GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS

MOD 1 LESSON 1: WHY DECISION MODEL? measurement and control, sensors, wireless applications, systems
integration, test measurement, and many, many more.
DECISION MODEL
o An intellectual template for perceiving, organizing, and managing
the business logic behind a business decision
o Model that impacts not just technology trends, but also business
management practices
o Brings to the world of business rules a well-defined structure based
on the inherent nature of logic, extended with integrity and
normalization principles
o It is similar in concept to what the Relational Model brings to the
world of data

HOW IT BEGAN
o Inception of computer systems in the early 1950
o Constant expansion of the functionality of computerized business “A big ball of mud is haphazardly structured, sprawling, sloppy,
systems (via applications) duct-tape and bailing wire, spaghetti code jungle. We’ve all seen them.
• Discrete applications These systems show unmistakable signs of unregulated growth, and
• Complex applications repeated, expedient repair. Information is shared promiscuously among
o Before the advent of commercially available computers, a business distant elements of the system, often to the point where nearly all the
carried out its processes through human effort guided by human important information becomes global or duplicated. The overall
thinking and logic. structure of the system may never have been well defined. If it was, it
o Critical processes were documented as a set of tasks and may have eroded beyond recognition” (Foote and Yoder, 1999)
important check- points, along with guidance for carrying out
THE ONE DIMENSION LEFT BEHIND
decisions along the way.
o Although it is true that much progress has been made in teasing
o Documentation exists today for many processes that are partly or
out the distinct aspects buried in the big ball of mud, there has not
wholly carried out by humans
been widespread success in teasing out the business logic so that
o Documentation together with training informs the processes and
it can be developed and modified independently
evolves them over time
o In the age of commercial computer processing, important business
BUSINESS LOGIC
processes, or parts thereof, have become ideal targets for
o The very heart of automated business systems
automation
o Simply a set of business rules represented as atomic elements of
conditions leading to conclusions
o Represents business thinking about the way important business
decisions are made
o Represents the “rules of the business” that operate perhaps
thousands of times a day in service to customers and partners
o The sequences of steps along with the business logic for making o Present and the future of the company
decisions behind those steps have been translated into program
code. WHY SEPARATE BUSINESS LOGIC?
o Businesses have gained a great deal by automating business o Many “rules of the business” are buried in program code or in
processes. people’s heads
o The ability to process transactions quickly, in greater volume, and o Sometimes, the business rules executing in program code are not
with more consistency has made all the difference in the world to what the business thought they were or even what the business
most businesses. needs them to be.
o The gains have been enormous and, consequently, the wave of o Important consideration in implementing change and delivering
business automation has grown beyond initial expectations. enterprise agility.
o So, too, have the sophistication of technology and the way o However, today they operate as a silent, invisible business asset
automated systems are designed. rather than one worthy of being managed separately from other
o However, a price has been paid for these great advances. dimensions.
o That is, many, if not most, enterprises have lost track of and control o As a result, they remain buried, scattered, and resistant to change.
over the business logic that is embedded in these systems. Even when captured separately from models and requirements, the
o This is a natural result of how the design and development of technology for storing business logic ranges from documents,
automated systems have evolved. spreadsheets, modeling tools, repository tools, and proprietary
software, to home-grown databases.
AUTOMATION o They are managed as a catalog or list of business rule statements,
o In the dictionary it is defines as “the technique of making an tied in one way or another to related deliverables. They are not
apparatus, a process, or a system operate automatically” managed in a common model as data is managed today. The
o the creation and application of technology to monitor and control historic impact of a common model for data is worth contemplating.
the production and delivery of products and services
FROM THE PAST
o the use of technology to perform tasks with where human input is
o DATA - earliest aspects teased out of the ball of mud
minimized
o Recognition that data should be separated from process (late
o encompasses many vital elements, systems, and job functions
1960s and early 1970s)
o Automation provides benefits to virtually all of industry. Some
o Mere separation of data into a list of data elements was not
examples:
sufficient for delivering the anticipated benefits of increased data
• MANUFACTURING - food and pharmaceutical, chemical
sharing and data quality
and petroleum, pulp and paper
o Design approaches still varied and were influenced by proprietary
• TRANSPORTATION - automotive, aerospace, and rail (exclusive) database technology
• UTILITIES - water and wastewater, oil and gas, electric o Separation alone proved to be insufficient – need for a common
power, and telecommunications design approach
• DEFENSE o Adoption of the Relational Model (Codd’s model) along with related
• FACILITY OPERATIONS - security, environmental control, technology and best practices significantly improved the quality of
energy management, safety, and other building automation data stored in database technology
o Automation crosses all functions within industry from
installation, integration, and maintenance to design, THE DECISION MODEL STRUCTURE
procurement, and management. o based on the premise that business logic has its own existence,
o Automation even reaches into the marketing and sales functions of independent of how it is executed, where in the business it is
these industries. executed, and whether or not its execution is implemented in
o Automation involves a very broad range of technologies automated systems
including robotics and expert systems, telemetry and o has a recognizable structure that is not the same as the structure
communications, electro-optics, Cybersecurity, process of other kinds of models

BY: KRISHA ANNE F. CASILANG pg. 1

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
o With the introduction of the Decision Model, it is improper to impose • Delivery of domain-specific decision logic that become standard
(and thereby bury again) business logic onto other kinds of models commodities
because business logic now has its own model. • Business leaders who will view, value, challenge, and simulate their
1. Data Model own business logic, before, after, and even if it is not, automated
2. Process Model Check ppt for pics
3. Decision Model

FIVE MOST INTERESTING CHARACTERISTICS OF THE DECISION

MODEL
o It is important that the Decision Model have its own notation and
principles that make it a totally different model from other kinds of
models.
1. It defines a technology-independent way of organizing an Vary in format: business rules or
important, some- what intangible business intellectual asset. That 1. free-form text statements (more
asset is business logic. 2. fill-in-the-blank templates accurately, their intended
2. The Decision Model is a pure representation of business logic. That 3. decision tables, decision logic) that are modeled in
is, it is devoid of biases from process, data, or technology. It a Decision Model
trees
possesses three significant features of technology-independent 4. sentences adhering to structure adhering to the
models: specific syntax or Decision Model principles
• a simple structure grammar
• declarative nature
• optimal integrity. THE DECISION MODEL AS AN INTELLECTUAL TEMPLATE
3. Despite being independent of technology, it is easily implementable o the Decision Model is a logical representation of business logic
in technology and transcends current and future technology o not a physical model of how that business logic is to be
products. implemented in specific technology
4. The Decision Model is neither a language nor a grammar. It is a o not even a model for how that business logic is to be communicated
model. Yet, languages and grammar can be defined over the through procedure manuals or training materials
Decision Model in much the same way that SQL, as a language, o an intellectual template for the full and rigorous specification of logic
was built over the Relational Model. o can be translated into one or more target technologies through
5. It is a model that addresses an important unsolved problem: how appropriate design methodologies
to effectively manage business logic and business rules, not as lists o a model and not just a list
or annotations attached to or buried in other models, but in a model
of their own. THE DECISION MODEAL AS A MODEL
o model representing a structural design of the logic embodied by
MOD 1 LESSON 2: DECISION MODEL AS AN IMPECTUS FOR those statements
CHANGE o unique representation of business logic, unlike other
representations
THE DECISION MODEL o is an independent representation of business logic based on the
o The Decision Model has the potential to change current business premise that business logic has its own existence, independent of
management practices and future technology how it is executed, where in the business it is executed, and
o enabling both business and IT professionals to rethink the way they whether or not its execution is implemented in automated systems
view, design, execute, and govern business logic. (set of business o the Decision Model is distinct in its representation of business logic
rules represented as atomic elements of conditions leading to because a Decision Model aims to be:
conclusions)
• Simple to interpret and manage
o By using the Decision Model, non-technical business people can
• Declarative so as to be independent of technology or
interact with their own business logic intuitively, according to
processing requirements
practice.
• Optimal in integrity, meaning that its business logic is
o In interacting with the business logic, the business people – leads
consistent within itself and aligns with business direction
to natural business governance over business directions and agility

