Process Day 2010 - Ronald G. Ross – What You Need to Know about Decisioning with Business Rules...

Business Rule Solutions, LLCThe Business Rule Technique Company 3 Copyright, BRS. All rights reserved.

byRonald G. RossCo-Founder & Principal, Business Rule Solutions, LLC

Executive Editor, Business Rules Journal, www.BRCommunity.com

Chair, Business Rules Forum Conference, Oct. 17-21, Washington DC

References:

Business Rule Concepts (3rd Ed), Ronald G. Ross, 2009, BRSolutions.com

Principles of the Business Rule Approach

Ronald G. Ross, Addison-Wesley, 2003

What You Need to Know about Decisioning with Business Rules

Process Days Conference – July 29, 2010


Mr. Ross is recognized internationally as the “father of business rules.” He has served as Co-Chair of the annual Business Rules Forum Conferencesince 1997. He was a charter member of the Business Rules Group (BRG) in the 1980s, and an editor of the two landmark BRG papers, “The Business Motivation Model: Business Governance in a Volatile World” (2000, revised 2005, 2007) and the “Business Rules Manifesto” (2003). He is also active in OMG standards development for business rules and business models, including SBVR.

Mr. Ross (RonRoss.info)is the author of eight professional books. His newest are: Business Rule Concepts (2009), a third edition of his popular, easy-to-read handbook, and Principles of the Business Rule Approach, Addison-Wesley (2003). An earlier work, The Business Rule Book(1994, 1997), was the seminal work in the field. Mr. Ross received his M.S. in information science from Illinois Institute of Technology, and his B.A. from Rice U.

Ronald G. Ross is Co-Founder and Principal of Business Rule Solutions, LLC (BRSolutions.com). BRS provides workshops, consulting, publications, and methodology supporting business analysis, business rules, business vocabulary, decisioning, and rule management. His popular public seminars, the first on business rules (starting 1996) and the longest-running in the industry, are given through AttainingEdge in North America and IRM-UK in Europe.

Mr. Ross co-develops ProteusR, BRS’s landmark methodology, featuring numerous innovative techniques including the popular RuleSpeakR (free on RuleSpeak.com, now also in Spanish, German and Dutch). These are the latest offerings in a 35-year career that has consistently featured creative, business-driven solutions.

Mr. Ross is also Executive Editor and regular columnist of BRCommunity.comand its flagship on-line publication, Business Rules Journal. Sponsored by BRS, BRCommunity.com is a non-commercial vertical community for professionals working in the field. Mr. Ross was formerly Editor of the Data Base Newsletterfrom 1977 to 1998.

About Ronald G. Ross


One Organization’s AchievementFinancial Services – Credit Card Fraud Detection

Business Set-Up� Suspicious transactions kicked out to fraud specialists for manual inspection.� Fraud specialists are an expensive and largely non-scalable resource.

Scenario� The bad guys pick up and move shop from Idaho to Manhattan.� Transactions deemed suspicious by zip code yield a 10x increase in volume.� Additional selection criteria (e.g., location of store, type of store, frequency of use, size of transaction, etc.) introduced to keep the volume of kick-outs relatively constant.

Achievement� Before rules engine … elapsed time: 30-60 days.� After rules engine … elapsed time: 3-6 days.

What is Possible?


Software

Release

Cycle

Separating the

Business Rule vs.

Software Release

Life Cycles

Business Workers

Business

Rule

Life Cycle

IT

What is Necessary!


One Organization’s AchievementHome Mortgage Department – Major U.S. Bank

Automated Decisioning Department� One of the most mature in the world. � “It's not an accident that the bank is in good standing in this financial crisis.”

Achievement� Software released about twice a year by IT.� Rules changed every 1-3 weeks by business analysts.

What is Possible?


Governing Rules

Practicable Rules

Automated Rules

Managing the Business

Operating the Business

Running the Systems

Business Traceability = Requirements Traceability

Traceability!Accountability!Transparency!

What is Necessary!


Business Workers

What is Necessary!

Reference:

Business Rule Concepts (3rd Ed.), Chapter 3

General Rulebook

System (GRBS)

Rulebook Management: the skills, techniques and processes needed to express, analyze, trace, retain, and manage the decision logic used in day-to-day business operations

Focus: Manage decision logic as a business problem rather than a technical problem.

Goals:Ensure that ...

� Basic business know-how is always accessible to those duly authorized.

� Business policies, regulations, and contractual obligations are interpreted in a faithful, repeatable and transparent fashion.


Software

Release

Cycle

Testing

Business Workers

Business

Rule

Life Cycle

IT

What is Possible?

“We do enough analysis of new business rules, that it is literally not worth the cost of going through traditional IT testing.”


$

$

$

$

When is the best time to find you

have anomalies in your rules?

