Defining the Business Model In BTM


Having established what business model means in BTM, it makes sense to move on to discuss how companies put business model definition to work helping them develop better business cases for their IT projects. Skipping this crucial activity can lead to damaging oversights. First, developing a business case without first modeling the business makes it difficult to develop and compare alternative business scenarios ”a step that is essential for performing impact analysis. Second, business model definition requires planners to think through a complete, big-picture view of the business. Since a picture is worth a thousand words, this view makes it easier for team members to visualize solutions, avoid a myopic focus, and contribute their expertise to the business case. And finally, since most business cases are simply paper documents, they can't be counted on the same way that a business model can to provide the concrete links to process and technology that form the basis for alignment. This last point is especially important because of the unpredictable nature of IT projects. Even the most thought-out initiative invariably faces unforeseen hurdles as it progresses from design to implementation. By giving the IT specialists, who are charged with finding these impromptu solutions, a mechanism for tracing back to the original business model, BTM helps to ensure that even the worst snags are ironed out for the good of the project as a whole.

Business model definition alleviates these concerns by providing a mechanism to perform as-is/to-be gap analysis for the parts of the business that could be affected by the project. The first of BTM's activities involves four general steps: drawing the big picture, understanding the as-is current business model, creating a portfolio of business scenario models that represent possible to-be states for impact analysis, and incorporating changes made by the project into an updated current business model.

Drawing the Big Picture

Since business models represent big-picture snapshots of the business (or business unit, division, or group ), realistically they aren't likely to change all that often; established companies don't completely reinvent their business models except in the most extreme cases. Most IT projects, then, find that they're able to leverage an existing current business model rather than develop one from scratch.

There are cases, however, when project teams need to develop a business model before beginning the activities of BTM ”after a major change to the business environment such as a merger or acquisition, for example. When this happens, it is essential to include input from as many subject-matter experts as possible. These contributors should work in the model directly to make sure that details aren't lost in the translation, and to increase their own understanding of the business by analyzing other parts of the model. When it isn't feasible to ask subject-matter experts to develop the model directly, the team can gather input for the business model either through surveys and data collection, or by talking to experts face-to-face during a meeting or seminar. No matter how the current business model is developed the first time around, it's important to consider the infamous "80/20 rule": 80% of the benefit comes from 20% of the effort. There's no point in agonizing over every detail in the current business model since its primary purpose is to provide a general starting point for spawning more specific business scenario models.

This highlights an important point about business model definition: The direct benefits that companies derive from modeling the business come from two sources. First, and most obviously, there are the specific elements and attributes that make up each of the models ”the end products of business model definition. Second, and of equal importance, is the actual process of researching and defining the model ”whether constructing a current business model from scratch or developing scenarios for impact analysis. The deliberate act of creating the model compels decision makers to think through the complete business landscape, and ultimately uncover hidden opportunities for improvement.

Understanding the Current Business Model

The process of creating or updating the current business model is an important one that companies will undoubtedly face from time to time. But it's important to distinguish this endeavor from business model definition as it's typically practiced in most projects. Recall that the purpose of the activities of BTM, (of which business model definition is the first) is to create a series of models that express as-is and to-be versions of the enterprise architecture. Since the as-is enterprise architecture rarely needs to be redefined from scratch, drawing the big picture isn't a part of most IT projects. Instead, business model definition usually begins when the project team sits down, queries their repository of reusable assets, and ensures that they completely understand the current business model.

Understanding the current business model before diving into detailed process and technology solutions improves the process by which companies justify IT projects in two important ways. First, it makes it easier to put a project in the appropriate context, thus freeing team members from the assumption that they need to justify every process, technology asset, and resource on the basis of their current project alone. More importantly, examining the current business model forces even technical experts to view the world from the business's point of view. IT professionals, for example, might learn from the current business model that improving customer service is a priority in the upcoming calendar year. As a result, they might be more likely to suggest that their current project include an audit of the company's call center processes and systems.

Many IT departments have a history of making technology decisions based on myopic, IT-centric justifications (such as the latest technology trends) without anticipating how these decisions may impact the business. By employing the current business model as a reference for IT, experts can help specialists who normally focus on specialized tasks to understand essential business basics. In this regard, the current business model deliberately covers a lot of ground without going into too much detail in any area; the integrated, big-picture view forces the project team to think through how the business works at a high level. They can then base process and technology decisions directly on that understanding.

Creating Business Scenario Models

Once the team understands the current business model, they can begin to create the business scenario models that form the basis for end-to-end impact analysis in BTM. Each scenario represents a viable , to-be alternative for accomplishing the goals set out for the project. For example, a procurement project may require one scenario to describe what it would take to join a public exchange, and another scenario to describe what would be required to develop and host a private exchange for preferred suppliers. By conducting a gap analysis between the current business model and each potential scenario model, the team fleshes out which parts of the current model are relevant to their project. This helps planners to measure the scope of change that each scenario requires, including the people, assets, and internal and external business relationships that will be impacted. Also, the structured and visual nature of models makes it easy for the team to compare these scenarios and eventually combine the best of each.

Incorporating Changes into an Updated Current Business Model

After the project has been successfully implemented, the team folds its final business scenario (or an updated scenario if changes were made before the project was completed) into the current business model, ensuring that upcoming projects have access to the latest, most accurate design of the business. This is similar to roundtrip engineering in software development, which ensures that the actual changes made to the real-world environment (the code in roundtrip engineering and the business in BTM) are reflected in an updated model (the object model in roundtrip engineering or the current business model in BTM). Business model definition, then, helps to bridge the knowledge gaps that traditionally exist between projects, and becomes a vehicle for making sure that the current enterprise architecture remains accessible and up-to-date with a minimum of dedicated maintenance.



The Alignment Effect. How to Get Real Business Value Out of Technology
The Alignment Effect: How to Get Real Business Value Out of Technology
ISBN: 0130449393
EAN: 2147483647
Year: 2001
Pages: 83
Authors: Faisal Hoque

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