Business Collaboration Management (BCM)

Traditional management hierarchy fails to recognize the responsibilities and interactions by which an enterprise actually functions. The enterprise is a network of collaborations. BCM focuses on the purpose, responsibilities, relationships, activities, and exchanges of deliverables of collaborations of various forms. The BCM model of the organization should assist in defining and supporting these collaborations with resources and automation.

Collaborations take many forms including business processes, organization units, committees, task forces, projects, interactions with customers and suppliers, and the application of capabilities (eg, capability methods). Understanding the purpose, roles, and contributions of collaborations is essential for understanding how the enterprise actually works, and for recognition of the values contributed by individual employees.

BCM not only clarifies the importance of the collaborations, but it clarifies the need to devote personnel resources to the efforts, beyond their traditional roles as members of an organization unit. In addition, the development of case management technology based on case management model and notation (CMMN, 2014) can substantially improve the efficiency and effectiveness of collaborations.

CMMN (2014) automation can provide guidance and advice to support planning and decision-making, it can improve communication and coordination, and it can provide a shared understanding of the current state of the endeavor.

Improved efficiency applies at all levels of the organization where people work together without predefined activities and interactions. These essential interactions can all be more effective if they are formally recognized, supported with automation, and engage appropriate participants.

Capability Based Architecture (CBA)

Capabilities are critical building blocks of the enterprise. Sustained capabilities can be consolidated as sharable capability units for economies of scale as well as consistency and control. These are offered as services through well-defined interfaces with defined levels of service for performance measurement and accountability.

This accountability for performance applies to the oversight of immediate management and extends to the consideration of the governing board, depending on the significance of the capability contributions and performance expectations.

Capabilities are delivered by individuals or collaborations in specific organization units, so the integration of capabilities is based on the integration of collaborations, and the activities and exchanges of deliverables in a capability method are specified as a collaboration. Thus capabilities are aligned with business processes and linked to responsible organizations.

A well-defined capability unit encapsulates the implementation of the capability to enable specialized technologies and continuous improvement without the burden of coordinating changes with related capabilities.

Value Delivery Management (VDM)

VDM involves modeling and analysis using Value Delivery Modeling Language (VDML, 2015). A model incorporates the collaborations of BCM and the capabilities of CBM. They define the contributions of values to value streams and value propositions for delivery of products and services to customers as well as internal recipients.

VDML provides the context for analysis and evaluation of capabilities because the impact of value contributions and changes to a capability can be evaluated in multiple value streams for the impact on customer satisfaction in multiple market segments. A new business opportunity can be evaluated and implemented by composing a value stream from existing capabilities with possible refinements and development of new capabilities where necessary. This is a critical capability for assessment and deployment of strategic plans.

The participation of capabilities in multiple value streams achieves economies of scale and supports analysis of the value contribution impact of changes to a capability implementation on value propositions of multiple value streams to achieve an enterprise optimum.

VDML supports scenarios for analysis of the impact on value propositions of different business contexts such as product mix or changes in other operating variables and for phases of business transformation.

Business Models

Business models based on Lindgren's Business Model Cube or Osterwalder's Business Model Canvas can be developed to describe a business under consideration and then developed in more detail using VDML to support detailed analysis and implementation. Alternatively, business models can be derived from a VDML model to provide a very abstract representation of key aspects of a product line or line of business for discussion with investors or other stakeholders.

Transformation Management

VDML significantly reduces the gap between strategic planning and the development and management of strategic initiatives. A detailed business design can be developed using existing capabilities with likely changes to support planning of capability changes and development of new capabilities as required. This can be compared to a current VDML model of the business to clarify details of the transformation. As a result, there will be a detailed, consensus business design to ensure more consistent transformation efforts in the organizations responsible for the new or revised capabilities. Objectives can then be defined based on the projected value contributions and the cost of more specific transformation projects.

Depending on the degree of transformation, VDML models may be developed for interim stages of transformation so that progress can be evaluated more frequently with viable, measurable advances. In addition, it is likely that there will be other initiatives introduced during a transformation effort that can then be introduced into the to-be model and reflected in remaining and possibly additional stages of transformation.

