What is a Rules Engine and Why Do You Need It?

A rules engine is a flexible piece of software that manages business rules. Think of business rules as “if-then” statements. So, a basic example of a rule would be, “If A, then B, else if X, then do Y.”

These straightforward but powerful conditional statements determine how an organization operates by evaluating whether or not a given input meets certain criteria.

Rules determine what an organization can and can’t do. So, when a business rules management software applies rules to a data set, it provides a true or false result depending on whether the input data matches that rule.

business rules engine

For example, an insurance company might have the following rule: if a new customer is under 30 years old, has never been in a car accident, then offer a 10% discount. This is a simple example of rule creation.

Your system can use any number of rules to optimize your processes.

Use Cases of Rules Engines

Laws, regulations, business goals, and performance requirements can all be expressed by rules.

Common real-life applications of business rules include:

  • An insurer determines whether a candidate meets eligibility requirements.
  • A bank reviews a loan application to ensure that all the requirements relating to credit and cash flow history, collateral, and character requirements are met.
  • A retailer decides which customers get free shipping and a 5% discount.

A rule engine automates repetitive and complicated tasks, increases collaboration, and cuts down on expensive mistakes.

Immediate Benefits Of Rules Engines

A rule engine can have a transformative effect on a company.  

One of the major advantages of a rule engine like Hyperon is that it enables users to modify business logic without touching the application's code.

Non-technical users can manage a company’s intellectual property and critical processes without having to plow through hundreds of thousands of lines of code.

Rule engines dramatically shorten the time it takes users to make changes —from months to a matter of minutes.  

As a result, new products have a significantly shorter time to market!

Let’s see how all the important features of rules engines translate into benefits for different types of organizations.

Compliance

A pressing issue facing companies across various industries is more regulatory scrutiny. Non-compliance can result in harsh fines and business disruption.

Compliance costs consist of everything necessary to keep a business compliant with relevant regulations. To do so, organizations must keep track of internal policies and local and international industry regulations.

when to use a rule engine

Rules can improve compliance by making processes transparent and creating audit trails. Compliance officers use rules to make necessary changes to business decisions so their organizations can effectively respond to changing regulatory policies.

No More Repetitive and Manual Tasks

Recent studies show that repetitive and manual tasks cost companies $5 trillion a year globally. Office employees spend on average 69 days per year on mundane work. These time-consuming tasks can easily be streamlined with a reliable business rule engine.

A rule engine allows employees to focus on creative work that actually merits human attention. Most rule engines can be integrated with customer relationship management software (CRMs) to reduce manual data entry.

High-Quality Work with Rules

Humans are fallible but machines aren’t. A rule engine has clear instructions that define each step, which gets rid of mistakes. By eliminating errors, teams can work more confidently and innovate quicker.

Customer Segmentation Using a Rule Engine

Consumers are looking for more thoughtful and engaging businesses. Perhaps one of the most important differentiating factors for companies is their ability to segment customers.

Consumers want to do business with brands that understand their needs and deliver exceptional tailor-made results. By creating relevant offers that provide high-value experiences, businesses can secure customer loyalty.  

This allows them to cater to the needs of a wide range of customers. For example, marketing teams can segment their audience based on their level of interaction with the business. This would allow them to tailor their ad campaigns accordingly.

Customer segmentation also helps companies identify new prospects with similar traits.

Rules Engines Across Industries

Let’s take a closer look at how rules engines can help companies grow across different industries.

Rules Engine: Insurance Industry

Insurance is a highly personalized industry that constantly creates new products and offers. However, not all insurance providers offer the same products or target the same audience.

Each type of insurance policy considers different factors when deciding whether to issue a plan or not. For example, auto insurance companies look at the applicant’s driving history, experience, and skills.

They also need to examine the value of the vehicle and its safety record to approve an application. Life insurers consider an applicant’s personal health, age, lifestyle, and family medical history.

