Methods of Work

The main purpose of collecting information is to develop an understanding of the problems and potentials of the existing business and its environment.

To understand where the problems are, the needs of the customers, the experiences of the employees, the intentions of the owners as well as the market trends often need to be understood. There are a number of ways to collect this kind of information.

Depending on the character of the project, one, several or all of the following tasks can performed:

• Assess the business strategy to align the vision and the strategy.
• Benchmark against other organizations to develop goals, objectives and innovative ideas.
• Understand the customer?s demands to involve your customers in the business-modeling effort.
• Understand the existing business to analyze what the problems are. 
• Measure the performance of the existing business to establish a starting point.
• Study new technologies to build a good understanding of state-of-the-art solutions, generally as well as within your own business area in order to find profitable process designs.

Information collection is best done in small groups, so divide the tasks among members of the business-modeling team.

If the current business processes are not well understood, you may need to describe the current organization in parallel.

If business modeling is done to reengineer and existing organization, a business? management team should be responsible for formulating a directive, or enabling it to be formulated. Management is also responsible for communicating the need for business modeling to both the people in the business-modeling team, and to all employees of the organization. It is vital that management does this if the business-modeling project is to succeed. 

Business Idea and Business Strategy

A company's business idea identifies the products and services the company wants to offer and the markets where this should take place. A business strategy defines the principles for how this should be accomplished and which the long-term goals should be.

The business strategy must of course be in line with the way the business works. The strategy must embody the business' long-term goals, and align the business use cases with those goals. As [DVP93] points out, "Strategy and process objectives must reinforce one another and echo similar themes."

A good business use case follows the direction of the strategy; a good strategy enables good business use cases. It is especially important that you base your business modeling work on a strategy that is fully communicated and accepted throughout the business. A well communicated, well-understood strategy simplifies the business-modeling work. On this basis, the business-modeling team can arrive at a good design and explain its motivation. [DVP93] develops a number of criteria for a good strategy applicable to business modeling:

• A strategy should not be based solely on financial goals. In general, employees tend not to perceive financial goals as being sufficiently concrete, because it is not apparent to them how they can attain the goals
• A strategy should be formulated so its effects can be measured. A change in lead time is measurable, as is customer satisfaction, and so on.
• A strategy should focus on a limited and realistic business idea.
• A strategy should inspire, not force, employees at every level to create a business that realizes the desired goals.

Benchmarking

• What is it?
• Who should you benchmark?
• What should you benchmark?
• How should you benchmark?

What Is It?

Benchmarking is an technique to analyze information about, and exchange knowledge with, other businesses. Benchmarking is designed to help you:

• Know how other businesses perform.
• Base your new goals on the goals of comparable businesses.
• Validate that your own use-case goals surpass those of your competitors.
• Learn innovations from other businesses.

Who Should You Benchmark?

Benchmark businesses that:

• Have a good reputation.
• Give thorough customer satisfaction.
• Yield high-quality results.
• Are recognized leaders in the field.
• Are interested in benchmarking.

Benchmarking is often performed as a joint task with another business, with which you share information. Because it can often be difficult to find competitors that want to benchmark, try approaching companies that operate in completely different business areas. Look for analogous tasks in the other businesses?this often reveals innovative ideas about how to work.

What Should You Benchmark?

Benchmark metrics?about the business itself and about the resulting products and services of interest. Relevant metrics are often a combination of time, cost and quality. You should also benchmark innovations, to get ideas on how you can achieve your new goals. For example, by looking for similarities, a software company can probably learn a lot about project management from a construction company.

How Should You Benchmark? 

There are several ways to gather information about other businesses:

• Visit them.
• Have telephone discussions with their executives and consultants.
• Consult publications.
• Study the published case studies, which often can be found in academic publications.

It is important that you contact the benchmarked businesses. Do not trust everything you read; some facts may have been omitted from a published report. You may even find that the happy ending described in a report never happened.

Measuring Existing Processes

You measure the existing business by measuring its business use cases. To do this, first define metrics for the business use cases, then measure the business use cases. Selecting metrics and measures for a business use case is key to understanding the business use case. As [HAR91] put it: "If you cannot measure it, you cannot control it. If you cannot control it, you cannot manage it. If you cannot manage it, you cannot improve it. It is as simple as that."

• Some generalities about metrics

• Defining metrics for business use cases

• Collecting metrics

Some Generalities About Metrics

You can measure the business by observing it from the outside (external metrics), or by measuring tasks inside the business (internal metrics). External metrics relates to business use cases and usability, while internal metrics concerns to the realization of business use cases.

Metrics can also be classified as either objective or subjective:

• Objective metrics record the performance of the business. For example, the time it takes to perform a task, the cost to produce something, or the number of errors in a product.
• Subjective metrics record people?s opinions. For example, how customers rate their satisfaction on a scale from 1 to 5, or if they would recommend the product to a friend.

Example

Metrics used to measure the Airport Check-In business use case:

Note that there are many things that cannot be measured easily, such as:

• Effect of training and education.
• Employee enthusiasm and motivation.
• Ability to invent new products.
• Ability to adapt to a changing environment.