Transparency

The VDML abstraction hides complexity of operational details to make the design more consistent with a management perspective and more manageable for consideration of alternative business designs.

The VDML abstraction of collaborations and activities aligns to organizations and operational business processes so that VDML measurements are an accurate abstraction of operational performance. Measurements of operational value contributions provide objective measures of performance that are associated with the responsible organization unit. In addition, a VDML model can be used as the context for measurements from actual business operations so that leaders can examine the detailed capabilities and activities that contribute to value levels in value propositions and can trace the impact of changes in value contributions on multiple value streams.

The alignment of VDML activity networks with operational business processes provides an overview of operational business processes for compliance with capability unit service level specifications as well as the ability to identify the specific capabilities and activities that could be targeted for value stream performance improvement. Management dashboards should support monitoring of selected performance measurements and progress toward selected objectives in the context of a VDML model.

Sense and Respond

The sense and respond directory provides a classification of events and circumstances that require follow-up. This provides a mechanism for employees throughout the enterprise to report circumstances that may be relevant to the enterprise so that information will be communicated to an appropriate person or process, and the status and resolution of the circumstances can be monitored.

Fig. 11.1 illustrates the general concept of the sense and respond process. A new situation is posted and raised to the attention of a person or process. If there is merit, a resolution team is identified and collaborates to define an appropriate resolution. The result is recorded including those that are abandoned. In any case, feedback is provided to the original submitter(s). If appropriate, the resolution is forwarded for action in strategic planning. Additional individuals may subscribe for notice of events and resolutions that may affect their area of responsibility.

The process identifies the possibility of another, similar situation being posted. It is considered for consolidation with the active resolution if it is effectively the same or suggests refinement, otherwise it is addressed in an independent resolution initiative.

This facility allows individuals to determine if a circumstance has already been reported and if some action has been initiated. It can also help identify where different individuals or groups are working on the same or a similar problem so their efforts can be coordinated or consolidated.

Circumstances of concern must include potential risks to current operations or future success of the enterprise such as economic, social, epidemiological, and political events as well as internal events that may have cross-organizational impact. These must be directed to appropriate persons or processes that can identify the potential consequences to the enterprise and mitigate or exploit the effects.

Innovation

Access to a current, robust model of the business is important for exploring innovative improvements in current business operations. A VDM model provides clear information on the impact of innovation on a capability and associated organization and value streams as well as specific interactions with other capabilities. The implications to risk management and regulatory compliance can also be more effectively assessed.

In addition, ideas can be developed and explored in shared interest groups that bring together persons from different organizations who have diverse experiences and perspectives. The sense and respond directory can help reconcile related initiatives to avoid duplicated efforts or conflicting results.

Knowledge management provides access to relevant documents, email distribution lists, and shared web discussion pages to solicit input on problems or suggestions on solutions. This supports ad hoc collaboration on topics of shared interest.

Master Data Management

Master data is the authoritative source of enterprise data on a particular area of interest. Alignment of master data management with associated service units aligns a segment of enterprise data with the organization that has primary responsibility and expertise for creation, update, and integrity of that data.

The data directory identifies the sources of master data and replications. A master data service receives and validates updates from other capabilities, and supports requests for notices of specific changes to the master data to initiate relevant actions and support updates to replicas.

Organization units responsible for master data must be accountable for data security, accuracy, availability, and metadata (data about the source, quality, and timeliness of updates).

Information Security

In this age of the Internet and integrated, interactive systems, information security is a major issue. A number of major corporations have had security failures exposing large numbers of people to potential identity theft. The agile enterprise must include a consistent information security system and it must provide manager-friendly role-based access control.

A consistent architecture reduces complexity and consequently potential oversights in protection. It provides ease of authorized, cross-organizational access, and it supports efficient and effective maintenance and monitoring to detect intrusions and attempted violations and response to new threats.

A consistent architecture should also include processes for authorization of special circumstances by raising the request for a controlled action to an appropriate level of authority, for example, a customer order or expense request that exceeds an authorized limit, or an action that is restricted by a policy to independent review or approval by a person with special knowledge or responsibility.

