How to Document Business Rules and Calculations at Saratoga

By Conrad Owens – Business Consultant. At Saratoga, we recognise the pivotal role that business rules and calculations play in shaping our clients’ operational excellence and decision-making processes. These elements not only guide their business operations but also ensure consistency, efficiency, and compliance across all endeavours. To keep pace with the rapid-change nature of modern business and help our clients to harness the full potential of their capabilities, we’ve refined our approach to documenting these critical components, integrating cutting-edge AI technologies to elevate our processes.

If you want to jump straight to the ‘how to’, click here!

Otherwise, let’s first let’s explore business rules and calculations.

What Do You Mean by Business Rules?

Business rules are explicit statements that describe, constrain, or control aspects of a business. They are designed to assert business structure, or to control or influence the behaviour of the business.

For example, this could involve how products are priced, how inventory is managed, or how transactions are processed, among other things.

Business rules can be applied to different areas of operations, such as data validation, regulatory compliance, operational decisions, and more.

Characteristics of business rules

• Specificity: They are specific and actionable.
• Consistency: They align with business goals and policies.
• Flexibility: They can be changed as business needs evolve.
• Independence: They are stated in a way that does not dictate how they should be implemented technically.

What Do You Mean by Business Calculations?

Calculations, in the context of business, involve mathematical operations used to derive key figures important for decision-making and analysis.

For example, to analyse financial performance, determine pricing strategies, evaluate investment opportunities, calculate risks, and more.

Calculations can range from simple arithmetic to complex financial modelling, and are essential for tasks such as budgeting, forecasting, financial reporting, and operational efficiency analysis.

Examples of business calculations

• Profitability Analysis: Calculating gross profit, operating margin, net profit margin, etc.
• Return on Investment (ROI): Assessing the efficiency of an investment.
• Break-even Analysis: Determining when a business or product will become profitable.
• Inventory Management: Calculating reorder points, economic order quantities, and safety stock levels.

Both business rules and calculations are vital for the systematic and efficient operation of a business. They help ensure that business activities are aligned with strategic objectives, are consistent, and can be evaluated for performance and efficiency.

Software systems used in businesses, such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems, often embed business rules and calculations to automate and optimise business processes.

Why is it Important to Document Business Rules and Calculations?

Documenting business rules and calculations is a fundamental practice that supports the efficient, consistent, and compliant operation of a business. It serves as a foundation for training, decision-making, change management, and continuous improvement initiatives. Often when companies expand quickly, documenting rules can become an afterthought and not get done. Here we elaborate on some of the key reasons why it’s important to document these rules and calculations.

1. Clarity and understanding

Documenting business rules and calculations ensures that they are clearly understood by all stakeholders, including employees, management, and external partners. This clarity helps to align everyone’s understanding and expectations regarding how business processes should operate and how decisions are made.

2. Consistency and standardisation

Documentation helps maintain consistency and standardisation across the organisation. It ensures that business processes and decisions are made consistently and serves to reduce variability and errors. This is especially important in large organisations or those with multiple locations.

3. Training and onboarding

Well-documented rules and calculations serve as valuable resources for training new employees and onboarding them more efficiently. They can quickly refer to the documentation to understand how specific business processes work and how certain calculations are performed.

4. Compliance and audit trails

For businesses in regulated industries, documenting business rules and calculations is essential for compliance purposes. It provides an audit trail that can be reviewed by regulatory bodies to ensure that the business complies with legal and regulatory requirements.

5. Change management

Businesses evolve, and so do their processes and strategies. Documenting business rules and calculations makes it easier to manage changes, as it provides a baseline from which changes can be made systematically. It also helps in assessing the impact of proposed changes.

6. Operational efficiency

Documentation allows for the review and optimisation of business rules and calculations. By examining documented processes and calculations, businesses can identify inefficiencies and areas for improvement.

7. Knowledge management

Documenting business rules and calculations ensures that critical business knowledge is retained within the organisation. It prevents knowledge loss that can occur due to employee turnover and ensures that operational knowledge is not siloed but accessible to those who need it.

8. Error reduction and problem solving

Documented rules and calculations can help in quickly identifying and rectifying errors in business processes. They provide a reference point that can be used to troubleshoot problems and implement corrective measures.

9. Technology implementation and integration

When implementing new technology systems or integrating different systems, the presence of documented business rules and calculations is crucial. It ensures that the systems are configured to accurately reflect and enforce the business’s operational rules and logic.

