A business rules engine is a software program that manages business rules. Think of business rules as “if-then” statements. So, a basic example of a rule would be, “If A, then do 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.
Business rules determine what an organization can and can’t do. So, when a business rules engine applies a business rule to a data set, it will provide a true or false result depending on whether the input data matches that rule.
For example, an insurance company might have the following rule: if a customer is under 30 years old, then offer them a 10% discount.
Laws, regulations, best practices, business goals, and performance requirements can all be expressed by business rules. Business rules can be represented as parameters, decision tables, or functions. Business rules are the instructions that tell your enterprise software how to run your business.
Some common real-life applications of business rules include:
- A health insurance company determines whether a potential new customer meets eligibility requirements.
- A financial institution reviews a loan application to ensure that all the requirements relating to credit and cash flow history, collateral, and character requirements are met.
- An online retailer decides which customers get free shipping and a 5% discount.
Business rules engines automate repetitive and complicated tasks, increase collaboration, and cut down on expensive mistakes. Ideally, business rules engines must be high-performing and allow rules modification during runtime if they are to make organizations more efficient.
Business users can also experiment with different products and quickly learn whether a business idea has real-world application. If it doesn’t, then scraping it is easy.
Immediate Benefits Of Rules Engines
Business rules engines can have a transformative effect on an organization. The question of process improvements is a never-ending concern for organizations.
One of the major advantages of business rules engines is that they enable users to manage business rules without touching the code. This feature gives non-technical users the ability to create and manage business rules without asking IT for help. Business users can manage a company’s intellectual property and critical business process without having to plow through hundreds of thousands of lines of code.
As a result, business rules engines dramatically shorten the time it takes users to make changes — from months to a matter of minutes.
This is why organizations today prefer business rules engines like Hyperon that keep the decision logic separate from the dizzying amount of code.
One of the main benefits of business rules engines like Hyperon is that new products have a much shorter time to market, which gives companies a significant competitive advantage.
Let’s see how all the important features of business rules engines translate into benefits for many different types of businesses and organizations.
A pressing issue facing businesses across various industries is more regulatory scrutiny.
Business rules engines help organizations remain compliant by making business processes transparent and creating audit trails while meeting deadlines easily.
Compliance costs consist of everything necessary to keep a business compliant with relevant regulations. Companies must keep track of internal policies and local and international industry regulations. Complying with international regulatory policies is especially important when businesses expand their operations globally into other jurisdictions.
Non-compliance can result in harsh fines, penalties, and business disruption that ultimately hurt a company’s revenue.
Therefore, businesses can’t afford to be careless about compliance. The cost of non-compliance significantly outweighs the cost of being compliant. Disregarding compliance requirements can have a devastating effect both on an organization’s finances and reputation.
Compliance officers use business rules engines to make necessary changes to business decisions so that their organizations can respond effectively to changing regulatory policies and requirements. And they can do all this instantly without help from the IT department.
No More Repetitive and Manual Tasks
Most 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 rules engine.
A business rules engine would allow employees to focus on creative work that actually merits human attention. Most rules engines can be integrated with customer relationship management software (CRMs) to reduce manual data entry.
High-Quality Work with No Mistakes
Humans are fallible but machines aren’t, which gives them an added advantage. Business rules engines have clear instructions that define each step, which gets rid of mistakes.
By eliminating errors, teams can work more confidently and innovate quicker. The result is that the quality of work improves.
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.
Organizations use business rules engines to segment their audience based on unique factors. This would allow 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.
By segmenting customers, companies are able to engage each segment appropriately, which increases sales and customer retention rates.
Let’s go over other ways that business rules engines generate new revenue streams for organizations.
Business Rules Engines Across Industries
Let’s take a closer look at how business rules engines can help companies grow across different industries.
Business Rules Engine: Insurance Industry
Insurance is a highly personalized industry that constantly offers a new selection of products and offers. Life and P&C (property and casualty) are the two branches of insurance. 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.
However, this isn’t enough information. Auto insurance companies will 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. To get travel insurance, the duration and destination are taken into account.
An increasing number of insurers use automated insurance underwriting to streamline the application process.
Also, insurance providers need to provide personalized services to meet customer expectations. A one-size-fits-all model doesn’t cut it.
For example, 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.
Insurance companies grow based on complex products that are simple and understandable for the client. So, insurance providers have to provide customized products to their customers while experimenting with new offers to not be left behind.
All this shows that what lies at the heart of insurance business processes are large datasets and complicated calculations. Some of the critical tasks that major insurers perform using business rules engines include:
Hyperon allows insurance agents to calculate plans and offer customized solutions to customers in real-time. Business users can make instant changes and can market new products in a matter of minutes. It is a tool that allows the operator to quickly search, view, and edit individual rules. And importantly, without having to wait for developers to help.