Role-based access control enables managers to quickly and easily provide appropriate authorization for an individual, or terminate authorization that is no longer appropriate (see Chapter 7). The authorization should clearly identify the grantor of access authorization.

Role-based authorization support processes can improve management control and awareness of the access authorization granted to individuals, and can more reliably terminate authorizations when employees change assignments or leave the company. VDM will help identify the authorization requirements associated with different roles.

Accountability

Accountability is important for performance evaluation, but it is even more important for actions that could have consequences to the assets, integrity, or liability of the enterprise. Accountability applies to external entities such as customers and suppliers as well as employees.

A key element of accountability is reliable signatures. Public key infrastructure provides the management of identities and keys for signatures on electronic documents. An electronic signature can establish that a document represents the authority of the person(s) whose signature(s) have been applied, and it establishes that they were in agreement with the content of the document.

Electronic signatures should be applied wherever an action is taken or approved that involves the transfer of assets or an action that could have adverse effects on the operation or integrity of the enterprise. This should include acceptance of responsibility to perform an action or exercise a control in compliance with an assignment, policy, or regulation.

Policies and Regulations

Regulations and policies must be appropriately applied to control business operations. The source of regulations must be identified and each regulation must be transformed to a policy or policies that express how the regulation applies to the particular enterprise. The regulations and policies should be captured in a directory that supports analysis of interactions including categories, such as their purpose and the data entities and attributes affected.

Policies must be linked to the specific organizations and activities where they are to be applied supported by a VDM model. Where appropriate, processes must be defined for deviation from strict application of a policy. Deviations from policies must be recorded for accountability.

Risk Management

Risk management is defined by Douglas W. Hubbard in his book, The Failure of Risk Management, John Wiley and Sons, Hoboken, New Jersey, 2009:

Risk is a critical consideration in planning, decision-making, investments, and business design. It is impossible to eliminate risk, and there are not well-defined disciplines or tools for assessing risk. The governing board assesses risks and reviews the risk catalog for completeness and adequacy of mitigations.

Levels of risk must be balanced against the cost of mitigation to arrive at acceptable levels. We discussed security as techniques for mitigation of information risks in Chapter 7. We discuss development of standards for risk assessment near the end of this chapter.

A VDM model provides a context for identification and evaluation of risk. Potential unfortunate, internal events can be identified, evaluated, and mitigated for each capability and for the consequences to the affected value streams. Single points of failure can be considered for backup or redundant operations. Unfortunate events can be considered for interruption of operations, cost and duration of recovery, and potential impact on customer values.

Where capabilities can mitigate risk, the associated organization unit should be accountable. In addition, unfortunate external events and their consequences to the enterprise should be identified for resource availability, market demand, or technology advances and for economic, social, political, or environmental events. These unfortunate events can then be assessed for their impact on capabilities and associated value streams and customer values.

An assessment of the financial impact of an unfortunate event might be based on an estimate of the cost of insurance that would compensate for the loss.

VDM can also help clarify when one unfortunate event impacts multiple aspects of the business, so one possible event does not become interpreted as independent events on each capability or value stream giving the impression of a much higher level of risk.

At the same time, the risk of an unfortunate event may change over time based on related circumstances or the occurrence of another unfortunate event. Consequently, it may be necessary for mitigation methods to be reconsidered. For example, a homeowner may enjoy the pleasant environment and recreational activities of a home on a river or lake. However, when there are heavy storms or a large snow-melt upstream, the homeowner would be well advised to prepare for a flood. These changes in risks may be identified and resolved through posting of events to the sense and respond directory where responsibility is identified for initiation of appropriate action.

We will see the potential for further advances in risk management in the last section of this chapter. In the absence of a comprehensive discipline and supporting tools, an agile enterprise should develop and maintain a directory containing sources of risk, the probability and severity of the risk, potential means to eliminate or mitigate the risk, and identification of circumstances when certain risks are exacerbated.

Governing Board

The governing board along with top management is responsible for “governance.” The following is a formal definition of governance:

This definition has also been adopted by the International Federation of Accountants (IFA) as expressed in Enterprise Governance—Getting the Balance Right, 2004.

