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A Quick Review of What “Rule”, “Business Rule” and “Business Policy” Mean (in the Real World!)

From Building Business Solutions: Business Analysis with Business Rules, by Ronald G. Ross with Gladys S.W. Lam, An IIBA® Sponsored Handbook, Business Rule Solutions, LLC, October, 2011, 304 pp, http://www.brsolutions.com/bbs You can find definitions and discussion of all terms in blue on Business Rule Community: http://www.brcommunity.com/BBSGlossary.pdf

   Reference Sources

[BMM] The Business Motivation Model (BMM) ~ Business Governance in a Volatile World.  [May 2010].  Originally published Nov. 2000.  Now an adopted standard of the Object Management Group (OMG). 
[MWUD] Merriam-Webster Unabridged Dictionary (Version 2.5).  [2000].  Merriam-Webster Inc.
[SBVR] Semantics of Business Vocabulary and Business Rules (SBVR) (Version 1.0).  [January 2008].  Object Management Group.
  rule:    [MWUD ‘rule’ 1a]:  guide for conduct or action;

    [MWUD ‘rule’ 1f]:  one of a set of usually official regulations by which an activity (as a sport) is governed [e.g.,] *the infield fly rule* *the rules of professional basketball* ;

    [MWUD ‘criteria’  2]:  a standard on which a decision or judgment may be based

              Note:  When we say rule we always mean real-world rule. business rule:  [SBVR]:  a rule that is under business jurisdiction

Discussion:  A business rule is a criterion used to guide day-to-day business activity, shape operational business judgments, or make operational business decisions. 

Some people think of business rules as loosely formed, very general requirements.  Wrong.  Business rules have definite form, and are very specific.  Here are a few simple examples expressed in RuleSpeak

      • A customer that has ordered a product must have an assigned agent.
      • The sales tax for a purchase must be 6.25% if the purchase is made in Texas.
      •  A customer may be considered preferred only if the customer has placed more than $10,000 worth of orders during the most recent calendar year.

Each business rule gives well-formed, practicable guidance.  Each uses terms and wordings about operational business things that should based on a structured business vocabulary (concept model, also called fact model).  Each expression is declarative, rather than procedural.  Your company’s business rules need to be managed and single-sourced, so we strongly recommend rulebook management.

A number of years ago, a colleague of ours, Mark Myers, came up with a highly pragmatic test to determine whether some statement represents a business rule or a system rule.  Except for eCommerce, it almost always works.  Imagine you threw out all the systems running your business and did it all by hand (somehow).  If you still need the statement, it’s a business rule.  If you don’t, it’s not. 

A colleague on the SBVR standardization team, Don Baisley, puts it another way: 

“Business people don’t set variables and they don’t call functions.”

Business rules represent a form of business communication and must make sense (communicate) to business people.  If some statement doesn’t communicate, it’s not a business rule.  Consider this example:  If ACT-BL LT 0 then set OD-Flag to ‘yes’.  Not a business rule.  

Consider another example:  An account must be considered overdrawn if the account balance is less than $0.  This statement communicates and therefore is a business rule.  Business rules can be technical, but only in terms of the company’s know-how or specialized product/service, not in terms of IT designs or platforms. 

SBVR provides the semantics for business rules.  In SBVR a business rule can be either a behavioral rule or a definitional rule.  Incidentally, SBVR does not standardize notation.  We use RuleSpeak to express business rules (including ‘exceptions’) in structured natural language.  

In SBVR, a real-world rule always tends to remove some degree of freedom.  If it does not, it’s not a rule, but rather an advice.  A business rule is always under business jurisdiction of your organization.  The point with respect to external regulation and law is that your organization has a choice about how to interpret the regulations and laws for deployment into its day-to-day business activity – and even whether to follow them at all. 

Business rules are not about mimicking intelligent behavior, they are about running a business.  Mimicking intelligent behavior in a generalized way is far harder (an order of magnitude or more) than capturing the business rules of an organization.  Unfortunately, expert systems have generally focused on the former problem, causing considerable confusion among business practitioners.

business policy:  a means that limits or establishes a degree of freedom for day-to-day business activity

Discussion:  Business managers create business policiesto control, guide, and shape day-to-day business activity.  Business policies are an important element of business strategy (e.g., Policy Charters) and the source of core business rules.

A business policy is not a business rule per se.  To become some business rule(s) first the business policy must be interpreted into a practicable form.  The Business Motivation Model [BMM] contrasts business policies and business rules this way:

“Compared to a business rule, a business policy tends to be less structured, less discrete, less atomic, less compliant with standard business vocabulary, and less formally articulated.” 

In general, business policies can address any of the concerns in Table 1, often in combinations (e.g., how many people are needed to produce a desired yield in the desired cycle time).  Business policies can also address exceptions (rules).

 Table 1.  Concerns that Business Policies Can Address
Question Word General Focus of Concern More Selective Examples
  What what things should (or should not) be available required kinds, quantities, states, or configurations
  How how things should (or should not) be done required outputs or yields
  Where where things that should (or should not) be done required facilities, locations, or transfer rates
  Who who should (or should not) do things required responsibilities, interactions, or work products
  When when things should (or should not) be done required scheduling or cycle times
  Why why certain choices should (or should not) be made required priorities

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