What Is Business Logic? Definition, Examples and Importance

Updated July 31, 2023

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What Is Business Logic?

Business logic, also known as domain logic, is the algorithms, rules or commands that operate on the backend of business software and dictate how the software creates, stores and processes data.

Business logic refers to the rules or commands that allow a database to communicate with an end-user application. These algorithms can help organizations store and use relevant data or make important calculations to improve internal processes and make them more efficient. Understanding the various components of business logic can help a company create effective data procedures and optimize daily production efforts.

In this article, we discuss business logic, its purpose and primary components, and we share examples companies can use.

What is business logic?

Business logic is a series of computer algorithms that contain guidelines for how to create, store and process data in a company's internal software or server. It typically describes a series of protocols that occur after employees create or change lines of data. For example, business logic for a retail store might contain inventory information and can help track how many products you sell in a specific timeframe. Business logic can also determine how to calculate numerical data for varied purposes, including sales and tax information.

Here are some key terms to learn for business logic:

  • Database: This describes categorized sets of data stored on a computer's hard drive, often using specialized software. Employees use databases to access business logic for work objectives.

  • Data management software: This describes software you can use to manage data from multiple databases. It also transforms data into more accessible formats for non-technical employees to use.

  • Workflow: A word describing the steps required to complete an action using data. Business logic workflows allow employees to perform a specific procedure, like compiling different products a customer purchases.

  • Trigger: This word describes code in a workflow that generates after one event in a workflow. For example, clicking on a person's name in payroll software might trigger their payment information to appear on the screen.

Related: What Is Data Management?

What is the purpose of business logic?

Business logic allows a company to manage and access large quantities of data for daily work efforts and practices. It translates company protocols into usable data for computer systems so employees can track important tasks and update information. A company may require business logic to better ensure any daily tasks involving multiple categories of data can remain operational and efficient.

For example, consider a company that uses a cash register program to manage inventory and purchases. A technician can input business logic into this program to define the steps for entering credit card information, generating accurate receipts and other similar tasks. To complete one of these tasks, employees only need to perform these inputted steps on the cash register program to alter data rather than reading the data itself.

Related: 12 Data Science Careers To Pursue (Plus Salaries and Duties)

What are the components of business logic?

Here are the core components of business logic:

Data consistency

Data consistency refers to data a person enters according to business logic guidelines and matches other information in a database. When data is consistent, then employees can accomplish workflows and more easily view the same information. For example, consider an employee entering customer information into a form using internal software. To maintain data consistency, the form allows an employee to only input specific information using a certain format, such as number values when entering a birth date or phone number.

Related: What Are Data Quality Metrics? (Plus Types and Uses)

Participant control

Participant control refers to how a database determines which employees see certain lines of data according to business logic guidelines. It's important for business logic to determine useful information for certain employees to view so they can streamline their interactions with a computer system. For example, business logic workflows might allow a sales manager to view data columns regarding sales quotas for all people in a company, while a retail staff member can only see data regarding their own sales quota.

Related: 13 Top Workflow Management Software for 2022

Modification check

Similar to participant control, a modification check refers to how a database determines which employees can alter certain lines of data. Some data might be critical to the everyday operations of a company, so it's important for business logic to outline which users can enact larger adjustments. For example, consider a company adhering to legal requirements about what personnel information they're able to store. Business logic workflows might only allow staff from a human resources department to alter data for personnel files, as their training requires them to understand those regulations.

Related: Data Analysis: Definition, Types and Benefits

Examples of business logic

Here are some examples of business logic a company can use:

Data flow

A data flow determines how a database processes and filters information when a user performs an action. It also determines which events need to happen for another event to occur. To create a data flow, you typically define the cause-and-effect relationships between lines of data and account for the different ways a user can perform that action. For example, a data flow might outline the steps required for a person to log in to a website, including username information, a password and an additional security question.

Related: Developing a Use Case: How-To and Why It Is Important

Data validation

Data validation describes a careful process of maintaining accurate and high-quality data. To use data validation in your business logic, you can create a testing procedure within a database program to better ensure people can input the right data in the proper location. For example, data validation can determine whether a person inputs the correct spelling and format of street address data.

Here are some common types of data validation checks:

  • Data type check: Inspects if an inputted line of data reflects a correct classification, like text versus numerical data

  • Length check: Reviews whether the inputted data has the correct amount of information, including whether it's too long for a certain bracket

  • Range check: Observes if number data fits within a pre-determined scope of numbers and integers, like 10 to 100

  • Data order check: To determine if the inputted data reflects a logical order, like a package delivery date recorded after a customer ordered the time it carries

  • Uniqueness check: For observing whether a person inputs the same line of data twice into the same program, which might cause certain errors to appear

Database transaction

Database transaction describes procedures for changing data from one state to another. It's important to write database transactions for business logic because it allows you to adjust large quantities of data accurately, which can affect multiple areas of a company's daily operations. For example, consider a bank employee transferring money from one account to another using data banking software. To maintain data consistency, the software only allows the employee to enter certain number values on the form so they can transfer the correct amount of money between accounts.

Related: Types of Database Languages and Their Uses (Plus Examples)

ACID and business logic

When describing the properties of database transactions, many people refer to the acronym ACID. Here are the definitions of each ACID term and how they relate to business logic:

  • Atomicity: This property describes how a person changes multiple sections of data with one action while accounting for all aspects of that data. For example, if a customer purchases an item, the atomicity property shows that a transaction removed that item from your inventory.

  • Consistency: Like the aforementioned component of business logic, this property highlights how a person can only change data under certain conditions. It also shows that pre-transaction data reflects an accurate post-transaction state.

  • Isolation: This property describes how data used during a transaction is invisible to some users until you complete it entirely, meaning another person cannot use it for another transaction at the same time. For example, some banking applications only allow customers to make one bank transfer per day to incorporate the isolation property.

  • Durability: After you complete a transaction, the durability property describes how the data effects are permanent, meaning they can remain active if a database ever malfunctions in the future. Conversely, it highlights how a database can restore itself to a pre-transaction state if a malfunction occurs during the process.

Data transformation

Data transformation describes the rules for changing a section of data's format or structure. It can involve adding lines of data, combining sections or reproducing them in another type of database altogether. People writing business logic might transform data to streamline the flow of information between different employees or upgrade a system a company uses to perform important actions. For example, consider a theater company that switches to a new ticketing software halfway through a season. As a result, they transform the data stored in their old program to make it readable for the new one.

Related: What Are the Different Types of Databases?

Data calculation

Data calculation is the process of combining numerical data to create an amount to use for multiple applications, including production costs. Companies typically use specific digital tools to calculate numerical data accurately and interpret it for its intended purpose. For example, a person writing business logic might include an algorithm for calculating taxation information using a specific mathematical formula. An employee can use this business logic to add a tax amount to a customer's purchase to give them their total amount.

Related: What Is Data Curation? (With Importance and Steps)

Data notification

Data notifications describe the windows that appear when a person accesses certain data or performs a workflow. People who write business logic can include notifications so employees can better understand what information in a database to focus on. Here's an example:

A streaming company allows subscribers to watch 10 free videos per day. An algorithm built into a data system notifies the company's marketing team when a person clicks on their 11th video. After, this team sends a message to the customer advertising a subscription update that increases the number of videos they can watch to 20.


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