Our approach to documentation

In our quest to document business rules and calculations, we work through a comprehensive process that leverages both our in-house expertise and the latest advancements in AI. Here’s how we do it.

Step 1. Understand the need

Our journey begins with a thorough discovery phase. Here we identify the specific needs of our teams. This is a vital step that sets the stage for effective documentation. Needs might include:

• The business wants a better understanding of the processes present.
• They need consolidated documentation of all the business rules for a specific business function or product.
• They want to understand the calculations in the systems – and which ones are producing incorrect results.

Step 2. Unpack the challenges

Now that we know what the documentation requirements are, it is time to unpack the problems our team may face. These could be:

• You are dealing with an old, legacy system.
• There is little to no documentation available.
• Key resources are snowed under with BAU (business as usual) issues and are not available to assist in the process.
• There are no experienced system analysts available in the company to reference.
• People who originally created and implemented the business rules may have left the company.

Step 3. Make use of AI tools

We utilise AI tools to speed up our documentation process. When we use AI tools, we prioritise the use of secure, state-of-the-art tools that enhance our documentation process without compromising our IP or our client data.

These tools allow us to efficiently summarise and analyse interview transcripts, interpret legacy code, and uncover insights that drive our business forward, all while ensuring the utmost security and confidentiality.

Step 4. Gather, sort, and store

1. Identify the business processes and requirements. We start by identifying and mapping out the core business processes. This gives us a good idea of the flow of operations and the decision points within those processes.
2. Identify and interview the stakeholders. See who your stakeholders are and initiate a discussion. This could be the product specialists, developers and analysts, as well as the product owners and managers. They might be sceptical at first, but this is where you introduce the need and the process to them, and where you get their buy-in. This is an important first step.
3. Collect existing implicit rules and calculations. Analyse current practices to uncover any implicit rules and calculations that are being used but are not formally documented yet.
4. Analyse legacy systems. We leverage AI to interpret sections of legacy code to allow us to understand and document existing business rules and calculations embedded within our systems. This approach helps us to bridge the gap between old and new and supports a seamless transition and integration.
5. Consolidate your findings. Compile the information that you gather from different sources and stakeholders and consolidate into a document. This could be a spreadsheet, or whatever platform you feel works best for you.
6. Define and categorise the business rules. Clearly define each business rule. A good practice is to state the rule, explain its purpose, and outline its scope and exceptions. You can organise the rules into categories to manage and reference them easier. These categories can be based on business functions, processes, or systems.
7. Document calculations. For each calculation, you can document the formula, whatever inputs are needed, the rationale behind the calculation, and any assumptions being made. Explain where and how each calculation is applied within the business processes, and what relevance it has.

Step 5. Standardise and review

1. Consistency is key. It is important that your documentation is consistent for optimal readability. To do this, use a standardised format to document both business rules and calculations. This might include templates or structured documents that outline the rule or calculation name, descriptions, rationale, conditions, triggers, actions, and examples.
2. Review and validate. Have your key stakeholders review of the documented rules and calculations to ensure they are accurate and complete. Test the rules and calculations in real or simulated scenarios to validate their correctness and applicability.
3. Version control and accessibility. Implement version control to keep track of any changes you’ve made over time. Ensure the document is accessible to important stakeholders and is centrally stored.

Final Thoughts – What to always keep in mind

Documenting business rules and calculations can be a challenging and complex exercise. Here are some takeaways to help you with your approach.

• Take enough time for collection and discovery of all your baseline information.
• Create a documenting plan and stick to it.
• Don’t listen to naysayers who tell you it’s too complicated or can’t be done.
• Be very thankful to your Subject Matter Experts – they will help you get this done.
• Be persistent.
• Show progress to your stakeholders often.
• Be creative with your methods of extracting information.
• Use AI tools and platforms that support collaborative editing, version control, automation, and accessibility.

Need help documenting your business rules and calculations?

Our documentation practices not only serve as a foundation for operational excellence but also empower our teams with the knowledge and tools needed to drive innovation and growth. Incorporating AI into our documentation process has been a game-changer as it allows us to efficiently analyse vast amounts of data, extract meaningful insights, and adapt to changes with agility.

When done well, documentation also supports your compliance responsibilities and risk management, and aids with the onboarding of new employees.

If you need help documenting your business rules and calculations, talk to us. We have the skillset, manpower, tools, and experience to get the job done. At Saratoga, we don’t just document business rules and calculations; we craft a blueprint for sustainable success, underpinned by technology, collaboration, and a forward-thinking mindset.