Business rules are the invisible engine behind consistent and efficient decision-making in organizations. They determine how processes run, what actions are taken and what decisions are made. But how exactly do business rules work? In this article, we will take a closer look at the operation, structure and application of business rules and how they play a crucial role in modern business operations.
What are business rules?
Business rules are formal guidelines that indicate how an organization should act under specific circumstances. They determine what is and is not allowed, how decisions are made and how processes run.
Examples of business rules:
- “Invoices over €10,000 require approval by a manager.”
- “Free shipping only applies to orders over €50.”
- “A customer must be at least 18 years old to take out insurance.”
- “You must be taller than 1.35 meters to ride this roller coaster.”
Business rules can be applied manually. But larger organizations often choose to automate business rules. This can be done by making the business rules part of the software. You can process the code manually rule by rule. You can also use a business rule engine. Read more about when it is better to choose a business rule engine here.
The Basic Operation of Business Rules
In general, four components are identified for a business rule:
- Name: A unique description of the rule.
- Context: The situation or process to which the rule applies.
- Condition: The criteria that must be met.
- Action: The specific step that is carried out.
The last two components in particular form the logical structure of a business rule, the conditions and actions:
Condition: This determines when a rule applies.
For example: “If an order exceeds €100...”
Action: This describes what should happen if the condition is true.
For example: “...give a 10% discount.”
The basic structure of a business rule is therefore: “If X happens, then execute Y.”
Het proces om een business rule mogelijk te maken is net iets uitgebreider.
stap 1: Input verzamelen
De regel begint met het verzamelen van gegevens, zoals klantinformatie, orderbedragen of voorraadniveaus. Die data worden vaak volgens vaste regels in een organisatie verzameld en gestructureerd. Je moet de data verzamelen maar ook weten hoe jouw data gestructureerd is. Denk maar eens aan namen van personen: ieder bedrijf houdt die weer anders bij. Soms is het de voornaam en de achternaam. Soms is het voornaam, voorzetsels en achternaam. En soms wordt alleen de volledig naam opgenomen in de database.
stap 2: Evaluatie
De invoer wordt vergeleken met de voorwaarden in de regel. Deze regels kunnen eenvoudig zijn, maar ook heel complex. We lichten hierna meer toe over de aard van de regel.
stap 3: Actie ondernemen
Als de data aan de voorwaarden voldoen, voert het systeem de bijbehorende actie uit.
Voorbeeld:
• Regel: "Als een klant een premium lidmaatschap heeft, biedt dan gratis verzending."
• Input: Klantinformatie (bijvoorbeeld: lidmaatschapsstatus).
• Uitkomst: Gratis verzending wordt toegepast bij de bestelling.
The types of business rules
There are roughly four different types of business rules.
1. Validation rules
These rules check whether input meets certain criteria.
Example: “A date of birth may not be in the future.”
2. Calculation rules
Rules that perform calculations based on input values.
Example: “Calculate discount as 10% of the total order amount.”
3. Policy rules
These rules guarantee compliance with internal and external regulations.
Example: “Employees may take a maximum of 25 vacation days per year.”
4. Process rules
Rules that determine how a process is carried out.
Example: “If an application is complete, forward it to the verification department.”
In practice, business rules are often not singular, but multiple. For example, calculating a discount may first require validation of a minimum order amount or an excluded product group. The actual discount is a combination of adding up the correct amounts within the order and a discount percentage. When assessing the conditions for a loan, the calculations can be very complex and it is not just one condition that must be met, but a whole list of conditions.
How Business Rules Work in Automation
In automated systems, such as a business rule engine (BRE), business rules are managed and executed centrally. The process consists of a number of steps:
Analyzing input data
The system receives data from various sources, such as CRMs, ERPs or APIs.
Configuring rules
Business rules are defined in comprehensible language or via a graphical interface. This can be done by business analysts or functional administrators. Rules must use the data present in the available data format. If the data does not yet provide the information needed to make a decision, a business rule may have to be written to 'create' the correct data. For example: someone must be at least 18 years old to buy an alcoholic product. You can determine whether someone is 18 years old using their date of birth. But you cannot include a date of birth in your business rule. Because then you would have to adjust your business rule every day. That is why you create a business rule to calculate whether someone is 18 years old on the order date.
Business rules should complement each other and not contradict each other. That is why it is important to have a good knowledge of the subject. While developing the business rules, you must constantly test whether the rules produce the desired results. That is why it is wise to have business analysts or other people with domain knowledge determine the business rules.
For example: Let's say that in a web shop, someone who orders more than 50 euros does not have to pay shipping costs. If someone orders more than 100 euros, they get a 5% discount. If someone orders more than 250 euros, they get a 10% discount. The orders of 100 and 250 euros are both entitled to 0 euros in shipping costs. However, the 250 euro order should not receive both a 10% and a 5% discount. You must therefore ensure that your business rule for the 5% discount and the business rule for the 10% discount are mutually exclusive.
Apply rules
The system evaluates the input data based on the rules.
Take action
The system carries out actions based on the outcome of the business rule. The outcome should also be stored in the database, for example. This could be the calculated discount amount or the decision whether a loan has been approved or rejected. Follow-up actions are then linked to the outcome, such as adjusting the amount to be paid or changing the status of the application.
Logging results
In most cases, it is also important to log the execution of the business rule, to record that the rule was executed and what the outcome was. This is important for auditing purposes and future analyses.
Conclusion
Business rules function as a decision-making framework that helps organizations operate consistently, efficiently and in compliance with regulations. They combine simple logic with powerful automation to streamline processes and minimize errors.
By automating business rules with tools such as a business rule engine, companies can react more quickly, respond more easily to changes and achieve better results.
Do you have questions about how to implement or optimize business rules in your organization? Contact us – we will gladly help you!
Blog
The five fundamental principles of business rules.
