1. CHAPTER TWO Dr. Rami Gharaibeh MODELING FUNDAMENTALS 1

2. Dr. Rami Gharaibeh Every model we have ever created is wrong, as is every model you will ever build. CHAPTER TWO Model Fundamentals 2

3. Dr. Rami Gharaibeh Being wrong is part of the nature of a model. The world that we model is much richer, much more complex, and much stranger than the models that we build of it. CHAPTER TWO Model Fundamentals 3

4. Dr. Rami Gharaibeh statistician George Box said it best: “ All models are wrong. Some models are useful. ” Sometimes people discuss whether a model is right or wrong, but that discussion is pointless since all models are wrong. Instead people should discuss whether the model is useful. CHAPTER TWO 4

5. Model Fidelity Dr. Rami Gharaibeh The fidelity of a model is a measure of how closely the model approximates the real world. Fidelity is an inverse measure of wrongness: a high-fidelity model is less wrong than a low-fidelity model. CHAPTER TWO 5

6. Model Fidelity Dr. Rami Gharaibeh Fidelity is all about shades of gray. A model can be a sort of accurate reflection of reality (for its purpose), and another higher-fidelity model can be more accurate. CHAPTER TWO 6

7. Model Validity Dr. Rami Gharaibeh A model is valid if it meets all the constraints, and it is invalid otherwise. Validity is a property of the model itself. Does the model meet the constraints? Then it is a valid model. All models have these two qualities: validity and fidelity. CHAPTER TWO 7

8. Classical business models Dr. Rami Gharaibeh organizational chart The org chart focuses on the employees and the reporting relationships. CHAPTER TWO 8

9. Organizational chart Dr. Rami Gharaibeh CHAPTER TWO 9

10. Classical business models Dr. Rami Gharaibeh Balance sheet The financial statements focus on how much money the restaurants are earning and what financial assets and liabilities they have. The two business models serve different purposes, and they are complementary. CHAPTER TWO 10

11. Balance sheet Dr. Rami Gharaibeh CHAPTER TWO 11

12. Four new model disciplines Dr. Rami Gharaibeh CHAPTER TWO Recently four newer business models have become important, models that complement the classic models. Instead the four new models focus on some different parts of the complex reality of business. These new models open up some new views of business — new views for new purposes. 12

13. Four new model disciplines Dr. Rami Gharaibeh CHAPTER TWO The four new models are business motivation models, business organization models, business process models, and business rule models. Each of these four kinds of models is a model discipline. 13

14. Four new model disciplines Dr. Rami Gharaibeh CHAPTER TWO A model discipline includes a set of constraints for determining whether a model is valid. The constraints are different from one model discipline to another. 14

15. Four new model disciplines Dr. Rami Gharaibeh CHAPTER TWO Each model discipline has a different focus, different questions that it can answer, and different analyses that it supports. When modeling a business, you usually build models in several different model disciplines, to look at the business from different angles. 15

16. Four new model disciplines Dr. Rami Gharaibeh CHAPTER TWO The four model disciplines also complement the classic accounting and organizational disciplines. If you wait long enough, everything important eventually shows up in the accounting, but sometimes not until it is too late to fix. 16

17. Four new model disciplines Dr. Rami Gharaibeh CHAPTER TWO example a restaurant can have good books this year but be slow to seat and serve guests. This will lead to customer dissatisfaction and lower demand. Accounting will show this next year, as the revenues decline. A business process model of how people are seated and served will illuminate the problem today. 17

18. Four new model disciplines Dr. Rami Gharaibeh CHAPTER TWO example a restaurant can have good books this year but be slow to seat and serve guests. This will lead to customer dissatisfaction and lower demand. Accounting will show this next year, as the revenues decline. A business process model of how people are seated and served will illuminate the problem today. Feedbackward controlling vs. feedforward controlling 18

19. model discipline maturity Dr. Rami Gharaibeh CHAPTER TWO Accounting is mature, with a long history and hundreds of thousands of professional practitioners around the world, accountants who focus their efforts on creating and interpreting accounting models. 19

20. model discipline maturity Dr. Rami Gharaibeh CHAPTER TWO Business process modeling is not mature enough yet. Until then, we must content ourselves with degrees of fidelity, without any professional consensus about how much fidelity is enough. Until consensus is achieved we must rely on our own judgments. 20