In brief, governance is ensuring that the enterprise is doing the right thing and doing it well. The board has an oversight role. It represents the interests of the investors, or for a government organization, the interests of the public for whom tax dollars are invested. Investors are concerned about the sustainable success of the enterprise that may be reflected in a profit, but is also a function of relationships with the recipients of products and services as well as suppliers, business partners, and the community at large. Doing the right thing involves meeting or exceeding investor expectations, and doing it well means efficiency, quality, and integrity. This expectation ultimately extends to the expectations of the other three levels of leadership.

In the traditional enterprise, success is measured, to a great extent, by return on investment and growth. These are objective, but crude measurements. In the following sections we will see how the agile enterprise can better ensure that the enterprise is meeting or exceeding expectations, and doing it well.

Top Management

Top management is responsible for managing the resources of the enterprise to achieve the strategic, tactical, and operational purposes of the enterprise, and for supporting the governing board in fulfillment of their responsibilities. This involves strategic planning, organizing, adapting, and investing in resources to fulfill the enterprise purpose. This includes monitoring and control to ensure that appropriate objectives are met, that the enterprise is successful in meeting the needs and demands of its customers, and that it is enabling the success of its suppliers and business partners.

Capability Management

Below top management, there may be multiple levels of capability managers. These are the managers of the management hierarchy. These leaders are responsible for managing their assigned resources and ensuring the sustained and reliable operation of their segment of enterprise operations. Generally, they have specific authority to spend money and hire and fire people. They are responsible for directing the solution of problems within the scope of their authority, collaborating with others and for informing their management chain of challenges and opportunities that have implications beyond their scope of authority.

Knowledge Workers

In any organization where there is actual work being performed, there are knowledge workers who understand operating details and are essentially responsible for continuous improvements and keeping the operation running. They may do mainstream work but they are also leaders in a particular aspect of the business.

These are the people who typically are the actual problem solvers, but they do not have formal authority for directing the activities or responsibilities of others. At the same time, they may have explicit authority and responsibilities in interorganizational collaborations by virtue of their insights, experience, or credentials. Most importantly, they have authority by virtue of their skills and experience.

Governing Board

The governing board has traditionally focused on the financial condition of the enterprise. For a profit-making enterprise the focus is on profit and growth. For government and nonprofits, the focus is on outcomes, but the board tends to leave the operation of the enterprise to the CEO.

The board of an agile enterprise should be expected to do more because they can, and investors should expect it. The agile enterprise enables oversight by the board that goes deeper into “doing the right thing and doing it well” because technology enables greater transparency and accountability. Investors are more concerned and aware of how the enterprise is being managed as a result of some high-profile cases of mismanagement and the recent global, financial crisis.

Most investors are not constantly watching the financial markets and moving their investments, but expect their investment to be good in the long run. To properly represent the interests of these investors, the board must ensure that top management is looking well beyond the next quarter financial reports. Investors are more concerned about the vision of the enterprise, expanded to include core ideology, core values, and core purpose as discussed in Chapter 9.

Oversight must ensure that the agile enterprise is actually prepared to adapt to threats and opportunities, that it fully utilizes the knowledge and experience of leaders at all levels, and that it delivers the values that are important to its consumers. The technologies of the agile enterprise make it possible to more effectively evaluate the challenges and the results.

Top Management

The leadership model of top management defines the context for leadership of the next two levels. Top management must develop a new way of thinking about and providing enterprise leadership that involves employee empowerment and inspiration.

Traditional top-down management is no longer appropriate. While top management has awareness of the breadth of issues facing the enterprise as a whole, people within the enterprise have the depth of understanding that is necessary for effective planning and decision-making as well as innovation and improvements. The VDM modeling capabilities, along with the knowledge management facilities of Chapter 6, identify sources of detailed knowledge.

Top management must inspire pursuit of a vision and a general commitment to success of the enterprise. Employees must realize personal value in collaborating with others and contributing to make the enterprise great. This must be reinforced by formal recognition of individual contributions and support of cross-organization collaborations.

Value Delivery Maturity

Top management must have a plan and report progress toward becoming an agile enterprise. The plan and progress can be based on the value delivery maturity model included in Appendix A. The maturity model defines criteria, in business and technical dimensions, for five levels of maturity depicted in Fig. 11.3. The leadership of the enterprise should evaluate their current level of maturity, refine the maturity model to be more specific to the particular enterprise, develop a timetable with objectives, and start the transition.

