Question

Describe what business rules are and how they are incorporated into BPMN Activity models and UML Class diagrams. How are business rules used to implement internal controls? Give some examples of how business rules can be used to implement company policies and guidelines.

Answer 1

Business rules define instructions or constraints on how each day actions should be performed.

Business rules can be divided into one of three types:

• 1. Coordination rules: rules set in place that are a general requirement that has to be met before continuing. The rules are geared to make sure the company keeps progressing without re-work.
  2. Qualification/disqualification rules: these rules are used to determine which subjects should be included and which ones should not. It's basically filtering and preventing wasted time and effort.
  3. Decision rules: this rule is used when a subject needs to be sent back for more information, approved, or rejected.

When business rules are designed separately from process implementations, they provide a powerful and flexible approach to help organizations move more quickly in meeting their goals and better respond to changing business needs.

Business Process Modeling Notation (BPMN)

BPMN is a graphical representation of business process using standard objects. It can also be defined as a set of graphical objects and rules describing connections between the objects.

BPMN consists of the following basic building blocks;

• 1. Flow objects: events (circles), activities (rectangles with rounded corners), and gateways (diamonds)
  2. Connecting objects: mainly comprising arrows, these indicate sequence flow (filled arrows), message flow (dashed arrows), and associations
  3. Swim lanes: pools (graphic container) and lanes (sub-partition of the pool)
  4. Artifacts: data objects, groups, and annotations.

The biggest advantage of BPMN is that it’s a standard with well-defined syntax. So many business analysts are familiar with it which makes collaboration much easier. Also, most modeling tools support BPMN which makes it much easier to share and edit if even using different software.

All these together makes BPMN the most popular business process modeling technique at the moment.

UML Diagrams

UML is a modeling language mainly used for specification, visualization, development and documenting of software systems. But business professionals have adapted it as a powerful business process modeling technique.

With 14 different UML diagram types, it offers a flexible and powerful way to visualize almost any business process. They are typically used for modeling the detailed logic of a business process. In many ways, UML diagrams are the object-oriented equivalent of flow charts.

As mentioned above one of its main advantages is its flexibility. But with 14 different diagram types, some might find it difficult to understand the diagrams. Add to that the same process can be modeled using different UML diagrams. So probably not the most popular choice among analysts.

Internal controls represent an important and essential source for providing information and support of the most critical decisions of managers, helping them to conduct business in achieving the intended goals.

Note that both the business management style and the way of managing internal communication are factors that, company to company, can cause a variation or another on the purpose and usefulness of internal controls.

But as a rule, organizations that invest heavily in information technology and therefore have highly computerized systems, have an advantage over the competition, because their internal controls allow them the rapid detection and correction of flaws and imbalances in their various processes, which means a huge competitive advantage.

Objectives of Implementing Internal Controls

• 1. To promote reliability and impartiality in the production of financial reports.
  2. To provide timely and easily accessible information, enabling the efficient and effective conduct of business processes.
  3. To ensure the compliance of internal processes and actions in general of the objectives of strategic planning, avoiding guideline deviations.
  4. To safeguard the company’s assets, support risk management and minimize any financial losses from mismanagement

Implementing Internal Controls, these things to be considered:-

• 1. Allocation and clear documentation of the obligations of each employee of the company, so that in the possible case of irregularity, the appropriate person responsible can be charged.
  2. Standardization and documentation of standards, procedures, and internal routines.
  3. Roles and responsibilities related to the execution of critical processes must be well targeted and managed as a team, so no overload compromises efficiency.
  4. Cost-benefit analysis and prioritization of certain internal controls, so that resources consumed by running them are no larger than the gains.

Some examples of business rules used to implement company policies and guidelines:

• 1. Degrees of customer discount
  2. Budget approvals
  3. Establishment of priorities

Consider a company that sells books online.

Business rules define the discounts which you can apply in each individual case and also, what the minimum threshold is to offer free shipping to customers, for example. A business rule will also establish that you can only send a purchase after recording that particular customer’s payment.

In another case, consider a SaaS that works from recurring sales. The company has been experiencing problems with Defaulter clients. What do you do if you don’t receive a payment within the agreed upon time limit?

The company that makes SaaS available can decide to cut the software supply based on a deadline established through a business rule. That is, it may decide to cancel the subscription of a client who fails to make payment for two consecutive months, for example. You should realize that executing these types of processes is fundamental.