BUSINESS RULES

Frequently Asked Questions

An introduction to business rules

Why are Business Rules Important?

The more an organization digitizes and automates its operations, the more important rules become. While machines can do more in less time than humans could ever do, they can only do what they’re programmed to do. This is where rules play a crucial role. For machines to be effective, rules must also capture the informal, implicit knowledge employees use on a regular basis.

For example, at a U.S.-based retail store, a good customer service rep would intuitively ask a customer to repeat their phone number if the rep only captured 9 digits, even if the rep was never specifically trained to do that specific task. However, an online checkout form application wouldn’t inherently know that a phone number must contain 10 digits (excluding country code) nor would it know to ask the customer to reenter their phone number if the customer entered anything other than 10 digits unless it was programmed to do so. Rules help ensure that there is consistency across the organization, whether tasks are completed by humans or machines.

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What are Examples of Business Rules?

They vary by industry, organization, domain, and purpose. Common types include the following:

Constraint Rules

These statements impose restrictions on certain actions. Typically, they arise from government regulations, industry standards, and corporate policies. Therefore, constraint rules and Compliance go hand-in-hand. For example, the minimum legal drinking age in the U.S. is 21 (excluding territories). A company that  sells wine would mostly have a constraint rule that requires all customers to be at least 21.

Structural Rules

These statements define the structure of data and documents to ensure records are consistent and easy to analyze. For example, that same wine company may have a structural rule that requires birthdates to be captured in MM/DD/YYYY format.

Validation Rules

These statements put checks around data to ensure records are accurate. For example, a customer can’t have a birthdate in the future (unless we managed to figure out time travel) so that is likely an input error. Therefore that wine company might have validation rules to define what birthdates would be likely erroneous and require fixing (ex. Birthdates cannot be after today’s date).

Calculation Rules

These statements specify how certain values should be computed. The wine company most likely has different calculation rules to calculate shipping costs, discounts, and taxes.

Derivation Rules

Similar to calculation rules, these statement specify how certain values are calculated (or derived) from other values. For example, age can be calculated from birthdate with a derivation rule like “A customer’s age is the difference between today’s date and the customer’s birthdate.”

Workflow Rules

These statements define the sequence of steps in a specific workflow (or process). Workflow rules streamline business processes and are necessary to automate those processes. Workflow rules can address issues like when customer complaints should be escalated to a manager and how customer orders should be packed and shipped.

Decision Rules

These statements guide decision-making and ultimately determine the appropriate course of action to take in a given context. Typically, they involve logic statements like “If these set of conditions are true, then do this.” The wine company most likely has decision rules that would prevent the sale of alcohol if the customer’s age is less than 21. Practically speaking, all the above types of rules could be considered as decision rules. Whether the wine company needs to establish eligibility criteria for a customer, pricing for an order, how to fulfill that order, and any security protocols, that company will need to rely a variety of rule types in order to make those decisions.

Are Business Rules Functional or Non-Functional Requirements?

It depends. Business rules are often confused with business requirements, so let’s go through the definitions of each:

• Business Rules: They guide what an organization should or shouldn’t do in a given context.
• Business Requirements: They inform what a particular system shall do in a given context. Functional requirements focus on the “what” (specific functionalities and actions the system needs to perform) while Non-functional requirements focus on the “how” (specific qualities that the system needs to possess such as usability, security, and scalability).

In other words, business rules are the laws of the organization while business requirements are the implementation of those laws into a system. Practically speaking, business rules can be considered a subset of business requirements (although some will argue that they’re completely separate).

What are the Limitations of Business Rules?

While business rules are important, they also have limitations, especially if they’re not created and managed well. Common limitations include the following:

They dependent on good information

Rules depend on timely, contextual, domain knowledge and expertise. If this information is incorrect, incomplete, or outdated, then the business rules will most likely be inaccurate.

They can be inflexible

Rules apply to a specific context so if that context changes, the rules will most likely no longer be valid. Without updating the rules, the company could be risking non-compliance, creating operational inefficiencies, or missing out on opportunities.

They can become difficult to manage

As an organization’s operations become more complex, the more complex the rules will likely be. Managing the interactions between, interdependencies among, and the sheer number of rules can become challenging, especially if the rules are overengineered.

They can be difficult to implement across different systems

In organizations with operational siloes, especially with different applications (software), it can be difficult to ensure that rules are applied consistently through out.

How Do You Write Business Rules?

The actual language and syntax you use to write rules will largely depend on their purpose, your audience (human or machine), and what tools you have available. Here are some general steps:

• Identify the trigger: Start by stating what event or set of conditions must occur in order to trigger the rule.
• Specify the action: Then state what should occur when the rule is triggered.
• Outline any exceptions: Next, state any alternative scenarios (this will likely lead to additional rules)
• Express rules clearly and concisely: Now put it all together. Convey the above three in unambiguous, easy-to-understand language. Where appropriate, use logic statements (“if-then”) and operators (and, or, not). For example, the wine company may have a rule, “If the customer is less than 21, then deny the sale.”

What Do Business Rules Require to Be Effective?

Rules, like with laws, are only as effective as they are implemented and enforced. Here are some best practices to address the limitations we addressed earlier and ensure that they’re enforced consistently through out the organization:

Collaborate

Effective collaboration among relevant business and IT stakeholders is necessary in gathering the right information to determine the right rules and to align on implementation. Everything should be well documented and easy to understand.

Leverage a Tool

Tools like busines rules engines, business rules management systems, or decision management systems like Sparkling Logic SMARTS™ allow organizations to more easily manage rules by providing a governance framework, a standard language for expressing rules, and automatic translation of business rules into executable code that can be used in multiple applications.

Test, Test, Test

Rules should be tested to make sure that they do what they’re expected to do.

Review & Update

Rules should be regularly reviewed and updated to ensure accuracy.

Complement Business Rules with AI

Organizations can leverage machine learning and other AI techniques to improve decision making inside the boundaries set by rules.

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