James McKee

Scenario Today, 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 Model J McKee 2

1. Simple Definition  To analyse strategic choices.  To Focus attention on who are the customers & how to make money (Magretta). 2. Complex definition  All the Above + show key  Processes  Resources  Capabilities  Suppliers & Relations  Some Financial aspects (McKay & Marshall). J McKee Business Model 3

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. J McKee 4

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. J McKee5

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. J McKee 6

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 J McKee 7

% Contribution Example Note: Level of Abstraction & Direct Relationship between Elements J McKee % Contribution 2nd Level Of Architecture Reference Model For Strategic Plan 8

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. J McKee9

Solution Components Provided by: Porter’s Five Forces and Value Chain SWOT PESTLE J McKee Relations are: ∙ Direct Linkage between related components ∙ With Degree of association ∙ Rationale for major components Search for the most relevant 10

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. J McKee11

Alter’s Diagram for Work System Analysis J McKee12

J McKee Customer Product Processes Technology HR Information Admin Ind Finance Infrastructure & 13

J McKee 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 14

J McKee 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 C A H L A U I E 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 15 Significant $2M loans to cover stock

J McKee 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 16

J McKee Context Political Economic Sociological Technological Legal Environmental Customer Product Processes Technology HR Information Admin Ind Finance 5 forces Competition New entrants Buyer power Supplier power Substitutes Suppliers V C A H L A U I E N Mark SWOT Infrastructure & 17

J McKee Each High Impact Statement -- link to element with % impact Customer Product Processes Technology HR Information Admin Ind Finance 5 forces Competition New entrants Buyer power Supplier power Substitutes Suppliers V C A H L A U I E N Mark SWOT Context Political Economic Sociological Technological Legal Environmental Business Model Strategic Plan Infrastructure & 18 Direct Sales with Invites to Demo Kitchen

J McKee Customer Product Processes Technology HR Information Admin Ind Finance Suppliers V C A H L A U I E N Business Model Strategic Plan Infrastructure & 19

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. J McKee 20

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 J McKee General Planning Framework 1.Formal investigative process 2.Structured solution development process 3.Unambiguous implementation planning document 21

In Conclusion Separating 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. J McKee22

References Alter, S. (2013). "Work System Theory: Overview of Core Concepts, Extensions, and Challenges for the Future." Journal of the Association for Information Systems14(2): Horn, R. E. (2001). Visual Language and Converging Technologies in the Next 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: J McKee23

Author: James McKee: Oct Affiliation: University of Wollongong (Retired) Wollongong, NSW, Australia JMC-Consulting.com J McKee24 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