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Modeling, Managing Business Performance

Many modeling vendors and consultants promote only one type of corporate model: business process models. While these are certainly valuable, there are many other business models that can be used to describe a business and thus offer insight: organizational models, systems architectures as well as data, strategy, rules and regulations models. Moreover, the overall value of such models increases exponentially when they are integrated, shared and discussed throughout the enterprise. Only then can these models effectively facilitate enterprise-wide business performance management.

Organizational models describe the structure and make-up of a business. When integrated with business process models, they enable managers to assign, reassign, assess and reassess both work and changes in the end-to-end business processes of a company. Further, many business modeling solutions enable the analysis and calculation of how much work is assigned to an organizational unit, even down to the level of individual employees. Effective organizational models will also align competencies and skills to the organization, especially wherever certain skills are necessary for specific business processes.

Diagrams depicting IT or systems architectures are also valuable business models. A systems architecture model linked with the organizational and process models will shed light on exactly which processes are supported by which systems and their functions, as well as which systems and functions support which processes. This becomes both critical and insightful as a business moves from one or more legacy systems to a new enterprise resource planning (ERP) or customer relationship management (CRM) solution.

The halls of corporations the world over are littered with tales of IT systems being unplugged in favor of new-and-improved technology, only to have disaster strike because someone didn't know that the tired-old legacy system was connected to other mission-critical processes and/or applications. A properly designed systems architecture diagram can prevent such a catastrophe. In today's world of increasingly tighter margins and global competition, few companies can afford to risk that type of disaster.

Many years ago, if we didn't know whom the users of output reports were, we would simply turn them off in the JCL (job control language) and see who would scream the loudest. These days, that's not so easy, which is precisely why integration of business process models, organizational models and IT/systems models is so very important.

Many people don't show much interest in data/information modeling. Nonetheless, this is a critical area. A company can have the greatest processes in the world, but if their data is badly architected, they can expect data quality problems which, in turn, cause process quality issues and ultimately failure from customer, supplier and/or internal business perspectives.

Talk to the right consultant or vendor, and they will also evangelize strategy models, rules models, regulation models and others. Strategies, policies, rules and regulations define why people do what they do; and when properly utilized, they often play a significant role in how things get done.

Consider this example: A pharmaceutical firm's business process models and systems architectures were not aligned with regulations and guidelines published by the Food and Drug Administration (FDA) or the Office of the Inspector General (OIG). When asked how they assess the impact of a change driven by a regulation or guideline, the unfortunate answer was that they could not effectively do that. If a strategy or regulation model is literally and physically linked to business process models, system architectures, organizational models and data models, most modeling solutions will enable the quick generation of a view or report that outlines which areas of the business need to be evaluated because of some specific strategy, rule, policy, regulation or guideline.

Control: The Name of the Game

When determining whether or not to invest in the breadth of business models available, consider what might well be the greatest benefit of all: control. Without control, business performance management is not possible. However, armed with integrated process, organization, systems, strategy, rules and regulation models, a senior executive will have a solid grasp on what needs to be done, for whom, by whom, when and how. Which executive wouldn't want that?

Such a collection of integrated models offers a clear road map that describes the route or routes a business will or can take to provide products and/or services to customers in a quality fashion. Without such road maps, products and services can certainly be delivered, but at what cost and with what quality? Business models allow executives to plan, assess and re-plan actions as change occurs, and we all know that change is inevitable. The models show how to integrate and implement business functions and operations. What's more, they provide metrics (targets) associated with cost, time, quality and other key factors. And when a business has such a set of models, the nature of change and continual improvement transforms from reactive to proactive, from defense to offense.

Just recently, I visited a business that expressed interest in process workflow modeling. I asked them what sort of business maps or documentation they had. The answer was that all of it was in Microsoft Word format. Think about this for a moment. Word format is not conducive to showing the flow of the processes and work. It does not work well for showing the linkages of organizations to people to work. It cannot clearly show process interactions or what the handoffs are between processes. And, it certainly doesn't work well for analyzing change and being proactive about it.

