Rules Deliver Intelligence

Business rules are not new to enterprises; however, they have been frozen in a state that requires deep and complex "system surgery" to change them. Business change has been a constant companion of systems development since the inception of IT, but a growing number of factors has led to the increase of change necessary to remain competitive in business. This increase in the frequency of change is leading to new approaches to alter the business rules embedded in business process flows, applications and even in the enterprise architecture.

Enterprises are more pressed to become adaptable and apply the knowledge captured in rule sets to outflank competitors and respond to changing business environments. Business users want to change rules without going through a long-running change process that is, at best, measured in days and, at worst, measured in weeks and months. We expect response times to be reduced to hours as enterprises move toward “zero time to market.” This is accomplished by pushing rules “outboard” and allowing business users to control critical business rules, generally through a business rule engine (BRE) — see related research on BREs in "Rule Technologies Are Starting to Do Just That: Rule," COM-15-1648 and "The 2002 Business Rule Engine Market Magic Quadrant," M-15-2087.

Another driver of changing business rules has been the success of rule technologies in vertical and horizontal markets. Rules have the ability to deliver guidance in a reference mode and explicit ways of managing business processes in an action mode. For example, in the financial services industry, rules have been quietly successful in delivering underwriting and risk applications. The medical and pharmaceutical industries have also enjoyed the benefits of flexible rule technologies. Almost every significant vendor in the customer relationship management space has some form of business rule variability. Several successful portal and business process management platforms employ rule technologies.

The business community’s most recent experiences with rules have been positive. The benefits of an agile business rule architecture is grossly underestimated from a business and technical perspective. As the time-to-market needs of businesses bump up against the limits of the IT change cycle, the benefits will become more apparent. As the acceptance of rule variability increases, the issues around rule management will become a focus.

Rule Adaptability as a Business Value on Investment

In a limited but highly structured double-blind study (one in which the sponsoring vendor was not identified to clients and vice versa), Gartner Consulting determined the business benefits of employing rule technology for a value on investment approach. The most-common themes are listed in Figure 1, generally under enterprise impact and, specifically, under business value. Value is unique to an enterprise and must be framed within its strategic direction. Thus, soft initiatives require strategic drivers and alignment. However, initiatives such as formalizing innovation must not be so rigidly tied to strategic plans that the connection prevents creating opportunities outside the current vision or strategy. Value is also contextual, depending on the viewpoint of enterprise stakeholders. For employees, value may be increased job challenges, opportunities and enrichment. For stockholders, it may be increasing share price and market value. For the CEO, it may be organic growth, increasing market value and sustained innovation. For individual business managers, it may be return on investment (ROI), increasing capacity, efficient business processes and talent development.

Figure 1

Business Value of Adaptable Rules

Source: Gartner Research

Rule Adaptability as an IT ROI

The survey showed ROI of nearly 10 percent today in IT costs being saved through the use of rule technology, growing significantly over time. Because of the increased velocity of rule changes and the eventual sharing of Web services and flows, there will be a significant need to allocate more of the IT budget on rule changes. We believe that many enterprises will battle this growth with more use of rule technologies, starting with simple rule externalization (separating the rules from the services/programs) that employ easier forms of rule change and downstream simulation/testing. This will free constrained IT costs from simple rule changes to more-important integration or value-chain extensions beyond the four walls of an organization to collaborative forms of business.

Between the accelerated growth of an aging application portfolio (bought, built or borrowed) and the need for business agility, the cost of IT will be a "runaway" train without an interjection of lower-skilled rule changes, lower-skilled integrators and portfolio cleansing. Although the coding portion of business rule change activities is much lower than analysis and design, which is lower than testing and implementation, it still is a skills-transfer opportunity. As when IT reluctantly gave reporting to the business, we have an opportunity to offload simple rule changes back to the business. With a strong rule management set of policies, methods, tools and techniques, IT should be able to help reduce the cost of impact analysis.

The hope for testing starts with the simple simulation of “what if I change this rule” implications that can evolve to complex system dynamics driven through a “gaming-like” interface expected by recent advanced management recruits. New management teams are being trained with advanced simulators for problem domains that are tricky and risky. Examples include supply chain simulators, setting up new companies, and managing high-risk organizations and intercompany value chain simulations. Another alternative would be goal-driven technologies that will optimize the process through the rules and constraints specified by business experts. Again, rules play a healthy role.

Enterprise Architecture and Adaptability

The amount of change coming from multiple directions has accelerated in recent years, and we see this as a growing and unrelenting trend. With the number of laws shifting, geopolitical events occurring and a need to react quickly to all conditions, enterprises will put a premium on employing rule technologies. By 2003, we expect to see rule sets simulated and put on the shelf for activation when the conditions are sensed by an advanced business activity monitoring (BAM) facility in leading organizations. Building this BAM facility will be a high priority during the next three to five years, concurrent with the implementation of business process management, business process analysis, a BRE and all of the associated management infrastructure.

Because of the tight interaction of the business logic with the support of the enterprise nervous system (ENS), we believe that 30 percent of the rules in the ENS revolve around business issues. Examples include transformation and routing rules that affect business outcomes through data, messages and flow sequences. As the ENS picks up more functionality over time, as depicted in Figure 2, and evolves to a richer enterprise architecture, it will contain more business-sensitive rules. Besides the business direct rules, there are performance optimization rules that revolve around the execution of business logic that may also require the same real-time tuning coordinating with the business changes. Examples include queue management, network optimization and platform utilization. The enterprise architecture is important because it constrains business agility, and usually is coded in lower computing languages that require high skill and longer lead times. Rules in the enterprise architecture can have a negative global impact if coded incorrectly.

Figure 2

Rule-Enhanced ENS

Source: Gartner Research

Architecting for Adaptability

It appears that a BRE is a necessity for the ENS. The likely success of a BRE will spread to multiple systems quickly, which will likely become a pervasive problem for certain rules. Rules, like data, have a life of their own and tend to focus on supporting individual systems. Left unchecked, the use of externalized rules will spread rapidly and create a long-term management problem for the core set of policies and rules that need to be managed strategically. Today, there are few integrated data architectures across applications, because the problems were identified too late or the managers of local ROIs didn’t think there would be great long-term costs and damage. They were wrong, and we have a chance to get ahead of this wave.

It is important to understand that, with or without a rule management system, only a segment of the core rules needs a kind of central management. A big mistake with the data efforts of the early 1990s was to chase all data as if it were centrally shared. Over time, more enterprise architectures will also include simulation and optimization capabilities. These are often found in business process analysis technologies that are fed in a real-time or near-real-time basis from BAM capabilities.

Bottom Line: Enterprises that are architecting through a best-of-breed approach should include a BRE. Enterprises that want to purchase a complete enterprise architecture will have to wait and look for simple-to-use rule capabilities. Vendors wishing to be dominant players in the enterprise architecture marketplace as it evolves should consider a BRE as a minimum "price of admission" for adaptability sake.

This research is part of a set of related research pieces. See AV-17-4818 for an overview.

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