Understanding Business Logic: Key Concepts and Examples

What Is Business Logic

Business logic refers to the set of custom rules and algorithms that manage how information is processed between databases and user interfaces. It forms the backbone of business operations, ensuring smooth workflows and data integrity. Business logic is also known as domain logic.

Business logic is crucial for efficient data handling and decision-making in modern business operations. Here are some real-world examples that showcase its importance in everyday business scenarios.

How Business Logic Functions in Software Systems

Put another way, business logic is real-world business rules put into computer code and shown in a computer program via a user interface. Business logic is most evident in its role in creating workflows that pass data between users and software systems. Business logic determines how data may be shown, stored, created, and altered. It provides a system of rules that guides how business objects (parts of software that control how data is transported) work with one another. Business logic also guides how business objects within software are accessed and updated. It exists at a higher level than the type of code that is used to maintain basic computer infrastructure, such as how a database is displayed to a user or as basic system infrastructure. 

The algorithms involved in business logic perform behind-the-scenes data processing that is invisible to the user but is critical to keeping things running smoothly in a modern economy. 

Comparing Business Logic and Business Rules

Business rules are useless without business logic to determine how data is calculated, changed, and transmitted to users and software. But without business rules to create a framework, business logic cannot exist. Business logic is any part of a business enterprise that makes up a system of processes and procedures, whereas anything else is an example of a business rule. 

Practical Example of Business Logic in Use

A credit card issuer's business logic may specify that out-of-state credit card transactions above a certain limit, say $500, be flagged as suspicious and the issuer contacted as soon as possible to confirm the authenticity of the transaction. The policy of flagging such a transaction is an example of a business rule; the actual process of flagging the transaction is an example of business logic. Given that millions of credit card transactions are conducted every single day, business logic enables such transactions to be checked and processed in an efficient and timely manner.