WHY BUSINESS MODELING?

The majority of software applications are no longer "gizmos" built by programming wizards to be used by computer hobbyists who appreciate technically elegant features for their own sake. Instead, most applications are everyday tools used by people in their working environments as well as at home. These applications need to fit intuitively into the organization in which they are used. We must be sure that the applications we build help people in their daily chores and that they are not perceived as gadgets that do not offer added value. To fulfill these needs better, the new standard is to try to understand the business domain before, or in parallel with, a software engineering project.

This is becoming even more obvious as organizations are preparing themselves to enter the world of e-business. Then, what is e-business, this buzz word that is so frequently used? As with all terms of this kind its meaning depends somewhat on the messenger. Our definition is that e-business is about building systems (sometimes called business tools) that automate business processes. In a sense, the business tools are the business, and a way to differentiate yourself from your competitors . For example, an e-commerce business tool automates the sales process.

We see organizations developing e-business software that now consider business modeling the most central part of their projects. They use model-based technologies to develop fast and in a controlled manner. They involve the CEOs and the marketing directors of the target organizations in developing these models, where before they would typically communicate with some level of "business domain experts" who might have known how business is run but were not empowered to make decisions about changing it.

E-business development is more than just automating the existing processes; it forces some reflection on the nature of the business and the way it is run. Business modeling and system definition are not only of interest to people in the IT department; they are of concern to everyone involved in business development. A project to develop a new business tool will involve people from all parts of the organization, from executives with the power to make decisions, to "grass roots" and end users who feel the consequences of those decisions.

The business tools built under the umbrella of e-business development can be categorized as follows :

Customer to business (C2B):

applications that allow you to order goods over the Internet, such as for electronic book stores
Business to business (B2B):

automating a supply chain across two companies
Business to customer (B2C):

providing information to ( otherwise passive) customers, such as by distributing newsletters
Customer to customer (C2C):

applications that allow customers to share and exchange information with little input from the service provider, such as for auctions

We do not recommend business modeling for every software engineering effort. It appears that business models add more value when there are more people directly involved in using the system and more information to be handled by the system. For example, if you were simply adding a feature to the software of an existing telecommunication switch, you would not consider business modeling because you would not be radically changing the purpose of the software. On the other hand, if you were building a brand new order management system to support the sales of telecommunication network solutions (an e-business application), business modeling would be valuable to understand how this new system would affect the way you conduct your business. The sales and order processes in this domain are complex because what you are selling is a custom-made solution, not an off-the-shelf product.