A Complete Guide to Business Rules Management Systems in 2024

Are you looking to streamline your operations and reduce complexity by better managing your business logic? If so, deploying a modern business rules management system (BRMS) could be a game-changer. This comprehensive guide will explain everything you need to know to evaluate BRMS tools for your organization.

What is BRMS and Why Does it Matter?

A business rules management system is a software platform that helps you define, store, execute, and optimize the business rules that control decisions and processes across your company.

Business rules are statements like:

  • IF a customer‘s order exceeds $100, offer free shipping
  • IF a customer has made 2+ repeat purchases, mark them as a VIP

These rules encode the logic behind your operations. A BRMS gives you capabilities to centrally manage all your diverse rules and automate them.

Without BRMS, business logic gets hardcoded across disconnected systems and apps. This leads to duplication, inconsistencies, and makes changes risky.

A modern BRMS architecture provides a single source of truth for your business logic that is flexible and transparent. This unlocks major benefits we‘ll explore later. First, let‘s look under the hood…

BRMS Building Blocks: Key Capabilities

BRMS platforms vary but generally provide these core capabilities:

Business Rules Repository

This centralized database stores, versions, and organizes all your active business rules in one place. This "single source of truth" ensures consistency.

Rules Authoring Tools

An intuitive interface allows both technical and business users to author new rules and modify existing ones without coding.

Features like graphical rule mapping, natural language input, and templates assist in rule definition. Users can also analyze rule accuracy and performance.

Rules Execution Engine

This engine evaluates data against relevant rules to determine actions. It breaks down decisions into simple conditional logic for reliable automation.

Advanced tools can process both high-volume tactical rules and lower-volume strategic rules. Analytical capabilities allow simulation of policy changes.

BRMS components

Now let‘s look at why BRMS delivers immense business value…

The Benefits of BRMS for Your Business

Implementing a BRMS solution provides major perks:

Agility – Subject matter experts can quickly update rules without coding, enabling faster changes. One insurer shortened rule change cycles from 6 months to 1 week!

Consistency – Central logic repository acts as a single source of truth, reducing conflicts across systems.

Compliance – Isolating rules helps track regulatory and policy compliance. One study found implementing BRMS increased audit compliance from 52% to 95%.

Cost Savings – BRMS automation and simplified architecture reduces IT overhead. One bank achieved $2 million in annual savings after deploying BRMS.

Customer Experience – Rules standardization and automation provides consistent, optimized experiences.

According to IDC, organizations see 539% 5-year ROI and payback in less than 6 months after implementing BRMS.

Clearly, the benefits are substantial. Next let‘s explore some common use cases.

BRMS Use Cases: Where it Applies

Many different verticals leverage BRMS to manage rules and drive automation. Here are some top examples:

Loan Underwriting

Lenders use BRMS to encode risk models, eligibility criteria, and other underwriting rules. Loan applications can be automatically validated and scored based on these policies. This reduces defaults through consistent underwriting.

Insurance Claims Processing

Insurers manage complex guidelines for claims assessment and routing within BRMS. Key details like time from loss, claim type, and policy specifics can drive automated claims handling.

One major European insurer reduced claims processing time from 52 days to 4 hours using BRMS-driven automation!

Dynamic Pricing

Retailers connect pricing engines to BRMS to manage promotional rules, competitor data, supply/demand, and other factors that determine optimal pricing. This agility maximizes margins.

Regulatory Compliance

Banks and other regulated entities use BRMS to encode internal and external policies as business rules. This simplifies demonstrating compliance during audits. Ongoing monitoring also ensures adherence.

Fraud Detection

Fraud analytics tools ingest data like transactions, clickstreams, profiles, etc. into BRMS. Embedded rules flag potential fraud based on risk thresholds, suspicious behavior patterns, and other indicators.

Customer Marketing

Marketing teams build customer segmentation and contact rules based on preferences, behaviors, demographics, etc. BRMS automates executing personalized campaigns per these rules.

These examples demonstrate the widespread applicability of BRMS across many industries and use cases.

Open Source vs Commercial BRMS Platforms

When evaluating BRMS options, you can consider both open source and commercial platforms:

Open Source BRMS

  • Pros: Free to use, transparent architecture, avoid vendor lock-in
  • Cons: Limited support and documentation, need in-house expertise

Commercial BRMS

  • Pros: Mature capabilities, vendor support services, tools for non-tech users
  • Cons: Higher cost, some vendor lock-in

Popular open source BRMS options: Drools, OpenL Tablets

Leading commercial BRMS vendors: IBM, FICO, Fujitsu, Red Hat, SAP

Consider your level of in-house expertise, need for full capabilities out-of-the-box, and cost sensitivities when deciding between open source vs commercial BRMS.

Modernizing BRMS Architecture

Many legacy BRMS platforms have limitations like disjointed authoring environments, lack of transparency into logic, and difficulty integrating into modern tech stacks.

Modern best-in-class BRMS architecture improves on these pain points through:

  • Consolidated platform – Unified authoring workspace, repository, and automation engine
  • Cloud native – BRMS delivered as loosely coupled microservices on cloud infrastructure
  • Managed APIs – Seamless integration into apps and processes via APIs
  • Auditability – Complete visibility into rule changes with detailed audit logs
  • Hybrid rules-ML engine – Combined declarative & probabilistic logic for optimized decisions

Moving to a modern BRMS architecture alleviates shortcomings of legacy systems.

Building the Business Case for BRMS

How can you build an ROI model to justify investing in BRMS? Key inputs include:

  • Cost savings – Staff hours saved by automating decisions and changing rules faster
  • Revenue uplift – Additional revenue from higher sales conversion, up-sell & cross-sell due to smart decisions
  • Improved CX – Value of higher customer satisfaction/lifetime value powered by BRMS consistency

One simple estimation approach:

  • Determine number of decisions automated per year
  • Estimate average time/cost to handle each decision manually
  • Calculate total hours and cost savings from automation

For example, if you automate 50,000 loan approval decisions:

  • Manual review takes a loan officer 15 minutes per application (@$20/hr hourly cost)
  • 50,000 applications x 15 minutes x $20/hr = $250,000 in annual savings

This simple model gives a good baseline for potential ROI. You can add benefits like increased revenue for a more complete view.

Implementation Considerations

To successfully implement BRMS, consider these best practices:

  • Start with high value processes – Pick use cases where BRMS can demonstrate quick wins
  • Phase rollouts – Gradually introduce BRMS vs overnight overhaul. This eases migration.
  • Get executive sponsorship – Ensures adequate budget and cross-department buy-in
  • Clean data beforehand – Flawed data leads to faulty rules. Invest in data quality.
  • Iteratively refine – Continuously collect feedback to improve and expand rules.

Following these tips will smooth your path to BRMS success.

The potential for BRMS to transform operations is immense. I hope this guide has provided a comprehensive introduction. Let‘s connect if you want to discuss BRMS opportunities for your organization:

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