Business Rules Applied—Business Better Systems Using the Business Rules Approach Barbara von Halle Wiley Computer Publishing John Wiley & Sons, Inc. Publisher: Robert Ipsen Editor: Robert Elliot Developmental Editor: Emilie Herman Managing Editor: John Atkins Associate New Media Editor: Brian Snapp Text Design & Composition: Publishers’ Design and Production Services, Inc. Designations used by companies to distinguish their products are often claimed as trademarks. In all instances where John Wiley & Sons, Inc., is aware of a claim, the product names appear in initial capital or ALL CAPITAL LETTERS. Readers, however, should contact the appropriate companies for more complete information regarding trademarks and registration. Copyright © 2002 by Barbara von Halle. All rights reserved. Published by John Wiley & Sons, Inc., New York Published simultaneously in Canada. Chapter 13 and 14 includes text and screen shots copyrighted by the following vendors: HNC Software (p. 476–489). ©2001 Brokat Technologies; ILOG, Inc. (489–491). ©2001 ILOG Inc.; Usoft, Inc. (433–450). ©2001 Ness Usoft Group; Versata, Inc. (p. 450–471) ©2001 Versata, Inc. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750- 8400, fax (978) 750-4744. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 605 Third Avenue, New York, NY 10158-0012, (212) 850-6011, fax (212) 850-6008, E-Mail: PERMREQ @ WILEY.COM. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in professional services. If professional advice or other expert assistance is required, the services of a competent professional person should be sought. Library of Congress Cataloging-in-Publication Data: Von Halle, Barbara. Business rules applied : building better systems using the business rules approach / Barbara von Halle. p. cm. Includes index. ISBN 0-471-41293-7 (pbk. : alk. paper) 1. Business. 2. Industrial management. 3. Business—Data processing. 4. Industrial management—Data processing. I. Title. HD31 .V594 2001 658—dc21 2001046536 10 9 8 7 6 5 4 3 2 1 Advance Praise for Business Rules Applied “Today’s fast-paced, competitive business environment demands flexible applications that can be adapted to meet changing business requirements. Insurance companies, financial institutions and other policy intensive organizations must develop applications that allow the easy modification and implementation of business and regulatory policy. Telecommunications companies must design their customer relationship management and billing systems to support frequent new product and service offerings. Application service providers must be able to rapidly customize their software to meet the unique business requirements of each individual customer. More and more companies are looking to business rules for the answer. Business rule technology delivers a key technical capability. However, like other technologies that promise to simplify and speed application development—object- oriented languages like Java and C#, platforms like J2EE and .NET, and data representations like XML—business rule technology alone cannot ensure a successful application. The promise of more flexible, adaptable applications, where business rules are managed separate from the application, can only be realized by good application design. Business rule technology vendors provide powerful enabling tools—but the success of the application depends on a thorough understanding of business requirements and an application design that implements those requirements. Little information is available today addressing the design and development of business rule applications. How should business rules be identified? How should they be represented? At what phase should they be integrated into the system development life cycle? How do business rules work with object-oriented applications and relational databases? How are business rules implemented in applications? These are among the issues addressed by Business Rules Applied. As Barbara von Halle’s bestselling Handbook of Relational Database Design guided data analysts and data base administrators, this book will help business analysts and developers build applications using business rules. This is an important book for those looking to implement business rule technology.” Colleen McClintock JRules Product Manager, ILOG, Inc. “With her book Business Rules Applied, Barbara von Halle puts the information systems design discipline at a higher level. Placing rules as a third design principle between data modeling and workflow concepts, she bridges a gap that until now has only been bridged by the object-oriented modeling techniques like UML. The book takes the reader all the way from early business level requirements analysis to the precise actual realization of the system. The author takes a step-by-step approach, describing the rules analysis and design process in regular terms of the IT professional. This book opens up a new world to anybody interested in capturing business logic in a structured way and from a business perspective. For every phase of development the book explains how to position the rules perspective in relation to the ‘normal’ way of working when modeling data and process only. Through crisp and clear guidelines and working from a detailed real-world case, the methodology described is truly effectuated for the reader. With