Introduction
At their highest level, business rules tell an organization what activities it should perform to achieve a defined and desired result. Many organizations first develop a business strategy to provide high-level direction about what the organization should do. Business rules provide detailed guidance about how the strategy’s points can be translated into action.
Business rules exist, even if they are never formally documented. Documenting business rules has many advantages. Some of these benefits include:
Discovering common processes and practices across business units.
Standardizing these processes and practices with common business rules and common language and representation .
Enabling shorter project delivery times.
Improved the understanding of an organization’s business processes.
Increasing organizational agility.
Improving the performance of data and processes in all of a business’s areas.
Often, business rules are discovered and documented informally during the initial stages of a project. Additionally, business projects , such as the launching of a new product or the re-engineering of a complex process, might lead to the definition of new business rules. As a result, organizations may create new and conflicting business rules within different organizational units or within the same organizational unit over time. This inconsistency creates problems that can be difficult to find and fix.
Gathering business rules is an important part of the business analysis effort. A business analyst can extract business rules from documentation and systems development code, people, use cases, data models, etc.… They may conduct interviews with subject matter experts (SMEs) to determine business practices and exceptions and write business rules based on this information.
What are Business Rules?
Business rules are statements that define or restrict the activities of an organization. They serve as a guide to aid decision-making and ensure that every action taken by employees aligns with the overall business strategy. Business rules are specific and leave no room for ambiguity, clearly stating whether an action should be taken or not. These rules can be applied across various industries and departments, impacting individuals, teams, or the entire organization. By implementing business rules, organizations can assert business structure, streamline business operations, and enhance overall business efficiency.
According to the Business Rules Group , business rules fall into one of four (4) categories.
Types of Business Rules
Business rules can be categorized into several types, each serving a unique purpose within business processes. These include:
Formula Rules : These rules define how to calculate values. For example, determining the price of a product based on its weight and material.Qualification Rules : These rules filter which subjects should be included or excluded. For instance, only allowing vendors from a pre-approved list to be selected.Timing Rules : These rules specify actions that occur after a set time period. An example would be escalating a customer support ticket if it remains unresolved for 48 hours.Trigger Rules : These rules contain a trigger and an action. For example, sending a notification to the sales team when a new lead is generated.
By categorizing business rules, organizations can better manage and implement them within their business processes, ensuring consistency and clarity.
Definitions of Business Terms and Defining Business Rules
The most basic element of a business rule is the language used to express it. The definition of a term is a business rule; defining a term is establishing a category of business rule. Terms are documented in a Managed Metadata Environment and can be imported into a conceptual model. Clear definitions of terms are essential for maintaining the organization’s business rules, ensuring consistency and efficiency across all departments.
The most basic element of a business rule is the language used to express it. The definition of a term is a business rule; defining a term is establishing a category of business rule. Terms are documented in a Managed Metadata Environment and can be imported into a conceptual model .
The nature and operating structure of any organization requires the use of terms that can be related to each other. “A customer can place an order” is not a business rule; it is a fact. Facts can be documented as natural language sentences or as entities, relationships, attributes and other structures in an entity-relationship diagram (ERD) model or in use cases.
Every organization constrains behaviors , and these constraints are related to constraints on what data may or may not be created, updated, deleted (CUD). Preventing an action on data, in many cases, is applying some form of constraint required by a rule. Constraints are also called “action assertions” by business rule experts. Traditional automation methods often rely on hard-coded business rules, which can hinder an organization’s agility and make timely updates challenging.
Business rules (including facts and constraints) define how information in one form may be transformed into other forms of information for a variety of purposes.
There are several parts to all business rules, according to the Business Rules Group.
Policy
Policy: A policy is a general statement of direction for an enterprise. Each policy may contain more detailed policies, or the policy may exist without extension. An example from EU-Rent’s car rental business, from the Business Rules Group documentation:
“We only rent cars in legal, roadworthy condition to our customers.”
Business Rule Statement
Business Rule Statement: A policy may be the basis for one or more business rule statements. Also, a business rule statement may be based on one or more policies. A business rule statement is a declarative statement, defining some structure or constraint that the business places on itself or has placed on it by law or other means. Each business rule statement may be related to one or more other business rule statements, or the statement may stand alone. For example, each of the following could be a business rule statement for EU-Rent:
“Cars should be checked on return from each rental, and on transfer between branches.”
“If any lights are not working, the bulbs should be replaced. If tires are worn, they should be replaced.”
“Under any of the following conditions the car should be scheduled for service or repair:
accumulated mileage since the last service is greater than 5000,
the brakes are not satisfactory,
the exhaust is noisy or emitting fumes,
there is any damage to body work (apart from superficial dents and scratches), lights or glass,
there are any significant fluid leaks.”
Atomic Business Rule
Atomic Business Rule: A business rule statement may be decomposed into one or more atomic business rules. Like a business rule statement, an atomic business rule is a statement that defines or constrains some aspect of the business, but it cannot be broken down or decomposed further into more detailed business rules. Each atomic business rule may be based on one or more business rule statements. For example, a business rule for EU-Rent might be:
“A car with accumulated mileage greater than 5,000 since its last service must be scheduled for service.”