Industry analysts predict significant growth* in the technology areas BUSINESS LOGIC: BUSINESS DERIVES CONCLUSIONS FROM
of Service-Oriented Architecture (SOA), Business Process FACTS
Management (BPM), and Business Decision Management (BDM—also, o First of all, each of these statements is expressed in the way that a
and interchangeably, referred to as Enterprise Decision Management business person might express it. None is stated in terse, forced,
(EDM)). unnatural, or pseudocode format.
Major corporations investing in one or more of these technologies o The expressions are business-friendly and serve as a starting
span all industries. The interest in these areas stems from a growing point. The goal is to discover the intended business logic behind
need to enable business agility, leverage current investments in IT the statements and translate it into a more rigorous form in a
infrastructure, and gain control over IT governance. Decision Model.
Each of these trends promises to deliver supporting infrastructure o In fact, a natural language statement can be generated from the
around an important and proprietary business asset: the business’s Decision Model that is more precise than the raw material from
logic that should drive its operational transactions in the most desirable which it started.
manner. Therefore, a model of such business logic is at the center of all o For now, each of the foregoing statements is, simply, one business
of these emerging areas. Industry analysts, vendors, and practitioners conclusion. That is, each statement comes to a simple or complex
proclaim that such business logic today needs to be separated from conclusion based on facts.
other logic so as to be reusable, changeable, and deployed in EXAMPLES OF BUSINESS LOGIC:
corresponding technology. It needs to be delivered in appropriate 1. A person who has not had any jobs in the past five years is
technology and made available to all business processes and systems considered to have a poor job history.
that need it and across emerging SOAs. However, without a well-formed 2. A person with more than ten jobs in the past five years is
model of business logic, there is little rigor and no solid roadmap for considered to have a poor job history.
achieving this. 3. A person with a poor job history, a large mortgage, and a
significant number of miscellaneous loans is considered very
DECISION MODEL HAS THE POTENTIAL TO BRING ABOUT THE
likely to default on a loan.
FOLLOWING KINDS OF CHANGES:
4. A person with a low credit rating must not be granted an
• IT and business management methodologies that promote
unsecured loan. (conclusion seems like an unconditional
business decisions and corresponding Decision Models to the level
constraint because it defines a situation that must never be true)
of prominent management levers
5. A person’s credit rating is computed according to proprietary
• Commercial automation software that supports decision services
formula. (conclusion is the result of a computation because it
derived from Decision Models provides a specific formula)
• Commercial modeling and requirements software that enable
specification and governance of Decision Models from business to o Regardless, each of the statements still arrives at a conclusion
technology using certain facts as input (conditions) specified by business
leaders.

BY: KRISHA ANNE F. CASILANG pg. 2

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
o Capturing business logic, from conditions to conclusions, and o What if Person Employment History is not Poor? What rows are
refining it until it is atomic, precise, unambiguous, and aligned with needed in this Rule Family
business objectives is what the Decision Model and its principles
are all about.
o A Decision Model is a prescription for how the business arrives at
fact-based conclusions that collectively represent the intended
business logic behind a business decision.
o The individual conclusions and their representation in a Decision
Model are independent of whether they support complex custom
software, purchased software packages, or processes carried out
by humans.
o Decision Model conforms to all Decision Model principles DISTILLING SENTENCES FROM THE DECISION MODEL
regardless of type of automation or lack thereof.
o It is best to develop (in practice) a Decision Model up front and then
determine whether the Decision Model is best carried out by
technology or by humans.
o If technology is most appropriate, the Decision Model can assist in
selecting the technology that best fits the characteristics of the
business logic behind the business decision. o If/when Person Employment History is Poor and Person Mortgage
Situation is Poor and Person Miscellaneous Loans Assessment is
FROM BUSINESS LOGIC TO DECISION MODEL STRUCTURE
High, then (the business concludes that) the Person Likelihood of
o A quick way to learn about the Decision Model is to start with a
Defaulting on a Loan is High
business statement and translate it into a structural element of a
o A Person with Poor Employment History and Poor Mortgage
Decision Model. Situation and High Miscellaneous Loans Assessment has a High
o Suppose a financial institution provides various kinds of loans.
Likelihood of Defaulting on a Loan.
Recently, the number of customers defaulting on loans has
o A Person has a High Likelihood of Defaulting on a Loan if all of the
increased so significantly that the business experts want to sharpen following are true:
the business logic that determines the likelihood of such default.
• Person Employment History is Poor
o The business experts, therefore, need a Decision Model that
• Person Mortgage Situation is Poor
comes to a conclusion about a person’s likelihood of defaulting on
a loan. • Person Miscellaneous Loans Assessment is High
o This new Decision Model needs to be put into action. The business NOT JUST A SET OF DECISION TABLES
then needs to monitor the frequency and magnitude of subsequent o the Rule Families of a Decision Model (at first glance) appear to be
loan defaults. nothing more than familiar decision tables
o A comparison of past to future defaults measures the effectiveness o common definition of a decision table is “a table of all contingencies
of the new Decision Model. and the actions to be taken for each” (“Decision Table”)
o If the improvement is not what the business anticipated, the o it is true that a Rule Family in a Decision Model resembles a
business logic within the Decision Model will be changed, perhaps decision table in that both are two-dimensional structures of
tested against sample loan applications, put into play in the contingencies leading to actions or conclusions
business, and the results measured again. o the Rule Family in a Decision Model differs from a decision table in
two important way:
1. Gathering Business Logic Input
• each Rule Family adheres to a full set of principles whereas
2. Creating the Decision Model Structure
a traditional decision table does not do so (one of the
3. Populating the Decision Model Content
principles, for example, prescribes that a Rule Family have
4. Distilling Sentences from the Decision Model
only one conclusion column)
5. Changing the Decision Model Content
6. Relating Decision Model Structures • not only may each Rule Family be related to other Rule
Families, but Rule Family relationships are managed
7. The Role of Rule Patterns
carefully
8. Not Just a Set of Decision Tables

GATHERING BUSINESS LOGIC INPUT MOD 1 LESSON 3: DECISION MODEL NOTATION AND
o The following statement represents a conclusion reached about the SUPPORTING SOFTWARE TOOLS
likelihood of defaulting on a loan based on certain business facts: DECISION MODEL NOTATION AND SUPPORTING SOFTWARE
• A person who has a poor employment history, a poor TOOLS
mortgage situation, and a high miscellaneous loans o To fully represent the Decision Model and its principles, a Decision
assessment is highly likely to default on a loan. Model notation is needed for at least two different kinds of
diagrams:
CREATING THE DECISION MODEL STRUCTURE • Rule Family table
o The fundamental structural element of a Decision Model is a two-
• Decision Model diagram
dimensional table relating conditions to one—and only one—
o One of the principles, for example, prescribes that a Rule Family
corresponding conclusion.
have only one conclusion column.
o A Rule Family is a two-dimensional structure that represents three
condition columns that are tested to arrive at the conclusion DECISION MODEL DIAGRAM
column.
o Depicts only the Decision Model’s structure and not the detailed
content of its Rule Families
o Begins with an octagonal shape that represents the entire business
decision
o Its shape relates to tasks within business process models and to
steps within use cases, precisely at places in those models where
the business decision is in play
o Business decision shape also connects to:
POPULATING THE DECISION MODEL CONTENT • business objectives
o Do all decision makers agree with these conditions leading to this • business tactics
conclusion? • business requirements
o What exactly is meant by Person Employment History? What are o the Rule Family directly connected to the business decision shape
values other than Poor? is called the Decision Rule Family because its conclusion is the
o What is meant by Person Mortgage Situation? What are its other conclusion sought by the entire Decision Model
possible values?
o What about Person Miscellaneous Loans Assessment? Which RULE FAMILY TABLE
kinds of loans are included and excluded? o A Rule Family table provides a complete view of the content of a
o What is mean by Person Likelihood of Defaulting on a Loan and Rule Family. Clearly, each Rule Pattern in the diagram may
what are its possible values? represent from one to many rows of business logic statements.

BY: KRISHA ANNE F. CASILANG pg. 3

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
o The Decision Model diagram enables a view of the structure of the
model without having to deal with the detailed content.

BUSINESS LOGIC AND BUSINESS RULES

o Decision Model constrains atomic elements expressed within
business rules or expressed in other ways and their arrangement
to produce one and only one proper structure.
o Any business rule or statement that can be expressed in a
language or diagram as atomic elements of conditions leading to
conclusions can be depicted in a Decision Model.
o It is important to note that not all such statements are created
equal.
o Some have more value to the business than others.
o Decision Model is most useful for business rules or statements that
can be expressed as conditions leading to conclusions that are of
measurable business impact
o The reason for this distinction is that there are many kinds of
statements and rules that are sometimes called business rules but
which are not the ideal target for a Decision Model (even if it is
possible to put them in a Decision Model)
o Business logic best targeted for a Decision Model is of a purely
business nature:
• involves evaluation of facts leading to a conclusion
• represents one business decision
• not easily represented by another means
• subject to change
o Those considerations lead to a model that is of high and
measurable value to the business.

