From Canvas to Blueprint: Aligning Business Models with Business Architecture Steve DuPont, Associate Technical Fellow Enterprise Architecture March 19, 2013 BOEING is a trademark of Boeing Management Company. Copyright © 2013 Boeing. All rights reserved. Global Boeing Engineering, Operations & Technology | Information Technology Enterprise Architecture Customers and customer support in 150 countries Total revenue in 2012: $81.7 billion 70 percent of commercial airplane revenue historically from customers outside the United States Manufacturing, service, and technology partnerships with companies around the world Contracts with 26,500 suppliers and partners globally Research, design, and technology-development centers and programs in multiple countries More than 170,000 Boeing employees in 70 countries More than 170,000 Boeing employees in 50 states and 70 countries Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 1 Agenda Engineering, Operations & Technology | Information Technology Enterprise Architecture Business Model Overview Business Model/Business Architecture Alignment Recommendations Future Considerations Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 2 What is a Business Model? Engineering, Operations & Technology | Information Technology Enterprise Architecture “A business model describes the rationale of how an organization creates, delivers, and captures value.” Osterwalder and Pigneur, 2010. Financial Aspects Value Proposition Customer Interface Infrastructure Management *Based on Alexander Osterwalder’s Four Pillars, 2004. Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 3 Why All the Attention on Business Models? Engineering, Operations & Technology | Information Technology Enterprise Architecture Focus on business model innovation Accelerating change drivers such as cloud, mobile, social, green The need to describe business complexities The need to decrease time to market Shrinking business model life cycles Maturing business model frameworks Accessible methods and tools Source: Alexander Osterwalder and Yves Pigneur, “Business Model Generation,” 2012. Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 4 Business Model Frameworks Engineering, Operations & Technology | Information Technology Enterprise Architecture A business model framework is a conceptual structure for organizing the elements, relationships, representations, and classifications of one or more business models Recent frameworks include Business Model Canvas, Alexander Osterwalder et al., 2010 Copyright © 2013 Boeing. All rights reserved. Business Model Cube, Peter Lindgren and the EU NEFFICS project, 2012 Boeing, EO&T IT EA | 5 State of the Practice Engineering, Operations & Technology | Information Technology Enterprise Architecture “Many managers do not really know what a business model is, let alone have an explicit model of their own business.” “…in spite of the intensive research carried out in this field in the past 15 years, the concept still remains very fuzzy in its definition, purpose and operationalization.” Yariv Taran, “Rethinking It All: Overcoming Obstacles to Business Model Innovation,” Center for Industrial Production, Aalborg University, 2011. Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 6 Business Model Canvas Engineering, Operations & Technology | Information Technology Key Partners Key Activities Value Proposition Key Resources Cost Structure Enterprise Architecture Customer Relationships Customer Segments Channels Revenue Streams Source: Alexander Osterwalder and Yves Pigneur, “Business Model Generation,” 2012. Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 7 Sample Canvas Formats Engineering, Operations & Technology | Information Technology http://www.businessmodelgeneration.com Style: Free form “dynamic” “creative” Copyright © 2013 Boeing. All rights reserved. Enterprise Architecture http://www.businessmodelgeneration.com Structured “stable” “analyzable” Boeing, EO&T IT EA | 8 Business Model - What Kind and How Many? Engineering, Operations & Technology | Information Technology Enterprise Architecture Business Model Type Abstract Business Model Type Business Model Concrete Proposal 2 Business Model Proposal 1 Scenario Business Model Deployed Operating *Based on: Alexander Osterwalder, “The Business Model Ontology, A Proposition in a Design Science Approach,” 2004. Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 9 Business Model as Unifying Concept Engineering, Operations & Technology | Information Technology Enterprise Architecture Business Innovation “What’s possible?” Business Strategy “What will we do?” Business Model “What does it look like?” Business Architecture “What’s the blueprint?” Business models are a unifying concept for Business Innovation, Strategy, and Architecture Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 10 Business Models and Strategy Engineering, Operations & Technology | Information Technology Business Model Strategy Map Enterprise Architecture Kaplan and Norton, “Strategy Maps,” HBR, 2004 Business model canvases and strategy maps address the same level of the Strategy Continuum with similar perspectives Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 11 Business Models and Business Architecture Engineering, Operations & Technology | Information Technology Enterprise Architecture Business model Products & Services Used to drive growth Customers Articulates key elements of strategy Incorporated into business plans Business architecture Partners, Competitors Value Streams Motivation Capabilities Information Measures Organization Business Rules Business Model Business Architecture Used to “align strategic objectives and tactical demands”* Enables interpretation of business models into concrete business concepts that can be targeted for improvement** *Source: OMG Business Architecture Special Interest Group, http://bawg.omg.org, and Business Architecture Institute, www.businessarchitectureinstitute.org. ** Source: TSG, Inc. Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 12 Business Model/Business Architecture Alignment Engineering, Operations & Technology | Information Technology Enterprise Architecture Alignment brings BM/BA frameworks and practice closer together Key aspects Products & Services Partners, Competitors Customers Framework alignment Value Streams Motivation Capabilities – Methods Information Measures – Artifacts – Meta-model Concept mapping Organization Business Rules Business Model Business Architecture – How do business model concepts influence business architecture concepts? – How do these concept mappings affect business model analysis and BM/BA translation? – Mapping guidelines can be useful Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 13 Benefits of BM/BA Alignment Engineering, Operations & Technology | Information Technology Enterprise Architecture Earlier and faster analysis of proposed business models Improved accuracy and completeness of business models Better understanding of key drivers for business transformation More responsive business architecture practices Better solution reuse for incremental innovation Products & Services Customers Motivation Partners, Competitors Value Streams Capabilities Information Measures Organization Business Rules Business Model Copyright © 2013 Boeing. All rights reserved. Business Architecture Boeing, EO&T IT EA | 14 Framework Alignment Approach Engineering, Operations & Technology | Information Technology Enterprise Architecture Define goals and objectives for alignment Align BM/BA framework concepts Establish BM/BA frameworks Tailor and/or extend frameworks for alignment Align business model design process with BA development method Map business model building blocks and elements to business architecture meta-model Prove out Improve Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 15 Aligning Development Methods Engineering, Operations & Technology | Information Technology Business Model Design Process (Osterwalder)* Mobilize Understand, Design Target Business Model Business Architecture Development Method (Generic) Initiating Vision Enterprise Architecture Implement Manage Target Business Architecture Business Architecture Design Implementation Planning Deployment Change Management * http://www.businessmodelgeneration.com. Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 16 Aligning Concepts Engineering, Operations & Technology | Information Technology Business Model Concept Aligns and Maps to… Enterprise Architecture Business Architecture Concept Value Proposition Aligns with… Maps to… Customer Segment Aligns with… Maps to… • Strategy, Value Item, Product/Service • Initiative* • Strategy, Customer, Stakeholder • Objective*, Capability* Channel Aligns with… Maps to… • Strategy, Partner, Resource • Value Stream* Customer Relationship Aligns with… Maps to… • Strategy, Customer • Value Stream*, Capability* Key Activity Aligns with… Maps to… Aligns with… Maps to… Aligns with… Maps to… Aligns with… Maps to… Aligns with… Maps to… • Strategy, Value Stream • Capability* • Strategy, Organization, Resource • Business Unit*, Capability* • Strategy, Partner/Stakeholder • Objective • Strategy • Value Stream, Capability • Strategy • Capability*, Business Unit* Key Resource Key Partner Revenue Stream Cost Structure *Source: Business Architecture Guild, “A Guide to the Business Architecture Body of Knowledge (BIZBOK™).” Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 17 Architecture-Supported Business Model Analysis Engineering, Operations & Technology | Information Technology Enterprise Architecture How well does the business model support the strategy? Does it fit within the intended environments? Does it integrate as intended with other business models? Is the integration consistent with the company’s operating model? What key infrastructure elements are affected (e.g., capabilities, value streams, information, resources)? What are the risks (e.g., tax, legal)? How well does the organization align with the business model? http://www.businessmodelgeneration.com. Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 18 Recommendations Engineering, Operations & Technology | Information Technology Enterprise Architecture Work toward a common definition of business models and architecture Tailor business model formats to use Infuse as much structure as possible into business models (judgment required) Create reusable business model building blocks Introduce business architecture concepts early (e.g., capabilities) Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 19 Future Considerations Engineering, Operations & Technology | Information Technology Enterprise Architecture Comprehensive, open business model frameworks Modeling languages and BM/BA interoperability Simulation Increased tool support Business architecture subsuming business models? Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 20 Engineering, Operations & Technology | Information Technology Enterprise Architecture Discussion Copyright © 2013 Boeing. All rights reserved. Boeing, EO&T IT EA | 21