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Programming is often seen as a black art only understood by those initiated into the computer sciences. But the trend over the last decades has been to make programming less obscure and more accessible. Nowadays, users programme their computers with Visual Basic or macros in Microsoft Word or Excel. This trend is advancing as business managers are being given power to change enterprise systems with a technology called “business rules”.
In most organisations any changes to IT systems require meetings between IT departments and managers to draft a specification, following which there will be months of programming. Managers hope that the changes being made are the ones they thought they had requested. Business rules allow most of this process to be skipped.
“It used to take months to amend the rules,” says Brian Stucky, Enterprise Rule Steward at the Federal Home Loan Mortgage Corporation, Freddie Mac. “Now managers can amend the rules when they need to.”
Freddie Mac buys mortgages on homes from lenders and then sells them on the financial markets. A purchase decision is complex depending on the type of mortgage, any regulations that apply to it, its geographic location and the price that Freddie Mac is willing to pay. Policy also has to be frequently updated as lenders develop products in response to conditions.
Business rules software from ILOG has been implemented giving managers power to change the process when needed. Rule changes now occur on average twice a week. Freddie Mac is looking to extend business rules into other areas.
Business rules also enable the automation of complex business processes such as dealing with regulations. One example relates to the peculiarities of property law in England and Wales where it is difficult to determine the liability for damage to sewers, but many property transactions need reports on this liability. Thames Water, a division of RWE Group, manages these sewers in the London area. It produces 250,000 such reports a year.
The process was difficult and painstaking; it involved comparing maps, plans, regulations and Thames Water’s own billing records. This complicated manual process was automated, being encoded in some 6,500 business rules as well as using specialist imaging software for the maps. So far Thames Water has saved £3m over five years and has made £1.4m of savings from ancillary benefits, including more accurate billing data.
“I question why anyone would put a complicated process into hard code,” says Peter Kaye, Operations Manager at Thames Water Asset Data Services, “It’s cheaper, faster and more flexible to use business rules.”
Because business rules should be easy for managers to use, many software vendors allow rules to be written in a tool familiar to anyone with a PC, a word processor like Microsoft Word, so that they can use its collaboration and revision features.
Another key to making business rules easy to use is to eschew arcane programming languages in favour of graphical user interfaces and natural language specific to the expertise of the managers. This also makes processes easily auditable. For example, rules from vendor Softlaw, uses terminology based on legal and regulatory language so is familiar to domain experts, who can use it to ensure compliance with regulations and corporate policy.
One example, is the Assert system that Northgate Information Solutions developed for the UK’s housing benefit welfare system. Although administered by local councils, payments are made according to regulations set by the Department of Work and Pensions. Business rules are used to model the legislation and other regulations. The process assists council officers in deciding whether a claimant is eligible for benefit.
However, implementing business rules systems is not always straightforward. Generally, the more flexible an enterprise’s software systems, the easier an implementation is.
“Business process management greatly benefits rules”, says Pierre Haren, chief executive of ILOG. This is because rules are a way of manipulating processes.
Despite the cost savings and the flexibility, it is often difficult to make a case for implementation. This is because some of the benefits, such as agility or regulatory compliance, are difficult to quantify, says Jim Sinur, vice-president and research area director at research house Gartner, the analysts.
Gartner recommends that companies consider the case for business rules based on quantifiable savings on the IT budget. A survey carried out by Gartner suggests companies are making a 10 to 15 per cent internal rate of return on business rules in respect of the day-to-day running of the IT systems.Others have found savings of 10 - 20% over a traditional software development project or system integration.
Once implemented, there are often additional benefits that flow from the extra flexibility, meaning that implementations become more common. In this way, the black art of programming will become a tool in every manager’s arsenal. “Once people figure out how to manage it,” says Mr Sinur, “it will spread like wildfire.”