Enabling Operational Excellence
Enabling Operational Excellence
Enabling Operational Excellence
Enabling Operational Excellence

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Business Policies vs. Business Rules: What’s the Big Difference Anyway?

The relevant standard on the question is OMG’s Business Motivation Model (BMM). I prefer the English (not UML) version: http://www.businessrulesgroup.org/second_paper/BRG-BMM.pdf. Business policies and business rules are both ‘elements of guidance’. The difference is that business policies are not practicable, whereas business rules always are.  A business rule must be ready to deploy to the business, whether to workers or to IT (i.e., as a ‘requirement’). So business policies must be interpreted and refined to turn them into business rules. An example I often use:

Business Policy: Safety is our first concern.

Business Rule: A hard hat must be worn in a construction site.

It’s very important to retain information about these interpretations for the sake of traceability. That’s at the heart of business rule management. Business policies are an integral part of strategy. In general, we find only 2-3% of business rules trace directly back to strategy. But those *core* business rules are very, very important (to enforce and monitor). One last point: Business rules must be expressed in a form that is understandable to business workers (who are authorized and capable). What IT usually specifies or implements as ‘business rules’ aren’t. They might be rules, but not business rules. And what do I mean by “rule”? Exactly what it means in the real world – ‘guide for conduct or action’ (Merriam-Webster Unabridged).

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Ronald G. Ross

Ronald G. Ross

Ron Ross, Principal and Co-Founder of Business Rules Solutions, LLC, is internationally acknowledged as the “father of business rules.” Recognizing early on the importance of independently managed business rules for business operations and architecture, he has pioneered innovative techniques and standards since the mid-1980s. He wrote the industry’s first book on business rules in 1994.

Comments (4)

  • James De Monte

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    I wish to talk about the “granularity” of business rules. Many examples in your litterature are instantiated at the front-line of service, for instance “A customer may place an order only if the customer has an account”.

    Suppose the “scope” of a rule were broader? For instance, “Patentable subject matter must be protected by a non-disclosure agreement if a supplier or an external party is given access to the subject matter.” This rule may seem practicable, but this practicability would involve multiple parties and a fairly elaborate process. I assume this is fine, as long as the rule is indeed practicable

    And another: “The business case of a project whose total cost estimate is at least $1M but less than $10M must be approved by Project Approval Committee.” This also seems practicable, but implies some quite significant process. Again, am I correct in thinking this does not matter, as long as it is a practicable declarative rule that can then be acted on in the operational environment by competent staff?

    The related business policy for the foregoing example might be “Projects must be prudently and diligently managed to ensure value for money, alignment of projects with business strategy, and achievement of business objectives.” Not practicable but sets expectations for business rules relating to project management.

    • Ronald G. Ross

      Ronald G. Ross

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      James, Basically I think you are on target. One point about policy and rules that cross-over business/enterprise boundaries. Each organization always has a choice about how to interpret and apply each policy or rule. So what it choses as its own version may not be exactly look like the original version. The only constraints … potential lawsuits, loss of trust, and personal integrity.

  • James De Monte

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    Can you clarify? Suppose a large enterprise consists of a number of divisions or businesses. Would you have one business policy for the enterprise, but distinct business rules in each division interpreting the business policy?

    • Ronald G. Ross

      Ronald G. Ross

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      Strictly an organizational issue. Ideally, there should be one interpretation of the business policy that applies to all division or businesses. In the real world, it doesn’t always happen that way. Why? Geographic or cultural variability. Local strategy. Leadership choice. The real question is accountability. If the organization is decentralized, then count on different interpretations.

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