There are at least four tiers of business analysis: 1. Process Definition and Design — The business process modeling often developed through process modeling and design 4. Business Analysts today are also involved in the development of project plans and often provide project management skills when these skills are not available in other project participants. Depending on the level of thinking about business analysis, the areas range from the technical Business Analysis role converting detailed business rules into system requirements , to conversion of shareholder return and risk appetite into strategic plans.
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However, they serve different purposes. Process modelling depicts how value-creating activities are performed. Business modelling captures and displays the elements of the business that characterise the economic choices that have been made by the entity. Business modelling is concerned with providing information that reflects the economic and strategic choices that have been made by the entity.
Three distinct user groups can be identified: Users Who are External to the Entity These include business consultants, analysts, members of the legal profession Osterwalder, Pigneur et al. Users external to the entity require the business model to assist them in understanding the business concept of the entity. The legal profession requires an understanding of business models to assess patenting requests and disputes. Researchers, consultants, and analysts may want to compare entities, classify entities according to their business model, and track changes in the business models of entities Eriksson and Penker ; Gordijn and Akkermans ; Osterwalder, Pigneur et al.
Researchers Susan Lambert will then be able to develop theories of business models that can explain and predict business phenomenon such as profitability, investment, financing, and other behaviour. Managers and Other Decision Makers Business managers and decision makers have a diverse range of needs in relation to business models.
Managers need a model that promotes the understanding and communication of the business logic of the entity to others within the entity. The business model should support decision-making regarding business developments such as innovation and change management as well as investment, finance, and organisational strategy decision-making.
Osterwalder, Pigneur et al. Such a business model must depict the value adding processes of the entity, the information technology infrastructure, human and physical resources, organisational structures, and strategies of the entity along with other business elements relevant to the entity. Information Systems Developers This group of users is a subset of the managers and other decision-makers. However, they warrant a separate category since their requirements are significantly different from those of business managers.
Information systems developers require a detailed depiction of the business that facilitates systems requirements engineering, knowledge management, and workflow and process goal definition Eriksson and Penker ; Osterwalder, Pigneur et al.
In this sense, the business model serves as a high-level enterprise model from which process models can be developed. Enterprise models explain various business systems, structures, and relationships, map the complexities of the particular business system, and provide a common communication platform between stakeholders.
Persson and Stirna A decision needs to be made as to whether business modelling is to serve one, or more, potential user groups, or if it should try to serve all of them. The accounting profession decided that it would aim to serve the common needs of all user groups, accepting that they would not be meeting all of the needs of any one group but that it would meet part of the needs of all groups Henderson, Peirson et al.
The needs of business model users can be analysed according to two dimensions; the level of abstraction required and the aspect of the view. The level of abstraction refers to the amount of detail conveyed by the business model. A highly abstract business model would provide an overview of the business. A low-level business model would contain detailed information about the elements of the business model and the associations with each other.
In general, external users of business models require more abstract models than internal users; information systems developers require more detailed views than business managers. The user might be interested in the value creation and exchanges aspect of the business model — as with the e3value ontology Gordijn and Akkermans Information systems managers are interested in aspects of the business model that impact on the information technology resources of the entity.
A division manager might require a view of the business model that shows the division and its relationship with the rest of the business model both inside and outside the organisation. In considering an e-commerce initiative, management need to model the impact of that initiative on the rest of the organisation. Shop plans depict out-of-context component design to be used by the subcontractor to build the component Zachman The representations are from different perspectives and different levels of detail.
The objective of business modelling is to provide information useful for understanding and evaluating the business concept s of an entity, it should therefore provide only the information required, uncluttered by irrelevant details. It is crucial that the integrity of the models is maintained by ensuring that all views are consistent with each other.
These qualities are equally important to business model information. For information to be useful, it must be relevant to the user. This quality is closely tied to the objective of business modelling. A business model architecture that permits multiple levels of abstraction, and multiple aspects of the same business concept to be viewed, facilitates relevance of information.
Reliability of information refers to the objectivity, or verifiability, of the information. There is always a trade-off between relevance and reliability Henderson, Peirson et al. The relative importance of each determines what information should, and should not, be included in the business model.
Assumptions regarding the capability of the user must be made so that the business model representations are understandable by the user. Comparability of information between entities, and over time is a qualitative characteristic of business models that makes the representations more useful to users.
This can be achieved only once generally accepted principles, and conventions for business modelling, are established. Determining the qualitative characteristics important to business model users is an area of potential, future research.
Close examination of the research reveals that there is considerable overlap in that many elements are common to several of the lists. Osterwalder et al Osterwalder, Pigneur et al. The conceptual framework provides an alternate approach to identifying business model elements. Rather than deriving an exhaustive list of elements from the literature, the elements can be derived from the conceptual framework itself.
