The Most Important and Most Neglected - Business Rules

Over the years the most important issue I have seen neglected on a transofrmation project is an honest thoughtful discussion on Business Rules. What should the process look like under the different conditions. Business rules come in all forms and levels of complexity. I share a few examples below for the purpose of clarity.

 

A healthcare provider member who wishes to renew her policy for her 7 year old child and 19 year old college student. The business requirement can have different rules, here are some:

• Rule A: Income Level: Family is low income and hence have an extra 10 day grace period
• Rule B: Residence: Family lives in rural counties of the state and hence is eligible for a 45 renewal window, versus same family living in the major cities of the state which has only a 30 day window for renewal.
• Rule C: Age: 19 year old child reached his 19th birthday less than 90 days prior to his policy expiration is treated differently than more than 90 days prior to expeiration date.

 

An example from the supply chain vertical related to demand forecasting and planning could be dependent on order cancellation business rules, for example:

• Rule A: Orders returned due to defective items that are reordered on the same order, should not be removed from demand
• Rule B: Orders returned due to defective items and are reordered on a new order, should be removed from the demand of the month of order, and reapplied to the month of the new order.

 

Projects of all sizes usually neglect business rules when designing and delivering a system. Business rules are the most important part of the process, for indeed that is where decisions are made. Decisions are where the bug are found in the system. Poorly thought through business rules automatically equates to bugs, miscalculations, data quality issues, rework, frustration and utlimately redsign and worse sometime a compelte overhaul of the architecture

 

 

Aspiring World-Class Universities: A Snippet On Clemson

As it becomes more challenging to compete in a global village, institutions of higher education look into their back pockets for ideas to differentiate and grow. These aspiring institutions do not need to replicate what top universities are doing, on the contrary their innovation in distinct new ways can unleash value and competitiveness.

A shining example is Clemson University in South Carolina. Clemson has been the traditional southern unviersity focused mostly on agriculture and mechanical engineering. Clemson has been able to transform its positioning and value proposition through a well articulated study of the regional economy. South Carolina had embarked on an economic development and conversion process to make the state one of the leading automotive regions in the US. Clemson formed a strategic alliance partnership with BMW [1] to recreate itself as the premier motor sports and automotive research and education university.

This transformation effort at Clemson was adopted and supported at all levels of the university - a key requirement for success - as was reflected in Clemson's vision statement [2], to be from among the top 20 public US universities. Clemson was 23rd in 2010 [3] up from 33rd in 2005 [4] and 74th when Clemson's President James Barker took office in 1999 [5]. Within a decade Clemson has been able to transform itself and achieve a new position through leveraging regional changes and collaboration with others outside higher education.

Each University will have a different catalyst for transformation and very different root-causes that challenges its aspirations. Leading universities are those who can carefully articulate their business challenges, understand the complexities of the societies and constituencies they serve, and apply the best strategies, approaches and frameworks to design an architecture that makes a lasting change.

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[1] BWM, Clemson and the State Begin Historic Partnership, Clemson World, Fall 2002, available at http://www.clemson.edu/centers-institutes/brooks/news/BMW.pdf

[2] Clemson's Vision Statement, http://www.clemson.edu/administration/president/vision.html


[3] Clemson Ranks 23rd Among Public Universities, http://www.clemson.edu/media-relations/article.php?article_id=3019

[4] Virginia Tech Undergraduate Engineering Ranked 14th in US, http://www.eng.vt.edu/newsitems/pdf/COEundergradranks05_dup.pdf

[5] Clemson Civil Engineering in Top 20, http://www.swampfox.ws/clemson-civil-engineering-program-in-top-20

[6] Picture, courtesy of Clemson University International Center for Automotive Research (CU-ICAR), http://www.clemson.edu/centers-institutes/cu-icar/

To Read Further:

• Germany Economic Development Mission to be Fueled By Upstate Alliance, BMW and Clemson University, http://www.swampfox.ws/upstate-alliance-officials-convened-with-bmw-clemson
• BMW's Shifting Strategy, http://www.businessweek.com/bwdaily/dnflash/jun2003/nf2003069_6720_db053.htm
• The Challenges of Establishing World-Class Universities, The World Bank, 2009.

Demand for Business Architecture

As the business world and the impact of technology on our lives increases, the demand for an architecture governing how business gets done is of paramount importance.

A couple of months ago I gave a talk at the International Institute of Business Analysis on Business Architecture and one of the interesting observations I gained from the audience is that we have all become accepting of the fact that we can introduce some chaos and uncertainty to our business operations. I have seen this trend across the business spectrum recently, regardless whether the business is a startup or a multinational conglomerate. We are more accepting of delayed projects, loose guidelines, higher risks, less than optimum quality, rework, compromised rights and invalid solutions simply because we can not deal with the complexities of new challenges and complications.

Take for example the recent outcry by the public regarding the use of full body scanners across the nation's airports [1, 2, 3], or the European debt crisis [4, 5], or other failed technology and business initiatives such as the recent Indian Space Program [6] setback. All of these could have been mitigated, minimized or avoided should a business architecture existed which integrated well with other enterprise architectures of the organization.

