Business rule

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 behavior of the business. Individual business rules that describe the same facet of an enterprise are usually arranged into business rulesets. Business rules describe the operations, definitions and constraints that apply to an organization in achieving its goals.

For example a business rule might state that no credit check is to be performed on return customers. Others could define a tenant in terms of solvency or list preferred suppliers and supply schedules. These rules are then used to help the organization to better achieve goals, communicate among principals and agents, communicate between the organization and interested third parties, demonstrate fulfillment of legal obligations, operate more efficiently, automate operations, perform analysis on current practices, etc.

Introduction

Business rules are means by which Strategic management is implemented. The rules tell an organization what it can do in detailed tactics, while the strategy tells it how to focus the business at a macro level to optimize results. Put differently, a strategy provides high-level direction about what an organization should do. Business rules can provide the tactical detail about exactly how a strategy will translate to actions.

Business rules exist for an organization whether or not they are ever written down, talked about or even part of the organization’s consciousness. However it is a fairly common practice for organizations to gather business rules in at least a very informal manner.

Organizations may choose to proactively describe their business practices in a database of rules. For example, they might hire a consultant to come through the organization to document and consolidate the various standards and methods currently in practice.

More commonly, business rules are discovered as part of a formal requirement gathering process during the initial stages of a project. In this case the collecting of the business rules is coincidental. Projects, such as the launching of a new product, might lead to a new body of business rules for an organization, i.e. this new product would require the employees to conceptualize about what the purpose of the organization is in a new way. This practice of coincidental business rule gathering is vulnerable to the creation of inconsistent or even conflicting business rules within different organizational units, or within the same organizational unit over time. Business Rules Methodology is the process of capturing business rules in natural language, in real-time while empowering users to manage rules with a few simple steps.

Gathering business rules is also called rules harvesting or business rule mining. The business analyst or consultant can extract the rules from Use cases, system code or by organizing SME workshops/Interviews etc. Software technologies designed to capture business rules through analysis of legacy source code or of actual user behavior, can accelerate the rule gathering process.

Categories of business rules

According to the white paper by the Business Rules Group [1] a statement of a business rule falls into one of four categories:

• Definitions of business terms

The most basic element of a business rule is the language used to express it. The very definition of a term is itself a business rule that describes how people think and talk about things. Thus, defining a term is establishing a category of business rule. Terms have traditionally been documented in a Glossary or as entities in a conceptual model.

• Facts relating terms to each other

The nature or operating structure of an organization can be described in terms of the facts that relate terms to each other. To say that a customer can place an order is a business rule. Facts can be documented as natural language sentences or as relationships, attributes, and generalization structures in a graphical model.

• Constraints (also called "action assertions")

Every enterprise constrains behavior in some way, and this is closely related to constraints on what data may or may not be updated. To prevent a record from being made is, in many cases, to prevent an action from taking place.

• Derivations

Business rules (including laws of nature) define how knowledge in one form may be transformed into other knowledge, possibly in a different form.

Real world applications and obstacles

Despite many software vendors, consultants and research institutions offering business rules solutions, business rules are usually only gathered when dictated by law, as the first step in the automation process or as an ephemeral aid to engineers. This is mostly due to the overhead and effort required to maintain this database of rules. This becomes most severe the more dynamic and fluid the business rules for an organization are, for example in start-up companies. Another factor reducing use is the lack of incentive for employees to part with their most valuable asset to the organization; their knowledge of the business rules. A third factor is access to viable technology for maintaining business rules. A classic solution is the business rules engine. Rules engine products have been gaining traction in the market place.

Many tools make a distinction between Business Rules Engines and Business Rules Management, and somehow need a translation between the two. Commercially available tools now also offer the possibility to combine both management and execution of rules. Combined with an easy to use interface and a proper notation (see best practices) which can be maintained by business users, a lot of the disadvantages mentioned above begin to diminish.

Software packages automate business rules using business logic. The term business rule is sometimes used interchangeably with business logic; however the latter connotes an engineering practice and the former an intrinsic business practice. There is value in outlining an organization's business rules regardless of whether this information is used to automate its operations. One of the pitfalls in trying to fill the gap between rules management and execution is trying to give business rules the syntax of logic, and merely describing logical constructs in a natural language. Translation for engines is easier, but business users will no longer be able to write down the rules.

Best practices

1. Declarative: A business rule is a statement of truth about an organization. It is an attempt to describe the operations of an organization, not an attempt to prescribe how an organization should operate. This is why business rules are said to be discovered or observed and not created.
2. Atomic: A rule is either completely true or completely false; there are no shades of gray. For example a rule for an airline that states passengers may upgrade to first class round-trip tickets if seats are available and they pay the fare increase does not imply that this deal is available for just one leg of the journey.
3. Distinct, independent constructs: Separate the things that define your business (the rules) from the processes (i.e. strategies and tactics). Don't build complex and cyclical dependencies - simplify and flatten the constructs.
4. Expressed in natural language: In order to appeal to the broadest audience, it is almost always best to express business rules in a natural language without the use of a lot of technical jargon.
5. Graphs: Alternatively, recent tools allow a graphical notation of business rules, rather than or in addition to textual notation. This semantic or model based notations avoid the pitfall of using too technical or too long textual sentences which cannot be understood. This also eases the understanding of complexity in e.g. interacting rules.
6. Business, not technology, oriented: For example, a company's business rules should not be foreign to a knowledgeable customer.
7. Business, not technology, owned: Business rules come from business decisions. These are independent from implementation decisions.

Formal specification

Business rules can be expressed in a very formal language. An example of when this rigour is required is in highly technical enterprises such as the building of a bridge. Another example is a project trying to automate the business rules gathering process. Example languages include Unified Modeling Language, Z notation, Business Process Execution Language, Web Services Policy Framework, Business Process Modeling Notation, or Semantics of Business Vocabulary and Business Rules (SBVR)

See also

• Best practice
• Business model
• Business Process
• Business rules approach
• Expert system
• Service level agreement
• BRMS

References

• WALKER, Adrian et al. (1990). Knowledge Systems and Prolog. Addison-Wesley. Template:Citation/identifier. 
• VON HALLE, Barbara & GOLDBERG, Larry (2006 October 9). The Business Rule Revolution. Happy About. Template:Citation/identifier. 
• VON HALLE, Barbara (2001). Business Rules Applied. Wiley. Template:Citation/identifier. 
• Principles Of Business Rule Approach, Ronald G. Ross (Aw Professional, 2003) ISBN 0-201-78893-4
• Business Process Management with a Business Rule Approach, Tom Debevoise (Business Knowledge Architects, 2005) ISBN 0-9769048-0-2

• Business Information systems : Muneesh Kumar and abhishek joshi