Business Rules Management

- Insurance claims: A mistake is made due to a gap in claim adjudication business logic and a worker's compensation claim is paid. The error is detected later, but by law, the insurance company is responsible for the continued payment for the disability for the working life of the employee. As many as 25 percent of all filings may have some element of impropriety. The National Insurance Crime Bureau estimates that workers' compensation fraud alone costs insurers $5 billion each year. This, according to Stanton Long, is billed back to employers in the form of at least $6.5 billion of premium.

- Billing errors: A customer of a telecommunications firm moves their office and has its numbers ported. The provisioning occurs correctly but the bill has the wrong tax jurisdiction, causing the customer an overcharge of $135,000 because of a gap in the tax business logic. The customer disputes the entire bill and holds up millions in cash flow until the error is corrected. According to the Rand Associates, 80 percent of carrier invoices have billing errors. For a firm with 10,000 employees, billing errors alone could add up to as much as $1.5 million in losses per year.

Defining requirements is fraught with problems due to the inflexibility and gaps in the tools currently used by participants in different roles throughout the process. Process mapping tools, such as Microsoft Visio, are helpful for business people, but too conceptual for the results to be useful for IT. Unified Modeling Language (UML) tools, typically used by IT, effectively capture the detail and technology information that IT works with, but are far too complex and specialized for business people to understand. There's no linkage, common language or ability to trace the business motivation and objectives with the detailed final documentation and execution. This makes collaboration on changes time-consuming, frustrating, complex and error-prone.

Benefits of a Rules-Driven Approach
A business rules approach offers a promising solution to these errors, process problems and their costs. According to the Business Rules Group, an independent standards group of business and IT professionals, a business rule is a directive, intended to influence or guide business behavior, in support of a business policy that has been formulated in response to an opportunity, threat, strength or weakness. A business rule is expressed as an English language-like statement that satisfies the needs of both users and IT. Both can easily understand business rules, and IT can easily convert them as needed into executable computer code. A business rule consists of decision criteria for evaluation and a corresponding action to be taken when the decision criteria are satisfied. For example: "If a customer has good credit, then assign a credit rate of 6."

Business rules are also extremely cost-efficient. In his article 'The Living Transaction', Presley Becerra estimates that one rule typically represents the equivalent of 100 lines of source code, which would take a developer two days to develop, using more traditional methods.

A business analyst can easily write 10 business rules per day, meaning that a business-rules approach can help development efforts realize a twenty-fold gain in productivity. Finally, since the business rules engine automatically generates the execution code on demand, the business rules approach provides greater agility to meet changing market conditions.

Despite the compelling benefits of business rules, they can be difficult to maintain. Problems arise when different business rules combine to produce results that weren't anticipated during the modeling phase. The complexity in the chain of dependencies across functions and multiplied by the volume of business logic makes it nearly impossible to spot all the contradictions, loopholes and vulnerabilities that may exist.