this book von Halle opens up the business rules way of thinking to a wider audience. It offers a new and practical perspective on information systems development, that every software engineer and business systems analyst should add to his toolkit.” Paul Mallens Author of the USoft Approach to Business Rules Automation Delft University of Technology, the Netherlands “Business Rules Applied is an excellent reference for anyone developing business systems that must respond to change. Starting with four core principles for business rules development, Barbara von Halle takes us on a tour of the rule-enriched systems development life cycle, illustrating the differences and advantages of a business rules approach at each and every step. Written in a methodology- and technology-agnostic manner, Business Rules Applied will prove compelling and educational to all developers—including those with business rules technology, and those unlucky enough to be without.” Steven Sweeting Director, Product Management, Versata, Inc. “There are only a handful of classic books that define the data and information management industry. Barbara von Halle has now written two of those books. Business Rules Applied defines business rule development the same way that the Handbook of Relational Database Design defined data modeling and database design back in 1988. Business Rules Applied is a must-read for all professionals that are serious about managing their business rules.” Robert S. Seiner Publisher, “The Data Administration Newsletter” (TDAN.com) “The author has provided significant insight into how IT systems might be made more agile and responsive to business needs. Business rule concepts are introduced and a case made for their adoption. A rule-based method for development is then provided which is built on simple but powerful principles, and which melds with existing object- oriented development approaches. The flexible approach is supported by many insightful guidelines together with a substantial case study. The case study adds particular value because it is used throughout the life cycle to draw out key insights and includes implementation in a number of commercial rule engines. Significant consideration is given to how to architect, design, and manage for rules under different business development constraints (e.g. financial, time to market), in order to provide value in a changing business environment.” Duncan McMillan “I have been waiting for Barbara von Halle and her colleagues at KPI to encapsulate for the rest of the world what their team has been putting into practice for the past half- decade. This book represents a wonderful accomplishment, an integrated, time-tested, means of using business rules to build better systems. Two primary accomplishments of the text are worth pointing out: First, how much more effectively new systems can be made using the intelligence that is currently tied up in organizational legacy code. Second, how much better the new systems will be able to support organizational objectives because of lower system maintenance and better architectural engineering. My hat is off to Barbara and the rest of KPI—this book will quickly become a must read in the business rules community and beyond as word of these successes spreads.” Peter Aiken, PhD Co-author of Building Corporate Portals with XML To kindergarten tee-ball players everywhere. Acknowledgments Without a doubt, this book would not be possible were it not for the efforts and moral support of many special people. For starters, I would like to express my gratitude to early reviewers, Neela Waghmare, Nancy Shipley, and Chip Didden, who pored over initial manuscripts, submitted questions, and worked on solutions to the case study. I am indebted to Grace Van Etten who also reviewed chapters, especially regarding technical points. A very special thank you goes to Janet Wall and Linda Nieporent who devised the detailed case study and its solution, giving the book a fun but realistic target business rules system. There is a special thank you to Linda Nieporent who devised useful rule techniques and created various case study solution documentation. Additional gratitude goes to Art Moore and Janet Wall for assisting in the coordination of contributors and to Janet Wall for coordinating vendor correspondence. I also want to offer a sincere expression of gratitude to Janet Wall, Art Moore, and Neville Haggerty, all of whom wrote many versions of various chapters, mostly during nonworking hours. They never seemed to get tired of working on this book. All of us who worked on the book are grateful for the contributions and dedication of business rules vendors in exploring and implementing our case study. Without their contributions, the book would be deficient in alternatives in a full business rules solution. We are especially grateful for their patience with our questions through email and conference calls. From ILOG Inc., we want to thank Colleen McClintock and Steven Paulin. From USoft Inc., we appreciate the incredibly quick and thorough response from Sjors Niesten and Rob Haarst. From HNC Software, we owe our thanks to Ken Mollay, Vince Emery, Eric Odell, and Tom Goering. From Versata Inc., we are indebted to Steven Sweeting for working on the case study against difficult deadlines as well as his