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A Sustainable model needs the
support of an architecture
James McKee
2
ScenarioToday, businesses are more complex and ever-
changing, requiring more sophisticated management
solutions.
Example: The Business Model
Important to the future of an organisation
Confusion of definitions
Difficult to develop
Objective: Develop a more Sustainable Business
ModelJ McKee
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1. Simple DefinitionTo analyse strategic choices.To Focus attention on who are the customers & how
to make money (Magretta).
2. Complex definitionAll the Above + show keyProcessesResourcesCapabilitiesSuppliers & RelationsSome Financial aspects (McKay & Marshall).
Business Model
4
Approach
To separate the more enduring business descriptors
from the decisions on how to add value.
So: Use a well structured Information architecture to
describe the business that will aid and support the
development of the business model.
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Why Architecture?Architecture provides a formal layout to present the
key elements of a complex structure.
It provides a general understanding of how the structure is organised to enable evaluation of the effectiveness and robustness of the design.
It would allow comparison of similar organisations.
The clarity of understanding would provide a useful communications tool for staff to implement changes.
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Information Architecture
The Open Group offer this definition of IS/IT architecture:
The structure of components, their interrelationships, and the principles and guidelines governing their design and evolution over time.
So: Architecture shows the critical structure, the foundations, the supporting structures and the overheads requiring support.
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Information Architecture
Principles are:
A formal detailed plan to guide implementation
Describe all components and their structure
Define the interrelationships between components
Has guidelines covering evolution over time
- the rationale of why major components are
present
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% Contribution
Example
Note: Level of Abstraction & Direct Relationship between Elements
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Action ‘n”
Date:Who By
Action 1
Date:Who By
CSF 1
Target: How it contributes to Objective:
CSF ‘n’
Target: How it contributes to Objective:
Objective 1
Target: How it contributes to Objective:
% Contribution
2nd Level Of Architecture Reference Model For Strategic Plan
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Solution Requirements
Formal Plan – separate Architecture & Model.
Need a Clear and unambiguous Architecture
With a Brief and succinct summary
Backed by supporting detail.
Determine focus areas for attention.
Determine key components & critical
interrelationships & ratios.
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Solution Components Provided by:Porter’s Five Forces and Value Chain
SWOT
PESTLE
Relations are:
∙ Direct Linkage between related components
∙ With Degree of association
∙ Rationale for major components
Search for the most relevant
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Visualisation of Solution (Horn)
Use Alter’s Work system analysis for summary presentation of key factors (next Slide).
Add in Porter’s five forces to the customer and product elements where critical.
Show both Admin. & Production Key Processes.
Show Processes with High ‘Value Add’ relative to cost.
Show % value add for departments
Incorporate critical SWOT.
Show any critical PESTLE affects.
Alter’s Diagram for Work System Analysis
Customer
Product
Processes
Technology
HR
Information
Admin Ind
FinanceInfrastructure &
Customer
Product
Processes
HR
Admin Ind
Finance
Suppliers
85 employees (70 skilled renovators and 15 admin )
Significant $2M loans to cover stock
Commercial Caterers 45% of state market
Renovating commercial kitchens
Each High Impact Statement -- link to related element with % impact
5 forces
SWOT
Threat - Competitor B developing similar expertise = 70%
Customer
Product
Processes
HR
Admin Ind
Finance
Suppliers
V CA HL AU IE N
85 employees – 30% of expenses = 50% value.Strength - High expertise
Threat - Loan interest repayments causing strain
Commercial Caterers 45% of state market
Renovating commercial kitchens
Significant $2M loans to cover stock
1. HR - Strength have the leading experts in the field. The
85 employees add 50% of value to product for 30% of
cost.
2. Threat of main competition (B) is developing similar
skills getting close to 70%.
3. Need to ensure continued loyalty - include in annual
staff review.
4. Finance- Threat Loan overhead $2M - causing strain on
cash flow ($10K per month).
5. Need line of long term ( 5 years) credit.
6. Need to increase sales by 10%
SWOT Analysis
ContextPoliticalEconomicSociologicalTechnologicalLegalEnvironmental
Customer
Product
Processes
Technology
HR
Information
Admin
Ind
Finance
5 forcesCompetitionNew entrantsBuyer powerSupplier power Substitutes
Suppliers
V CA HL AU IE N
Mark SWOT
Infrastructure &
Each High Impact Statement -- link to element with % impact
Customer
Product
Processes
Technology
HR
Information
Admin
Ind
Finance
5 forcesCompetitionNew entrantsBuyer powerSupplier power Substitutes
Suppliers
V CA HL AU IE N
Mark SWOT
ContextPoliticalEconomicSociologicalTechnologicalLegalEnvironmental
Business Model
Strategic Plan
Infrastructure &
Direct Sales with Invites to Demo Kitchen
Customer
Product
Processes
Technology
HR
Information
Admin
Ind
Finance
Suppliers
V CA HL AU IE N
Business Model
Strategic Plan
Infrastructure &
Foundation &Overhead
SupportStructures
Function
Focus Direction
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Business Planning Remarks
The concise format to present the key information:Allows regular review and updating
The structure and levels of abstraction allows the plan to be developed iteratively.
Line managers can determine essential ratios and required actions
Separation of key structural data from strategic business decisions makes the model easier to develop, manage and adapt.
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Identified Method
1. Architectural model for documentation structure –
allowing iterative analysis and development
2. Separate Business model for decisions on approach to
product and customer allows regular review & change
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General Planning Framework1. Formal investigative process
2. Structured solution development process
3. Unambiguous implementation planning document
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In ConclusionSeparating information between the Architecture and
the Model allows better focus on each.
Reducing the information in the Model allows it to be
reviewed and updated more regularly.
The result is clear unambiguous planning documents
which provide better communication throughout.
Material derived from McKee, J. (2013). Applying Principles from IT Architecture to Strategic Business Planning,, IGI Global, Hershey PA.
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ReferencesAlter, S. (2013). "Work System Theory: Overview of Core
Concepts, Extensions, and Challenges for the Future." Journal of the Association for Information Systems14(2): 72-121.
Horn, R. E. (2001). Visual Language and Converging Technologies in the Next 10-15 years (and Beyond). National Science Foundation Conference on Converging Technologies (Nano-Bio-Info-Cogno) for Improving Human Performance.
Magretta, J. (2002). "Why Business Models Matter." Harvard Business Review: 3-8.
McKay, J., & Marshal, P. (2004). Strategic Management of e=Business. Milton, John Wiley.
McKee, J. (2013). Applying Principles from IT Architecture to Strategic Business Planning. Hershey PA, IGI Global.
McKee, J. (2015). Architecture as a Problem Solving Tool. Encyclopedia of Information Science and Technology, . M. Khosrow-Pour, IGI Global: 75-84.
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Author: James McKee: Oct 2014. Affiliation: University of Wollongong (Retired) Wollongong, NSW, Australia 2522.
• The Open Group. (2006). The Business Executive's Guide to IT Architecture: Why IT Architecture is Crucial to the Success of Your Business. Retrieved from http://www.opengroup.org/public/arch/pl/oview