Creating Effective Business Rules
To create effective business rules, follow these steps:
Find the Decision Points in Your Processes : Analyze your existing business processes to identify where decisions need to be made.Consider Your Business Goals : While business rules are granular, they should support the broader objectives of the company.Document Everything : Write down every rule, including examples, to ensure clarity and consistency.Automate Workflows if Possible : Automating workflows can help maintain accuracy, reduce errors, and improve productivity and efficiency.
By following these steps, organizations can implement business rules that enhance decision-making and streamline business operations.
Implementing Business Rules in Business Processes
Business rules can be implemented in the following ways to ensure they are followed consistently:
Manual Implementation : Employees manually apply business rules, which can lead to inconsistencies and errors.Automated Implementation : Using software, such as Business Rule Management Systems (BRMS), to automate business rules ensures consistency and accuracy.Hybrid Implementation : Combining manual and automated methods to implement business rules can balance flexibility and consistency.
Implementing business rules effectively within business processes helps organizations maintain control and improve operational efficiency.
Business Rule Management
Business rule management involves the process of creating, implementing, and maintaining business rules. This includes:
Defining Business Rules : Clearly and concisely define business rules to avoid ambiguity.Implementing Business Rules : Ensure business rules are consistently applied across the organization.Managing Business Rules : Regularly review and update business rules to keep them relevant and effective.Asserting Business Structure : Use business rules to assert the business structure and ensure it is consistently followed.
Effective business rule management helps organizations maintain clarity, consistency, and alignment with their business strategy, ultimately enhancing overall performance.
Category Meaning Examples
(Business) Term
Nouns in the business and their definition. Terms explain and constrain business concepts, and are the building blocks for all other business rules.All business terms should be entered and defined in the Business Glossary.
A Job is defined as a set of services provided to a Customer on a specific day.A Special Book is defined as a Book that is not available in stock on the day that a Customer has attempted to purchase it.
Derivations
Calculations that use terms to arrive at new terms.
Job Discount = (Job Total x Customer Discount)Discounted Total is calculated as the sum of the prices of all ordered items minus any applicable discounts
Inference
Definitions of how knowledge is transformed by operating on terms and facts.Note: may be mirror image of another Glossary term. Do not use same examples in both Glossary terms, and avoid circular references.
If Customer’s combined purchases are >$999.99 during the last 12 calendar months, then Customer is considered a Loyal Customer
Fact
Necessary connections between termsNote: Facts can be documented as natural language sentences, relationships on a data model, or attributes of an entity in a data model.
Each Service Agreement must have an Estimated Amount.Each Order must include at least one book.
Constraint
Prohibits behavior or prevents information from being created or action from being taken if certain conditions are not met
An Order must be paid by only one payment method.A rush Order must not be accepted if order payment method is Cash on Delivery (C.O.D.)
Action Enabler
Conditions or facts that trigger actions
When a Job Completion Date is > 7 days after the Job Request Date, apply 5% discount to the total.When Customer has outstanding balance > $200, reject new order.
Business rules can represent how the business performs its operations in accordance with its strategy and operating guidelines. They serve as statements to demonstrate how each action should be executed to achieve the process’ objectives and to satisfy the organization’s goals. Documenting and managing business rules brings clarity and consistency to the organization, and can serve to reduce costs and increase performance efficiency across the entire enterprise.
Advantages of Implementing Business Rules
Efficiency in Decision-Making : Clear and consistent business rules reduce the time employees spend making decisions by providing ready-made guidelines, eliminating the need to constantly consult managers or interpret ambiguous scenarios.Enhanced Customer Service : By applying formula rules and decision table rules, organizations can ensure quicker responses to customer needs, such as calculating discounts when a customer spends over a certain amount.Increased Trustworthiness : Establishing transparent and well-documented rules builds customer trust, as it demonstrates a reliable and closely related alignment between business operations and customer expectations.Guidance for Employees : Well-defined rules help business people avoid confusion by providing a structure for decision-making and resolving disputes, especially when managing multiple conditions or complex process designs.Legal Risk Mitigation : Clearly documented rules prevent reliance on tribal knowledge and help ensure compliance, reducing the potential risk of legal issues arising from inconsistent or misunderstood practices.
This business rule approach streamlines operations and supports an organization’s ability to remain competitive in a digital transformation era, where consistency and clarity are business rules important for maintaining value.
Business Rules Automation: Enhancing Efficiency and Responsiveness
Automating business rules can greatly improve an organization’s efficiency and agility by separating business logic from process logic. Through a BRMS, organizations can define, implement, and manage business rules in a structured and centralized manner. This approach allows employees—including non-technical staff—to create and update rules in a no-code format, reducing reliance on the IT department and enabling faster adjustments.
Key advantages of automating business rules include :
Streamlined Process Workflows : Automating workflows ensures processes remain consistent and up to date, minimizing errors and redundancies.Improved Agility : With automation, companies can quickly modify or add rules to adapt to industry trends, compliance needs, or business demands.Centralized Rule Management : Using a single platform ensures the same rules are applied across all teams, improving organizational alignment.Ease of Use : Domain experts can manage rules in an easy-to-read format, without requiring advanced technical knowledge.Cost Efficiency : By automating repetitive processes such as invoice processing, organizations can reduce manual effort, time, and potential risks.
For example, using tools like decision table rules or formulas, businesses can assert business structures that align with their goals. This future-proof approach minimizes reliance on hard-coded logic, making it easier to maintain and evolve many business processes over time.
