Business Modelling - A Performance Framework

Before embarking on a Business Process Management project there needs to be a clear understanding of the business model. Also a desire for the acceptance of change within the organisation as things progress over time and market dynamics fluctuate due to competition, product evolution and economic factors. By establishing a Business Model Framework it positions and defines the contribution that the Business Model provides to the organisation and the required end-to-end process measures needed to monitor the business performance

A Business Model comprises of four main elements:

1. Value Proposition – Within the context of the Business Model it applies to all the resources:
   1. Customers
   2. Partners
   3. Shareholders
   4. Departments
   5. Employees
   6. Suppliers

The value proposition describes the experience that will be gained from each of the constituents, it also defines the products and services offered along with the benefits each constituent will achieve from the business relationship. By having a Value Proposition that covers all constituents is ensures the Business model levels as shown in the diagram are linked and the impact at each level on the total model can be monitored and measured.

1. Profit Model – The profit model underpins the Value Proposition ensuring financial targets are met and establishes a platform for defining the Resource Model required to ensure the Value Proposition is delivered. It also provides the hierarchical measurement model required to manage the utilisation of resources needed to meet the profitability goals required by the organisation and its investors.
2.  Resource Model – Resources can be broken down into four main areas:
   1. Men – Human Resources, Skills, Knowledge and Experience required supporting the Profit Model.
   2. Money – Financial Investment, Return on Investment and Growth Rate required to ensure the continuance of the business over time.
   3. Machines – The Technology, Machinery and Buildings required to support the profit and planned growth targets.
   4. Materials – The investment in materials and technology and continued commitment by the suppliers to meet the needs of the organisation and its customers.
3. Business Process Model – Develop a Business Architecture around a framework that ensures ownership and responsibility by all concerned within the organisation to meet the goals and aspirations of the business. The Business Process Model should be hierarchical providing a means for continuous measurement of performance of resource consumption and output, at all levels engaged, in the delivering the Value Proposition and Profit Model goals of the organisation.  The Business Process Model should be continuously improved to ensure the effective management of resources and the elimination of waste.

The next few Blogs will develop this approach further. I have been engaged in numerous Business Process Consulting projects that have been at departmental level, justifying the purchase of software or supporting the delivery of specific projects as part of the change management process. It was hard to see how many of these projects contributed to the continued success of the organisation and where they fit into their long-term goals.