An enterprise-specific maturity model will provide the basis for development of a transformation plan and the specification of objectives for monitoring progress.

Capability Management

Management of capability services is quite different from management of a traditional organization in a silo-oriented enterprise. This includes LOB management of LOB-specific capabilities. Services are designed to respond to requests through a well-defined interface while the implementation of the service is hidden from the consumer. Service level specifications define performance requirements. Value contributions define the impact on one or more value streams. The cost of the service must be billed to the consumer, including the cost of any services it uses so that alternatives, such as outsourcing, redundant services, or benchmarks can be properly evaluated.

Business leaders must create a culture where knowledge workers are inspired to be creative and collaborate. This requires incentives for both the knowledge workers and their managers. Knowledge workers should be encouraged to participate in interest groups to share experiences and develop new business solutions.

Knowledge Workers

Knowledge workers do work that requires analysis, planning, and decision-making as opposed to performance of prescriptive processes. Knowledge workers provide different levels of leadership depending on their training and experience as well as the problem at hand. They must be inspired to contribute to the success of the enterprise beyond the scope of their formal responsibilities. They should be encouraged to share their knowledge and experience in collaborations, emails, web discussions, and posting of documents. They should view these efforts as contributing to their career development and advancement. They should also envision their role as contributing to the continuous adaptation of the enterprise.

Agility, Strategic Planning, and Transformation

In order to lead, you must be agile. It is not enough to have good ideas, you must implement them. Agility is needed, not only for continuous improvement but for strategic change.

Strategic planning and transformation are essential components of agility. Again, it is not enough to have good ideas, but it must be possible to implement those ideas in a timely and reliable fashion.

Consequently, the first step in taking the lead is to pursue value delivery maturity (Appendix A). Full realization could take a decade, although progress toward maturity may also demonstrate industry leadership capability in the near term. The potential speed of realization of maturity will depend somewhat on the enterprise and the industry. Some capabilities may be encapsulations of legacy systems where there is not a critical need for transformation. Some capabilities might be outsourced to take advantage of provider economies of scale. The consistent information systems infrastructure will be essential.

An enterprise should focus on maturity of mainstream business operations first and extend the architecture and technology to supporting services later, but obsolete support services may adversely affect the capabilities that interact with them, and will increase the cost and complexity of maintaining those interfaces.

Although the maturity model focuses on mainstream business operations, the agile enterprise should continue to expand the scope of the transformation to include all aspects of the business and exploit continued advances in technology.

Industry Advances

The enterprise must impress the industry with innovative ideas or the ability to achieve and maintain competitive advantage. It is not enough to implement best practices; it must implement better practices. Engaging the creative talents of business leaders and knowledge workers from throughout the enterprise is fertile ground for industry leadership, assuming the creativity reaches strategic planning or participation in development of regulations or standards, discussed later.

Industry advances must be driven by increased value to customers. In some cases these are new or changed markets, but customer value is one goal that all members of an industry can agree upon. This extends to the realization of value to business partners who are essential to the future success of a business. A new business endeavor may involve new business partners that must also be successful for the new business to succeed.

An enterprise cannot be the industry leader if it does not achieve value for itself, its customers, and its business partners.

Regulations

Regulations are often viewed as requirements imposed by governments for values that increase costs but not revenue. That applies to products and services as well as operating methods. However, in a broader context, regulations represent values that will not be realized in a purely competitive environment. The enterprise that, unilaterally, implements all the safety and integrity protections and precautions may be a good citizen but may also be at a substantial competitive disadvantage.

Regulations raise the costs of all competitors and benefit many customers or other citizens who are otherwise unable to obtain the benefits at reasonable cost. For example, if airbags were offered as an option on automobiles, the cost of the option would be much higher because the option would only be produced on some vehicles. In addition, many people who did not choose to go without airbags (passengers or nonowner drivers) would suffer severe injuries as a result. Air bag regulations ultimately save lives at lower cost than if the purchase were an individual choice.

