Enabling Operational Excellence
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Business Model vs. System Model – Very, Very Different … Do You Get the Difference?!

You can find definitions and discussion of all terms in blue on Business Rule Community: http://www.brcommunity.com/BBSGlossary.pdf ~~~~~~~~~~~~~~~~~~~ business model:  a blueprint for a business capability based directly on real-world things and ideas strictly named and represented using words natural to business people

Discussion:  Even the words used for the building blocks of business models (e.g., the vocabulary used to develop structured business vocabularies) must be natural for business people – again, real-worldBusiness people talk about real-world things! 

A business model enables business people and Business Analysts to engage in discussion about what needs to be created, managed, operated, changed, and discontinued in the business in business terms.  Developing a business solution using a future-form business model does not necessarily imply software development, but if software development does ensue (as it usually does) the business model provides a solid grounding. 

Examples of business models include strategies for business solutions (Policy Charters), business process models, structured business vocabulary (fact models), business milestone models, and Q-Charts (for decision analysis).  The term business model is also used collectively to designate all the business models for a particular business capability.  A business model is always subject both individually and collectively to the business rules specified for it.

system model:  a model that provides a design for an automatable system that is computationally competent

Discussion:  For many years John Zachman, creator of the Zachman Architecture Framework, has explained that a business model is always about real-world things.  These real-world things are as the business leads see or define them. 

A system model in contrast comprises “… surrogates for the real-world things so that the real-world things can be managed on a scale and at a distance that is not possible in the real world.”  Surrogates include data entities in place of real-world things; GUIs and use cases in place of face-to-face, real-world communication; network nodes in place of real-world locations; system events rather than operational business events; and so on.

Does the separation between business model and system model blur in eCommerce?  No.  If business leads see or define ePersons (for example) as real-world, then real-world they are.  To ensure you have a winning business solution, the ePersons should be defined and shaped within a business model.  Afterwards comes design of a computationally-competent system model so you can conduct actual business with the ePersons.  [John Zachman, informal communication, June 2011] ~~~~~~~~~~~~~~~~~~ Excerpted from from Building Business Solutions: Business Analysis with Business Rules, by Ronald G. Ross with Gladys S.W. Lam, An IIBA® Sponsored Handbook, Business Rule Solutions, LLC, October, 2011, 304 pp, http://www.brsolutions.com/bbs

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Ronald G. Ross

Ron Ross, Principal and Co-Founder of Business Rules Solutions, LLC, is internationally acknowledged as the “father of business rules.” Recognizing early on the importance of independently managed business rules for business operations and architecture, he has pioneered innovative techniques and standards since the mid-1980s. He wrote the industry’s first book on business rules in 1994.

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    Tom Hathaway


    Great distinction and an important one to make! My first allegiance as a BUSINESS ANALYST has to be to the BUSINESS wherein technology can and most often is an enabler. The goal of “Strategic” business analysis (aka enterprise analysis?) is to understand the business goals, objectives, problems, opportunities, and needs to enable the development of BUSINESS and Stakeholder requirements that are aligned with the business. Anyone who performs Strategic business analysis wears the BA hat at that time. The primary tools of strategic business analysis are the business models, business rules, etc. and the ultimate outcome is the business case for change.

    Operational business analysis at the project level expands the stakeholder requirements and develops solution requirements that define the business and technology future situation. At this level, both business and system models may be necessary for a deeper understanding of the problems and proposed solutions on both sides of the aisle (business and technology). People with an IT background perform Tactical business analysis for the IT components primarily to develop detailed solution requirements, test scenarios, and Transition requirements. People with the System Analyst job title are often responsible for Tactical business analysis and they need to understand business models although they work primarily with system models. People with business acumen perform Tactical business analysis on the business side to develop/modify business rules, workflows, and instigate organizational change to take advantage of the new technology solution. For this, they need to understand the system models but the business models drive their activities.

    I believe these distinctions are important not only in the deliverables (i.e., business vs. system models), but also in the roles and responsibilities of the individuals involved (business vs. system professionals). It takes a multitude of skills to make a business successful and regardless what job titles people have, they perform much better when they have the right tools and abilities to get the job done.

    p.s. I enjoy your books and philosophies. I offer free videos and a clear distinction between strategic, operational, and tactical business analysis at http://businessanalysisexperts.com.

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