Enterprise Architecture Matters

Adrian Grigoriu

Business Model as a Value Chain

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If you  wish to employ Business Models in your enterprise analysis and strategy specification, you may first have to understand what that is. 

A Business Model shows how a company goes about its business to be able to return value/profit. Representing properly the business model down on paper is a bit more difficult though. 

 

In fact, I would say that, on paper, a business model, rather than showing a list or disconnected boxes on a diagram as it does today, should illustrate the value chain, represented in sufficient detail to reveal the costs and revenue for the calculation of profitability. That's not the case today though, not to my knowledge.

 

Hence, to be of any use, the representation of the business model should be built on the value chain which in effect illustrates how value is returned step by step. 

In turn, the value chain should be mapped on an enterprise wide architecture (EA) to enable the analysis of the chain of components and their resources that deliver the product.

 

A business model may be represented thus as a path through a full EA that illustrates the customer segments, channels, partnerships, processes and the resources that execute them. A map of disjoint boxes would not do the job to illustrate the sequence of processes, technology, people resources and partnerships that add value and accumulate cost at each stage of product delivery necessary to estimate the business model profitability.

The assessment of the business model processes and resources and estimation of total cost can be properly calculated only on the EA that describes the value delivery in sufficient detail. 

But true, there is not often that you see a simple EA blueprint today either.

 

As an observation though, profit appears to be the only value taken into consideration by a business model today. Still, there are other things though that matter to a company, such as the impact on the environment and in general corporate social responsibility and customer satisfaction. 

These may be estimated though on a value chain business model.


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Adrian Grigoriu blogs about everything relating to enterprise and business architecture, SOA, frameworks, design, planning, execution, organization and related issues.

Adrian Grigoriu

Adrian is an executive consultant in enterprise architecture, former head of enterprise architecture at Ofcom, the spectrum and broadcasting U.K. regulatory agency and chief architect at TM Forum, an organization providing a reference integrated business architecture framework, best practices and standards for the telecommunications and digital media industries. He also was a high technology, enterprise architecture and strategy senior manager at Accenture and Vodafone, and a principal consultant and lead architect at Qantas, Logica, Lucent Bell Labs and Nokia. He is the author of two books on enterprise architecture development available on Kindle and published articles with BPTrends, the Microsoft Architecture Journal and the EI magazine. Shortlisted by Computer Weekly for the IT Industry blogger of the year 2011.

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