So, in a way, regulations enable enterprises to do the right thing without the risk of competitive disadvantage. Stockholders are increasingly aware of the good (or bad) citizenship of the enterprise.

Business leaders should view regulations as potential benefits. An enterprise that takes the initiative to develop benefits to customers and employees should propose regulations that demonstrate good citizenship and also enable the enterprise to benefit from readiness when regulations take effect. Regulations may also reduce liability.

Of course, this works in the context of a national market, but what about competition in international markets where the lack of similar regulations creates a competitive disadvantage? First, most enterprises are not “citizens” of one country, they are citizens of the world. When a new regulation requires a product improvement in the world's greatest marketplace (the United States), foreign competitors are going to comply even if their governments do not demand it. They will also want their government to adopt similar regulations so that they do not suffer competitive disadvantage against local competitors. In the long term, there is a global benefit.

Similar dynamics can drive improvements in business practices that benefit stockholders. Stockholders will be sensitive to risks of misconduct or losses, particularly if discussion of regulations exposes these practices. Public corporations compete for investors in a global marketplace. Again, national regulations can exclude noncompliant enterprises from the national market, providing an incentive for them to advocate for regulations in other countries to level the playing field. The enterprise that takes the lead can also benefit from a reputation for quality and integrity.

The marketplace can also drive improvements in internal business practices for the benefit of employees. If poor business practices are visible to the public, then better employees will leave and better prospective employees will apply elsewhere. This will not be as effective in foreign markets, but enterprises that respect their employees will have an advantage with customers and stockholders.

Standards

In this book we have described the synergy between business and technology to achieve an agile enterprise. We have discussed a number of industry standards for systems that support the design and operation of the agile enterprise. There are standards for the information infrastructure to support the integration, security, and accessibility of systems and services. We described standards for modeling information systems and for modeling the design of the business. These standards have enabled development of today's agile enterprise.

However, the evolution continues. There will be new advances in technology that continue to change the marketplace and advances in the design and management of the enterprise. The technology solutions can be solved by each enterprise, but it would be preferable to resolve technical issues in a standard way so that the enterprise does not create new solutions that become a legacy burden down the road or limit the ability to switch to more advanced products from other vendors. The preference is to implement industry standards so that when future products provide better solutions or a lower cost, the enterprise is not faced with another expensive and time-consuming transformation.

The agile enterprise should be a leader in the development of new information technology standards. Much of the pain of developing and maintaining information systems as well as the continuing adoption of advancing technology is a result of incompatibility of new solutions. Large suppliers of the technology thrive on bringing proprietary solutions to market in order to capture an emerging market, lock customers into their products, and create a barrier to entry of competing products. The solution is for users of the technology to provide the leadership needed to define the market, exploit advances in technology, and optimize business solutions—to drive the technology rather than letting the technology drive business change. So the goal is to use and develop industry standards so that investments in transformation are built on a durable foundation.

The same principles apply to standards for products and services. Some, large corporations can benefit from creation of de facto standards—the standards they create for their products. However, in today's world, it is becoming increasingly difficult for a large corporation to develop a new product that sets the standard when smaller companies can more quickly develop a standard and deliver more specialized products, capturing an early market. Here is where Clayton Christensen's (2016) disruptive innovation can apply for the creation of new markets. Christensen's disruptive innovation introduces a revolutionary product that does not necessarily meet the demands of the traditional, sophisticated customers, but satisfies the need of customers who cannot afford the sophisticated solution to create a new market. It then grows into a solution that takes over the traditional market.

Development of standards is driven by market demand. Much of the work of developing a standard will be done by the companies that will implement the products that comply with the standard. These companies will not invest in that effort unless they see a business threat or opportunity. The perception of a market for new solutions must come from needs or demands of potential customers.

Larger suppliers will tend to develop solutions behind closed doors and attempt to capture the market with proprietary solutions that become de facto standards. Smaller suppliers need a standard to create a market for their efforts, and are unlikely to invest in development of a standard unless they believe the standard will be accepted by the industry. At the same time, smaller suppliers are more agile and will support early adopters and continued improvements while being compatible in the long term.

