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Business Decisions and Business Rules?

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Choosing between Business Decisions and Business Rules? Which one is more important to you? What are the differences between these two and how they are alike?

Critical Distinctions between Business Decisions and Business Rules

Given the ever more frequent blurring of the lines between day-to-day business communications and what we will call ‘techspeak’, we feel it is important to point out the significant difference between transactions that are driven by a series of business rules and those decisions that are made as part of everyday business operations.
After all, a operational business decision is an entirely separate entity from underlying business rules. A business decision is a logical conclusion that directly impacts day-to-day business. Conversely, a business rule is simply a part of a larger ‘set’ i.e. ‘ruleset’ that allows a series of rules to work in concert in order to affect an outcome. In other words, business decisions are far more complex than business rules, and the two should never be confused.

Similarities

Basically, an end goal of both business decisions and a set of business rules is the same – to reach a conclusion that allows the business to run more smoothly and, in most cases, profitably. Originally, the concept of business rules allowed users to use software in order to create logical decision-making paths that reached a satisfactory outcome without the need to involve IT along every step of the way. As business rule management systems became more sophisticated and user friendly over the years, vendors began to offer these systems as ‘decision management’ facilitators.

But, in our view there is a world of difference between business rules and business decisions.

Granularity

For starters, a business rule is always far more granular in nature than a business decision. In a typical application, a business decision usually represents the end point of an entire transaction. But a business rule is more about the details of implementation, constraints and data.

Business Decisions and Business Rules

Sample business rules that ensures validation of a data

Sometimes, policies are represented as a collection of business rules (i.e.ruleset), but they’d better to be modeled as a business decisions. In this scenario, a business decision, for example, whether or not to approve a customer loan would constitute a business decision based on the organization policy which may be the outcome of the execution of a large number of business rules.

Hierarchy and Dependencies

Business decisions live in different level of abstractions. So essentially a business decision may be dependent upon an entire hierarchy and sequential flow of the business rules which ultimately support that decision. Every input to the final decision is supported by a network of dependencies driven by business rule outcomes. These outcomes are tangible in that they support everyday operational efficiencies and can be easily understood by management. At a much deeper level, the microcosm of business rules that led to an intended and justifiable outcome needs to be carefully managed and innately understood by subject matter experts, ideally without the need for IT intervention.

Business Decisions and Business Rules

Sample of loan approval decision strategy

Measuring efficiency

Also consider that a business decision lends itself to being measured for effectiveness and efficiency, whereas a business rule does not. There are rarely key performance indicators attributed to a business rule, whereas KPIs are measured for business decisions as a matter of course. In other words, business decisions deliver a tangible result and are directly related to business processes, especially at the service level, whereas business rules do not necessarily do so and may rely on other related dependencies to achieve an outcome.

Business Decisions and Business Rules

Measuring the performance of business decisions based on a KPI

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Conclusion

In summary, a business decision relies on supporting logic to reach a measurable operational outcome that is part of a recognised business process, is easily understood by a subject matter expert, and is also capable of recognising and addressing exceptions to the business rules that drive the ultimate decision. The bottom line is that business rules and business decisions are not synonymous, as some might have you believe

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