An article by John Owens, creator of IMM the Integrated Modelling Method.

What is a Business Function?

A Business Function – more commonly called a Function – is a discrete activity or a coherent set of activities that a business must perform in order to meet its business objectives and continue in existence.

Functions are what the business ought to be doing. I use the term ‘ought’ as many businesses are often doing things that are so far away from what they ought to be doing that it is a miracle that they continue to exist.

Function modelling is the foundation of all good business systems modelling as it tells you what the business is all about! Know your functions and you will know your business.

Examples of Functions are:

• Sell Product to Customer

• Maintain Stock of Material for Manufacture of Product

• Charge Customer for Product Supplied

• Recruit Employees

• Collect Payment from Customer

The term ‘function’ is often incorrectly used to mean an organisation unit within a business. People will refer to the ‘Finance Function’ when they really mean the ‘Finance Department’. This misuse of the term should be avoided. The term ‘Finance Function’ can still be valid when used to mean ‘all of the finance activities required to support the business’.

Function modelling is all about identifying, analysing and modelling Business Functions, independently of:

• how they are currently done

• who currently does them.

• the current organisation structure

This is how the full power of Function Modelling is achieved!!

The main reason for this is that how things are done in a business, who does the and the organisation structure can (indeed, will) change dramatically over time (due to changes in such things as policy, technology, etc.) whereas what has to be done, by and large, remains the same.

An example of this might be in the accommodation industry where ‘Establish Client Creditworthiness’ is a ‘what’ that would have needed to be done 50 years ago and still needs to be done today. But the ‘how’ of then and the ‘how’ of now are entirely different:

Misconceptation

It is a common misconception that you need to model how a business currently operates in order to know what the business ought to be doing.

On the contrary, how a business currently operates is often as far from where the business needs to be as one could get! Many months (in large organisations, years) can be wasted in modelling this. This approach also introduces many layers of unwanted complexity due to modelling current mechanisms and procedures (how things are currently done) as opposed to what ought to be done.

Always go straight to modelling what the business OUGHT to be doing, this will enable the business to go straight there too!

In order for Function Modelling to be truly effective it must be done in a structured and ordered fashion. In all there are five distinct stages to Function Modelling:

• Information gathering

• Analysis and investigation

• Modelling

• Feedback

• Implementation

Information Gathering

This stage consists of finding identifying the key personnel or sources within the business that can tell you:

• What the business modelling project ought to achieve.

• What the business OUGHT to be doing.

• The order in which it ought to be done.

• The information required to do it.

• Whether or not they support the project.

• Who else you ought to be interviewing.

Information gathering can be done in three main ways:

1) Using existing strategy documents.

2) Running strategic interviews.

3) Running modelling workshops.

These methods are not mutually exclusive! In a well run business modelling project each of them will be used as and when appropriate.

Existing Documents

In order to avoid unnecessarily repeating the work previously done by other analysts or business managers the first thing you should do is to identify all relevant existing documents that will help you to build up a meaningful picture of the business before you go into one-to-one strategic interviews (see below). Such documents would include:

• Business strategy documents for the business as a whole or for that part of the business being modelled.
• Previous analysis documents produced by business managers or by the Information Systems departments as part of previous systems development.
• Strategy documents produced by outside consultants as part of recent work.

The main reason for using existing documentation is to avoid wasting the time of managers during one-to-one interviews; they are not to be used instead of one-to-one interviews.

Using existing documents does carry some dangers for the following reasons:

• They can be out of date with little relevance to the business as it needs to operate now and in the future.
• They can be vague. Strategy documents are all too often written in vague ‘mission statement’ terms with the real strategy locked in the heads of senior managers.
• Documents written by outside consultants can be also be vague and written in such a manner that, without having the consultant who wrote the document present to explain what they mean, could be open to several interpretations.
• Analysis documents produced by the Information Systems / Computing Department are all too often written in jargon or in terms of perceived system’s solutions as opposed to business terms.

So, before getting too embroiled in existing documents, you should evaluate their quality and, if they pass evaluation, use them to prepare for one-to-one interviews.

You must also make sure that the documents and models that you produce during this business modelling project do not joining the rest of the unused and unusable documents produced up until now.

Using the elements of IMM™ in the way that we recommend, plus your skills as an analyst plus a healthy amount of common sense will ensure that the likelihood of that happening is very low!

Strategic Interviews

The one-to-one strategic in-depth interview is the most effective means of gathering information from senior directors and senior executives.

The purpose of these interviews is to find out from these key people what their opinions are regarding the business area in question and the project itself.