CONSIDERATION #1: THE LOGIC IS OF A PURELY BUSINESS

NATURE
o Does not include logic for determining data quality, data
transformations, workflow routing, or driving interface sequences
o Most often, data validation rules are not the optimum target for a
Decision Model.
o One reason is that they do not arrive at a business-oriented
conclusion.
o Rather, data validation rules ensure that data meets certain
requirements so that it is of good quality
o Once data validation rules have been applied to data, the data can
be used as facts leading to a conclusion in a Decision Model.
o However, the data validation rules themselves are typically not part
of the Decision Model, but external to it.
o Transformation rules contain logic for translating data from one
format and representation to another.
o Data transformation rules do not result in a business- oriented
conclusion. Workflow or process-routing rules contain logic
regarding where to send work.
o However, this conclusion is about managing workloads, not making
purely business-oriented conclusions.
o User or system interface rules come to conclusions about a
particular navigation sequence through Web pages or some other
interface, but do not result in a purely business-oriented conclusion.

CONSIDERATION #2: THE LOGIC IS INTUITIVELY REPRESENTED

AS CONDITIONS AND CONCLUSIONS
o An entire web of interconnected logic emerges based on the very
nature of the logic itself
o For example, data validation rules for an address are usually a list
of constraints for each field in an address.
o A state code must be two characters drawn from the set of standard
state codes.
o A zip code has its own type, length, and domain.
o The same is true for street number, street name, and town name,
and other possible pieces in an address.
o Although it is possible to express these data validation rules as
conditions leading to a conclusion of either “valid field” or “invalid
field,” this is not the most intuitive way to represent them.

BY: KRISHA ANNE F. CASILANG pg. 4

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
o Further, most data validation rules are simple, and the set of data entity, input form, Web page, etc. The business concepts in this
validation rules for one field may be unrelated (or minimally related) table are person, claim, insurance policy, loan inventory item, and
to the validation rules for other fields. vendor. The second row in the table denotes a business decision that
o Therefore, they do not form a very interesting cohesive logic model. comes to a conclusion about a particular attribute of the business
concept of Claim. This business decision comes to a conclusion about
CONSIDERATION #3: THE LOGIC HAS A NATURAL BOUNDARY the amount to pay on a claim, and this judgment is probably based on a
o The Decision Model captures business logic bounded by the limits complex evaluation of business criteria.
of a business decision. It means that the logic is about business
reasoning, not other kinds of reasoning. WHY ARE BUSINESS DECISIONS SO IMPORTANT?
o BUSINESS DECISION is defined as a conclusion that a business
arrives at through business logic and which the business is
interested in managing
o Institutes (establishes) a realistic boundary around a Decision
Model
o Requires that an entire web of business logic (a whole Decision
Model) arrive at an externalized conclusion worth managing
o The notion of business decision that elevates business logic to its
highest business value

CONSIDERATION #4: THE LOGIC IS NOT KNOWN OTHERWISE

o May include logic that lies buried within system code, peoples’
heads, or in imprecise, outdated manuals
o On the other hand, logic that stems from a reliable, proven
representation, such as data validation rules, is not the optimum o Taylor and Raden (2007) state that “organizations are perceived
choice for a Decision Model. through the lens of the decisions they make”
o Security and authorization rules are sometimes considered as o However, not all business decisions are equal in value. Some are
business logic for a Decision Model and sometimes not. of high value, others of less value. Some are automated, others
o One reason they are usually not the optimum choice for a Decision may never be automated. Any one of these business decisions,
Model is they come to a conclusion about a very narrow type of taken by itself within the context of one transaction, may seem to
judgment. have a low value.
o The conclusion is about access to systems, data, or other o However, a new realization is that the high volume of these
resources. operational decisions, taken as a group, has a huge cumulative
o There are other more common and practical ways to manage these effect on an organization’s health. Other business decisions of low
kinds of rules, usually within security and authorization software. volume but of a strategic nature also can have a huge impact on
o Data validation rules are most often represented as part of data- an organization’s health.
oriented deliverables (ex. data models, database Data Definition o This means that there is an emerging business focus on how to
Language), data transformation rules in Extract Transform Load better manage and automate business decisions.
(ETL) deliverables, workflow rules in Business Process o This is the practice of BDM. Not only does BDM focus on the
Management Solutions (BPMS), and so on. business value of business decisions (and their Decision Models),
o There is usually no pressing need to represent such rules in two BDM also advances Business Process Management (BPM) and
different ways when current practice suffices. Service-Oriented Architecture (SOA) by promoting business
decisions to the status of a visible asset worthy of management.
CONSIDERATION #5: THE LOGIC NEEDS TO CHANGE OFTEN
o The Decision Model is for managing important business logic,
especially the business logic that enables enterprise agility.
o If target business logic hardly ever changes, other forms of
documentation may suffice (ex. data validation rules). These tend
to be very static, once defined. So, these are not the optimum target
for a Decision Model.
o For business logic that changes, a Decision Model (and Decision
Modeling tool) provides traceability for impact analysis
o Traceability includes connections to other Decision Models,
business process models, use cases, systems code, and business THE THREE CHARACTERISTICS THAT ARE IMPORTANT TO A
metrics impacted by changes BUSINESS DECISION’S BUSINESS VALUE
Business decisions vary in character a great deal, and are not
MOD 2: THE BUSINESS VALUE OF DECISION MODELS AND made in a vacuum. There are three characteristics of a business
CHANGING THE GAME: BPM AND BDM decision that are important to its business value as well as to the
applicability of the Decision Model
THE NATURE OF A DECISION MODEL’S BUSINESS VALUE
o A Decision Model aims to contribute on the health and well-being CHARACTERISTIC #1: EACH BUSINESS DECISION HAS AN
of a business. OPERATIVE CONTEXT.
o These considerations include the following: o The operative context is the complexity of the business
• How much the Decision Model accelerates business agility environment in which the business decision is made.
• How the Decision Model proves useful in normal, complicated o The operative context determines how a Decision Model solves a
and threatening times, and in times of crisis. business problem or opportunity
• How much profit, reputation, consistency, and quality the o The complexity of the business environment may range from
Decision Model delivers to the marketplace. simple to very complex. Some business decisions are made in the
• How much valuable, expensive and rare business knowledge course of everyday business processes. Some are made during a
the Decision Model secures business crisis.
• How much the Decision Model corrects shortcomings in o Some are made when relevant facts are available, whereas others
today’s best practices, such as Business Process are made in the “fog of war,” when relevant facts are not available
Management(BPM) and Business Decision Management and intuition must substitute for them. The value of a Decision
(BDM) Model must take into account its operative context.
o Simple? → Complex? →Very Complex?
EXAMPLE OF BUSINESS DECISION
Table 3.1 contains seven examples of business decisions. The CHARACTERISTIC #2: EACH BUSINESS DECISION VARIES IN ITS
first column of the table shows that each business decision has a name VOLUME-BASED ECONOMIC IMPACT
that begins with a “deciding word” (e.g., calculate, estimate, determine) o The volume-based economic impact provides insight into the
and the object of that deciding word. Further, the object of that deciding financial value of the Decision Model.
word is correlated to a conclusion fact type, which is simply the piece of o Each instance of a business decision has an economic impact on
information about which the conclusion is made. And, third, the business the business.
decision and its conclusion fact type belong within a business context o An instance of a business decision that is strategic in nature—to
(i.e., a business concept), the latter usually being a business object, acquire another company, for example—may have a greater
BY: KRISHA ANNE F. CASILANG pg. 5
GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
economic impact on the organization than an instance of a The first two contexts, the Simple and Complicated, are in the
business decision to grant a particular level of discount to a given Ordered Domain, whereas the Complex and the Chaotic are in the
group of customers. Unordered Domain.
o Which has greater impact: strategic in nature? Grant discounts? Although the Decision Model is obviously quite appropriate for
o Each business decision also has a frequency of how often it is decisions occurring in the ordered domain, it also proves useful in the
made, which is called its volume. For example, a business decision unordered domain.
to acquire another company may only be made on a rare occasion,
but business decisions about customer discounts are likely made A BUSINESS DECISION IN THE SIMPLE OPERATIVE CONTEXT
many times a day. o In the Simple context, the “known knowns” form the natural
o The collective economic impact of a business decision - is a foundation of a Decision Model because not only are the fact types
combination of the economic impact of each individual instance and known, the fact values* are also known. In other words, it is
its volume. If a business decision granting discounts is made possible to identify the column headings for Rule Families, as well
millions of times a day, the actual financial impact of that business as the condition and conclusion expressions for each business
decision may be equivalent to that of a major acquisition decision. logic statement or row.
o The full value of a Decision Model must take into account both o In the Simple context, the Decision Model emerges as the primary
volume and individual financial value. business construct allowing capture, understanding,
communication, and consistency of the business logic behind an
CHARACTERISTIC #3: EACH BUSINESS DECISION VARIES IN THE important business decision.
COMPLEXITY OF ITS BUSINESS LOGIC o In this context, the parties come to agreement on the Decision
o The business logic complexity assists in understanding the cost of Model, deploy it, and measure it against relevant business
developing and managing a Decision Model. objectives. Business decisions in this context are typically those
o Some business decisions may have one or two Rule Families, each that guide business processes. The sequence of tasks in the
of which may contain only one or two business logic statements. business process is purposely designed to ensure that the facts
o On the other hand, there are business decisions that contain many necessary for making the business decision are available when the
Rule Families, and many hundreds, even thousands of business business decision is to be made.
logic statements. Some Rule Families may contain as few as no o The usefulness of the Decision Model in this context is that it
condition columns, or perhaps only a single condition column, while provides a shared understanding of the logic behind the business
others may contain many condition columns. decision, ensures a complete and accurate set of logic, and
o The value of a Decision Model must take into account its complexity enhances the agility of the corresponding business processes.
and the ease with which its business logic is understood and
managed AIRLINE TICKET PRICE DECISION MODEL

