Mar 07 2024

What Is a Business Rules Engine, and How Does It Improve Software Agility?

BREs can help organizations automate decision-making and change software to respond to evolving business conditions.

While artificial intelligence is driving a lot of buzz for how it will reshape industries — from banking to insurance and retail — a humbler but no less powerful technological force has been quietly chugging along in the background. Business rules engines, or BREs, have been around for decades and are fundamental to how automation works in modern business. They are also used to reduce friction in software development and customer experiences.

As defined by Gartner, a BRE is a software system that allows businesses to “explicitly define, analyze, execute, audit and maintain a wide variety of business logic, collectively referred to as ‘rules.’” In practice, this means a business can set certain rules, and once those conditions are met, the business automatically takes that action; for example, a credit card transaction might automatically be authorized, or an insurance claim might automatically be paid.

By automating decisions and decoupling business logic from processes, BREs can help organizations save time, automate decision-making tasks and ensure operational consistency.

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What Is a Business Rules Engine?

“A business rules engine is a piece of software that takes decisions that were normally made by humans and puts them into a computerized format so they can be executed repeatedly,” says Michael zur Muehlen, associate professor of information systems at the Stevens Institute of Technology. With BREs, he says, “decisions are always made the same way, the same criteria are applied. There’s no human judgment that sometimes can go one way, sometimes can go another way.”

Such rules engines have been around since the 1980s, zur Muehlen notes, with Fair Isaac Corp. (better known as FICO) widely seen as a pioneer.

Businesses have many rules that are evaluated every day, ranging from whether transactions should be approved to where customers should be directed. Without a BRE, humans make decisions at their own discretion, and that is a process ripe for inconsistency.

READ MORE: How artificial intelligence can promote more data-driven decisions.

How Do Business Rules Engines Work?

As IBM notes in a post, for rules to be read by automated applications, they need to be written in conditional programming languages. Think statements that include “if-then,” “if-else,” “only if” and so on. The rule has a set of conditions and then a set of consequences based on the conditions. 

IBM lays out a simple example for when a customer returns a product: “IF it has been less than 30 days since the customer ordered a product, THEN refund the product or ELSE, offer store credit.”

Another basic example, zur Muehlen says, is setting conditions for how to rate credit scores on a scale of 300 to 850, with anything from 300 to 500 being rated as low, anything above 700 rated as high, and anything in between rated as medium quality. Using a BRE, a company can change thresholds or boundaries without having to change underlying business logic.

If, later on, the company wants to adjust what it considers a high credit score, it can fine-tune the criteria in the BRE without having to make changes to other applications.

“It makes you more agile in terms of change management,” zur Muehlen says.

Once rules are defined, they are stored in repositories; BREs then allow applications to access the rules and execute them in runtime environments, according to IBM. The application sends data about a request to the BRE, and the BRE then “checks the request against the relevant rules and returns a decision. Finally, this decision triggers the application to take some specific action.”

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What Are Some Examples of Business Rules?

Business rules boil down to decisions that are made where parameters of the decisions are being put together, zur Muehlen says. Examples abound in almost every industry.

For instance, for airline flights, if passengers want to upgrade from economy class to business class, business rules are used to determine the order in which customers are added to the upgrade list and which priority is used to evaluate their upgrade request. Those rules may include the customer’s frequent flyer status, the ticket fare and when the passenger checked in for the flight.

After those inputs are taken into account, the BRE uses rules to automatically determine, if space is available, who gets the upgrade. Different airlines may have different rules for how frequent flyer customers are classified, but that status is an example of a rule. 

As IBM notes, business rules can also be used to distribute leads or customers internally to different teams. For example, if a lead has under 100 employees, then the BRE would automatically direct that lead to the small business sales team; if the lead has between 100 and 1,000 employees, the lead would be directed to the medium-sized sales team, and so on.

Michael zur Muehlen
With BREs, we take the business logic out the software and we put it into the rules.”

Michael zur Muehlen Associate Professor of Information Systems, Stevens Institute of Technology

How BREs Improve Software Agility

BREs make it much easier for businesses to change their applications and how they respond to changing inputs or new compliance regulations. Businesses can also choose to hardcode business rules into software, but that can quickly become a problem if regulations change, for example, how contracts need to be evaluated, zur Muehlen says. Hardcoded software is inherently more fragile and difficult to change.

BREs make it easier for business users outside of IT to change how decisions are made, a process accelerated by the introduction of the Decision Model and Notation specification in 2013. DMN has a graphical layer that allows users to see the decisions, the inputs used for making them, and decision tables that have columns for inputs and outputs. This interface makes it much easier for line-of-business users to see and alter BREs and thus change how software makes decisions. DMN aims to “provide a notation for decisions understandable to all audiences, including business and technical people,” as Modern Analyst notes.

LEARN MORE: Drive accelerated automation in your business.

Why BREs Can Create Business Value

BREs open decision-making tools to a wider range of users, zur Muehlen says. This makes businesses much more efficient and agile.

Software developers, he notes, are great at making systems reliable and available, but are not subject matter experts in business rules. In a financial services company, an analyst or accountant likely has much more knowledge about which fees to apply to certain managed accounts based on the net worth of the client, for example. Those subject matter experts can much more easily and accurately apply the business rules.

“With BREs, we take the business logic out of the software and we put it into the rules,” zur Muehlen says.

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By combing workflow automation software that automatically distributes tasks with BREs that automate decisions, businesses can create a very potent tool for driving efficiencies “because you can automate the decision-making that is really repetitive,” zur Muehlen says.

BREs can also help “prestage human decision-making by translating, maybe, certain technical criteria into something that is more humanly readable,” he says. They also create value by automatically presorting customers into buckets, using consistently applied rules, speeding up decisions that need to be made down the line.

For BREs to truly help organizations, they need to have clean, orderly data, zur Muehlen adds: “If you don’t have good inputs, or if you don’t have a clean format of your inputs to put into the decision algorithm, you’re not going to get clean outputs.”

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