Business Rules 101: What's a Business Rule?

Gladys S.W.  Lam
Gladys S.W. Lam Co-Founder & Principal, Business Rule Solutions, LLC , Publisher, Business Rules Journal and Executive Director, Building Business Capability (BBC) Read Author Bio       || Read All Articles by Gladys S.W. Lam

One of the things I enjoy most about my work as Principal of Business Rule Solutions is the opportunity to collaborate with a wide variety of organizations and industries.

But if there's one thing I constantly observe when I visit different organizations, it's that "business rule" mean different things to different people. What's more, companies tend to confuse "business rules" with business requirements.

The key to understanding business rules? The word 'business'

Let's take a closer look. A common mistake is thinking that you only need business rules when setting up systems. No. Business rules come into play before an application is required: they are criteria used in business operations to guide behavior, shape judgments, and aid decision-making.

How can you tell if you have a business rule? Ask yourself if you need that rule if you don't have a system. Let's take a look at the following example: "A shipping invoice must have an address." You need that rule to know where to ship your order. Whether or not you have a computer system is irrelevant.

Business Rules vs. System Rules

The confusion stems from the fact that a lot of analysts think the business rule is "If a shipping invoice does not have an address, then display an error message." No. That is a system rule — one that provides you with a way to enforce the business rule.

You only have one BUSINESS rule: "A shipping invoice must have an address," and there are many ways to enforce it. If a shipping invoice does not have an address, you can have the system display an error message, look up the address from the client account, display a map, or ask for the address using a speech robot.

Ultimately, the way you choose to enforce your rule is entirely dependent on the technology you have at hand. But in order to act correctly, you need to know your business rules first.

The definition of a business rule is a criterion used in business operations to guide behavior or make decisions. Business rules are needed to ensure your business processes function correctly with or without an automated system.

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Standard citation for this article:

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Gladys S.W. Lam, "Business Rules 101: What's a Business Rule?" Business Rules Journal, Vol. 21, No. 01, (Jan. 2020)

About our Contributor:

Gladys  S.W. Lam
Gladys S.W. Lam Co-Founder & Principal, Business Rule Solutions, LLC , Publisher, Business Rules Journal and Executive Director, Building Business Capability (BBC)

Gladys S.W. Lam is a world-renowned authority on applied business rule techniques. She is Principal and Co-Founder of Business Rule Solutions, LLC (, the most recognized company world-wide for business rules and decision analysis. BRS provides methodology, publications, consulting services, and training. Ms. Lam is Co-Creator of IPSpeak, the BRS methodology including RuleSpeak®, DecisionSpeak and TableSpeak. She is Co-Founder of, a vertical community for professionals and home of Business Rules Journal. She co-authored Building Business Solutions, an IIBA® sponsored handbook on business analysis with business rules.

Ms. Lam is widely known for her lively, pragmatic style. She speaks internationally at conferences, public seminars and other professional events. She is also Executive Director of Building Business Capability (BBC) Conference, which includes the Business Rules & Decisions Forum and the Business Analysis Forum.

Ms. Lam is a world-renowned expert on business project management, having managed numerous projects that focus on the large-scale capture, analysis and management of business rules. She advises senior management of large companies on organizational issues and on business solutions to business problems. She has extensive experience in related areas, including BPM, structured business strategy, and managing and implementing information systems.

Ms. Lam is most recognized for her ability to identify the source of business issues, and for her effectiveness in developing pragmatic approaches to resolve them. She has gained a world-class reputation for fostering positive professional relationships with principals and support staff in projects. Ms. Lam graduated from the University of British Columbia with a B.S. in Computer Science.

Read All Articles by Gladys S.W. Lam

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