.
1. , Business Rules Come First.
2. , Business rules.
10. , 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: .
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.