Introduction
Describing a business model should be the starting point for every planning and implementation of strategic changes in business: If you plan to change the way you do your business, you first have to identify and understand the internal and external influencers which affect your business!
To do that in an organized manner, you need a well-approved structure which gives you some kind of template and guidance as the Business Model Canvas by Osterwalder/Pigneur provides. You are not urged anymore to start from the scratch answering time-killing questions as: What actually is a business model? What are its key elements? How are they related to each other? You can start instantly with the content.
The Canvas in ARIS
The Business Model Canvas will be supported by ARIS Business Strategy with the next Service Release of 7.2. The Canvas enables business architects to describe their business model in a standardized manner and to map the different influencers [1] of their business model to their models and objects in the ARIS repository. To do so, the Canvas provides nine building blocks which represent the core dimensions of a business model [2]:
- Customer Segments are “(…) groups of people or organizations an enterprise aims to reach and serve”
- Value Propositions is the “(…) bundle of products and services that create value for a specific Customer Segment”
- Channels are the way “(…) how a company communicates with and reaches its Customer Segments to deliver a Value Proposition”
- Customer Relationships represent ” (…) types of relationships with specific Customer Segments”
- Revenue Streams are the “(…) representation of the cash a company generates from each Customer Segment”
- Key Resources are ” (…) the most important assets required to make a business model work”
- Key Activities describe “(…) the most important things a company must do to make its business model work”
- Key Partners represents the “(…) network of suppliers and partners that make the business model work”
- Cost Structures cover “(…) all costs incurred to operate a business model”
The following figure shows us the business model of UMG’s financial services sector (note: UMG is our demo company). In the demonstration scenario, UMG management has decided to revise the current business model in order to reveal its limitations.
.png)
Descriptions of business models can be deliverables from strategy projects in which stakeholders as strategists or consultants think of new ways to improve business performance (e.g. entry to new markets, cost-cutting strategies, sourcing strategies). Improvement usually means change and change always means transforming business. So, the challenge is not only the right definition of how to improve business, it is also finding an answer on how to bring good ideas into practice by successfully implementing business models. That’s why a close integration of business modeling to tools from Business Process Analysis and Enterprise Architecture is so important.
Conclusion
A main benefit of the Business Model Canvas is to have one single view on what a business model is. Get rid of misunderstanding among stakeholders and time-killing discussions on the business model.
In the second part of my blog post, I will share some thoughts with you on how to start business modeling in practice and on the actual mapping between the Business Model Canvas and connected business elements and models in ARIS.
References
[1] OMG Business Motivation Model – URL: http://www.omg.org/spec/BMM/1.1/PDF
[2] Osterwalder, A. et al.: Business Model Generation. 2010, Wiley New Jersey, page 20-42.
