Why do so few companies actually manage their business rules?

The products and services offered by today’s modern companies are increasingly virtual constructs modeled and defined through business rules and enforced by automated computer systems. Insurance policies, lending agreements and other financial products are often essentially contractual agreements between a provider and a consumer. These products and services amount to risk mitigation or behavior governance strategies to produce a financially beneficial outcome to the provider while offering something of value to the consumer. Such contractual agreements are really nothing other than a product or service modeled through the use of business rules and resulting actions, which combined, govern the relationship and responsibilities of both the provider and consumer.

Products and services that are defined through business rules force the creation of additional business rules that govern the company’s operations. Activities such as billing, fee and rewards calculation, verification of eligibility, and compliance require that a new, but related, set of business rules be put in place which both support and constrain daily operations to ensure that the terms of the agreement are met. In addition, most companies must comply with federal and state regulations, resulting in another set of business rules that must be enforced.

Through all of this, we can see how business rules lie at the foundation of modern business, from being the actual product or service itself, to governing the necessary supporting operations that make adhering to the agreement possible while also complying with regulations. Executing, enforcing and complying with ever more complex and numerous business rules is, increasingly, becoming the business.

Interestingly enough, very few companies actually document and actively manage their business rules as the intellectual property, legal commitment, or competitive advantage they are. A business rules management approach, at a minimum, provides us with knowledge about what the rules are, where they are, and what the overall impact of a business rule change will be. Business rule management is not necessarily the centrally controlled or bureaucratic process it appears to be. However, scattering business rules and their documentation across the enterprise in use cases, requirements management tools, manuals, and -- most often – in code, does not a business rules management approach make.

So, given the importance business rules play in the modern enterprise, why do so few companies actually manage their business rules?

Here are a few high-level business reasons that I could think of for this lack of management, in no particular order:

• Business rules have only recently become recognized as key company assets.
• Although rule engines have existed for over 20 years, business rule management tools and methodologies are still in their infancy.
• Only in the last 10-20 years has the business and regulatory landscape, products, and services become so complex that a rules management strategy is becoming essential.
• Since business rules change so often, old rules go away, and new ones are created, companies treat them as throwaways rather than as assets that need management.
• Companies are overwhelmed managing other aspects of their business that were positioned as critical much earlier than business rules (i.e., BPM, CRM, ERP, Just in time XYZ etc.).
• Companies have seen so many past promises about management approaches and technology evaporate that they are reluctant to adopt new trends until they have been proven by others.
• Managers are not around long enough to see value or implement long term strategies.
• Companies generally do not take an overall view of their business which means efforts are departmentalized and large efforts uncoordinated.
• Companies do not realize the savings from retaining and maintaining their intellectual property such as the expertise embodied in their employees.
• IT shops are unfamiliar with rule engines so anything related to rules management is equally unfamiliar.
• There simply hasn’t been enough hype around business rules for most managers to notice.

Naturally, it is too simplistic to say companies do not manage their rules. Insurance companies have been forced for years to manage rules to some extent due to mandated state filings on changes and proposed coverage. Similarly, companies who regularly audit their business activities must be able to prove certain practices are in place and business conducted according to regulations.

In that case, why aren’t companies managing most of their rules the same way they manage some of their rules?