The impact of business decisions on a business is a function of all

three characteristics. Each characteristic measures a different aspect of
a business decision and assists in maximizing the usefulness of the
corresponding Decision Model. The following sections explain how the
three categories determine the business value of business decisions
and Decision Models as follows:
• The operative context determines how a Decision Model solves
a business problem or opportunity.
• The volume-based economic impact provides insight into the
financial value of the Decision Model.
• The business logic complexity assists in understanding the cost ABUSINESS DECISION IN THE COMPLICATED OPERATIVE
of developing and managing a Decision Model. CONTEXT
CHARACTERISTIC #1: ITS OPERATIVE CONTEXT o In the Complicated context, the Decision Model emerges as the
primary business construct to review when conditions change, to
o The definition of business decision given earlier stated that change, extend, add, or remove columns (fact types), rows
business decisions are conclusions arrived at through business (business logic statements), or even whole Rule Families.
logic, and hence derived from facts. Yet, not all business decisions o In the Complicated context, the business decision operates with
made in the course of business can be made based on facts alone, “known unknowns.” In this situation, specification of the fact types
because sometimes the facts are just not available. When events or fact values requires expert advice and assistance. Typical of
do not follow an expected course—due to opportunity, crisis, or business decisions in the Complicated context is that the fact types
unforeseen events—decisions must be made in the absence of (i.e., column headings), are known, but there may not be sufficient
desired facts. information to populate the condition or conclusion cells for those
o These decisions have to be made by relying on the decision headings. The usefulness of the Decision Model, then, is that it
maker’s intuition or expertise instead of some or all of the facts. highlights the unknowns that help to identify the kind of business
These types of decisions are referred to as “pattern based” or expertise needed. When and if those experts are included in
“event based.” To the extent that they are not fully fact based, they development of the Decision Model, it will represent content that is
cannot be fully modeled by a Decision Model. However, in these shared from expert to nonexpert.
circumstances the Decision Model still plays an interesting and o Often a business decision operating in a Complicated context may
important role. need to allow for more than a single solution for the same input. If
o The concept of operative context is explained in “The Cynefin so, the usefulness of the Decision Model is that it provides a clear
Framework”* (Snowden and Boone, 2007). This is a “Leader’s understanding of those multiple solutions and simplifies the
Framework for Decision Making”, formulated by David J. Snowden comparative analysis among them. Business decisions in the
and Mary E. Boone. The framework defines an operative context in Complicated context sometimes provide guidance for business
which business decisions are made, representing these operative processes, but are more likely to do so in Complex Event
contexts as a continuum of “contexts.” Processing (CEP),* and in other event- driven contexts.

Snowden and Boone define four different operative contexts AIRLINE TICKET PRICE DECISION MODEL ADDING FUEL
for business decisions based on the input to them, as follows: SURCHARGE
• The Simple context, where the input consists of “Known
knowns.” All parties share an understanding of the facts required
to make a decision.
• The Complicated context, where the input consists of “Known
unknowns.” This is the domain of experts, where there may be
a need to work in unfamiliar environments. More than one correct
answer may exist for the same input.
• The Complex context, where the input consists of “Unknown
unknowns.” This is when there is incomplete data, and there
may be no correct answer for some or all inputs.
• The Chaotic context, where the input consists of
“Unknowables.”

BY: KRISHA ANNE F. CASILANG pg. 6

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
A BUSINESS DECISION IN THE COMPLEX OPERATIVE CONTEXT CHARACTERISTIC #2: ITS VOLUME-BASED ECONOMIC IMPACT
o In the Complex context, the Decision Model emerges as the o Business decision – inverse proportion to individual economic
primary business construct for iterative invention of experimental value
solutions in fluid environments. o Sometimes economic value of everyday transactions – is
o In the realm of the “Unknown Unknowns,” the Complex context, insignificant in an enterprise as a whole
the Decision Model is more difficult to construct. The fact types are o A strategic business decision may be made only once in a long
as yet unknown. There may be no clear solution for some or all period of time, but a single strategic business decision may have a
inputs. Experimental solutions may be necessary. The usefulness profound economic value
of the Decision Model is that it is an aid for inventing solutions. o Its Volume-Based Economic Impact Taylor and Raden (2007) state
Business decisions in complex contexts are found in fluid that a key factor in the categorization of a business decision is the
circumstances such as business mergers and acquisitions, number of times it is made in a given period, such as per day,
disruptions in the marketplace, major changes in regulatory month, or year. For example, a discount decision for customer
environments, unexpected litigation, and similar events. orders may be made many times a day based on the quantity of
daily customer orders. On the other hand, a business decision to
AIRLINE TICKET PRICE DECISION MODEL ADDING FUEL upgrade the product’s current features may be made as
SURCHARGE infrequently as once a year or less often. In general, operational
decisions, those guiding core business transactions on a day-to-
day basis, are made in the highest volumes. In contrast, the
business decisions made at the strategic level of the business are
typically the lowest volume of frequency.
o An example of a strategic-level business decision is a merger
decision which, in some businesses, may be made only once in an
entire business lifetime, if ever. An interesting observation about
business decision volume is that it often occurs in inverse
proportion to its individual economic value. For example, although
a customer order discount decision may be made many times a
day—perhaps in some businesses thousands of times an hour—
the economic value of each by itself is relatively inconsequential to
the enterprise as a whole. The opposite is also true. A strategic
business decision may be made only once in a long period of time,
but a single strategic business decision may have a profound
economic value. The overall economic impact of a business
A BUSINESS DECISION IN THE CHAOTIC OPERATIVE CONTEXT decision to the enterprise is the product of its volume and its
o In the Chaotic context, the Decision Model emerges as the primary individual economic value. So, in the discount example, the value
business construct by which business leaders carve out islands of of the discount decision taken as a whole is the product of the
order from chaos and develop Decision Models for them. inconsequential impact of its single execution and the thousands,
o The complexity and unknowns in the Chaotic context are perhaps millions, of times that it is invoked in a given time frame.
beyond those even of the Complex context. In the Chaotic o Thus, a business decision on one side of the volume continuum
context, the business needs to make decisions in the realm of may be as important to the economic health of the enterprise as
“unknowable.” In this operative context, there is little applicability one on the other side. Indeed, Taylor and Raden point out that while
for a Decision Model that addresses the entire business decision. a great deal of support for strategic business decision making is
o However, the Decision Model still plays an important role. available, very little is provided for those operational business
o The Chaotic context is improved by finding areas within the decisions that are made daily in the business, and that this is at the
chaos that can be separated from the chaos and developed into peril of the enterprise.
an area of relative order. o The Decision Model provides tangible support in the management
o It is in these areas that the Decision Model proves useful in of operational business decisions—an area where such support is
bringing order to the chaos. In the Chaotic context, the Decision lacking.
Model emerges as the primary business construct by which
business leaders carve out islands of order from chaos and develop Table 3.3 The Value of the Decision Model Based on the
Decision Models for them Management Level and Volume-Based Economic Impact

Table 3.2 summarizes the usefulness of a Decision Model based

on the operative context. The next characteristic of a business decision
that aims to contribute to the health of a business is its volume-based
economic impact.

o As discussed, operational decisions are primarily decisions made

in the simple context, and are —or should be—intrinsic to an
organization’s business processes.
o Table 3.3 summarizes the value of a Decision Model based on the
management level and volume-based economic impact of its
corresponding business decision.

