Business rules are predefined rules/conditions that aim to standardize an organization’s workflow and reduce errors, thereby saving time and overhead.
Essentially, business rules are a set of “laws” that streamline business operations. The only difference here is that business rules are about work efficiency rather than business ethics.
Additionally, these rules are much more flexible and can be customized to meet operational needs.
A growing business has several autonomous departments working in tandem to ensure daily business operations run smoothly. As an organization grows, it becomes increasingly difficult to establish operational understanding across all departments. Employee mistakes, lack of a well-defined business structure/hierarchy, poor communication, etc. can seriously affect the efficiency of the business.
How can this be avoided? By implementing well-defined and well-structured business rules.
Contents
- What are business rules
- Examples of business rules
- The importance of business rules automation
- Types and Examples of Business Rules
- Combining business processes and automated business rules
What are business rules
So what are the business rules?
Business rules define how business processes should be executed under specific conditions. They set specific instructions on how business activities should be conducted. Business rules are often applied to approval workflows within organizations – for example, invoice approval, loan approval, etc.
Most companies act based on agreed upon relationships and specific guidelines, in a more verbal/informal manner. However, digital documentation and implementation of sample business rules allows for tighter control of these guidelines.
Business rules control business activities and processes by integrating required conditional logic into an organization’s workflow. When implemented correctly, business rules can reduce unforeseen events and conflicts that slow down business processes and make the organization much more efficient in terms of time, energy and costs.
Business rules are typically implemented through business rules management systems (BRMS). BRMS is decision management software that gives organizations the ability to write, manage and enforce business rules across the organization.
Examples of business rules
Although we can find many business rule examples in different workflows, here are some use cases where business rule examples are effectively implemented:
Customer Discount Programs
Example business rules can be used to automate customer discounts based on sales amount. For example, if you want to offer a 20% discount on any product over $10,000, you can apply this rule when processing the invoice. Likewise, discount programs can be used to reward customer loyalty by employing business rules such as: “Offer 10% off to customers who have purchased from us at least ten times in the last year.” “.
Approval of loan proposal
Loan processing requires the evaluation of many factors such as the applicant’s credit history, type of investment, and current employment status. An automated approval system can use business rules to calculate an applicant’s credit score based on all of these parameters. This can help streamline the loan approval process in financial organizations to a large extent.
Bonus based on employee performance
Many organizations use business rules to distribute bonuses and contingent commissions to employees. For example, a conditional bonus of $1,000 can be automatically added to an employee’s salary once they reach a sales goal above $50,000.
Additional invoice approvals
These business rules limit the financial responsibility assigned to employees who are not authorized to carry out transactions beyond a certain limit. For example, the system can be automated to require special authorization from a manager/executive to finalize any purchase over $100,000 made by the purchasing department.
Assign better leads to salespeople
When a sales rep makes a number of high-value sales, the company may want to assign better prospects interested in larger purchases. This business rule can be implemented in an automated system by applying a sales trigger that automatically moves sales reps up a customer level each time they reach specific sales goals.
The importance of business rules automation
As business structures and workflows become more complex, a guided set of automated rules becomes necessary to ensure that all business operations are carried out efficiently. Additionally, automating business rules can improve sales, reduce costly errors, and help employees achieve organizational goals much faster.
Business rules management systems (BRMS) create visual representations of processes and workflows conducted in a business environment. This helps identify critical tasks and identify inefficient processes. Additionally, these systems can help speed up critical tasks through directives and changes and automate inefficient processes, thereby increasing overall work speed.
Automated business rules can be used to assign goals based on specific roles, expertise, or conditions that enable individuals to make better decisions. Examples of business rules include limiting the purchase of goods over $20,000 by non-management personnel. Here, this rule ensures that the most important purchasing decisions are made only after approval from a manager, thereby reducing bad decisions within the purchasing department. Trade rules also impose specific conditions on these decisions.
Automated business rules that prescribe certain standards for employee performance and overall task execution can increase employee productivity. Streamlining menial activities using automation software allows employees to focus on the important aspects of their work, thereby increasing their output.
Types and Examples of Business Rules
Business rules are expressed using conditional statements. They implement a certain set of consequences once a condition is invoked. Generally speaking, there are two types of business rules.
Constraint rules
Constraint rules limit the behavior of an object based on specific conditions. They are then grouped into stimulus and response rules, operational constraints, and structural constraints. Challenge and response rules perform specific actions only when conditions are true.
Senior management is only notified of an individual sale (via system notifications) if it is greater than $10,000.
Operational constraints control what happens before and after an operation is performed.
An employee is entitled to $X in benefits if they have been with the company for less than five years. After five years, the system automatically adds a salary benefit of $Y (greater than X) to their payment package.
Likewise, structural constraints create broader limitations on data and policy-based decisions set during its programming.
Only a manager should be able to access employee data such as working hours, days off during the month, sales target achieved and customers handled by the employee.
Derivation rules
Derivation rules infer a certain set of facts based on given information. They are subdivided into inference rules and calculation rules. Inference rules test the truth of conditions and attempt to determine a specific conclusion based on the facts.
If a lead does not respond within 30 days of first contact, it must be a cold lead and may be marked accordingly.
Computer rules do the same, but use complex computer algorithms to derive these conclusions.
Rules engines use a combination of these rule types to automate and streamline daily workflow.
Combining business processes and automated business rules
Organizations can install business rules management systems (BRMS) into their workflow to automate business decisions and standardize business processes. These systems are applied across the organization and make business rules more manageable by tracing and standardizing business rules and managing their implementation in automated business processes. Their malleable nature allows shareholders, developers, and managers to interact with sample business rules to apply, update, or modify them without requiring technical assistance.
Nanonet’s comprehensive business process automation solutions enable companies to streamline their documentation, trade inspections, and many other important organizational activities. Our modules based on optical character recognition (OCR) and Deep Learning help you digitize all your documents in seconds. With Nanonets, you can harness the power of the best business automation software to ensure your business always follows your rules!
