What Is A Business Model?

Possessing a sound understanding of an organization’s business model (and industry) can assist the analyst responsible for modeling a proposed information system. While the term “business model” lacks a generally accepted definition, Samavi, Yu, and Topaloglou define a business model as “an artifact that conveys a high-level understanding of the overall vision and strategic goals of a business” [3]. Others define a business model as “the method of doing business by which a company can sustain itself -- that is, generate revenue” [4]. A third perspective on what constitutes a business model comes from Harvard Business School professor, Michael Porter. While Porter does not actually use the term “business model”, he appears to be referring to business models when he discusses the importance of an organization’s value chain and its value activities that use and create information, as well as create financial assets and liabilities [5].

When performing conceptual modeling (or any other facet of systems analysis), analysts must be sure to incorporate “elements such as business drivers… trade-offs, differentiation, and other strategic goals” into their reasoning and analysis [6]. Technical proficiency in information systems, alone, will not suffice in analyzing and designing robust information systems. Since information systems exist to achieve some form of business need, a systems analyst must utilize her knowledge about an organization’s business. Depending on the complexity of the system being analyzed, a systems analyst may need to bring considerable business knowledge in order to complete the task. Tools such as a company’s annual reports, website, and intranet may assist the analyst in understanding the business needs which will ultimately drive the design of their related information systems [7]. Another tool available to analysts is the strategy map, which provides a graphical illustration of an organization’s critical goals in the context of four major performance perspectives: financial, customer, internal processes, and learning and growth [8]. If the information system being analyzed is large or complex enough, a systems analyst may need to acquire a firm understanding an organization’s strategy in order to perform her analysis effectively.

Other methods for increasing business understanding include meeting prospective users and effectively utilizing questions in order to understand the users’ reasoning for their information systems "wish list". Questions related to functionality, data needs, data integrity, security, and the surrounding environment may assist the analyst in deepening her understanding of an organization’s business requirements [9]. While an understanding of an organization’s business is critical to all phases of systems analysis, it is particularly important in Requirements Structuring. The next section will provide a closer look at Requirements Structuring, and in particular, Conceptual Data Modeling.

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