Tuesday, April 11, 2006

Business Processes and Rules

Sometimes we sell a product to businesses that improves their efficiency. Improved efficiency can help the business achieve:
  1. Increased production or sales volume.
  2. Lower production and operational costs.
There is a discipline called "business process improvement" (BPI) dedicated to the subject of improving operational efficiency. Companies like Dell spend a great deal of time on BPI projects to determine how they can make different aspects of their business more efficient.

Key concepts in BPI include business processes and business rules.

Business processes are the steps a business executes to achieve their objectives. Accepting and processing orders, doing payroll, and hiring and firing employees are all examples of business processes.

Business rules are rules the company follows as it executes its business processes. An example is a pricing rule that states the minimum price or margin a sales person is allowed to negotiate with a customer. You can also view the steps within an established business process as rules; i.e. the rule is that the employees follow those steps.

When we are developing a product for sale to businesses, it's important to understand the business processes and rules of the businesses we are targeting. That way we can understand how best to deliver value - a product that will improve the businesses' operating efficiency.

In my next entry, I will explore the relationship between product requirements and business processes/rules.


rodgert said...

Hi Roger,

I recently when for an interview where I was asked

Explain the difference between a business requirement and a business rule?

Roger L. Cauvin said...

My next entry addresses the question you were asked in your interview.