Business Model Definition In Action

The variability in which the activities of BTM can be performed and the breadth of information they cover makes it difficult to capture the essence of business model definition, process optimization, and technology automation without seeing them in action. For this reason, Ch. 5, 6, and 7 each refer to a simulated case that illustrates how the activities of BTM might work in a fictional business environment.

Rauha Communications, a telecommunications company, has kicked off a project intended to roll out CRM in its wireless services division. This initiative, code named Project Alpha, has two strategic objectives: First, the company wants to identify their most valuable customers and cross-sell new data services to them. Second, deregulation has increased competitive pressures on the company, and they want to improve their customer service to minimize the attrition of these high-value customers.

This simulated case provides a series of valuable glimpses into the people and day-to-day tasks that are impacted when a company undertakes the activities of BTM, and, more importantly, into some specific advantages that can follow from doing so. For business model definition, this example illustrates how Rauha Communications goes about defining its current business model, and how stakeholders collaborate with one another and leverage insights provided by the current business model to help build compelling business scenario models for Project Alpha.

Capture An As-Is Current Business Model

Soon after Rauha Communications kicks off Project Alpha, a business analyst staffed on the project meets with the project manager, and is tasked with meeting an important milestone: coordinating between multiple team members and external stakeholders from the business to construct a current business model. This fits well within the business analyst's normal job function, which is to serve as a mediator between the requirements of the business and the capabilities of the IT department.

Normally, Rauha Communications wouldn't be starting from scratch with their as-is state of the business; the project or program management office (PMO) would provide a similar model that could be used as a starting point. But Project Alpha is the wireless services division's first initiative to take advantage of BTM; previous projects relied on unstructured, paper-based analysis of the business. Before Project Alpha can really get underway, then, the business analyst needs to put together a big-picture view of the business to use as a starting point.

Putting this picture together will involve two major tasks. First, the analyst will need to create a general, high-level snapshot of the wireless services division, since this is the functional unit for which the project is intended. The business analyst pulls information from the project charter, the current operating plan for wireless services, and some business cases developed for previous projects to complete this picture. Figure 5.2 illustrates the big-picture view that the business analyst creates.

Figure 5.2. A high-level view of the current business model for Rauha Communications that drills down to reveal the major goals for Project Alpha

The second task requires the business analyst to define portions of the business model that are relevant to Project Alpha in more detail. This means coordinating in-depth with the business unit, so he reviews the project charter to determine appropriate contacts from each division. This research yields three names : a marketing manager, a director of sales, and a customer support supervisor. Since these three people will represent the end- user base for the CRM system, it's essential that they be brought into the planning process early on.

Because the marketing, sales, and customer support divisions are all located in the same physical location, the business analyst is able to schedule a morning workshop that includes the three representatives from the business. The workshop begins as the business analyst walks through each of the high-level business model elements that are defined, and asks the marketing manager, director of sales, and customer support supervisor to flesh out the details that relate to Project Alpha. For example, the marketing manager describes each of the product and service offerings, as well as the hardware and distribution partners ; the director of sales confirms the specific distribution channels, and refers to a data warehouse of customer information that can be used to identify high-value customers.

By encouraging representatives from disparate parts of the business to collaborate and share information beyond their usual organizational boundaries, the business analyst creates a current business model of the wireless services division that will function as a starting point for Project Alpha. When the next project is kicked off, presumably with different objectives, business model definition will begin with this current, as-is state. Over time, as individual projects flesh out specific areas, the model will become a more accurate and complete picture of the wireless services division.

Develop Business Scenario Models For Impact Analysis

After the current business model is in place, Rauha Communications' project team moves on to developing each of the business scenario models that form the basis for impact analysis. The team collaborates with marketing, sales, and customer support representatives to examine the current business model as a starting point, and to identify areas where technology might be used to improve the business. Once an opportunity has been identified, it is fleshed out as a business scenario model, or potential to-be state.

After examining Project Alpha's current business model, a marketing assistant suggests that the project could help increase revenue if it were timed to coincide with a campaign to cross- and up-sell to existing customers. This prompts a representative of the sales department to point out that the existing data warehouse of customer information could be a powerful tool for segmenting the customer base according to total spend , demographics , and past purchases. The marketing assistant agrees, and adds that segmenting this data would also help her to hone the discount structure and improve margins. This multifaceted analysis of the model leads the team to create a particular business scenario model that promises to increase revenue by cross- and up-selling to existing customers who are identified by a new customer segmentation component (see Fig. 5.3).

Figure 5.3. A high-level view of a business scenario model for Project Alpha that drills down to reveal customer segments

By using the current business model as a vehicle for communication and collaboration between beneficiaries of the project, Rauha Communications' project team helps to ensure that the business scenario models that they build pull together all of the relevant internal and external assets of the enterprise. In this way, the as-is model acts as a vehicle for collaboration between otherwise disparate beneficiaries of the project, who, by contributing their personal expertise, are able to identify drivers for the business scenario model that complements each of their areas of responsibility.