5 Signs of a Dysfunctional Attitude in Your Organization

The Baldrige National Quality Program covers all functional components of a business. An effective organization will exhibit strong interacting processes across the various functional units. Many organization however lack such strong interactions among its functional groups. How to know if yours is one of them? Five common symptoms are:

1. Hiding mistakes and keeping them internal to the functional unit.
2. Selfishness and attempting to get all the resources we need for our unit, regardless of the needs of other units.
3. Making sure we spend all the budget before the fiscal year is over, to avoid reduction in next year's allotment.
4. Focusing on own unit's work and not supportive of initiatives outside the unit.
5. Ignoring the external customer unless we are in a sales or marketing role.

Organizations which structure internal operations based on end-to-end processes have been able to offer their customers a more comprehensive and integrated value proposition. Moreover the organizations are more streamlined and efficient. A leading example is IBM's Enterprise Process Framework (EPF) 1, 2. IBM transformed its operations across multiple end-to-end levels, each level represents one enterprise process area, for example product ordering, IT services or HR services.

A process optimized organization is a mid-stage organization in between a business unit optimized organization and an enterprise optimized organization. Optimized business units are silos of work centers and processing units, process optimized are definitely a step above where waste is reduced, processing is automated end-to-end and economies of scale can be achieved. If your organization is exhibiting any of the five signs above, then know that you are still way far from a process optimized organization.

Read more here:
- Streamlining Business Processes, IBM
- The Business Shrink The Dysfunctional Workplace
- Top Ten Reasons Teams Become Dysfunctional

Do Not Undermine Your Most Valuable Asset: The Soft Assets

A couple of decades ago software was provided almost as a possible freebie to encourage buyers to purchase computer hardware. Today both hardware and software are available for free. With services such as Google's App, IBM's Symphony Suite, Sun's Open Office, G.ho.st and others software applications and hardware platforms are available for free. The competitive difference between two organizations is not what assets (capital, resources, technology, etc..) they have but rather how they utilize these assets. In other words their capabilities and in particular their soft capabilities.

Soft capabilities is becoming increasing important. As discussed in a past blog entry soft skills of individuals are things like a person's interpersonal skills and emotional intelligence. The question on the table is what defines an organization's soft assets? We can state that soft assets of your organization include its agility, culture, values, alignment to its mission, sustainability. The reason they are soft is because we usually can not measure them easily. This might change in the future. Today we can measure an organization's performance through monitoring its financial reports and deriving some measures that reflect its level of success in managing its capital and financial resources. However this performance measure is very narrow-sighted, it only addresses one stakeholder of the business, the investor, and does not include all aspects of a business' mission, or maybe none of it at all.

Take for example a company whose mission statement is "preserving and improving human life". To effectively measure the delivery of its mission, measuring return on investment and debt / equity ratios will not provide a true picture. Rather measurements of soft aspects of the business are needed. Examples would be return on educating customers about diseases, adoption of good practices by patients, healing rates, impact of side-effects on the health of patients, economies and other aspects of human life, and the list goes on. Our lack of solid approaches and well-defined techniques makes measuring these performance indicators difficult, and hence we call them soft.

Businesses need to focus on these soft areas, whether they are soft outcomes of the business, soft assets, or soft capabilities; simply because this is where true value lies. True value of a business is its ability to achieve its mission. I consider any business metric that can not be measured in a standardized approach across business borders to be part of the soft side of the business. For example, a business' performance is a soft attribute, simply because true performance is not simply financial return on investment (which has very standard approaches of calculating and measuring), but could include customer satisfaction, and other metrics that most people today do not have standard way of measuring across autonomous domains. The first step of understanding a business's soft-side is to include it as part of the business architecture.

The concept of soft extends beyond businesses and organizations and is also considered at country level, an example is discussed on the Foreign Policy Blog which is seen to be an emerging component in valuation of nations.

In summary, (1) the soft-side is where value is located, and its is usually hidden simply because we do not attempt to measure it, and those who do attempt to measure do not have sound approaches. (2) anything that a business has difficulty in measuring will be defined as soft.

Strategy and its Role in Becoming Capable

Strategy is focused on the matching of an enterprise's opportunities and threats (external factors) to the enterprise's capabilities.

In some cases an organization might not have a capability in place that allows it to benefit from an opportunity. In such cases the capability will need to be realized otherwise the opportunity will be missed. The realization of such absent capability is part of the enterprise strategy, and will require enablers from across the enterprise such as technology, locations, roles, processes, intellectual property and more.

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Robert Grant, "Contemporary strategy analysis: concepts, techniques, applications", Blackwell Publishing, 2002.

Harvey Thompson, "The Customer-Centered Enterprise: How IBM and Other World-Class Companies Achieve Extraordinary Results", Mc Graw-Hill, 2000.

