Lessons Learned #3: The Difference Between Business Rules and Business Process

Using the same playbook for strategy is not working for most companies, because the pace of change and is so rapid, and competition is constantly evolving.  To understand what is unique about your business, the diagnosis and separation of Business Process vs. Business Rules needs to be understood.

Business Process clearly describes the work performed by all resources involved in creating outcomes of value for its customers and other stakeholders, as stated by the Business Process Manifesto.  Business Process outlines the activities and variations made up of all different levels of detail. These activities are executed either by a human being (with or without the support of technology) or are fully automated. The Amazon distribution model is an example of both human and robot business processes, used to complete packaging of orders for delivery.

Separating the rules that govern a process will provide a superior level of flexibility and ability to adapt.

Business Rules are lists of statements that tell you whether you may or may not do something, and give you the criteria and conditions for making decisions. They define or constrain some aspects of business, and always confine answers to being either true or false.

According to the Business Rule Group, business rules can be categorized as one of the following types:

  1. Definitions of business terms
  2. Facts
  3. Constraints
  4. Derivations

Business rules can be hidden in source code (e.g., legacy systems), workflow descriptions, decision tables or tacit knowledge buried in people’s heads.  Business rules which are constantly changing are embedded into business processes.

Examples of a business rule would be the pricing structure at a large retail store, how sales tax is calculated, and when discounts and promotions should be applied.   Another example is if a new Federal or State law determined if a payment to a claimant should be made for an Insurance claim.

Separation of Business Process vs. Business Rules

Business Rules need to be separated from Business Process. Think of the game of football; you have the rules, which can determine the process (outcome of the play). Having your business rules in business processes can cripple the business process.  This is especially true in highly regulated industries, such as Financial Services, Insurance, and Healthcare.  When rules are embedded in a process, that process will need to be reprogrammed each time the rule changes.

Separating the rules that govern a process will not only provide a superior level of flexibility and configurability to adapt, but will also allow for consistent execution of business policy. In most cases, the separation of the two will also allow for a reduction in the number of decision branches involved in the process. Some organizations can reduce the number of steps in their business processes by 50%.

Knowing this, create an internal plan to centralize all of your business rules, so that you can have a holistic view of the process, and ensure that both business and IT are looking at the same rules.

This is not an easy process, and trying to consolidate all business rules at once is not recommended. Instead, look at each department or function of your business, start the consolidation process there, and then centralize.

Summary

Separation of Business Processes and Business Rules needs to be understood and implemented to achieve rapid innovation and strategic improvements. Consolidate and centralize your Business Rules.  The results will lead your company to faster and more agile decision making, and allow for more rapid course correction with strategies.

Want to see more lessons learned? Check them out here.

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