Business 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 business rules engines to operate efficiently and remain competitive. Banks use rules engines to develop new financial products while maintaining pricing accuracy and compliance. As a result, new products enter the market in a matter of days instead of weeks or months.
Business rules engines allow banks to segment clients and customize services quickly and securely. Also, rules engines offer a seamless onboarding process, while mitigating risk and remaining compliant.
Business rules engines can empower financial institutions to streamline important processes such as:
- Product Eligibility
- Credit Scoring
- Compliance & Fraud Detection
- Data Validation
- Cross-sell and Upsell Opportunities
- Customer Self-service
Business rules engines remain a powerful tool that can effectively prevent fraud and money laundering. A business rules engine allows fraud examiners to quickly react to a fraud attack. For example, if fraudulent behavior is traced back to a particular location, then a fraud examiner can immediately block all orders from that place.
However, financial institutions can also use business rules engines 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 rules in a business rules engine that would prevent this kind of fraud from harming the financial institution.
Robust business rules engines, like Hyperon, give users additional control by allowing them to experiment with new processes without going live. Our customers tinker with rules on a daily basis, so it’s important that they can do so safely.
Poorly configured rules can harm an organization by blocking critical business decisions. This can happen if a new team member who is new to the system makes a mistake.
Our team at Hyperon has implemented safeguards that let users see how the rule will affect the organization without making any actual changes. This way business users can see what sort of changes a combination of rules will bring. For example, an organization can learn what customer segment would have been underserved by introducing a new rule.
Evaluating Risk with Credit Scores
When a borrower applies for a loan, the lender (bank or credit card company) must evaluate their creditworthiness. Using available customer data, such as payment history or credit types, the lender will decide whether to approve or reject the application.
If there is a significant risk that the borrower will fail to make the required payments, the lender will deny the application. Financial institutions use the borrower’s credit score to determine whether to grant them a loan. The credit score is simply a numerical expression of their creditworthiness. A credit score can be used for various financial products, such as mortgages, private loans, credit cards, or car loans.
What is A Scoring Model?
Simply put, a scoring model is a mathematical model that takes many input variables (the customer’s data) and converts them all to a single score that represents the customer’s creditworthiness. The higher the score, the more likely the borrower will pay off their loan.
A FICO score, introduced by the Fair Isaac Corporation, is one of the most common scoring models. There are many different versions of scoring models that are used in particular market segments (e.g. automotive lending or mortgages). However, even if the exact structure of the FICO model is secret, some components are widely known, such as payment history, current debt, length of credit history, types of credit used, or recent loan searches.
Using business rules engines, financial institutions can assess an applicant’s creditworthiness by performing complicated calculations in real-time.
Business Rules Engine: Retail
The retail industry is dynamic with many moving parts. In order to compete, retailers must enter new markets while improving their range of products. This means that they need to keep track of their supply chain and meet consumer demand at the same time.
As a result, retail businesses update a lot of their business rules on a daily basis. For example, the shipping price could change every week 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 manage. Retailers need solutions that help them:
- Provide online consumers with customer-centric product information
- Add new items and update existing ones
- Streamline supplier approval process
- Establish immediate responses to price changes
This is why major retail companies across the globe use business rules engines to leverage the power of their data.
Interestingly, the retail industry has a notoriously poor track record of properly managing business rules over the years. It was quite common for business rules to be written on paper.
Obviously, this hurt the flow of information within the company. Also, when an employee left a company, they often took their knowledge with them!
Luckily today the retailers that use business rules engines can store their business decisions in one accessible place.
Choosing the Right Business Rules Engine
The ideal business rules engine for your organization depends on the types of rules that you need to implement and your specific business goals.
So, which type of business rules engine you need depends on what sort of business rules you want to create and manage. Also, the business rules engine should be compatible with your ultimate user — they should be able to use the tool without any issues or assistance from technical team members.
Not surprisingly, business and non-technical users stand to benefit the most from business rules engines.
A large amount of mission-critical processes take place in departments like Human Resources, Finance, Procurement, Office Administration, and Sales. Business rules engines like Hyperon empower specialists from these departments to manage important business 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 business rules. The result is a streamlined organization that uses a single tool to make decisions that help generate new revenue streams.
Hyperon is designed to give business users a good level of automation and control over their business processes. With little initial training, non-technical users can create and manage their own processes on Hyperon without any help from IT.
This user-friendly business rules engine shortens the development and deployment time of complex products down to minutes, allowing companies of all sizes to make better decisions and respond to market changes immediately.