The impact of rule based decision engines on business efficiency

MARCIN NOWAK
May 6, 2024
Blog

Growing your business isn't just about boosting sales—it also involves cutting costs and continually optimizing your operations. This strategy lies at the heart of lean management and the theory of constraints, concepts that have gained significant traction in modern business practices. 

Learn how integrating rule-based decision engines can revolutionize your operational efficiency and business strategy, as well as significantly enhance your bottom line. Discover the potential financial benefit and strategic enhancement that awaits your enterprise.

What Are The Most Common Barriers to Business Efficiency?

As we talk with our clients about their operational challenges, most of them face one or more of these:

  1. Resistance to Change – Often, employees and management show reluctance towards adopting new systems and processes due to uncertainty and fear of new technology. This resistance can slow down the adoption of innovations necessary for efficiency improvements​​.
  2. Tool Proliferation – Excessive use of different tools and technologies can lead to decreased productivity due to context switching, where employees spend significant time toggling between different applications rather than focusing on productive tasks​.
  3. Inefficient Communication – Lack of clear and open communication can create silos within an organization, leading to misaligned goals and duplicated efforts, which hamper overall business efficiency​.
  4. Poor Delegation – Inadequate guidance and reluctance to delegate important tasks can lead to inefficiencies. Managers may hesitate to delegate due to a lack of trust or fear of losing control, which can stifle team development and efficiency​​.
  5. Ineffective Data Management – Organizations often struggle with managing vast amounts of data effectively. Poor data management practices can lead to flawed business decisions and lost opportunities​ (The Enterprisers Project)​.
  6. Misaligned Team Goals – When teams operate in silos without a clear understanding of how their work contributes to organizational goals, it can lead to inefficiencies and redundancies across the organization​.
  7. Security Concerns – With digital transformations, security risks increase. Organizations that fail to implement comprehensive security measures may face breaches that disrupt operations and reduce efficiency​.

How much does it cost? According to IDC Reserach the overall cost of inefficiency is 20-30% of revenue. In the United States alone it is estimated to account for $3 trillion annually.

What is a Rule-Based Decision Engine? 

What is a rules engine? In the context of business, a rule-based decision engine is a sophisticated software system designed to interpret and apply business rules to data in order to automate decision-making processes. These engines operate by following a set of predefined rules created based on business strategy and operational objectives. 

The automation enables consistent and efficient outcomes without the need for manual intervention.

A rule-based decision engine integrates seamlessly into business systems, pulling data from various sources to analyze and execute decisions like: 

  • Dynamic Pricing Adjustments – The engine adjusts prices  automatically based on stock, market demand, and competitor prices to help increase sales and profits.
  • Fraud Detection – The engine examines transaction patterns to spot potential fraud, setting off alerts for any suspicious activities like unusual transactions or failed logins.
  • Human Resources Management – The engine automates HR tasks like resume screening and employee onboarding to speed up hiring and ensure consistency.
  • Customer Support Routing – The engine sorts incoming support tickets by urgency and topic, directing them to the right support team for faster response times.
  • Supply Chain Management – The engine automatically orders new supplies when stock levels get too low, preventing production delays.
  • Compliance Monitoring – The engine constantly checks that business operations comply with laws and regulations, like privacy standards in healthcare.
  • Quality Control – In manufacturing, the engine automatically inspects product quality against set standards, flagging items that need further review.

The decisions and actions remain compliant and consistent even when you change management.

Reducing Time to Market for New Products and Services

Rule-based decision engines significantly accelerate the time to market for new products and services. Usually, it can take anywhere from 9 to 12 months to launch a new product.

Rules engines are:

  • automating the decision-making processes, 
  • eliminating lengthy manual reviews
  • reducing the number of meetings needed, and related to it collisions of unavailability,
  • shortening feedback gathering and overall development cycles.

For example, in the consumer goods sector, a rule-based decision engine can swiftly analyze market data and consumer feedback to adjust product features or marketing strategies. This rapid iteration process allows companies to adapt their products to meet consumer demands in real time.

