Advice for
Beginners
If you are
just getting started with business rules management,
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BIZRULES
BIZRULES
helps companies get started using rules. We can help you
move from the business rules idea stage to the action
stage.
Our full range of training,
consulting, and rule harvesting services and turnkey solutions help companies
redesign and automate rules and processes.
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to discuss your situation and how we can help.
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Business
Rules Revolution
Executives across all industries are using
technology to rewrite the rules of
business—literally.
By Kristine Blenkhorn Rodriguez
Reprinted courtesy of INSIGHT Magazine, The
Magazine of the Illinois CPA society. For the
latest issue, visit
www.insight-mag.com. August 2006. |
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IT’S ONE OF THOSE TOPICS THAT MANY EXECUTIVES
DON’T LIKE TO admit they don’t know quite
enough about. So they nod sagely while their
tech savvy counterparts discuss the business
rules “revolution.” The revolution part is easy
enough to understand. But what exactly are
business rules, at least in this context?
Business rules are the rules by which you run
your business. Sounds too simple, right? Wrong.
They can encompass any area, from tax
withholding for employees to marketing strategy
when a major competitor turns up the heat. Many
are unspoken. They reside in the legacy code
held within your computer systems. And they
reside within your executives’ heads. Therein
lies the problem, and here cometh the
“revolution.”
“We’ve been implementing business rules ever
since computers became mainstream,” says Ron
Ross, a member of the Business Rules Group, an
organization of professionals from the public
and private sector who are dedicated to
developing and supporting business rules
standards, among other things. “We’ve taken a
rule and translated it into computer code so
your systems do what they need to do when they
need to do it to help you run your business.”
Not necessarily revolutionary. But, with the
increasing popularity of business rules engines—
software that can be bought as a stand-alone
item or as part of an enterprise system—your
business rules have become simpler to create and
change. “You use rules engines to change the
behavior of your programs without having to
reprogram anything,” explains Paul Haley,
founder, EVP and CTO of Haley Systems, Inc, a
technology solutions provider specializing in
business rules management systems.
For example, he explains, take any sort of
financial business. “Your staff goes by many
rules. They probably say things like, ‘Revenue
from a contract will not be recognized on
balance sheets until the invoice is paid’ or
‘Here’s how we delineate between expense and
capitalization.’ These rules are changes that
occur on a regular basis as your business
situation or pricing, etc. changes. You used to
have to call in your IT people every time
something like this was altered. They’d bring in
an army of programmers who would then code
everything to reflect the change. This could
take some time and could get expensive on
projects you had outsourced. A rules engine
takes the specification of conditions, if X then
Y, out of programmers’ hands and puts it into
your executives’ hands.”
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That
change is key, says Rolando Hernandez, CEO and
chief rules architect of BIZRULES, a firm
specializing in business rules, business process
and knowledge management. “You save time because
you’re not hard-coding rules, anymore. Business
rules engines are basically software development
programs that minimize programming. They
separate business logic from computer code,
which allows business people—not programmers—to
edit and change rules using a simple,
user-friendly interface and plain English.”
The advantages, Hernandez explains, are
plentiful. You reduce your time to market. You
prevent business mistakes and fraud. You retain
knowledge that might otherwise be lost through
attrition. You manage risk by increasing the
probability of across- the-board compliance. And
you reduce application development and
maintenance costs because you have enabled your
own businesspeople—who make the rules—to write
the rules instead of relying on a programmer to
hard-code them.
Revolutionary? Yes. But not exactly new.
Business rules in this form began in the 1980s,
when rules engines were known as “expert system
inference engines.” Which means that, while many
companies haven’t yet taken advantage of
business rules engines, they are far from their
nascent stage, and are already a proven
mission-critical technology in the Fortune 500.
But if you’re after revolutionary and new, then
here you go: According to Hernandez, many call
center operators here and overseas ultimately
will be either aided by artificial intelligence
(AI) business rules engines or replaced by
knowledge-based expert systems that will give
the right answer every time, 24/7.
“Imagine a call center with 200 people,” he
explains. “There is high turnover in the center
and a lot of your staff is new much of the time.
These are your front-line employees, not senior
execs, on the phone with your customers. The
problem is that customers get different answers
depending on who they talk to. Business rules
can be applied here to improve service delivery.
If operators were using rules engines, your
customers would get the same, right answers
every time. You could put this intelligence on
the Web and enable customers to help themselves,
using the knowledge and rules of your best
experts. That could eventually eliminate some of
those operators, but it will certainly reduce
customer service costs. AI-based and rules-based
self-service customer support websites will
emerge and customers will love them. Expert
answers; instant gratification.”
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It
all sounds well and good, but does it fly in the
real world? Marty Colburn, CTO and EVP for the
National Association of Securities Dealers
(NASD) cannot speak with firsthand knowledge of
AI-based systems, but he can attest to the
success traditional rules engines have brought
the companies he’s worked for.
“We have billing streams that enter our system
through PeopleSoft,” Colburn explains. “We
needed to change them, so we purchased a rules
engine. It took us one month to develop the new
rules and one month to implement them. It cost
us $200 thousand. Without the rules engine, it
would have been a seven-figure project that took
a year to complete. There are clearly advantages
of scale and economy when you use business rules
engines. Your time to market is much faster, and
your cost and schedule improve immensely.”
Colburn worked for Fannie Mae in the early
1990s, where he also used business rules
technology. “We built an underwriting and
origination system,” he recalls. “We were ahead
of the times then because rules engines were
still not in widespread use. But the results
were similar to what NASD has experienced. A
huge improvement.”
“The primary goal today is agility,” Ross
explains. “Rules need to change as quickly as
your business changes. Your business analysts
want to be able to get their hands on rules
without digging through mountains of code to do
it. They need to evaluate the impact of rule
changes quickly so you can quickly determine the
route you want to take. It’s literally
impossible to operate a business at scale,
across the globe, without automation.” |

Hernandez sees global clients reap immense
benefits from rules engines. “One of our Fortune
10 clients is using rules engines for global
statutory compliance, including SOX,” he
explains. “How do you manage global tax
compliance across multiple tax jurisdictions,
multiple ERPs and multiple P&Ls? How do you
manage risk across hundreds of legal entities
and P&Ls over 200 countries, and a variety of
products, services and IP? How do you manage a
tax return consisting of over 20,000 pages
across many countries in every region of the
world? How else can you close the books on time,
every time? A $3 million investment in business
rules engines, rules harvesting and knowledge
engineering has helped this client greatly
increase its chances of across-the-board
compliance. This change done via the traditional
hard-coding programming route would have cost
$30 million.”
Compliance with Sarbanes-Oxley regulations is a
natural fit for business rules engines,
according to our experts. “SOX maps very well to
this solution,” says Hernandez. “If you go to
all that time and expense to document, assess,
test and certify your processes and controls
(i.e. business rules) anyway, then it’s
relatively easy to get to the next level of
compliance by using a rule engine to simulate
and automate them.”
With business rules automation, says Haley, “You
gain precision and control. What you say is what
runs in your systems. And you know what is
running in your systems. Put simply, it gives
your executives more power, speed, agility and
precision. The IRS, Wells Fargo, GE, GM, Cigna
and a host of other companies are doing this.
I’ve seen analyst estimates that 80 percent of
companies will be using business rules by the
end of 2007. In 2005, I think it was something
like 20 percent of companies. Business rules are
here.”
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