BY: KRISHA ANNE F. CASILANG pg. 7

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
o Table 3.3 indicates that the operational business decisions that are parts of the Decision Model for appropriate automation or for
the subject of Taylor and Raden’s book fit into the simple operative human handling.
context. Hence, the corresponding Decision Models deliver the
same values as any Decision Model operating in that context. Table 3.4 The Value of the Decision Model Based on Complexity of
o Table 3.3 highlights the fact that strategic and tactical decisions Business Logic
referenced in Taylor and Raden, although of high economic value,
are likely to span operative contexts. Thus, the value of their
corresponding Decision Models is the same as described in Table
3.2 for those contexts.
o For operational business decisions, Table 3.3 notes that the
Decision Model is traceable to business metrics. This is especially
helpful for those business decisions that, if not done properly, result
in loss of revenue, loss of customers, significant fines, reprocessing
of transactions, or the need to reclaim money incorrectly paid out.
All of these have individual economic value that can add up to
significant economic impact. The third way of categorizing a
business decision is by the complexity of its business logic

Taylor and Raden (2007) highlight the importance of operational

decisions and the need to better manage them in “Smart Enough
Systems Manifesto.” They argue as follows:
• Operational decisions are important.
➢ Organizations are perceived through the lens of the
decisions they make.
➢ Lots of small decisions add up.
➢ All decisions an organization makes should be managed
as though they are deliberate.
• Operational decisions can and should be automated.
➢ High-volume, operational decisions especially can, and
should, be automated.
➢ Traditional technology approaches will not succeed in
automating decisions.
➢ The overall effectiveness of automated decisions must be
measured, − tracked, and improved over time.
• Taking control of operational decisions is increasingly a
source of competitive advantage.

CHARACTERISTIC #3: ITS COMPLEXITY OF BUSINESS LOGIC

o The word complex means “a whole made up of complicated or
interrelated parts.” (Merriam-Webster Online Dictionary
“complex”)
o For a business decision, the whole is its corresponding Decision
Model.
o It is complicated or interrelated parts are its Rule Families of
conditions and conclusions and the relationships among Rule
Families.
o So, in order to categorize a business decision by the complexity of
its business logic, it is necessary to understand the:
o quantity of Rule Families
o conditions
o conclusions
o relationships among Rule Families.

o The complexity of the business logic of a Decision Model is most

often considered to be high when there is a large quantity of Rule
Families (e.g., 10 or more), where each single Rule Family consists
of a very large quantity of fact types (e.g., 10 or more), and many
logic statements in a Rule Family (e.g., 50 to 100s and 1000s). On
the other hand, the complexity of the business logic of a Decision
Model is considered low when a Rule Family contains few fact
types (e.g., fewer than 5) or perhaps only a single formula for its
conclusion fact type. In between, these are the Decision Models of
medium business logic complexity.
o Some industries operate with very complex Decision Models,
where the quantity of Rule Families and business logic statements
is higher than indicated in the previous paragraph and where the
relationships among them are many and complex. This is often true
of the insurance and financial services industries.
o Table 3.4 provides a summary of the value of Decision Models
when viewed through the complexity of their business logic.
Essentially, for the simplest business logic complexity, the Decision
Model provides a means for documenting, sharing, standardizing,
and changing that logic. As the complexity of the business logic
increases, the Decision Model also serves as a mechanism for
discovering that complexity, possibly simplifying it, and positioning

BY: KRISHA ANNE F. CASILANG pg. 8

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS

CASE STUDY
A financial institution is reevaluating its loan approval process,
which is partly automated and partly handled by loan officers. The
system seems to operate well in making most decisions involved in
approving loans except in the area of the possibility of the applicant’s
defaulting on a loan. A disturbing organizational issue is that the
evaluation of an applicant’s likelihood of defaulting on a loan often differs
depending on who the loan officer is, because different loan officers use
different criteria. Another disturbing issue is that the quantity of defaulted
loans over the past six months has significantly increased. CHANGING THE GAME: BPM AND BDM
The institution wants to automate the business decision o The previous lesson showed that business decisions made in the
involving the applicant’s likelihood of defaulting on a loan to enforce simple and complicated operative contexts are likely to serve as
consistency and so that only exceptional situations in this regard require elements of guidance in business processes. Further, when those
immediate handling by a loan officer. Therefore, new objectives are set: business processes are executed in high volume, the business
to decrease by 60% in one year the number of loan applications decisions have a significant economic impact on the enterprise.
evaluated by a loan officer regarding the likelihood of default and to
reduce by 25% in one year the quantity of defaulted loans. BUSINESS PROCESS
TASK o a series of repeatable, defined activities taking place in a planned
sequence by actors (being individuals or systems) within a defined
scope of organization where the tasks add value to a good or a
service for a customer
o Business processes are important; some more than others. A
business designs, implements, manages, monitors, and optimizes
them to obtain advantage. The goal in managing business
processes is to provide customers with outstanding products or
services, or to lower costs. In short, improvement in business
processes aims to perfect business performance.
o A business process is wide in scope, an end-to-end chain, rather
than a functional narrow view. So a business process is less
concerned with the functional departmentalization (functional silos)
of the organization, than with the breadth of business processes
that deliver value to the customer. So, a business process exists
regardless of, and spanning, the functions of the organization. In
this way, the focus is on the value chain of the organization. The
value chain is simply the set of steps by which the business adds
value to the goods or services delivered to customers.

THE VALUE CHAIN

o the set of steps by which the business adds value to the goods or
services delivered to customers

EXAMPLE OF A BUSINESS PROCESS

o For example, within an airline, one business process is the
customer’s interaction from the moment the customer inquiries
about a flight to that customer’s completion of the journey, referred
to as the “Customer Trip Process.” It involves many steps, including
inquiring about flight times and cost, completing the reservation
process, arriving and waiting at the airport, boarding the plane, and
so on until the end of the trip. Of course, this business process
involves many different departments and personnel from the airline.

BY: KRISHA ANNE F. CASILANG pg. 9

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
It may also include the hiring of a car from one of the airline’s rental o A declarative solution, on the other hand, only specifies what needs
car partners because wide business processes may cross the to be done, with no details as to how, in a step-by-step manner, it
boundaries of the organization to include partner and customer is to be carried out, because sequence is irrelevant to arriving at
organizations. the correct result. A Decision Model is a declarative solution
o In addition to spanning multiple departments or functional silos of because it is a set of unordered business logic, not a set of ordered
an organization, business processes also span a significant period tasks. A Decision Model is the “What” of a special kind of unit of
of time. The whole “Customer Trip Process” can take days, weeks, work. “HOW means saying how, step by step, the work is to be
or months from start to finish. Hence, business processes are done; WHAT just means saying what the work to be done is” (Date,
“long-running transactions.” 2000).
o To improve business processes, a business designs, implements, o The declarative Decision Model for a business decision should be
possibly automates, and continually improves them. A whole theory removed from the procedural business process so that it can be
of process improvement has evolved, using techniques for creating managed separately in a declarative form.
an abstract visual representation called a business process model. o Separating business decisions from business process tasks
This assists in gaining a shared understanding of the business simplifies the business process model, offers more creativity in
process among stakeholders. Today, automated modeling tools for organizing the business logic, and delivers the business logic in a
producing business process models can simulate the business form that transcends technology options. These advantages
process and serve as a source of building blocks when automating become clear in the following examples.
it. There are many different diagrams that represent parts of
business process models, including flowcharts and activity
diagrams, swim lanes and process charts, and process and
functional decomposition diagrams.
o Regardless of which types of diagrams are preferred, most
business process models today do not separate business
decisions from the business process. Instead, the business logic of
the business decisions is merged into the visual representation of
the business process flow. This leads to the creation of inefficient
processes that are difficult to modify. Such business processes do
not enable optimum business agility even when agility is the main
objective. That’s because such business processes are not
decision aware.

