A business rule is a guideline, constraint, or regulation that defines or controls aspects of a business. In essence, it dictates how things should be done.
Definition of a Business Rule
A business rule represents an explicit statement that shapes behavior in the pursuit of specific business objectives. These rules can range from simple operational guidelines to complex algorithms that drive automated decision-making. They help ensure consistency, compliance, and efficiency across an organization. For instance, a rule might specify that "all invoices over $10,000 require approval from the CFO."
Types of Business Rules
Business rules can be categorized in several ways. Here's a breakdown of common types:
1. Definitional Rules
- Purpose: These rules define terms and concepts within the business. They provide a shared understanding of what things are.
- Example: "A 'Preferred Customer' is any customer who has spent over $5,000 in the past year."
2. Behavioral Rules
- Purpose: These rules dictate how the business operates and how specific processes are executed. They guide how things are done.
- Types:
- Constraints: Restrictions on actions or data. Example: "A customer's credit limit cannot exceed $20,000."
- Calculations: Rules for computing values. Example: "Sales tax is calculated as 7.5% of the purchase price."
- Inferences: Rules that derive new facts from existing facts. Example: "If a customer is a 'Preferred Customer' and their payment history is 'Excellent', then automatically approve their credit increase request."
- Actions: Rules that trigger specific actions. Example: "When a customer places an order exceeding their credit limit, send an email notification to the credit department."
3. Structural Rules
- Purpose: These rules define the structure of the business, including relationships between different entities and data elements.
- Example: "Each customer must be assigned to at least one sales representative."
4. Enterprise Rules
- Purpose: These high-level rules guide strategic decisions and align with overall business goals.
- Example: "Always prioritize customer satisfaction over short-term profit."
5. Technical Rules
- Purpose: These are rules that are more specific to IT systems and data management, describing how the data should be handled by the system
- Example: "Date fields must adhere to YYYY-MM-DD format".
Examples of Business Rules in Different Contexts
| Context | Business Rule Example | Type |
|---|---|---|
| E-commerce | If an order total exceeds $100, offer free shipping. | Behavioral |
| Banking | A new account must be verified before any funds are deposited. | Behavioral |
| Healthcare | Patient records must be kept confidential and accessible only to authorized personnel. | Enterprise/Behavioral |
| Manufacturing | All raw materials must meet specific quality standards before being used in production. | Behavioral |
| Human Resources | Employees are eligible for a performance bonus only after completing one year of service. | Behavioral |
Importance of Business Rules
- Consistency: Ensures consistent application of business logic across different systems and processes.
- Compliance: Helps organizations comply with regulations and industry standards.
- Agility: Enables quick adaptation to changing business needs by modifying rules without altering core application code.
- Automation: Facilitates automation of decision-making processes, improving efficiency and reducing errors.
- Clarity: Documents business logic clearly for all stakeholders.
In conclusion, business rules are critical components of any organization, guiding operations, ensuring compliance, and facilitating consistent decision-making. Understanding the different types of business rules is essential for effectively managing and optimizing business processes.
