Rules Governance Framework: 4 Phases

Rules Governance is a specific form of corporate governance applied to ensure consistency and predictability of an organizations approach to managing fundamental business rules. Rules governance is just emerging as a concern within forward-thinking organizations that recognize that business rules at the core of a company's operational performance and must be managed to:

• minimize risks of non-compliance with regulatory and legal procedures and


• maximize the competitive advantage of business practice intellectual property.

Business rules are the guiding principles behind every transaction between an organization and it's key stakeholders--external; customers, suppliers, and shareholders, as well as internal; divisions, departments, individuals. Business rules need not be embodied in a computer system, though clearly, our majority focus is on doing so in the best possible fashion. Business rule implementations may be just as effectively implemented by documenting them in training and SOP documents as in encoding them in an IT application. So, rules governance does not immediately suggest that IT is involved. Rules Engines are the most highly evolved repository for business rule embodiment. However, one must consider that not all business rules are suitable for embodiment in software and indeed not all businesses are prepared to begin to solidifying business rules into software.

So, as business leaders become aware of the importance of managing fundamental business rules as strategic assets, Rules Governance practices will evolve. To begin our exploration of the rules governance practice, we require a few simple tools to allow us to frame-up the domain.

Rules Governance is a process--ideally, an iterative process--which seeks to unearth common business practices and facts, bring them into focus for management, enrich them through re engineering, and finally to ensure their usage in the proper business contexts.

So, roughly, there are 4 phases of the iterative Rules Governance process:

1. Discover


2. Document


3. Design


4. Deploy

The Discover and Document Phases are alike in that they are best owned by the Business Operations staff, while Design and Deployment are best owned by Business Engineering (see Rules Governance Framework: 2 Partners). The Discovery and Deployment phases should encourage broad participation in an organization; to achieve buy-in and ensure completeness. Document and Design phases, on the other hand, require small audiences of accountable individuals to avoid excessive analysis and the traps of consensus decision making.

Each phase evolves a body of business rules (technically called a ruleset); validating, improving and clarifying the ruleset.

Discover Phase

The starting place for any governance process is to gather the common understanding of the rules currently used to govern business decisions. Discovery typically involves a combination of SME interview, documentation review, and software code inspection. The modern organization will house their SOPs in each of these forms. Initial discovery will often uncover redundancy and inconsistency in application of business rules; the guiding directive of this phase, however, is to collect rather than to judge. The discovery phase may be enabled using advanced knowledge management tools. (see RulesSeeker)

Document Phase

Once candidate business rules are collected, they must be recorded in a format that makes them available to the stakeholders for consideration. The documentation phase is about classification and clarification. Evolution of a business rule catalog begins in this phase. The end goal is to render existing business rules in a format most easily understandable by business stakeholders. Clear language, consistent structure, and a common lexicon of terms is required. This will unlock the underlying meaning of the recorded rules for debate and decision by management.

Design Phase

The Design Phase begins the formal analysis of rulesets to remove redundancy, improve efficiency, and further define the appropriate contexts for rule application. Re engineering methodologies such as Lean BPM or Six Sigma may be applied to complex situations to provide objective analysis that may feed improvement of common practices. The Design Phase will introduce new hybrid rules which capture the best of an organization's wisdom and eliminate rules which do not reflect internal best-practices.

Deploy Phase

The final phase for each iteration involves putting an evolved ruleset into affect in an organization. This will require updates to SOP document, encoding of processing rules into formal executable language, and functional training curricula. Deployment efficiency requires that rulesets are conveyed in a timely manner to any and all related decision points in the organization's value chain. That deployment must include means to measure the adoption and application of the rulesets--this information is useful for auditing the impact of rulesets, informs the next iteration of the governance process, and allows management to score and improve operations.