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Business rule

Business rules or business rulesets 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

Strategic management is distinct from business rules. Business rules are a means by which strategies are 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.

Example business rule domains include: *

How business rules are gathered

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 are 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 English, 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. Business analysts or consultants 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.

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 mitigating usage 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.

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.

Best practices

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.
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.
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.
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.
Business, not technology, oriented: For example, a company's business rules should not be foreign to a knowledgeable customer.
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)

References

WALKER, Adrian et al (1990). Knowledge Systems and Prolog. Addison-Wesley. ISBN 0-201-52424-4.
VON HALLE, Barbara & GOLDBERG, Larry (2006 October 9). The Business Rule Revolution. Happy About. ISBN 1-60005-013-1.
VON HALLE, Barbara (2001). Business Rules Applied. Wiley. ISBN 0-471-41293-7.
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