The objective of business modelling BMCF Level 2 and the qualitative characteristics BMCF Level 3 of the information to be conveyed in the model determine the necessary elements of business models. This element serves as a starting point for deducing and inferring other elements and their relationships with each other.
There must be an axiomatic point of reference from which all other concepts are derived Every conceptual structure builds on a concept that has primacy.
That is simply another way of saying some element must be given meaning before meaning can be attached to others. I contend that assets have that primacy Gellein p. All coherent and cohesive sets of rigorously defined concepts, regardless of the field of knowledge to which they apply, attach primacy to certain concepts. Those are the concepts that are used to define other concepts. Those concepts provide unity and prevent the set of concepts from being internally inconsistent.
In mathematics, the assumption of the existence of zero is equivalent to assigning conceptual primacy to zero. Nothing else can be defined until zero is defined. In the interest of developing a coherent and internally consistent conceptual framework, the business model element that commands primacy must be identified.
It is proposed that conceptual primacy belongs to the value proposition element. The value proposition represents the object s of value the entity offers customers. It is the reason for the entity existing and goes to the heart of the business concept. The value proposition can be a product, a service, or information. It can be simple or complex. It might be a combination of products, services and information.
The primacy of the value proposition stems from the fact that all of the other elements of a business model flow from this element, without which the entity would not exist, or at least, would have no reason to exist. Nothing else in the business model makes sense without reference to the value proposition.
Support for primacy of the value proposition is evident in the literature Afuah and Tucci ; Applegate ; Bouwman, Haaker et al.
Table 2 presents a set of questions which, when answered, identify, and define, the remaining business model elements. Table 2: Questions that relate to the value proposition element Questions in relation to the entity Business model element What is the value proposition?
Value Proposition: product, service, information or combination of these To whom is the value proposition offered? Customer: segment or type What is received in return? Value in Return: such as rent, commission, sales revenue, advertising space, future contracts How is the value proposition offered? Channel: of value transmission How is the value proposition created? Value Adding Process: and related resources, capabilities, activities, strategies and organisational structure What other entities contribute to providing Suppliers and allies the value proposition?
A Conceptual Framework for Business Model Research Elements directly identified from the value proposition questions are referred to in this paper as basic business model elements. It can take the form of products, services, information or a combination of each.
It can be a group of consumers or other businesses. Where differences exist in terms of demand or servicing requirements, a new customer group needs to be recognised. It can be money e. The Value in Return can be realised at different points of time. It transmits one, or more, of the Value Propositions and the Value in Return. More than one channel can be used to effect a transaction. It can be a manufacturing process, a retailing operation, or a service process.
It describes how the Value Proposition is provided. At the most detailed level the Value Adding Processes can be defined precisely a process model can be constructed. However, at the external user and management levels, all that will be depicted, are the inputs and outputs of the Value Adding Processes. In some instances, the Ally is a regulatory body that plays an important role in the value domain. The Ally can also be a third party that provides the Value in Return to the entity.
The basic elements are adequate for describing a business concept and for comparing business models. However, to understand the requirements of the business, or to evaluate the potential of new business initiatives, including e-business initiatives, more needs to be known about the Value Adding Process element.
The Value Adding Process is in fact a compound element that combines the following elements to produce the value proposition and the channel. They are provided by resources both human and other.
Capabilies can be provided by an ally. Decisions relating to the nature of the Value Adding Processes, how activities will be performed, and by whom, are dealt with by this element.
It is both deterministic and consequential of the Value Adding Processes. Together these elements explain how the business is configured to create the Value Proposition.
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I Title QA A73 A82 Why not build everything higgedy piggedy, like a house? Common sense would tell any decision maker that such an aircraft would hardly be able to take off And the approaches and methods used in mature engineering disciplines, such as aeronautics, simply prohibit such a development Yet, irrespective of your position in the information technology IT industry, you will almost definitely have come across a software system or an IT organization that very much looks like a jet airplane with a helicopter propeller on top of it Even though as members of the IT industry we are aware of the problems of poor design, inefficient organizations, and ad-hoc solutions, most of us have been asked to buy, design, or participate in the development of such a thing What is it that distinguishes mature engineering disciplines from our industry? The answer is architectural style—the main topic of this book Have you ever wondered why system development is still so complex despite the rich array of products, techniques, and tools available today?
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However, they serve different purposes. Process modelling depicts how value-creating activities are performed. Business modelling captures and displays the elements of the business that characterise the economic choices that have been made by the entity. Business modelling is concerned with providing information that reflects the economic and strategic choices that have been made by the entity. Three distinct user groups can be identified: Users Who are External to the Entity These include business consultants, analysts, members of the legal profession Osterwalder, Pigneur et al.