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Оглавление4.1 Key Learning Points
This chapter will help you to understand the topic of business modeling and how it relates to Enterprise Architecture within the context of the TOGAF standard.
Key Points Explained
This chapter will help you to answer the following questions:
• What is a business model?
• What are the impacts and benefits of business models?
• What are some different example representations of business models?
• How to explain the relationship between business models and Business Architecture?
• How are business models used according to the TOGAF standard?
• Why business model innovation should be approached in a structured manner?
4.2 The Definition of Business Model
(Syllabus Reference: Unit 1, Learning Outcome 1.1.1: You should be able to define what a business model is.)
Definition: A business model is a description of the rationale for how an organization creates, delivers, and captures value.
See also Section 3.2, Business Model.
All Organizations have a Business Model
All Organizations have a business model, regardless of whether it is explicitly documented. Where it is not explicitly documented it may be an abstract concept that exists in a leader’s mind, or encapsulated in the way of working for the organization (e.g., the procedures and behavior).
Business models provide a high-level visual representation of the design of a business at various states; for example, current state, transitional state, or future state. They describe the rationale for how an organization creates, captures, and delivers value to its various internal and external stakeholders.
Business models also provide a basis for establishing a common understanding of how to describe and manipulate the business in pursuit of new strategic alternatives. In that sense, business models are a starting point for discussions around business innovation and strategy planning for the allocation of resources.
The development of a business model is initially performed at a relatively abstract or conceptual level. Maintenance of this summary view encourages and enables the creative thought process that underpins innovation. It also helps to communicate key ideas about the vision and strategy to a broad audience, at a level that is appropriate to generate cross-disciplinary discussion and promote buy-in.
Usually there is sufficient information available in a draft business model for interested parties to explore overall feasibility and support strategic decision-making. On the other hand, this sketch view does not normally contain sufficient information to perform a risk assessment or to develop a plan to execute the agreed strategy.
4.3 The Impact and Benefits of Business Models
(Syllabus Reference: Unit 1, Learning Outcome 1.1.2: You should be able to describe the impact and benefits of business models.)
Business leaders can obtain powerful leverage using business model artifacts in conjunction with other strategic planning artifacts, Business Architecture views, and organizational change methods to accelerate strategic execution and alignment.
Why Business Models Matter?
The business model “forces” managers to think rigorously about their business.A business model’s great strength as a planning tool is that it focuses attention on how all the elements of the system fit into a working whole.
[Source: Joan Magretta, Harvard Business Review]
Business model artifacts highlight the critical relationships between the various elements that constitute a business in ways that:
• Are not fully covered by other approaches or techniques and, therefore, contribute to a more complete examination of costs, revenues, and other business perspectives
• Are covered by other approaches or techniques – but through a different method or viewpoint – in which case business modeling helps cross-check and correlate other points of information and assumptions
The benefits of use of business models include:
• Improved communication: improved communication among business executives, by providing a common perspective for the organization’s core business logic, can help executives to “get on the same page”
• Providing a Common Perspective: having a common perspective, structure, and understanding allows for more effective business design6 and enables the successful deployment of an organization’s target-state Enterprise Architecture
In summary, business models support clarity of thought using a different point of view from the one provided by traditional strategic planning methods and can foster the greater level of thinking required for innovation.
4.4 Different Example Representations of Business Models
(Syllabus Reference: Unit 1, Learning Outcome 1.1.3: You should be able to describe different example representations of business models.)
Business models can be represented in many different ways. This section describes a number of examples, including the Three-Element Framework shown in Figure 3. Other well-known framework examples include the Four-Box Framework (Figure 4), the Business Model Cube (Figure 5), and the Business Model Canvas (see Figure 6).
4.4.1 The Three-Element Framework
The Three-Element Framework from the Business Model Innovation Factory7 shown in Figure 3 describes the structure of a business model in its most abstract form, relating operating model, customer experience, and the financial model.
Figure 3: Abstract View of a Business Model
4.4.2 The Four-Box Framework
The Four-Box Framework, shown in Figure 4,8 comprises:
• A customer value proposition – an offering that helps customers more effectively, reliably, conveniently, or affordably solve an important problem
• A profit formula – defining how a company creates value for itself and shareholders
• Key resources – the people, technology, products, equipment, partnerships, channels, and brand to deliver the customer value proposition
• Key processes – such as design, development, manufacturing, marketing, and training, which deliver the customer value proposition
Many of the terms and ideas are similar to the Business Model Canvas (see Section 4.4.4).
