Business rule engines have become increasingly important in the insurance and finance industries. A business rule engine, where you define rules strategically, can partially automate decision-making processes, ensuring consistency, compliance, and efficiency.
In insurance and finance, rules engines play a vital role in areas such as:
- Underwriting: Automating the assessment of risk and determining policy terms and premiums based on predefined criteria.
- Claims processing: Expediting the claims evaluation process by applying rules to detect fraud, validate coverage, and calculate payouts.
- Compliance: Ensuring that all decisions adhere to regulatory requirements, industry standards, and internal policies.
- Product configuration: Enabling the creation of customized insurance and financial products tailored to individual customer needs.
And when the time comes to make a decision about introducing a business rules engine to your organization, a dilemma emerges – open source vs proprietary software?
Both have pros and cons. Let's look at it.
Open Source Rules Engines – Benefits
Open source rules engines give you access to community driven innovation and flexibility which can be key to responding to market demands.
One of the biggest benefits is low cost. Open source doesn’t have expensive licensing fees so it’s available to organizations of all sizes. This means you can allocate your resources to other areas of the business like customer service or product development.
Flexibility is another big one.
Open source rules engines let you customize the software to your specific needs. You can modify the code to create solutions that fit your business. This is particularly useful in industries like insurance and finance, where regulations and market conditions can change quickly.
Transparency is a key characteristic of open source software. You can see the source code, which builds trust and allows for independent security audits. This is critical in highly regulated industries where compliance to industry standards is key.
Community support is another big plus for open source rules engines. A big community often surrounds these solutions with updates, security patches and documentation. This collaborative environment helps to make the software more robust and longer lived as users contribute to its development and evolution.
Examples of open source rules engines are Drools and OpenRules. These show how open source can handle complex business rules and decision-making.
Open Source Rules Engines Challenges
Despite the benefits open source rules engines present some challenges that you need to consider. Understanding these challenges is key to making an informed decision about software.
Safety issues
Open source IT solutions have been a topic of debate regarding their safety compared to custom or proprietary solutions.
The very nature of open source software allows anyone to view and modify the code. While this transparency can foster collaboration and improvement, it also means that malicious actors can identify and exploit vulnerabilities more easily than in proprietary software, where the code is hidden from public scrutiny.
Open source solutions may appear cost-effective initially, they often incur hidden costs related to implementation, ongoing maintenance, and security updates. Organizations may need to hire specialized developers or allocate significant internal resources to manage these systems, which can negate the perceived financial benefits.
One of the most notable failures involving open source software was the Equifax data breach in 2017, which exposed sensitive information of approximately 147 million people.
In 2019, a former employee exploited a vulnerability in a misconfigured web application firewall that was part of an open source solution. This breach affected over 100 million customers and led to a settlement of $80 million for Capital One.
Complexity
Implementing and maintaining open source solutions requires a high level of technical expertise. In other words – you need to know, what you're doing.
Organizations may struggle to deploy these systems if their staff don’t have the necessary skills. This complexity can lead to longer implementation times and higher training costs.
Support limitations
While open source community support is usually great, it’s not the same as vendor support for proprietary systems. Organizations may find themselves waiting for community driven updates or troubleshooting help, which can impact operational efficiency.
Let's put it this way – if something goes south with managing rules or business logic, you don't want to be dependent on people actually not obliged to do anything.
Integration capabilities issues
Open source rules engines may not integrate with existing systems seamlessly, so you’ll have compatibility issues. You’ll need to invest time and resources to make the open source solution work with your current technology stack.
Lack of enterprise features
And open source rules engines may not have all the enterprise features that larger organizations need. Advanced functionality like sophisticated analytics or comprehensive reporting tools may not be available in open source solutions, so they may not be suitable for more complex business environments.
You need to weigh up these challenges against the benefits of open source rules engines. A technical assessment of capabilities, resource availability and business requirements will help you decide if open source is right for you.
Proprietary Rules Engines
Proprietary rules engines are designed with user experience and functionality in mind for the business.
One of the key features of proprietary rules engines is the user interface. These systems are often designed with simple and intuitive interfaces that makes defining rules and managing them easy and accessible for non-technical users. This means decisions and rule changes can be made quicker and less reliant on software developers.
Vendor support is another big plus for proprietary solutions. Organizations can have dedicated customer support teams to help with implementation, writing rules, troubleshooting and ongoing maintenance. This support structure means any issues are dealt with quickly, minimizing downtime and keeping operations running.
Proprietary engines come with advanced features for enterprise needs. These may include sophisticated analytics, robust framework for compliance, reporting and security.
Proprietary rules engines integrate seamlessly with existing systems. They are designed to work with other software applications within an organization, so implementation is simpler. This is especially useful for organizations with existing technology stacks, as it minimizes disruption during the transition to a new rules engine.
Which solution will be the best for you?
Open source is like building a house yourself. You have a parcel, materials, time, and energy. It will always be cheaper in terms of money. But is it better overall?
Proprietary rules engines are like a house built by skilled and experienced construction workers with an oversight from a construction manager, who ensures the quality and safety of the building. It comes with a price, but you know what you're paying for.
Choosing the right rules engine solution for your organization depends on various factors, including budget, technical expertise, and operational goals. Here are some considerations to help guide your decision:
- Open Source Rules Engines – If you have a limited budget or a strong in-house development team capable of managing and customizing the solution, an open source rules engine may be suitable. This option allows for flexibility and cost savings, but be prepared for the complexities of implementation and ongoing maintenance.
- Proprietary Rules Engines – If you prefer to outsource the management of your rules engine and seek a solution that provides robust support, advanced features, and seamless integration, Higson is an excellent choice. With Higson, you benefit from:some text
- User-Friendly Interface: Simplifies rule management, allowing business users to engage directly without heavy reliance on IT.
- Dedicated Support: Professional support ensures quick resolution of any issues, minimizing disruptions.
- Advanced Features: Enterprise-grade functionalities enhance decision-making and operational efficiency.
- Rapid Implementation: Smooth integration with existing systems reduces deployment time and resources.
- User-Friendly Interface: Simplifies rule management, allowing business users to engage directly without heavy reliance on IT.
If you're interested in exploring how Higson can specifically benefit your organization, feel free to request a use case tailored to your needs.