support and encouragement throughout the book project. We would also like to thank Tony Phillips, formerly of Versata Inc., who wrote a valuable Versata methodology document. The truth is that this book would never have been possible without the encouragement and support of every employee of Knowledge Partners Inc. (KPI). Only because KPI employees were willing to take on some of my regular job responsibilities was I able to dedicate significant time to the book. Other employees graciously accepted that the book writing would impact my ability to participate in all company activities. Therefore, in one way or another, all KPI employees made a sacrifice for this book. I am, as always, amazed at and humbled by their unending and sincere support. I would like to extend a very special thank you to Bob Elliott of Wiley and Sons who encouraged me throughout the years to eventually write a business rules book. Also deserving recognition is Emilie Herman of Wiley and Sons, whose regular encouragement, support, and advice assisted every step of the way. No one can write a business rule book without giving tremendous credit to Ronald G. Ross. His intellectual depth, publications, teaching, consulting, and persistence in the field of business rules have created tremendous opportunity for business rule practitioners and vendors. Every book project has its unplanned challenges. Sadly, as this book neared its completion, I was diagnosed unexpectedly with breast cancer. I am forever grateful to Dr. Vivien Chou whose diligence and intuition would not let go of a cancer that seemed to defy detection. As a result of the diagnosis, my life was changed forever and it was sometimes difficult to keep up with book deadlines amid medical appointments. I am therefore grateful to medical doctors, Dr. Robert Goodman, Dr. Jan Huston, and Dr. Richard Michaelson, who were flexible with my schedule. In particular, the caring and cheerful attitudes of John Tirado and Lauralee Curcione in the radiation department kept my spirits in the right place, day after day after day. I am also grateful to everyone within KPI, my family, and Wiley (especially Emilie Herman), whose support and caring during this time allowed me to complete the project as originally scheduled. As always, I am personally indebted to my husband of 24 years, Mike von Halle, for his never-ending belief in and support for me. Without his dedication and assistance in both our personal and business lives, this book would never have been possible. About the Authors Barbara von Halle is the founder of Knowledge Partners, Inc. (KPI). She plays many roles in the company, from strategic planning to career development of employees. She is best known for pioneering in the world of Data Architecture and Business Rules through writings and consulting work. In 1996, she received the honored Outstanding Individual Achievement Award from the International Data Management Association. She was a leading contributing editor for Database Programming and Design magazine, co-authored The Handbook of Relational Database Design, and co-edited The Handbook of Data Management. About the Contributors Neville Haggerty is a Principal Consultant with Knowledge Partners, Inc. He has 34 years of experience in information management. For the past 17 years, he has held information technology management consultant positions specializing in facilitating communications between business and information technology people. Most recently, Neville introduced clients to templates for capturing business requirements, extended System Architect to include the capture of business rules, and facilitated rule scoping sessions. Neville has been utilizing these skills and techniques in soliciting and storing business rules for various business rule projects. Art Moore is a Principal with Knowledge Partners, Inc. He has experience in consulting practice management, methodology development, project management, and delivery oversight in information architecture, data warehousing, and a business rules approach to systems specification. He played a key role in developing and testing a business rule mining methodology. Most recently, he has been applying formal facilitation skills to the soliciting of business rules. Linda (Jeney) Nieporent is a Principal Consultant with Knowledge Partners, Inc. She has seven years of experience as a consultant, instructor, and speaker in data architecture and business rules, including working for a CASE tool vendor. Assisting clients in soliciting data requirements and business rules, she creates corresponding data models and correlates them to rules. Most recently, she has been integrating business rules analysis into data modeling activities and exploring how rules technology vendors support the implementation of rule-oriented systems. Janet Wall is a Principal with Knowledge Partners, Inc., and provides leadership in business development, employee mentoring, and development of Intellectual Property. Previously, Janet was Director of IRM and of Applications Development for a pharmaceutical research institute. Janet has been a key member of member of a business rule methodology team. She coordinates business rule experiences and deliverables and assists in future methodology development. Foreword Business rule systems—evolutionary or