I got an interesting email from Dan Appleton this week. Dan is a principal of The Capabilities Center and his email prompted me to blog today on this topic. Dan’s email introduced his perspective on how business rules, especially in the context of enterprise decision management or EDM. He and I are broadly in agreement and I thought he made some really good points so, with his permission, here are some quotes from his email with my comments.
Business strategy is fundamentally an economic challenge, not a technical challenge. Business Rules, to my thinking, were required as a bridge between the two (strategy and technology) but first and foremost, they were expressions of economic thought.
Dan is quite right here, at least as far as corporations are concerned (other factors might come into play in the public sector) and, like him, I think business rules can be a very effective bridge between these two worlds. In many ways the use of decision as a critical component in enterprise thinking is the most important outcome of adopting EDM. Decisions, I believe, represent the ideal way to link business strategy to technical implementations as they are usable by executives, can be simulated and measured and yet can be rationally implemented as Decision Services (wiki). Having specified the rules for a decision it becomes possible, as Dan noted, to validate them against both strategy and to ensure economically profitable behavior.
Business decisions…are all intended to accomplish desirable economic outcomes…
Therefore, the rules of concern to managers are economic rules which they package into their management doctrines. These doctrines foster processes, not the reverse. It is these doctrines that distinguish one organization from another
I like the way Dan describes this, particularly how he puts decision-making ahead of processes. I too think that the right way to design processes is to make sure that they can implement the decisions you need. The idea that management have a set of “doctrines” that should be applied to the rules for a decision and to the process itself is very compelling.
“decision effectiveness” is a function of the quality of the rules, and that rule quality derives from economic thinking, not technical thinking
Rule quality (relevance, accuracy, legality etc) does indeed derive from business or economic thinking. The true power of business rules, especially used in the framework of EDM, is that it allows the direct connection of this business/economic viewpoint to the execution of information systems through the connection of decisions to decision services.
I am constantly looking for ways to show managers and executives how EDM would empower them – I think they need to understand the extent to which existing software development approaches reduce their ability to control their own destiny. When executives don’t understand how a system acts and cannot participate effectively in deciding how to change it to respond to some business condition then they are completely un-empowered. EDM empowers them by allowing them to collaborate in the critical operational decisions embodied by their information systems. Dan pointed out the work of Oliver Williamson – Economics Professor at UC Berkeley – who introduced a concept in his book “Markets and Hierarchies” of “bounded rationality”. Dan summarized this as the continuing struggle of any management team to understand the complex environment it is designed to regulate. Given that a modern organization is its information systems in a very real sense, the complex environment a management team must understand should be considered to include their information systems. EDM, by giving them more control over the decisions taken in those systems, would therefore greatly empower them.
Finally Dan provided a model which I reproduce below. I think the model needs Decision added but I like it anyway.
Dan and I would love to know what you think….