An increasing number of insurers use rules to streamline the application process with automated insurance underwriting.  

Build Insurance Segments with A Business Rules Engine

Insurers need to provide personalized services to meet customer expectations.

An insurer might segment their audience into “budget-conscious” and “agent loyal” groups. Customers who are in the former group are characterized, mainly, by their desire for minimal coverage and determination to find the “best deal.”

Conversely, customers who are in the “agent loyal” segment feel strong loyalty to their agents and value highly personalized services. Therefore, the insurer would have to come up with different products and services to effectively engage both segments.

Organize Tasks with A Rule Engine

Some of the critical tasks that major insurers perform using rule engines include:

business rules management system

Insurance agents use Hyperon to calculate plans and offer customized solutions in real-time.  They can quickly search, view, and edit individual rules.

Rules Engine: Banking & Finance

Financial institutions face tighter budgets and higher pricing pressure. This inevitably eats into their profit margins. Meanwhile, the competition to attract, engage, and increase profitable customer relationships is stronger than ever before.

In this environment, financial institutions rely on rule engines to operate efficiently and remain competitive. Banks use rules to develop new financial products while maintaining pricing accuracy and compliance.

Tasks Performed by Rule Engines

Rules engines can empower financial institutions to streamline important processes such as:

  • Product Eligibility
  • Credit Scoring
  • Data Validation
  • Cross-sell and Upsell Opportunities

Also, rule engines remain a powerful tool that effectively prevents fraud by allowing organizations to quickly react to new data.

Rule Engine as a Fraud Prevention Solution

If fraudulent behavior is traced back to a particular location, then a company can immediately block all orders from that place.

However, financial institutions can also use this tool to remain proactive and prevent new schemes.

For instance, a bank could be aware of a developing trend in fraudulent behavior. A fraud analyst can simply create a rule in a rules engine that would detect this particular scheme.

Our team at Hyperon has implemented safeguards that let users see how each rule affects the organization without making any actual changes. You tinker with rules on a daily basis, so it’s important you can do so safely.

Rules Engine: Retail

To compete retailers must enter new markets while improving their range of products. Therefore, they need to keep track of their supply chain and meet consumer demand at the same time.

As a result, retailers update their rules daily. For example, the shipping price could change every day due to the changes in shipping fees. Retailers can’t wait days or weeks to make these sorts of changes to the system.

All of these demands translate into a vast amount of information a retailer has to maintain:

  • Provide consumers with customer-centric product information
  • Add new items and update existing ones
  • Streamline supplier approval process
  • Set immediate responses to price changes

This is why major retail companies use rules to leverage the power of their data.  

Interestingly, the retail industry has a notoriously poor track record of managing rules. It was quite common for business rules to be written on paper. Unsurprisingly, rules would often be misplaced or lost!

Luckily today retailers that use business rules management solutions can manage their business decisions and all their knowledge in one accessible place.

Choosing the Right Rule Engine

The ideal rule engine for your organization depends on the set of rules you need to implement and your specific goals.

Also, every user should be able to use the rule engine without any issues or support from technical team members.

Not surprisingly, non-technical users stand to benefit the most from rules engines.

Mission-critical processes take place in departments like HR, Finance, Procurement, Administration, and Sales and can be optimized with a rule engine.

A solution like Hyperon empowers specialists from these departments to manage important processes and transactions in real-time. From running customer screening and credit risk management to creating regulatory policies and customer segmentation, Hyperon gives experts the power to create, deploy, and manage any number of rules without touching the code.

This creates a streamlined organization that uses a single tool to make decisions that help generate new revenue streams.

With little initial training, any non-technical user can create and manage their own processes in Hyperon without IT support.

One of the advantages of this user-friendly business rules engine is it shortens the deployment time of complex products down to minutes. This way companies make better decisions and immediately respond to market changes.

Ready to see how Hyperon can optimize your organization's process management? Get in touch with us today and learn what our rule engine can do for you.