revolutionary? The best answer is “yes.” I say that without tongue in cheek. The really big changes are always based on a matter of degrees. Small quantitative differences can become large qualitative ones. A football game, as they say, can be won by inches. Heat water to 99 degrees Centigrade, and you still have a liquid. Heat it a bit more, though, and you get something quite different. The Business Rule Approach has been in a long period of incubation, gradually heating up degree-by-degree all through the 1990s. Refinements in the approach have come in many small increments by dedicated pioneers in out-of-the-spotlight corners of the IT world. But for those of us fortunate enough to have participated in this process, we have always known the approach would eventually come into its own in a big way. As I’ve said many times in my lectures and seminars, business rules are inevitable! Why? Well, Barbara is about to tell you why. Just plunge into Part 1 and you’ll quickly get the picture. No need for me to repeat that here. Here’s where I want to focus: small quantitative differences producing big qualitative ones. Heat the water just a bit more, and you get steam. Harness that steam on an industrial scale, and you get a source of new power far beyond anything before. The trick from a business point of view, of course, is all in the timing. The winners usually wait until the approach is proven, but jump in before competitors. As I write this today, that’s exactly where we are in the Business Rule Approach. As Barbara’s book demonstrates, there is a whole new source of power to meet IT needs in the 21st century—business rule methodology. Barbara lays this out in wholesome detail in Parts 2 through 5 of her book. I also agree with her when she points out that you don’t necessarily need a new engine to benefit from that. But let me be straight about this. I believe there is a rule engine in your future—and probably sooner than you think. “If things would only slow down some,” you might say, “coding rules in procedural languages would work just fine.” But therein lies the flaw. With each passing year, do- ing business is inexorably moving faster, not slower. And there’s no sign of that letting up. I believe your business will inevitably move toward knowledge automation—rule engines—simply because it is already feeling so much heat. Quantitative differences produce qualitative ones. Back now to the original question: Business rule systems—evolutionary or revolutionary? Like I said, the answer is yes. Let me quote Barbara on this. In the Summary of Chapter 3 she writes, “At first glance, you may believe that this book does not contain any new ideas. This is a natural first impression because you have always dealt with all aspects of a system, regardless of what you called those aspects or which is your favorite system development paradigm. However, this book proposes that the Rule Track . . . makes all the difference in the world in the world to the business itself” [emphasis mine]. There you have it—evolutionary yet revolutionary. Just one more thing before I close. On a personal note, let me thank you, Barbara, for all those regular Friday afternoon phone discussions on business rules back in the early- and mid-1990s when I was writing (incubating, really) The Business Rule Book. On a cabinet in my office I have a note from that period predicting that you would write a book about business rule methodology for IT professionals by the year 2000. (Really true—the ink is even faded.) Just one question: Why were you a year or two late? No matter, it was worth waiting for! Ronald G. Ross Principal, Business Rule Solutions, LLC Executive Editor, www.BRCommunity.com Table of Contents Business Rules Applied—Business Better Systems Using the Business Rules Approach Foreword Preface Part I - Business Rule Basics Chapter 1 - The Need for a Business Rules Approach Chapter 2 - Business Rule Concepts Chapter 3 - Introduction to Business Rule Methodology Part II - Getting Started on Business Rules Project Chapter 4 - Scoping for Success Chapter 5 - Project Planning with Business Rules Part III - Discovery Chapter 6 - Discovering Initial Requirements Chapter 7 - Discovering Rules and Data Chapter 8 - Discovering Rules through Facilitated Sessions Part IV - Analysis Chapter 9 - Analyzing Data Chapter 10 - Analyzing Rules Chapter 11 - Analyzing Process Part V - Design Chapter 12 - Designing for a Business Rules Approach Chapter 13 - Implementing Business Rule Systems Using Data- Change-Oriented Rules Products Chapter 14 - Implementing Business Rule Systems Using Service- Oriented Products Chapter 15 - Rule Management References Index 1 Preface A business rules approach to systems development promises to be the most practical and desirable way to build systems. It can help you build better, easily changeable systems faster than any previous approach. This book provides a step-by-step practical approach for building systems using a business rules approach. The timing of the emergence of a business rules approach is compelling. Adaptability is a subtle but powerful change in the way we build systems. As a parallel, let’s look at how the emergence of relational concepts and corresponding technology took place. Ted Codd documented his relational model in a landmark paper in 1970. Subsequently, small software vendors created database management systems based on a subset of the concepts of the relational model. Shortly after that, major software vendors did the same. Around that time, authors like C.J. Date published books and gave presentations that explained the concepts of the new software to the IT industry. Eventually, people such as Candy Fleming and I published books and gave courses in how a practitioner can proceed from gathering requirements to using the new software for creating relational databases. Relational technology flourished for many reasons:  It was theoretically sound.  