Business Leads

Logic Architects

Tech. Engineers

Technicians

Workers

Business Model (CIM)

Computable Model (PIM)

Platform-Spec. Model (PSM)

“Code”

Functioning Bus. Capacity

What is Necessary!


Rule Anomalies …

� An order over $1,000 must not be accepted on credit without a credit check.

� An order over $1,000 may be accepted on credit only with a credit check.

Linguistic Equivalences

Modal Equivalences

Logical Equivalences

Subsumations

Conflicts

� A permanent employee must receive a salary.

� An employee who is permanent must receive a salary.

� A high-risk customer must not place a rush order.

� A rush order must not be placed by a high-risk customer.

� A rush order must have a destination.

� An order must have a destination.

� A shipment must include more than 1 order.

� An out-of-state shipment may include only 1 order.

What is Possible?


Expression

Example

Discourse-Dependent Rule:Please mute your phone.

Discourse-Independent Rule:A webinar attendee must mute their phone while not speaking.

A best practice for expressing rules …

� Business rules must be understandable ‘out of context’.

Meaning

What is Necessary!

Say fully what you mean …… and mean fully what you say.


Origin:

� Developed by Business Rule Solutions, LLC (BRS) starting in 1996.

� Applied in hundreds of projects since that time.

Standardization:

� One of three reference notations used in the creation of SBVR.

� Fully consistent with that standard.

RuleSpeak®

… for business-friendly business rules in structured natural language

… in English (2.0), Dutch, Spanish & German … released April, 2009

… free onwww.RuleSpeak.com

What is Possible?


Business Rules … Criteria for making

minute-to-minute business decisions

Human Behavior

“… criteria for conduct or action.”

Business rule:

A gold customer must be allowed access to the warehouse.

Is this a gold customer or not? … Yes!

Classifications and Computations

“… criteria for shaping concepts.”

Business rule:

A customer is always considered a gold customer if the customer places more than 12 orders during a calendar year.

Let this customer in or not? … Yes!

What is Necessary!


Design Decisions = Business Decisions

Software Vendor:

“… Depends on your definition of ‘business rule’...

… If I change a definitional rule like ‘customers only have 1 address’ to ‘customers can have multiple addresses’ …

… then that can have deep consequences on [automated] systems.”

What is Necessary!


Claimant

Take ClaimInformation

Verify BasicClaim

Information

AdjudicateClaim

makes claim

if valid claim

if claim

denied

if fraud suspected

if claim accepted

if policy number missing

if policy number invalid

if policyexpired

If claimant name invalid

If no location given

If …

How many “ifs”?!?

How many rules?!?

no

no

no

no

no

yes

yes

yes

yes

yes

� Never embed diamonds (or series of diamonds!) in your business process models.

� These diamonds alwaysrepresent business rules … which are best defined independently.

� Embedding diamonds will hopelessly complicate your model.

What is Necessary!

“Anytime you stick your business rules in your process, you’re dead.”

Roger T. Burlton


Rule:A claim can be considered valid only if it has all the following: � An active policy.� A claimant.� An incident.

Decision-making may involve a very large number of business rules!

Verify BasicClaim

Information

AdjudicateClaim

if valid claim

A best practice for business process models …

What is Possible?

Business Rules …

� Govern the interpretation of a conditional.

� Provide criteria for branch points in the business process model.


What is Possible?

Claimant

Claimant

ClaimantTake ClaimInformation

Verify BasicClaim

Information

NotifyClaimant

RequestAdditionalInformation

NotifyClaimant

AdjudicateClaim

ClaimantMakePayment

ClaimsClerk

Adjudicator

ClaimsPaymentSystem

makes claim

if invalid

claim

if insufficientinformation

if response

if valid claim if no response

if claim

denied

Uponsuspicionof fraud

if fraud suspected

if claim approved

if no fraud detected

Process Claims

“… the tasks required for an enterprise to satisfy a planned response to a business event …

… from beginning to end ...

…with a focus on the roles of actors, rather than the actors’ day-to-day job”

Janey Conkey Frazier

Incremental Development!


� “The staff at GE observed that flowcharts, formulas, and narratives were inadequate when working with complex logic.”

Reported in Communications of the ACM, Vol 4, No 11 (November, 1961), pp. 516-520.

� “The … design and implementation practices of software engineering have a weak point: the design of the internal logic of the module or segment. Such … designs should be disciplined, easily understood, and checkable.”

Decision Tables in Software Engineering, by Richard B. Hurley, Van Nostrand Reinhold Company, New York, 1983, p 1.

What is Necessary!


Capture

Analyze

Deploy

Execute

Price Offering

“Making information more readily available is important, but making better decisions based on information is what pays the bills.”

Smart (Enough) Systemsby James Taylor & Neil Raden

Prentice-Hall, 2007, p. 337

What is Possible?


Capture

Analyze

Deploy

Execute

Price Offering

What is Necessary!


