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Why Business Analysts Need To Know About Business Models

By Michael Lachapelle, Past President, Ottawa-Outaouais Chapter
 
imageBob is a very experienced business analyst. He has been handed a project to collect requirements and help design a solution for a business group. The problem is, every time he talks to someone from operations about the business, he gets different, often conflicting explanations of how the business works. He’s getting confused and frustrated. It’s enough to make a grown analyst cry.
 
Most experienced BAs have faced this reality. Commonly, line operations’ view of the way the business works is coloured by the limited view of the respondents, or their opinion of the “real way” business is done. The culprit is often that business is understood intuitively, and various areas of the business have differing mental models of how business works. In one extreme example, I worked with a large organization that had eight different ways to describe their business and none of the critical terms were documented—because everyone knew that’s really how the business worked.
 
The greatest challenge for a BA in this environment is to ensure they can gather and document a shared view of the business. If not, they risk delivering a solution that may be a successful project from the delivery view, but a miss in accomplishing business goals. BAs need a tool and a language by which they can develop this externalized, shared view of how business works. 
 
Fortunately we have found relief in the Business Model Generation (BMG) approach developed by Alexander Osterwalder and Yves Pigneur. In BMG Osterwalder & Pigneur have developed a common language for describing businesses using nine core components, and a tool for documenting and analyzing business, the business model canvas.

View an example of the Business Model Canvas.
 
A business can be described by starting with who the customers are (customer segments) and what are the products and/or services being delivered (value proposition). To complete the customer facing view of the business—the right side of the canvas—one needs to understand how the business communicates and transacts business (channels) and how it gets, keeps, and grows its customers (customer relations). 
 
For the infrastructure—the left side of the canvas—we need to understand the capabilities required by the business (key activities) as well as the various assets necessary to run the business (key resources). Other critical aspects to any business are the suppliers and supporters that help you (key partners). Rounding out the understanding of any business is the financial component, cost centres (cost structure) and types of revenue (revenue streams).
 
Using the canvas to document the business model, the BA can build an externalized, shared view of how the business works. Once the model is established and the BA understands the components and dynamic of the business, they can use this context to understand how the solution is intended to improve the business and get a clear handle on the business goals for the solution.
 
By using the business model canvas to complete the strategic view of the business, the BA can develop an understanding of the context of the project and the business goals driving the initiative. The business model view should be an integral part of any business case or context component of the business requirements document.

©iStockphoto.com/bowie15

Michael has been a member of the IIBA® Ottawa-Outaouais Chapter since 2005, and has served on the Board as VP Communications and President. Over more than 12 years Michael has worked in many levels of business analysis: requirements gathering, process management, improvement and re-engineering, feasibility studies, policy analysis, business transformation, enterprise and business architecture. For the last five years Michael’s business analysis work has focused on business design and innovation in the private, public and government sectors. He has also worked in the areas of entrepreneurship and business startup as a mentor with a few business incubators. Michael has been involved with an international community developing the practice of business design. He is one of five featured members, and administrator of the Business Model Hub, a community of more than 14,000 entrepreneurs, analysts and academics from 132 countries developing the knowledge base around business models and business innovation.