Software vendors understood the theory, to some extent, and delivered commercial products.  IT notables, such as C.J. Date, eloquently explained the theory, benefits, and practicality of relational products to the IT industry.  Other practitioners gained early experience and developed step-by-step approaches for using the new software. Let’s now evaluate the evolution of the business rules approach. Ted Codd laid the groundwork for the integrity aspect of the relational model back in 1970. While this aspect has not been fully deployed by relational DBMS vendors, it had made strides through triggers and stored procedures and in research under the auspices of active database systems. Innovative software vendors (such as Versata Inc, Brokat Technologies, USoft Inc., ILOG Inc., The Haley Enterprise, and Rule Machines Inc.) incorporated those concepts into a type of software product called commercial rules technology. These products are used mostly by application developers, less so by database professionals, because the product environments promote the idea that those integrity constraints, the business rules, are part of the application development world. In addition, Ronald G. Ross has published further theory on the classification and grammar of the various types of integrity constraints, or business rules. C.J. Date published a book for IT practitioners that explains the history of the business rule phenomenon as it relates to the relational model, as well as the adoption process for software vendors. He further acknowledges that, while specification of constraints (business rules) can be part of a fully matured relational database management system, there are benefits to doing so in a middle tier that manages the rules independently of the DBMS. So, as for the business rules approach:  It is theoretically sound.  Vendors understand the theory, to some extent, and are delivering commercial products. 2  C.J. Date and Ronald G. Ross have explained the theory and product capabilities to the IT Industry. It is now time for a step-by-step approach for applying the theory to technology in the world of e-business, Web-based, object-oriented, and relational database systems development. This book combines best practice systems design principles plus adherence to the principles of a business rules approach, thereby enriching what you already know how to do. A system built according to the business rules approach has many advantages over other systems. However, given the pressures of e-commerce, the most important advantage is that a business rules system is designed to easily accommodate changes in the business with minimal disruption. Therefore, this book introduces a new emphasis and formalism around capturing, validating, and automating the rules of the business so that the business can easily change those rules as it sees fit. The methodology in this book builds on familiar methodologies such as structured systems analysis, information engineering, and object-orientation so that readers can easily add a business rules approach to existing practices. The most significant aspect of this book is the introduction of a rule track into a systems development methodology. The steps, guidelines, techniques, and examples of activities in this track guide the reader in understanding what business rules are, why they are important to the business, why it is important not to bury the business rules in code again, and how to analyze and deliver the rules as a valuable, changeable aspect of the resulting system. Defining the Business Rules Approach A business rules approach is merely a formal way of managing and automating an organization’s business rules so that the business behaves and evolves as its leaders intend. Essentially, a business rules system is an automated system in which you separate the rules, logically, perhaps physically, and share them across data stores, user interfaces, and applications. You can apply most of the concepts in this book regardless of whether you utilize special rules technology, although use of such technology will deliver the most immediate and long-lasting benefits. As a starting point, during scoping for example, you will pay special attention to the business motivation for your project. Aspects of this motivation may include objectives, goals, strategies, tactics, and policies. These are the fundamental justification for the rules you uncover, deliver, and change during the systems development effort. During the discovery of requirements, you will seek important decisions behind the target system and dissect these into atomic rules, capturing them in a rules repository. You can extend an existing repository, utilize an existing CASE tool, or build a simple rules database. Moving into analysis, you become involved in steps and techniques specifically aimed at verifying the quality of rules, connecting rules to information and knowledge, and understanding dependencies among rules. Finally, in the design phase, you consider implementation options, paying close attention to those that allow you to deliver the rules in a way that accomplishes four significant objectives:  Separate rules from the rest of the system so you can reuse them  Trace rules to the reasons they exist as well as to where they are implemented  Externalize rules so everyone can know what they are [...]