21. model usefullness Dr. Rami Gharaibeh CHAPTER TWO To be useful, a model must have enough fidelity for the intended purpose. But fidelity alone is not sufficient. Models are read and interpreted by people, sometimes by the same people who built the model, and usually by others as well. An overly large model is not useful; it cannot be comprehended, and so the purpose of the model will not be achieved. 21

22. model usefullness Dr. Rami Gharaibeh CHAPTER TWO The following diagram shows strategy alternatives for Adelina restaurant and the consequences of the different alternatives. There are 14 model elements in and 18 associations among these model elements. If a model is too big and complex to be understood, it will be ignored. 22

23. model usefullness Dr. Rami Gharaibeh CHAPTER TWO 23

24. model usefullness Dr. Rami Gharaibeh CHAPTER TWO Beginning modelers often build models that are too big and too complex; they often ignore the limits of human comprehension. 24

25. model usefullness Dr. Rami Gharaibeh CHAPTER TWO How big is too big? A useful rule of thumb is that a model should have no more than nine elements. Nine is about how many things a typical person can keep in her head on a good day. Beyond nine, people often get confused. And if the model you built confuses the people who read it, the fault is yours, not theirs. Your model is not easy to understand. 25

26. model attractiveness Dr. Rami Gharaibeh CHAPTER TWO Attractive models are easier to understand and more readily accepted than ugly models. Attractive models are therefore more useful. 26

27. model attractiveness Dr. Rami Gharaibeh CHAPTER TWO The following example shows the activities performed by a server, a bartender, and a cook in taking drink and dinner orders in a restaurant, preparing them, and serving them. This is a valid business process model, and it is simple enough, but it is ugly. 27

28. model attractiveness Dr. Rami Gharaibeh CHAPTER TWO 28

29. model attractiveness Dr. Rami Gharaibeh CHAPTER TWO the following example shows the same business process model after a makeover; it has the same modeling elements and flows, but they are arranged in a manner that is visually appealing. 29

30. model attractiveness Dr. Rami Gharaibeh CHAPTER TWO 30

31. model attractiveness Dr. Rami Gharaibeh CHAPTER TWO The unconscious emotional response to an attractive model has another effect: It makes the model more persuasive. As described in Chapter 1, models are not just used for communication. They are also used for persuasion. 31

32. Modeling tools Dr. Rami Gharaibeh CHAPTER TWO Some models use special-purpose modeling tools that exist just for creating business models. Other modelers use general-purpose diagram drawing tools (such as Microsoft Visio ™ ) that are used both for creating business models and for many other diagramming uses. Both provide functionality to make models attractive: fonts, colors, and model element layout. 32

33. Modeling tools Dr. Rami Gharaibeh CHAPTER TWO Visio offers no special support for recording the typical duration of an activity or for noting the sub-process behind an activity. Visio understands the activity as a rectangle in a drawing, not as an activity in a business process. The special-purpose modeling tools are better for business modeling. These tools understand business activities as activities, not as rectangles. 33

34. Modeling tools Dr. Rami Gharaibeh CHAPTER TWO Special-purpose modeling tools also make it easier to build valid models. Many tools support business process simulation, allowing you to experiment with prospective business processes to see what happens. Some tools support direct execution in a business process engine, allowing you to turn your business process model into executable workflow. 34

35. Application interface and publication Dr. Rami Gharaibeh CHAPTER TWO Business modelers work with a modeling tool to create models and analyze the models they create. But every model built by a modeler will be consumed by others. These consumers of business models do not have any modeling tools loaded on their desktops. To make models accessible to this wider audience, many of the business modeling tools have publication functionality. A model can be published to a variety of accessible formats: HTML, PDF, Microsoft Word 35

36. Simulation Dr. Rami Gharaibeh CHAPTER TWO Sometimes it is difficult to understand the implications of a business model, particularly complex business models and models that have many interacting elements. Simulation is a technique for running a model to get a deeper understanding. Many business modeling tools support simulation. A model that simulates is more useful than one that does not. 36

37. Simulation Dr. Rami Gharaibeh CHAPTER TWO what is simulation, really? First, simulations are based on models. Within SimCity is a model of a city: houses, neighborhoods, roads, rail, parks, and malls and the 37

38. Simulation Dr. Rami Gharaibeh CHAPTER TWO First, simulations are based on models. Within SimCity is a model of a city: houses, neighborhoods, roads, rail, parks, and malls and the interactions of people who live in those houses, travel on those roads and trains, play in those parks, and shop in those malls. 38