Such interviews will give you a feel for, provided you listen to what is said (sometimes what is unsaid), what is most important to the interviewee and, as he or she is a key member of the business, it is vital that you know this before proceeding with the project.

This is the type of information that you cannot gather from documents alone. All of the knowledge you gather here will help you to formulate a forward strategy for the business modelling project.

Who To Interview

Effective strategic interviews with appropriate senior executives are the essence of the success of any business modelling project. The term “appropriate” means that the person:

• Is knowledgeable about the business area in question.
• Is a key player in theat area.
• Is empowered to define and implement strategy for that area.
• Has a vision of the way forward.
• Supports the objectives of the business modelling project

Analysis Workshops

 The purpose of analysis workshops is to add detail to the information gathered during one-to-one interviews with senior managers.

Who to Interview

Once again the choice of interviewee is essential to the success of the workshops. These will be middle management and other key people from the business who:

• Have a vision of the way forward for the business.
• Can see the business in terms OTHER THAN how things are currently done, who does them and the systems used to support the business.
• Are comfortable working in a workshop environment.
• Support the aims of the business modelling project.
• Are empowered to act on behalf of the part of the business they represent.

What Next?

In my next article on Function Modelling I will show you how to extract the information from strategy documents and interviews in order to build the Function Catalogue – the heart of ALL business systems modelling.

To find out all you need to know on Function Modelling you can read my eBook IMM Function Modelling available at http://www.integrated-modeling-method.com

The Function Catalogue

This lies at the CORE of any good business systems model.

The activities carried out by a business are called a “Business Functions”.  The business model that represents these is called the “Function Model”.

The Function Model is best presented in the form of a hierarchy.  An example function hierarchy is shown below.

Above an Example of a Function Hierarchy

In IMM™ the Integrated Modelling Method the function model is called the “Function Catalogue” as it truly is a catalogue all of the activities of the business.

Read and extended article on Function Modelling 

To find out all there is to know on Function Modelling and how to do it successfully in any size project get John Owens’ by e-mailing him at john@kiwi-dreams.co.nz

Business Model

Put three business managers in a room and ask them the question “What is a business model?” and you will get at least four replies – none of which may be correct!

The usual picture that comes to the minds of business people, consultants and analysts when they hear the term “business model” will be:

• a “dot.com” model
• a “utilities” model
• an “air transport” model

What these models represent are Commercial Classes of business.  They “model” the financial structures these classes of business ought to have. They define how a business in the class ought to be capitalised and structured from a financial point of view, its key financial performance indicators, its anticipated profit profiles, etc. Strictly, they should be referred to as “Commercial Business Models”.

Commercial business models are very important but they are only a small part of the overall picture.  What they miss out is the ESSENCE of the business – what it is that the business does and the information needed to do it.  Without knowing these things it is unlikely that any business can be made to perform in the manner that the commercial business models predict.

And yet it is amazing how many businesses try to operate without this ‘essence’ model!

If a business person has a factory he/she will have plans of this showing the overall shape, entrances, exits, services, machinery layout, etc.  These plans are essential to successfully managing the factory. No business would think of being without them.

Yet the factory is only the place where the business is carried out.  Far more important than the factory (and more complex) is the business itself and yet few businesses have a model of this – not outside the heads of managers!  It is not surprising that most businesses fail to meet their full potential.

Business Systems Model

This model. which is ESSENTIAL to EVERY business, is called the BUSINESS SYSTEMS MODEL.  This is a model that shows (as a minimum):

• what it is a business does (or ought to be doing)
• the structure of the information it needs to do it

Additionally the model can also show, when needed:

• the order in which activities need to be carried out.
• how information flows between these business activities.
• how data is changed from one state to another.
• how activities, data, departments, technology are related to each other.
• the manner in which functions are executed.

Integrated Modelling Method - IMM™

IMM™ was created by John Owens in order to provide business management and business analysts alike with a set of tools that would enable them to model the systems of a business of any size with ease and accuracy.

More importantly, the models built using IMM™ will bring REAL benefits to the business and its employees.

Business Modelling Tool Box

IMM™ can be thought of as a ‘modelling toolbox’ for use by business managers or business analysts.  As with any toolbox, not all of the tools are used all of the time.  The most suitable tool for the job is chosen and used with skill.  Modelling is a craft and needs to be practiced.  But knowing the right tool to use and the correct way of using it means that, with just a little practice, business managers and analysts can achieve high quality results.

Find out more about Business Systems Modelling