DECISION-AWARE BUSINESS PROCESS

o one that is designed to distinguish between tasks that perform work
(i.e., process tasks) and tasks that come to conclusions based on
business logic (i.e., decision tasks).
o decision aware business process makes distinction (between
process and decision tasks)
o the details behind a decision task are separated from the details
behind the process task
o the separation enables the details behind a decision task (business
logic) to be represented in a different kind of model, specific to
business logic
o However, most business processes today are not designed to be
decision aware.
o “Although organizations have automated standard processes with
enterprise software, these operational decisions haven’t been the
focus of investment. They are overwhelmingly made manually or EXAMPLE #1: SEPARATION OF BUSINESS DECISIONS FROM
automated poorly, which is a mistake. Embedding business BUSINESS PROCESS
processes in systems to streamline operations but not managing o Consider a small piece of a business process model to determine
and improving these decisions leaves half the opportunities for a person’s credit rating.
improvement untouched” (Taylor and Raden, 2007) o Option 1 in the business process models in Figure 4.2 prescribes
o To manage and improve business decisions, they need to be that first the process determines a person’s employment history,
separated from the business processes that rely on them. To and then if the result is good, the process next determines the
separate business processes and business decisions, they must person’s debt. If the debt is low, the process sets the person’s credit
somehow be different from each other in a recognizable way. It rating to “A.” However, if the results are bad and high, respectively,
turns out that they are truly different in a very significant way. In the process branches elsewhere. In this business process flow, the
fact, the inherent nature of a business process is very different from sequence of evaluating the business criteria or conditions is set in
that of a business decision. To date, however, this difference has a specific order. The process flow is rigidly specified, not allowing
not been well understood, but the advent of the Decision Model for alternative sequencing.
brings this difference to the forefront. o Yet Option 2 prescribes a different sequence that also works,
o Essentially, a business process is procedural in nature, but a although this process flow likewise does not allow for alternative
business decision is declarative in nature. However, without a clear sequencing.
understanding of declarative versus procedural nature, common o Option 3 offers a significant improvement simply by removing the
practice involves creating business process models in which declarative business decision from the procedural process flow. It
business decisions are loosely represented as just another part of represents a simpler process flow consisting of only one task. That
the business process. In other words, it is common practice to task combines the whole previously sequential set of tasks into one
model business processes and business decisions in a procedural task, denoted as a decision task, behind which a business decision
manner rather than modeling the latter in a declarative manner. executes in a declarative fashion. Within the process flow, the
This common practice not only constrains the business decision decision task looks like any other task but contains a decision
unnecessarily, it seriously hinders agility for both the business shape within the task box. Option 3 also includes the Decision
process and the business decision. Understanding the difference Model diagram, which puts the Decision Rule Family in context with
between a business process and a business decision means its related Rule Families, and Option 3 includes a Rule Family table
distinguishing and preserving the difference between a procedural for the Decision Rule Family. Neither the Rule Family table nor the
versus declarative solution. Decision Model diagram is embedded in the process flow. They are
separate deliverables, anchored to the process flow by the decision
DISTINGUISHING A PROCEDURAL TASK FROM A DECLARATIVE shape.
DECISION
o A procedural solution specifies how, in a step-by-step manner,
something is to be done. So a business process model is a
procedural solution because it prescribes a set of tasks that are
carried out in a particular sequence. The business process model
is the “How” of a unit of work.

BY: KRISHA ANNE F. CASILANG pg. 10

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
5. Makes governance of business process and business logic difficult
to manage
6. Results in business logic and business processes that are not
reusable
7. Compromises SOA (Service-oriented architecture)

depicts a sequence
of process tasks that
are forced to occur in
a particular sequence
but for which such
sequence is actually
not required

depicts a much
o The Rule Family, by definition, implies no particular sequence simpler business
among the conditions to be tested. The Rule Family in Figure 4.2 process model. The
also indicates via the “?” that there are other possible combinations business process
of conditions to consider. The Rule Family can contain as many model is simplified by
rows as are needed to reach the correct conclusion. For that matter, removing parts of it
it can contain additional columns if other conditions are needed to that can be
determine a person’s credit rating. The Rule Family table also represented in a
contains business logic for the logic not modeled in the business declarative Decision
process models of Option 1 and Option 2. These include the Model.
adjudication of the credit rating for all values of person’s debt and
employment history other than “low” and “good.” Incorporating
these into the business process model rather than in the Decision
Model would have enlarged and added unnecessary complexity THE SECRET OF THE MISSING BUSINESS LOGIC
and unnecessary sequence information to the business process o But then where is the missing business logic in business process
model. To change or add conditions in such a business process models like those in Option 1 of Figure 4.3? Apparently, because
model is far more cumbersome than doing so in the corresponding all of the business logic is not directly visible in the business
Rule Family. process model, some of it must be buried in one or more of the
o Immediate observations are that Option 3 is an improvement over tasks. In fact, it probably is buried in many places, because some
Options 1 and 2 because it: of it may be used in several of the tasks (which is the case in this
• Allows a much simpler business process model business process model).
• Easily highlights all possible combinations of conditions o So, it is likely that some of the business logic is hidden from view
• Permits changes in the Decision Model without changing the in a procedural business process model such as in Option 1.
business process model Further, it is difficult, if not impossible, to resurrect all of it in one
• Permits changes in the business process model without visual artifact—not even by drilling into the detail behind each of
changing the Decision Model (supporting the principle of the process tasks. Therefore, the business logic is rendered
separation of concerns, or teasing apart the ball of mud) unmanageable.
o On the other hand, the Decision Model, by definition and purpose,
EXAMPLE #2: A BUSINESS PROCESS MODEL NEVER REVEALS
resurrects all of the business logic in one visual artifact. In a
ALL BUSINESS LOGIC
populated Decision Model, all business logic is clearly visible in one
o The previous example illustrated that business process models that place and assists in rapidly and accurately gauging the impact of
do not separate business decisions from process tasks bury some
suggested business logic changes without reviewing every task in
business logic in the business process model itself. Example #2 which some portion of that business logic may reside.
now illustrates that, even when this is so, it is usually impossible to
o In a Decision Model, the business logic in one business decision is
resurrect all business logic from such a business process model.
a chain of inferential dependencies. The inferential nature of
Figure 4.3 shows two business process models for determining
business logic within a business decision makes it amenable to
Food Stamp (FS) eligibility. Option 2 depicts a much simpler
having its own model, with distinct boundaries and distinct
business process model than does Option 1.
connections to business processes as needed. In this way, the
o That’s because Option 1 depicts a sequence of process tasks that
Decision Model can be viewed, managed, and executed as one
are forced to occur in a particular sequence but for which such whole set of business logic, as a black box evaluating conditions
sequence is actually not required. The business process model is
and reaching a conclusion.
simplified by removing parts of it that can be represented in a
declarative Decision Model. EXAMPLE #3: SIMPLICITY, PRODUCTIVITY, AND COST SAVINGS
o So, the high-level Decision Model in Figure 4.4 represents the o The business process model in Figure 4.5 is based on a real project
business decision “Determine FS Eligibility.” Although the Decision and is a typical representation of a business process model when
Model contains business logic from several of the tasks in Option it is depicted without regard for whole business decisions. Some of
1, namely, FS Eligibility and Children Qualification, it also contains the tasks evaluate one condition, so the sequence of such tasks
several Rule Families that are not represented by process tasks in imposes a sequence on the evaluation of those conditions. Further,
the business process model: Citizenship Status, SSN Validation, the model contains textual annotations in red representing other
EmploymentStatus, and Income Qualification. So, mingling business logic (or business rules) that are not represented as tasks
business decision logic with process flow as in Option 1 does not in the model itself. So, the business logic has two different kinds of
necessarily expose all of the business logic in that process flow. representations, neither of which seems optimal. It is not difficult to
imagine that producing such business process models is time
DISADVANTAGES TO BURYING DECISIONS (BUSINESS LOGIC) IN consuming, and they quickly become complex. Management of the
BUSINESS PROCESSES business logic and business rules becomes tedious, if not
1. Forces unnecessary sequence and constraints on business logic impossible, because some of it is stated explicitly, some is buried
2. Makes changes to business process and business logic difficult in the business process model itself, and some is probably missing.
3. Adds unmeaningful complexity to business logic and business In fact, this business process model became so unmanageable that
process the client gave up maintaining it, the typical result for models that
4. Fails to deliver a visual representation of all business logic mix process and logic, because they are not decision aware.