39. Simulation Dr. Rami Gharaibeh CHAPTER TWO Second, a simulation shows how a model behaves over time. Things happen in SimCity over time: houses are built, existing roads become congested, crimes are committed, and neighborhoods improve or slide in disrepute. These changes are not scripted; the decline of a neighborhood in SimCity is not preordained by the application. Rather, things happen the way they do because of the gradual interaction of all the elements of the city model over time. 39

40. Simulation Dr. Rami Gharaibeh CHAPTER TWO Some business simulations are also playable, like SimCity. But most business simulations are not playable. They are simulated purely for understanding behavioral results of a new process or strategic environment. Simulation becomes another method of analysis. Usually many different simulation runs will be made of a non-playable simulation, to explore a space of possibilities, and the results will be summarized in graphs or statistics. 40

41. Simulation Dr. Rami Gharaibeh CHAPTER TWO For example, you might create a business process model of how Portia customers experience the restaurant. A customer arrives, perhaps waits for a table, is seated, orders a meal, pays, and departs. Of course, the customer ’ s quality of experience will be affected by the food, but it will also be affected by delays and customer service. Simulating the process model will reveal where delays are present and allow us to experiment with alternative techniques — more servers, fewer reservations, etc. — to reduce those delays. 41

42. Simulation Dr. Rami Gharaibeh CHAPTER TWO No one is playing this Portia simulation. Rather, this non-playable simulation allows us to better analyze and understand the process. 42

43. Traceability Dr. Rami Gharaibeh In examining a model, it ’ s always useful to ask about the purpose of individual model elements. Why do we enforce this rule? Why do we perform this business process task? The answers to the questions of purpose are usually model elements in other models. We enforce this rule because of a particular strategy we are working. CHAPTER TWO 43

44. Traceability Dr. Rami Gharaibeh Traceability is connecting model elements between models, explaining a model element in one model by referring to a model element in another. Traceability answers “ why ” questions — questions about rationale, purpose, and intent. Some business modeling tools support traceability. CHAPTER TWO 44

45. Traceability Dr. Rami Gharaibeh At fast-food restaurants, takeout restaurants, and many other places, food and beverages are ordered together. Why do the servers at our restaurant work first on the drinks and only then on the food? CHAPTER TWO 45

46. model attractiveness Dr. Rami Gharaibeh CHAPTER TWO 46

47. Traceability Dr. Rami Gharaibeh One reason is that customers will drink more if they are served drinks first, and drinks are high-margin items for the restaurant. Another reason is that at more sophisticated restaurants, taking the drink order and dinner order at the same time is considered to be rushing the customer and is inconsistent with a high-end image. CHAPTER TWO 47

48. Traceability Dr. Rami Gharaibeh the following figure shows part of the restaurant ’ s motivation model — the goals that the restaurant are trying to achieve and how it is trying to achieve those goals. Asking for drink orders first is a tactic, a short-term course of action that is meant to channel effort toward objectives or goals. CHAPTER TWO 48

49. Traceability Dr. Rami Gharaibeh CHAPTER TWO 49

50. Traceability Dr. Rami Gharaibeh Of course, this is only a small example. A more complete motivation model for our restaurant would include many more tactics, objectives, and goals as well as other motivation model elements such as influencers and threats. CHAPTER TWO 50

51. Traceability Dr. Rami Gharaibeh The activities of a business process model are connected to the tactics, objectives, and goals of a business motivation model through tracelinks. CHAPTER TWO 51

52. Traceability Dr. Rami Gharaibeh CHAPTER TWO 52

53. Traceability Dr. Rami Gharaibeh Note that tracelinks are not relationships between whole models. We are not tracing the whole business process model to the whole business motivation model. Rather, we are tracing two individual elements of the business process model to a single element in the motivation model. We are not answering broad questions about the purpose of the business process model. Instead we are answering narrow questions about the purpose of serving drinks first. CHAPTER TWO 53

54. Traceability Dr. Rami Gharaibeh Traceability is useful for understanding the impact of a change. If we change this tactic, what activities must be changed? By examining the tracelinks that point from activities to the tactic, we can determine which ones are affected. With the right tracelinks in place, we can continue our traceability walk, looking at which systems support the activities that are affected by the changed tactic. CHAPTER TWO 54