The same is true for those businesses that elect to describe their business with PowerPoint or other presentation graphics packages. The bottom line is that these formats do not lend themselves to effectively outlining business models. However, when such documentation is integrated with a set of high-quality business models, now you have something! Not that you should throw such traditional documentation away just because someone elects to build a strong set of business models: save it, integrate it, reuse it and make it add value and depth to the business models.

In 30 years of business modeling, I've also learned another important lesson. I worked in a very large computer industry company and did a lot of enterprise architecture and business modeling. It seemed that each time we set off on some business optimization or reengineering initiative we had to do current state (as-is) documentation as well as the future state (to-be) business models. Why? Because there was no central repository where all the models and supporting detail documentation could be stored. Most of the models were built using Visio. We knew there were as-is models of the processes we were redesigning but couldn't find them. So, we repeatedly spent money and made consultants rich simply because we did not know where the as-is models were.

High-quality business modeling solutions will have a repository where business models can be stored, from which the models can be retrieved for review and assessment, upon which analyses can be done, through which revision and change control can be effected, to which supporting and existing business documentation can be attached, and with which the overall modeling solution can be tailored to the customer's modeling formats and nomenclatures without the need for extensive new code development by the modeling solution provider.

As businesses all around the world listen to the quality gurus, analysts and consultants, there will be pressure to become ISO certified, comply with Sarbanes-Oxley, invest in Six Sigma programs, business process management, business performance management, business activity monitoring, etc. These investments are important, but more important than all of them: Make sure you have, store, can retrieve, analyze, change and use your business models as your road map.

So often we see that the models hang on walls, barely more than shelfware. Business modeling is a process, and the process must be repeatable. Keep your models in a repository where everyone in the business can get at them and can change them as needed.

In the last year or so, I have talked with so many companies that are doing duplicate/redundant business modeling. For example, the finance and procurement processes of a business are the same processes (models) whether they are being mapped/modeled for basic business documentation and procedures for your organizations or for some IT system implementation or for Sarbanes-Oxley. Many companies have multiple organizations doing business modeling: one to satisfy the SOX needs, another for ISO certification, more for Six Sigma and others. It's the same process! Use it, reuse it and represent all of your process needs in one model and in one repository. This could save tens, even hundreds of thousands of dollars in just one year.

View your overall set of business models, whatever they are and represent to you, as the score for your business. Choreograph your business and make sure that you, your employees, your suppliers and your customers follow the score. If your organization doesn't dance well to the music, improve it. That's what continual improvement in the quality management system is all about.

Business modeling is important to the success of any business, big or small, but it must be done within reason, and it must be germane to business needs. Business modeling supports all quality-related programs and applications, and is central to the overarching process of business performance management. More important than any of these is a fundamental belief and execution to a basic Plan, Do, Check and Act model.

Use the business models and modeling techniques to plan and replan, direct (DO) business integration and implementation, check how well the processes are working and act (improve) on what is learned. Do this and you will be ahead of many other companies in your industry. This is not hard stuff, but does require a commitment.

I recently met with a CIO from a large entertainment company. We were talking about ROI and the fact that many business executives ask about the ROI for such modeling and the use of business models in their management system. His statement about their interest in ROI was noteworthy. He said, "If they have to ask about ROI for this basic management tool, they're already dead!" He gets it! At the end of the day, the key is simply to say what you're going to do through the framework of your integrated models and management system, and then do what you said you would do.


With more than 38 years of experience in managing both business and IT environments, Steven Arbogast specializes in defining, mapping, integrating and changing corporate processes. A veteran of enterprise architecture design and maintenance, he understands both the technical and organizational components necessary for effective business change management. An internationally published author and presenter, Arbogast spent his first 31 years with IBM. In 1999, Arbogast formed Advanced Enterprise Services (www.advent-services.com), a professional services business focused on overall business change management. In 2001, he also assumed the role of president for enterprise software vendor QualiWare, Inc., a subsidiary of Denmark-based QualiWare APS, where he worked through 2005. Arbogast still provides management services to Qualiware (www.qualiware.com), while also providing professional services to a variety of businesses.

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