BY: KRISHA ANNE F. CASILANG pg. 11

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
o However, the business process model in Figure 4.6 is a
reengineering of the one in Figure 4.5, but with one subtle and
important difference: The business decisions are noted simply by
the decision icon within decision tasks. (The notation style
difference between the two diagrams may be ignored.) The
corresponding business logic statements or business rules are
nowhere on this diagram. This solution depicts tasks in a
prescribed sequence, differentiating those tasks representing a
conclusion carried out through business logic. The detailed
business logic is captured in corresponding Decision Models.
o Simplification became obvious when the quantity of business
process models for the entire project was reduced from
approximately 25 to 10. Additionally, at least 5 of those business SOME OBSERVATIONS IN FIG.4.7
process models were reused elsewhere because removing o illustrates one of the project’s business process models and how
business logic resulted in more generic business process models. its Decision Models represent all of the business logic alluded to in
Most of the Decision Models also became candidates for reuse. the original deliverable but more completely, accurately, and
o The diagram in Figure 4.7 illustrates one of the project’s business visually
process models and how its Decision Models represent all of the o the business process model, devoid of business logic in Figure 4.6,
business logic alluded to in the original deliverable but more contains visible anchor points (e.g., decision shapes within task
completely, accurately, and visually. The business process model, boxes) for five Decision Models
devoid of business logic in Figure 4.6, contains visible anchor o the business process model, devoid of business logic in Figure 4.6,
points (e.g., decision shapes within task boxes) for five Decision contains visible anchor points (e.g., decision shapes within task
Models. One of those Decision Models isshown in Figure 4.7, boxes) for five Decision Models.
complete with its Decision Rule Family and five other Rule
Families. Three of those Rule Families appear as Rule Family EXAMPLE #4: WHEN BUSINESS LOGIC REQUIRES DELIBERATE
tables SEQUENCE
o With these deliverables, the original set of approximately 250 o There are, however, certain circumstances when sequence of
random groups of business rules was reduced to approximately 20 business logic execution is relevant to arriving at the correct
business decisions totaling 51 Rule Families in third normal form. conclusion. In such circumstances, a single Decision Model does
It took much less time to create the revised business process not suffice.
models, new Decision Models, and populated Rule Families, o The business logic must be divided into multiple Decision Models,
compared to the original “combined” deliverables that were each linked to a separate process task. In this way, the deliberate
ultimately abandoned as unmanageable. Further, the “pure” sequence of the process tasks enforces the sequence of Decision
business process models, Decision Models, and Rule Families in Model execution because business process models enforce
Figure 4.7 were dramatically easier to implement in the target sequence and Decision Models do not.
technology than the original deliverables. o For example, in Figure 4.3 (Option 2) the process flow has two
process tasks, each one a decision task. The first task calls a
decision to Determine FS Eligibility, whereas the second task calls
a decision to Calculate FS. The question is: Can this business logic
be combined into a single business decision, and hence a single
Decision Model? If so, then the business process model needs only
one decision task, not two. Therefore, why separate the two
business decisions when it is possible to calculate the value of the
food stamps and set the value to zero for those who are not
eligible? At first glance, this appears to be a reasonable question.
o However, there are business circumstances that require separate
business decisions and Decision Models. First, each business
decision may be governed by a different group, hence having
separate Decision Models facilitates separate governing bodies for
SOME OBSERVATIONS IN FIG. 4.5 the business logic. Second, there may be a process task that needs
o some of the tasks evaluate one condition, so the sequence of such to take place after one conclusion based on the first conclusion
tasks imposes a sequence on the evaluation of those conditions before arriving at the other conclusion (i.e., sequence!) such as
o contains textual annotations representing other business logic (or sending a message based on the first conclusion. These are some
business rules) that are not represented as tasks in the model itself of the circumstances that dictate a required sequence (even if the
o producing this kind of business process models is time consuming, pure business logic itself does not require a sequence).
and quickly become complex o So, the business process model is simplified and collapsed by
removing business decisions from the business process model
when sequence is not required within the business decision logic.
Business decisions are therefore represented, not by spreading or
diluting them across process tasks and imposing unnecessary
sequence, but by separating them in declarative Decision Models
that sit behind a decision task. In this way, the business decision is
represented as a separate model from that of the business process
model, can be managed independently, and can share its
conclusions with business processes. This also implies that a
business process model is not the optimum way to visualize the
business logic of a business decision.
o The previous examples dealt with operational business decisions
(i.e., guiding operational business transactions). The next example
illustrates that separating business decisions from business
process is also powerful when dealing with strategic business
SOME OBSERVATIONS IN FIG.4.6: processes and corresponding business decisions.
o the business decisions are noted simply by the decision icon
within decision tasks
o the corresponding business logic statements or business rules
are nowhere on the diagram
o depicts tasks in a prescribed sequence, differentiating those
tasks representing a conclusion carried out through business
logic
o detailed business logic is captured in the Decision Models