Getting Capable

Institutions vary widely in their capabilities to achieve their mission. You could find two organizations in the exact same line of business, with very similar strategies and business drivers, yet very different results due to the differences in their capabilities. Lets take an example of two airlines. Both airlines share the same mission, transporting humans across the globe safely and in an enjoyable manner. Airline A always takes off on time, lands on time and does not lose luggage. Airline B always takes off late and loses luggage.

Their business requirement is the same, yet their outcomes are very different, which is due to differences in their capabilities.

A capability is a realized requirement, it could also be said that a capability is a business requirement added to some value acquisition process. The value acquisition process should span the entire enterprise to ensure that is picked from all strengths of the enterprise and also did not bring along any unnecessary baggage.

Organizational Capabilities in Less than 100 Words

How quick can your organization respond to its constituents needs. How effective can it adapt to changing dynamics in the environment surrounding it? How efficient can it deliver its mission? The answer to these questions depends on what we call organizational capabilities.

Similar to an individual's ability, organizations have abilities to do certain things, these abilities combined with resources, assets, processes and skills form an organizational capability. A few examples of strategic capabilities are (1) The ability to innovate and be creative, (2) the ability to develop and deploy products in a compressed cycle, and (3) the ability to educate and train young people.

Are your capabilities well defined? Do you know how to improve them, and how to measure where these capabilities are enabling your stakeholders to realize the value proposition you are offering?

Know Thy Business Events

A business event is a valuable building block in an enterprise's business architecture. Business events provide insights to triggers and decision points in the business domain. Business events could be classified into three types: External events such as a customer service request, internal events such as closing a project or an employee time sheet submission, and finally temporal events which occur based on the elapse of a given time-frame such as end of month.

There are many important questions to ask oneself about events when building a business architecture or when defining events. Examples are:

1. How are these events identified?
2. Are they unique?
3. Can they be repeatable?
4. How can we structure events in the context of a business architecture?
5. How can events be modular?
6. What processes are related to events?
7. What business capabilities are impacted by events?
8. What impact does the event have on the business services, operations and other areas?
9. Who reacts (which roles) to an event and in what way?
10. How often does an event occur and what is its significance?

Step By Step Business Architecture

Developing a business architecture for an enterprise can be a daunting task. However following a systematic approach makes it a bit easier, or at the very least organized.

1. Develop a description of the existing business architecture if it exists. The description should include as much of the AS-IS architecture as needed for the development of the TO-BE architecture.

2. Identify any reference models, tools, patterns and techniques that should be used to develop the TO-BE architecture based on the context, complexity and scope of your business requirements.

3. Select viewpoints of the business architecture to be utilized to illustrate the architecture, according to the business requirements. Common business architecture view points are operational, systems, technology, governance, financial and functional viewpoints.

4. Develop an architecture model for your TO-BE business requirements. Ensure that you perform each of these,

• Create the model for the specific view point. For example create the activity model for an operational view point of the business architecture. Common models are activity models, use-case models, class models, node connectivity diagrams and information exchange matrices.
• Verify that all stakeholder requirements and concerns are included.
• Ensure you have models for business goals and objectives, business functions, business services, business processes, roles, business data,
  
• Ensure your architecture has captured the interlocking of organization and functions, and interlocking of processes and systems.
• For each business function identify when, where, where, how often and by whom will the function be performed. Identify the inputs to the function and the expected outputs.
• Identify dependencies and assumptions for each business function.
• Conduct trade-off analysis if any conflict exist among the different views.
• Validate and verify the developed model against requirements for completeness and scope

5. Select the business architecture building blocks. Reuse blocks as applicable, and develop new ones to add to the BA library.

6. Hold a formal architectural review of the developed model and building blocks with the stakeholders.

7. Review the non-functional requirements and service level agreements. Common non-functional requirements are scalability, performance, availability, costs, reliability and capacity.

8. Complete the documentation for the business architecture by ensuring that you,

• Have a completed requiements traceability report.
• Identified requirements that are driving the architecture.
• Mapped the architecture to reference architectures and models in the organization.
• Identified new vs. reused building blocks.
• Documented rationale for architectural decisions.
• Completed the business architecture report including the business footprint, detailed description of business functions, and their information needs.
• Outlined the governance footprint as related to the business needs and scope of the TO-BE
• Included a table of standards, rules, guidelines, assumptions, dependencies, and measures used.

Business and Enterprise Architectures: Differences and Commonalities

Business architecture is a unifying structure that enables the execution of business strategies through initiatives to achieve business results. The business architecture could also be viewed as the relationships and connectivity among the various value streams and the inputs that feed these value steams, the processing centers that enable the value streams and the value realized.

Business architecture is only one component of enterprise architecture. In an enterprise there are business objectives, technology and infrastructure assets, organizational units, security concerns information handling and processing and various other components, each of which can be defined as a separate architecture and part of a defined framework.

The business architecture encompasses the business flows, activity models, use cases, user models, class models, node connectivity diagrams and business information exchange matrices. Business architectures usually reflect a baseline known as the AS-IS architecture and defines a future aspiration known as the TO-BE architecture.

Enterprise architectures explain all aspects of an enterprise; its data, business processes, infrastructure, technology and business