Moreover, these engines facilitate a more efficient collaboration across different departments. With automated routine decisions, team members can focus on higher-value activities such as innovation and strategic planning

The impact of rule-based decision engines on time to market is clear. They enhance operational efficiency and empower businesses to leverage market opportunities faster than ever before. 

Improving Compliance and Risk Management

Nowadays, the average cost of compliance is $5.47 million, while the cost of non-compliance reaches nearly $15 million. The average cost of compliance for a large company is about $10.000 per employee. The cost of compliance for retail and banks has increased by 60 percent compared to pre-crisis era.

Rule-based decision engines play a pivotal role in enhancing compliance and risk management within organizations. Automating of the enforcement of regulatory standards and internal policies gives you certainty that all business activities align with legal requirements and ethical standards. This automation minimizes the risk of human error and the associated liabilities.

The precision of rule-based systems allows for detailed tracking and monitoring of compliance processes. 

For instance, in the financial sector, these engines can automatically vet transactions against anti-money laundering regulations, flagging any suspicious activity for further investigation. 

A rules engine in insurance automates risk assessment by quickly analyzing multiple data points, such as driving records or health information, against set criteria. This enables insurers to accurately determine policy terms and premiums, minimizing subjective judgment and enhancing consistency and speed in risk evaluation.

Furthermore, rule-based decision engines adapt quickly to changes in regulations. They can be updated with new rules as soon as changes are legislated. This adaptability is perfect for industries like healthcare and finance, where regulations frequently evolve.

Cost Reduction and Resource Allocation

Integrating rule-based decision engines leads to significant cost reductions and improved resource allocation. With automated decision-making processes, diverse industries can decrease their reliance on labor-intensive tasks, reducing overhead costs associated with staffing. Labor can account for even 70% of total costs.

Rule-based engines optimize resource allocation by ensuring that tasks are performed by the most appropriate tools or personnel, based on pre-set criteria. It prevents resource wastage and maximizes output. 

For example, in manufacturing, these engines can schedule equipment maintenance based on usage patterns and performance data, thereby extending the lifespan of machinery and reducing unexpected downtime. Rules engines in logistics can also schedule maintenance check or optimize routes to use fuel efficiently and so on.

With the addition of machine learning, you could analyze historical data to predict future trends and optimize decision-making processes accordingly. 

Enhancing Operational Efficiency and Reducing Meeting Overheads

Rule-based decision engines significantly contribute to operational efficiency by speeding up decision-making processes and reducing the time spent in meetings. 

Rules engines automate routine decisions that would typically require lengthy discussions and approvals, thus freeing up valuable time for employees to focus on more strategic tasks.

For instance, in project management, a rule-based engine can automatically approve budget allocations based on predefined criteria such as project size, importance, and historical spending. This eliminates the need for multiple project review meetings, enabling quicker project progression and reduced administrative overhead.

Additionally, these engines support real-time decision-making. Instead of waiting for scheduled meetings to discuss and resolve issues, rule-based systems can instantly evaluate situations and make decisions, keeping projects and processes moving forward without delays.

Conclusion

The transformative power of rule-based decision engines in enhancing business efficiency is undeniable. From reducing time to market for new products and services to improving compliance and risk management, these engines are pivotal in fostering a dynamic and efficient operational environment. 

Their ability to automate decision-making reduces overhead costs and allows for better resource allocation, ensuring that businesses are well-positioned. 

The Higson Rules Engine, with its advanced features and capabilities built into your system to integrate seamlessly will enhance both operational efficiency and governance. It helps companies with automated decisions, enabling them to speed up product development cycles, ensure rigorous compliance with industry standards, or optimize resource management.

Do You Seek to Improve Your Business Efficiency?

Book a demo and see how the Higson Rules Engine can tailor its solutions to your specific needs. Discover firsthand how our engine can streamline your processes, reduce the need for extensive meetings, and significantly boost your overall business efficiency. Share in the success stories of numerous companies that have already made the leap towards automated efficiency.

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