Figure 4: Four-Box Framework
4.4.3 The Business Model Cube
The Business Model Cube, shown in Figure 5,9 is designed as a generic framework for working with any business model, proposing that any business model has seven generic dimensions (Value Proposition, User & Customer, Value Chain, Competencies, Network, Relations, Value Formula).
Figure 5: Business Model Cube
4.4.4 The Business Model Canvas
The Business Model Canvas, described in Business Model Generation by Alexander Osterwalder and Yves Pigneur (see References), is an intuitive technique for creating a sketch of a business model. As shown in Figure 6,10 it includes nine segments which form the building blocks for the business model. This is explored in detail as an example of how to create a business model in Chapter 5.
“We need a business model concept that everybody understands: one that facilitates description and discussion. We need to start from the same point and talk about the same thing. The challenge is that the concept must be simple, relevant, and intuitively understandable, while not oversimplifying the complexities of how enterprises function”.
[Source: Alexander Osterwalder & Yves Pigneur]
Figure 6: Overview of the Business Model Canvas
4.5 Business Models and Business Architecture
(Syllabus Reference: Unit 1, Learning Outcome 1.2.1: You should be able to explain the relationship between business models and Business Architecture.)
Business models provide a high-level visual representation of the design of a business. They describe the rationale for how an organization creates, captures, and delivers value to its various internal and external stakeholders. They also provide a basis for establishing a common understanding of how to describe and manipulate the business in pursuit of new strategic alternatives. In addition, they can be used for discussions around business innovation and strategy planning for the allocation of resources.
Usually there is sufficient information available in a draft business model for interested parties to explore overall feasibility and support strategic decision-making. On the other hand, the sketch view does not normally contain sufficient information to perform a risk assessment or to develop a plan to execute the agreed strategy.
While a business model creates alignment for achieving business strategy, it is the Business Architecture that articulates the different perspectives and impacts of the business model.
Business Architecture breaks the business model down into the core functional elements that describe how the business works, including the business capabilities, value streams, organizational structure, and information objects required to deliver the desired business result. This process can also identify gaps and conflicts in the thinking and assumptions used to create the business model. In doing so, it can loop the discussion back to any required changes or improvements to the business model.
In the TOGAF standard, Phase B (Business Architecture) is where architects take the high-level business model diagram artifact and develop a detailed set of architecture blueprints (representing different viewpoints of the proposal) to enable more in-depth planning, investment, and option analysis. These detailed perspectives are useful and necessary for planning teams, business analysts, and business unit managers to understand and evaluate the overall impact of the proposed business model on the operation.
Business Architecture using the ArchiMate® Modeling Language
The ArchiMate notation supports the key concepts of Business Architecture, especially in its motivation and strategy elements. It can be used to bridge the gap between high-level strategy models such as the Business Model Canvas and solution models.
However, its notation is primarily intended for architects. Appropriate alternate visualizations tuned to communicate needed information are recommended for business stakeholders.
See Appendix E for summary information on Business Architecture using the ArchiMate modeling language.
4.6 Using Business Models with the TOGAF ADM
(Syllabus Reference: Unit 1, Learning Outcome 1.2.2: You should be able to explain how business models can be used according to the TOGAF standard.)
This section summarizes how business models are used with the TOGAF ADM. Detailed descriptions of ADM Phases A and B are given later in this document.
Business models are a key input into the Phase B (Business Architecture) of the TOGAF ADM and are either developed or located during Phase A (Architecture Vision).
The business model is highly effective at aligning members of the leadership team around new strategies or a different business direction. The Business Architecture is more effective at aligning the rest of the enterprise on what needs to be done (and how) at an operational and organizational level.
Activities related to business models in Phase A and Phase B are as follows:
• First, planners and architects use the business model to identify key partners that are stakeholders in the change
The business models are analyzed to gain insight into additional stakeholders, including their concerns, objectives, and key business requirements.
• Next, the business models are validated against the business goals, strategic drivers, and constraints of the organization
Any inconsistencies or gaps are provided as feedback to the sponsors of the Statement of Architecture Work for clarification.
• Architects then analyze the business models and use capability mapping to identify new capabilities or enhanced capabilities required to realize the target business model, and capabilities no longer required