The business decision architecture as a layer of your target operating model

02Jun10

(part 2 of a stream of thoughts on what business decision architectures are required for enterprise decision management, how to align it with business goals, and how to provide the right information to support the decision architecture. This is all work in progress and there will most definitely be contradictions between posts as my thinking develops and I get to test it properly. Comments and conversation are welcome!)

When reorganising a business to align its activities with strategic goals, a commonly seen and successful approach is to agree a target operating model which defines the future shape of the business, from markets and channels through information and people to infrastructure and locations. All too often, the critical decisions associated with executing many layers of the strategy are left out of the process layers, are left undefined or are defined inconsistently.

A target operating model is over and above everything else a communication and agreement mechanism. Without including decisions and their analytic requirements in the future design of the business, process improvement through decision management is going to be a false start. A TOM is the chance to get decisioning in front of senior management in a big way. In order to optimise operational and tactical decision making in the future then we need to build it into the target operating model at the start. A target operating model will typically will show the desired layers of the future business in line with a specific business strategy, e.g., growth/increased market share, operational efficiency, cost reduction etc.

  • The benefit of the operating model is that it is discussed in business, not IT language, and allows senior stakeholders to agree the direction of the business and what is required behind the scenes to support the strategic goals.
  • The model will include a variety of ‘layers’ including the future markets (including customer segments) products to be sold to those customer segments, processes to support this, information required for these processes, people, infrastructure, facilities, locations etc.
  • The creation and agreement of a target operating model is the right time to think big about how you want the business to change. If driving operational efficiency or cost savings is part of your goal, then you will want to think about increasing efficiency and reducing cost through better decision making at all levels of the business. If growth is your goal then you will want to look at how your decision making can increase revenues and profitability.

The main affected layers of the operating model are:

  • Processes – high level descriptions of each business process (e.g., loan sales) need to be assessed for the high level decisions and made explicit in…
  • A new layer: Decisions – definitions of the key operational and tactical decisions made at each point (e.g., Assign a sales advisor, Pick the right product, Approve/reject a loan) based on…
  • Information – the information required to support each decision (e.g., customer history, sales person history and training, product details, proposed loan value) and whether analytic models are required. Also, information will be needed for other purposes than decision-making, for example corporate data (i.e., financial, AP/AR, system of record stuff) and process data such as customer contact details, manufacturing process management data. (How much ‘management information’ is actually required if it is not for decision making. Another one to discuss.)

The decision layer here would essentially be a ‘level 0’ or ‘conceptual’ level of your business decision architecture but should include the key decisions that you will want to make in the future business. The next step is typically to drill into the architecture to flesh out the details and to-be target maps

There will be further impact on layers such as technology (are there investments needed), people (who are the experts, who will need to be trained), location (can making better decision-advisory data available allow outsourcing) but they are questions that need to be answered anyway and will be more affected in the detail.

So, things I need to follow up on:

  • What does the decision architecture look like? (follow up from previous post)
  • How does it combine with process and information architectures (the decision catalogue and the key classifiers, the key links between layers etc) and other TOM layers
  • What is the impact of decision-orientation on the information architecture? How do we need to re-classify information needs?

Comments welcome!

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5 Responses to “The business decision architecture as a layer of your target operating model”

  1. When an organisation embarks on radical change, a representation of how the organisation is proposed to operate in the future may be required in the form of a Target Operating Model (TOM). Developing a TOM is a cross functional team effort with, for example, the finance function describing how financial processes and systems support the business and its regulatory obligations. A fully developed TOM will usually comprise a graphical representation with supporting explanatory documentation.

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