Defining Metrics for Business Use Cases

A good combination of metrics usually includes objective and subjective metrics.

The objective metrics should be a combination of time, cost and quality metrics. In our experience, a focus on the optimization of a business use case?s time parameters (such as lead time) usually results in automatic improvements in both cost and quality parameters.

The subjective metrics should focus on customer satisfaction. When you define subjective metrics, remember that what counts is how the customer perceives the performance of the business. Subjective metrics should measure the performance of the business as perceived from the outside.

Avoid internal metrics?use them only if they are clearly derived from external ones.

As you define the metrics for a use case, ask yourself:

• Can they be measured? If not, remove them or change them.
• Do they measure each use case from the perspectives of time, cost and quality?
• Do they emphasize the outside perceptions of the business?

Collecting Metrics

Measure the business use cases in the current target organization according to the metrics you have defined. Be sure to collect the measurements from the people in the business that really knows the answers.

Later, you will compare these collected values with the values of the modified business use cases. For example, if shorter lead time is an objective for a new business use case, be sure you can verify that this objective has been satisfied.

Analyzing Existing Processes

There are several ways to analyze the existing business; the following subsections describe the most essential:

• Analyzing the Business from a Customer Perspective
• Analyzing Each Activity in Use-Case Workflow
• Analyzing Each Business Use Case on the Basis of Metrics
• Investigating Short-Term Rationalization Improvements
• Analyzing Existing Use of Information Technology (IT) Support
• Making an Inventory of Knowledge and Skills
• Determining Requirements for Future Changes

Analyzing the Business from a Customer Perspective

"Walk through" each kind of customer?s "lifecycle," to see how he interacts with the business. Start with the customer?s first contact with the business. Does the customer interact with many different people in the business? Does the customer have to wait for answers, deliveries, and so on?

Analyzing Each Task in a Business Use-Case Workflow

"Walk through" each use-case workflow and classify each task as value adding (VA) or non-value adding (NVA). A VA task increases the value of the final product, from the customer?s perspective; an NVA task does not. Examples of NVA are reviews, writing reports, moving information or resources within the business. Each NVA task is a candidate for removal or minimization. Analyze each NVA task to identify the real reason why it is being performed.

If time is critical you can analyze how time is spent in each business use case. For each task note the total time and the waiting time. Analyze each task to see if time can be reduced.

If cost is critical you can analyze the cost of each business use case. Note the cost of each task. The cost is often directly related to the amount of work that is spent on the task.

Analyzing Each Business Use Case on the Basis of Metrics

On the basis of the values used to measure the existing business use cases, together with the benchmark metrics, you can identify the business use case?s problems and limitations.

To understand the problems you find, you probably need to talk to the people involved in the business use cases under investigation. The aim is to gain insight into the problems and to elicit suggestions for improvements. If you have succeeded in motivating the employees to do the business-modeling work, they will respond by contributing valuable information and creative ideas.

Investigating Short-Term Rationalization Improvements

Investigate the possibility of making short-term rationalization improvements to the existing business use case. Short-term improvements show the employees that progress is being made early in the business-modeling work, which helps keep them motivated. Short-term improvements must be easy to implement and produce the results quickly. The staff can regard even small changes to the daily routine as very positive. In addition, by understanding the simple things that can improve the existing business, you will be better able to evaluate the more radical rationalization suggestions.

Analyzing Existing Use of Information Technology (IT) Support

Determine the existing business tools, with respect to both software and hardware. Describe how business tools optimizes the work, and discuss both the advantages and disadvantages of their use.

Investigate if greater effectiveness can be achieved by expanding or modifying the parts of the business use cases that are implemented using business tools. Be aware that old information systems can render an organization permanently hierarchical. Sometimes it is simply impossible to engineer a business without constructing a completely new information systems. At the same time, it is important to realize that it might be impossible to throw out, in one step, a system in which the business has invested a great deal of money.

Making an Inventory of Knowledge and Skills

Make an inventory of knowledge and special skills areas. This is important in order to understand the additional skills that will be required by the personnel of the new business. Look at the roles key personnel play in the existing business and determine how to spread this knowledge, possibly dividing the work tasks among several people. All businesses have key people?individuals who drive development or have unique knowledge about the business? products. But it is dangerous to be too dependent on a few individuals. The business cannot in any way guarantee the availability of these people in the capacity required?if they fall ill or leave the business, it could be a catastrophe.

Determining Requirements for Future Changes

Try to determine the requirements for future changes in the business use case that might arise from the environment. This can result in changes in the existing business use cases, but may also show that the business must be able to offer completely new business use cases, whose requirements have not previously been envisaged. A competitive situation may require this; either because competitors are already offering certain services that customers are now demanding, or because the business has identified a new way of increasing its competitiveness. In the first case, it means launching something that is seen as being at least as good as the competitor?s product. In the second case, the business is in a much better position, being one step ahead of the competition.