Capture

Analyze

Deploy

Execute

Price Offering

General

Rulebook

System

(GRBS)

Solutions!�Faster deployment

… Decision Cycle Time

�Rule engines

… Business Rules

What is Possible?


Service Oriented Architecture (SOA)

“pricing”

Business Rules

Repository

Decision Service

The business rules are now...� Traceable � Re-usable

� Improvable...� Auditable...

What is Possible?


Service Oriented Architecture (SOA) ??

“pricing”

Business Rules

Repository

Decision Service

What is Necessary!

“Business events are a more natural way for business people to express requirements than 'services’ …

SOA is a flawed paradigm. The focus should be on 'what event is happening', rather than 'what service do I need'.”

Mike GualtieriForrester


Rule: The applicable sales tax rate must be the percent in County-by-Year Sales Tax Table for a given year and county.

County-by-Year Sales Tax Table County

Year Harkin Lopes Qwan Quail2008 6.95 8.2 7.35 4.0

2009 6.73 8.3 9.0 4.5

2010 6.15 8.4 9.0 5.0

2011 6.15 8.3 9.0 5.5

2012 6.15 8.4 6.75 6.0

2013 6.15 8.2 6.75 6.75

2014 5.75 8.2 6.75 7.0

2015 5.95 8.4 7.5 7.25

What is Possible?

About Decision Tables


About Decision Tables

Human Behavior

“… criteria for conduct or action.”

Business rule:

A gold customer must be allowed access to the warehouse.

Is this a gold customer or not? … Yes!

Classifications and Computations

“… criteria for shaping concepts.”

Business rule:

A customer is always considered a gold customer if the customer places more than 12 orders during a calendar year.

Let this customer in or not? … Yes!

What is Necessary!


Three

Multi-Value

Criteria

One Table

Observation:

� This is the natural format for

decision tables in the real world.

What is Necessary!


Rule: A library card may be used to check-out a book only if the book is owned by a library for which the card is authorized.

Library Fact Model

Business Rules encompass ...

� Terms

typically 100s

� Facts

typically 10X Terms

� Rules

typically 10X Facts

librarycard

assessmentperson

borrower

book

librarian

library

is used to check-out

worksfor

makes

owns

is made for

borrower type

holdsis chargedagainst

is authorized for

organization

fee amount

is ownedby

Legend

= Term (+ Definition)

= Fact

= Category

What is Possible?


An ASSESSMENT is a specific monetary charge against a Library Card for abuse of books or borrowing privileges.

A BOOK is any document, publication or work in any media that is held by or available through a Library.

A BORROWER is a Person or Organization of interest to a Library that can potentially borrow Books.

A BORROWER TYPE is the category of a Borrower -- i.e., Person or Organization.

A FEE AMOUNT is the total amount of an Assessment.

A LIBRARIAN is a certified professional who can work in a Library in an official capacity.

A LIBRARY is a repository of Books and/or a lender of Books to Borrowers.

A LIBRARY CARD is an agreement between a Borrower and a Library indicating that the parties agree to abide by the Library’s book-lending rules.

An ORGANIZATION is legal entity that can act independently of particular persons.

A PERSON is an individual who acts in his own behalf.

Defining Terms: The Concepts Catalog (Glossary)

What is Possible?


Case from the Electrical Transmission Industry… “Load”Business Meaning1. A network component that uses energy

2. The operating level of a network component that uses energy

3. A party that owns a network component that uses energy

4. A state of a network component

5. A part of the output of a generating resource

6. Constancy (“firmness”) of energy usage

7. Demand for energy

… Context of Business Usage… Physical facilities that use energy

…Amounts of energy that physical facilities use

… Organizations participating in the energy marketplace

… Resources that can sometimes use energy (“net”)

… Measurements of energy production

… Projections of energy production and usage

… Aggregate network estimates

What is Necessary!

“Our people think they are talking to each other using the same language … but they often aren’t!”

One Executive’s Lament


Article 3. Deliberate Knowledge, Not A By-Product

3.1. Rules build on facts, and facts build on concepts as expressed by terms.

Reference:Business Rule Concepts, (3rd Ed.), Chapter 1 and Part II.

Business logic is built in building-block fashion.

Business rules express basic business knowledge.

Business Rules Manifesto

The Principles of Rule Independence

by Business Rules Group, 2003www.BusinessRulesGroup.org

What is Necessary!


About Business Rule Solutions, LLC

Ronald G. Ross Gladys S.W. Lam

Over 14 Years Exclusively in Business Rules

Co-Founders More Ways to Find Out More …

Oct. 17-21, 2010Washington, DC

Public Seminars …Ottawa – Sept. 21-24

Public Seminar …London – Nov. 18-19


Thank You!

~~

Decisioning with Business Rules: Summary

Process Day 2010 - Ronald G. Ross – What You Need to Know about Decisioning with Business Rules...

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