BY: KRISHA ANNE F. CASILANG pg. 12

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
SOME OBSERVATIONS IN FIG.4.3 (OPTION 2) o Most analysts today agree that Dell’s failure could be attributed to
o the process flow has two process tasks, each one a decision task: several specifics, chief among which were the following:
• first task calls a decision to Determine FS Eligibility • Dell failed to recognize that the general consumer was
• second task calls a decision to Calculate FS transitioning to laptop computers, and so Dell remained
o Can this business logic be combined into a single business focused on desktop computer sales.
decision, and hence a single Decision Model? • Hewlett-Packard and other computer manufacturers were
able to achieve and exceed the efficiencies of Dell’s supply
EXAMPLE #5: SEPARATION OF BUSINESS DECISION FOR NON- chain and direct supply model. Competitors retained major
OPERATIONAL BUSINESS DECISIONS sales in the retail and other channels, giving them the
advantage of cumulative volume through multiple channels
THE CASE
as volume is an important element in the cost calculus of PC
o In 2000, Pitney Bowes, a $7 billion U.S. corporation, made a
manufacturing.
strategic business decision to transform itself from a hardware-
• Dell remained focused on the U.S. market, and failed to
oriented provider of mail-room equipment to a software and
recognize that the international market was rapidly catching
service-oriented provider. The tactical approach for achieving this
up to the U.S. market in size and importance. Again,
was to do so through acquisitions.
competitors were able to build volume in those markets that
o So, Pitney Bowes purposely formalized its acquisition business
positioned them to exceed Dell.
process, identifying places where important business decisions
were needed, and creating rigor around corresponding fact-based • Dell’s response to its cost and product disadvantage was to
business decisions. Over time the acquisition business process continually ratchet margins down to meet the competition,
and corresponding business decisions have been improved based which it was unable to off- set by any further saving in
on experience, but the essentials have remained constant. (Nolop, operational expense. Eventually, the point was reached when
the gross margin slipped below operational cost, and the
2007)
model broke completely. The company was forced, from a
o The Pitney Bowes case not only better defined a strategic business
weak position and by 2006—very late in the cycle (some think
process, but also developed fact-based business decisions that
too late)—to rethink their strategy and reorganize.
likely are worth tens or hundreds of millions, or even billions, of
dollars and which are only executed a few times a year. By • After the first round of reorganization, by early 2008, Dell’s
elevating the acquisition business process to a formally defined recovery is faltering. It appears that the company has not
business process, and managing the business decisions been able to fully embrace the essential transformation they
separately from the business process, Pitney Bowes were able to needed to make, and they remains mired in problems.
place these strategic business decisions into the simple operative IMPORTANT!!!
context. This enabled them to manage the business process and
o The lessons from Dell—and many others—are that key business
corresponding decisions in much the same way they manage
processes must not only be efficient and consumer-friendly, they
operational business processes and business decisions. must also be smart and agile.
o Eight years later, the company had made 83 acquisitions, a rate of
o Business processes become agile when declarative business
over 10 per year, while investing $2.5 billion. The acquisitions have decisions are separated from procedural business process tasks.
caused revenue to grow by 25%, substantially accelerated organic o Business processes become smart when the business decisions
growth, and made a positive contribution to net income and cash
are governed appropriately by business leaders.
flow.
o Business decision governance involves monitoring the business
o This example confirms what Chapter 3 pointed out—that the
decision performance against objectives and recognizing when
management of business decisions and Decision Models is
events occur that raise the operative context of a business decision
valuable for decisions made at various management levels:
into the complicated, complex, or chaotic realm.
strategic, tactical, and operational. Of importance is the
o When the business leadership clearly understands the business
Complex operative context and how much that may be reduced to
logic behind the business decisions, the impact of those decisions
a Simple context. If all the facts can be known, the business can be ascertained, and the business can quickly and easily make
decision functions in the orderly operative context and can be
adjustments.
modeled fully in a Decision Model.
o Complex operative context → (how much that may be reduced to) EXAMPLE #7: THE POWER OF SMART DECISIONS BEHIND
→ Simple context BUSINESS PROCESSES
o To understand the idea of smart decisions, consider the case of
MORE REAL-WORLD EXAMPLES Parker Hannifin, a U.S.- based Fortune 500 manufacturer of motion
o A great deal has been written about the use of Business Process and control equipment (Aeppel, 2007). In 2001, a long-time
Management (BPM) to achieve business objectives and to
employee, Donald Washkewicz, became president of the company.
transform the enterprise into a customer-focused value chain. He very soon realized that the company’s pricing policies were
Organizations adopt BPM to achieve operational excellence, the
flawed: managers would simply pitch their prices to earn the
epitome of which is the lowest possible cost of providing a given company a gross margin of 35%, considered an industry standard.
level (presumably high) of service. This is commendable, but is o Washkewicz realized—with the help of outside consultants—that
often insufficient for the truly competitive organization.
this failed to capture the value that the company was adding for
o After all, squeezing inefficiency out of a business process is a tactic
their customers. He began to under- stand that by being able to
available to all competitors in the marketplace. All other things price according to a formula that recognized this value, he could
being equal, the most efficient operator will, over time, inevitably be transform the company. It took a major reorganization of the
challenged by a competitor who achieves or exceeds the same company’s business processes (and a very significant change of
level of efficiency. The key differentiation then becomes the
culture) to engineer this capability. The reengineered business
organizational intelligence that operates behind critical business processes separated price, tying it to a system of intelligence
pro- cesses. This means that competition is not only about how
gathering to accurately determine the appropriate price for a given
efficient a business pro- cess is but also how smart its business
product.*
decisions are. o This was not easily achieved. The old pricing rules were deeply
EXAMPLE #6 WHEN BUSINESS PROCESS EXCELLENCE ALONE buried, hard- coded in computer systems, many of them as recently
IS INSUFFICIENT FOR COMPETITIVE ADVANTAGE deployed as the 1990s. But management persevered and
o An excellent example of business process excellence alone being eventually succeeded, despite the impediments created by
insufficient for competitive advantage is Dell. Long the dominant automation itself.
PC company, Dell had achieved leadership through the creation of o Today, Parker Hannifin researches the pricing of each and every
an outstanding supply chain, coupled with a razor sharp focus on product it manufacturers, and tracks feedback on those products
their peerless direct sales channel. With every possible cent from its customers over time to constantly validate and adjust the
squeezed out of their cost, and the ability to deliver attractive price. It works closely with its customers in helping them
product at the lowest conceivable cost directly to the consumer, understand the price/performance advantage of its products
they dominated the PC world for many years. compared to the competition, and constantly improves the products
o It appears that Dell’s operational excellence, delivered through its in ways that can save the customers money.
hyper-efficient business processes, failed to provide the feedback o At the same time, Parker Hannifin refined its other processes,
that would warn of the changes in the marketplace. Even when Dell including its “buy side” value chain (how it purchases products from
finally read the signals (in some cases only after outside analysts suppliers), and adopted lean manufacturing. The results have been
had pointed them out publicly), its business processes appear not dramatic.
to have had the ability to make the necessary adjustments.

BY: KRISHA ANNE F. CASILANG pg. 13

GE ELEC 10: BUSINESS LOGIC 1 ST SEMESTER: MIDTERMS
o Parker Hannifin today is a leader in its industry, in fact a leader in
almost any category of U.S. business. Between 2002 and 2007, its
stock rose 160%, exceeding twofold the rise of the high-tech
NASDAQ, and eightfold the growth of the Dow Jones Industrial
index. Other key numbers:
• Revenue —Just topping the $5 billion mark in 2001; analysts
estimate $12 billion for 2008.
• Profits —In 2002, the company achieved a profit of $130
million; in 2008, analysts estimate profit will be closing in, on
$1 billion.
• Fortune 500 Ranking—In 2001, the company was ranked
330; in 2008, it was ranked 247.
o Parker Hannifin took several of the major steps necessary to create
smart processes. They separated the business decisions from the
business processes, tied specific targets of performance to the ESTABLISHING BDM
business decisions, and implemented the means to measure that o Early adopters of the Decision Model have begun to adopt best
performance. In their case, the focus was the added value of the practices for BDM. From an organizational perspective, doing so
product to their customer. Not only did they determine this value, requires seven important considerations.
but actively worked with the customer to understand this value, and
worked with the customer to improve the value by improving the CONSIDERATION #1:
design of the product. o Recognize business decisions as key business assets that drive
o Today, Parker Hannifin continues to monitor the value of products business processes.
to ensure that the price remains competitive while delivering a good o Success begins with the recognition that business decisions and
return to the company. As acompany, it has achieved some of the corresponding business logic should be made explicit and agreed
highest gross profits in their sector of industry upon by relevant business stakeholders.

IMPORTANT!! CONSIDERATION #2:

o In the case, when the company decided to pursue a “value pricing” o Adopt the Decision Model as a separate, cohesive representation
strategy, they placed themselves into a complex operative context, for the detailed business logic behind business decisions.
and they may not have recognized, at the time, the methods of o The Decision Model provides a graphic representation of this
dealing with this context. business logic.
o Having a Decision Model, and knowing something of their context, o The Rule Families provide a means to explore the complete logic
may have shortened the cycle and reduced the difficulty of behind the Decision Model in a clear and simple manner.
implementing this strategy. o In other words, the Decision Model can be used to achieve a
o took several of the major steps necessary to create smart shared understanding of the business decisions and reach a
processes: consensus around them.
• separated the business decisions from the business
processes CONSIDERATION #3:
o Define the active role of business people in creating, changing, and
• tied specific targets of performance to the business decisions
governing the important Decision Models.
• and implemented the means to measure that performance
o In their case, the focus was the added value of the product to their CONSIDERATION #4:
customer. Not only did they determine this value, but actively o Use the Business Decision Management Maturity Model (BDMM)
worked with the customer to understand this value, and worked to develop a road map toward implementation of BDM.
with the customer to improve the value by improving the design of o This will help to reduce risk and to maximize the return on
the product. investment.
HOW THE DECISION MODEL ADVANCES BDM Consideration #5:
o Business processes that meet the criteria of being smart and agile o Establish a center of excellence for BDM to outline methodology,
are those for which the business decisions have been separated deliverables, standards, and training.
from the business process, are represented in Decision Models,
whose impact on the business is monitored, and whose business CONSIDERATION #6:
logic is adjusted to remain aligned with business objectives o Evolve the current state of business requirements to include
Decision Models.
BDM
o The practice of managing smart, agile decisions is called Business CONSIDERATION #7:
Decision Management (BDM). BDM is often referred to as o Prepare the technology. Select a modeling tool for creating and
Enterprise Decision Management— these terms can be used managing important Decision Models.
interchangeably o Invest in specific technology for automating selected Decision
o Figure 4.10 summarizes the three elements of BDM: business Models.
motivation, business logic, and business metrics. These three o Consider technology to provide the necessary modeling tools to
elements interact to create “smart” business systems, which is the project performance and analytic tools to track the performance of
GOAL OF BDM: business decisions.
• BUSINESS MOTIVATION o Start to build the architecture to support BDM
- general business plan, and the specific business
objective/s within that business plan, that the
business decision is meant to implement.
• BUSINESS METRICS
- measurements and time periods that are set by the
business objectives, and that must be achieved by
the business.
- These metrics are arrived at in the business
planning phase, and may be supported by
predictive modeling techniques.
• BUSINESS LOGIC
- the logic underlying the business decision that is
implemented to achieve the business objective.
- This business logic is formulated to best deliver the
business metrics set by the business objectives.
- The role of the Decision Model in BDM is to maintain
a stable, normalized and complete representation of
that logic.

BY: KRISHA ANNE F. CASILANG pg. 14