... players 2 Business rules influence not only the behavior of players but of onlookers 3 Business rules teach and instill confidence; they lead to greater productivity in decision-making 4 Business rules can relieve stress because they explain results 5 Business rules guide the players’ freedom of choice 6 Business rules guide behavior so common objectives are more likely to be met 7 Business rules are... players 8 Business rules can motivate players or demotivate them 9 Business rules determine the likelihood of achieving common goals 10 Business rules are mechanisms by which an organization changes itself What Is a Business Rules Approach? A business rules approach is a methodology—and possibly special technology—by which you capture, challenge, publish, automate, and change rules from a strategic business. .. intelligence An organization’s business rules, captured and analyzed and challenged and automated in a business- oriented way, not only determine who an organization is but what it can become Behind the business rules approach lurks the opportunity to capture the business rules and challenge them The business rules collection becomes a magnet for serious analysis A business rules approach becomes focused... a business rules approach is that it correlates the underlying rules to many aspects of business motivation These include goals, objectives, strategy, and tactics In this way, the business can evaluate the effectiveness of the rules in guiding the business toward its desired ends Advantages of Building Systems Using a Business Rules Approach At a glance, ten advantages of building systems using a business. .. Developing a business rules system can be more cost effective than customizing packages A business rules approach enables rule enforcement across technology environments allowing for migrations from one technology to another and interfaces to multiple technologies A business rules approach positions you for technology evolution How Can a Business Rules Approach Deliver These Benefits? The business rules approach... of Applying the Business Rules Approach APPLICATION BENEFIT can be expressed as rules Provides an avenue for improved decisionmaking because rules are known Positions the organization for rules technology Using the business rules approach for discovery, analysis, and design (but not using commercial rules technology) All of the above plus: Enables easier rule changes Using the business rules approach... for understanding and justifying a business rules approach for developing systems Part 2, “Getting Started on a Business Rules Project,” assists in scoping and planning your business rules project Part 3, “Discovery,” contains details for discovering system requirements Part 4, “Analysis,” presents details for analyzing the three parts of a business rules system: rules, data, and process Finally, Part... successful, you will want to use its rules and approach as a foundation for building more business rules systems and also incrementally building a business rules asset Most of you will not read this book from start to finish Rather, you will use it as a reference for topics most relevant to your interest in a business rules approach and your responsibilities on a business rules system development project... this way, everyone should win (business people and IT people) and everyone keeps on winning because the rules can and should easily keep on changing 10 Part I: Business Rule Basics Chapter List Chapter 1: The Need for a Business Rules Approach Chapter 2: Business Rule Concepts Chapter 3: Introduction to Business Rule Methodology 11 Chapter 1: The Need for a Business Rules Approach Overview What differentiates... The result is a business rules system, an automated system in which the rules are separated, logically and perhaps physically, from other aspects of the system and shared across data stores, user interfaces, and perhaps applications As you can see, at the heart of a business rules approach is an appreciation for rules as a valuable asset for a business organization In fact, a business rules approach . Cataloging-in-Publication Data: Von Halle, Barbara. Business rules applied : building better systems using the business rules approach / Barbara von Halle. p. cm. Includes index. ISBN 0-4 7 1-4 129 3-7 (pbk. : alk Business Rules Applied Business Better Systems Using the Business Rules Approach Barbara von Halle Wiley Computer Publishing John Wiley & Sons, Inc. Publisher: Robert Ipsen. business rules so that the business behaves and evolves as its leaders intend. This book will help you build systems based on a business rules approach. When you do this, not only can the business