It is important for potential customers to participate in the investment so that (1) both large and small suppliers perceive and participate in a market opportunity, (2) the solution actually solves the business problem, and (3) the potential customer can be prepared to take advantage of the solution, potentially as an early adopter.

The agile enterprise should also participate in development of industry standards where they are relevant to the enterprise products or services. Leadership in development of standards can create a market, and can position the leader to be the early market leader.

Strategic Planning and Transformation

Strategic planning and transformation involve analysis of alternative business models with VDML and development of a detailed to-be model along with transformation phase models. VDML represents value contributions and value propositions for analysis of the impact of changes on multiple value streams. The transition from the current business model to the to-be model requires analysis to define stable, intermediate states as phases of transformation. These will depend on an understanding of the changes and their dependencies. In Chapter 9 we described a framework for business transformation based on phases of transformation specified with VDML scenarios.

Transformation modeling should build on VDML to provide mechanisms to identify the specific changes from one phase to the next, identify the dependencies between changes, and assess the consequential effects of the changes that may suggest the need for additional change or refinements to the phases. The changes become the requirements for activities in the transformation plan, and deliverable flows represent transformation dependencies.

This basic transformation plan then must be refined to elaborate the activities required for the design changes, such as training and information systems development, and to define milestones that represent objectives of particular interest to the management. As phases are completed, VDML scenarios will provide target measurements for evaluation of actual performance.

Business Architecture Support

The current displays of VDML models were defined to support general requirements for creation and viewing of a VDML model with the expectation that additional displays would be developed based on user experience and practices.

VDML currently supports detailed modeling to support the work of business architects. A concern of business architects is to present more abstract artifacts of the intended business design for top management. Additional VDML display specifications should provide the needed artifacts. Business architects will then develop the abstract artifacts to capture management requirements and expand the VDML design detail to validate the approach and provide details needed for clear requirements and for transformation planning detail.

At this writing, there is work in OMG (Object Management Group) to define requirements for business architect artifacts.

Data Directory Service

The purpose of a data directory is to identify the master source of specific data along with replicas of that data in the distributed database environment. However, there is a need for more than a simple directory since the databases may not be implemented with a consistent data model, particularly if they are legacy or enterprise application (commercial software product) databases.

In general, other systems will need access to data from master databases. They may access that data ad hoc, or they may maintain a copy for future use. A copy will become out of date, so there is a need to receive updates when there are changes to the master database. This was discussed in Chapter 6.

A solution is for the data directory to provide a data access service based on specifications of specific database views. Business item definitions in the VDM can be the basis for definition of these views. A view is data retrieved or updated as a record that includes elements coming from multiple database tables.

The data directory could receive requests for specific views to be retrieved from a master database and, if required, it could request an update to each view when the content changes. This then provides a consistent form of exchange for the data that is independent of the database implementation.

Role-Based Authorization

In Chapter 7 we described a spreadsheet approach to specification of access authorization based on roles. A computer-based model could make this easier to develop and manage with a more effective user interface and an automated link to information infrastructure access control facilities.

Roles in the model should be consistent with the roles in the current VDM, and the role authorization model also should be linked to the business process models and access control systems for improved efficiency, reliability, and timeliness of updates.

Sense and Respond Directory

The concept of a sense and respond directory has been discussed in Chapter 9. The goal is to be prepared for observations, events, circumstances, or disasters—internal or external—that require attention. The directory provides a taxonomy of circumstances for classification of an observation, event, circumstance, or disaster, and identification of the person(s) and/or processes that will receive notice to take some action.

The resulting action should lead to a disposition. There may be multiple initiatives representing different perspectives. Status and progress of each initiative should be tracked in the directory. The directory should facilitate consolidation or coordination of efforts if the same or related circumstances arise. Initiatives of interest groups or other collaborations should also be captured and tracked for potential consolidation or coordination.

The directory might be defined as a specialization of CMMN where a directory entry is case data and ad hoc participants in the case contribute to the resolution. This supports status tracking, events to initiate action, alerts to participants, as well as planning and coordination of the effort.

This facility might also be linked to the current VDM model such that the classification of circumstances includes affected business capabilities and notification to the organization responsible for each capability.

Risk Modeling

A risk management catalog is needed to capture information about risks. There are many sources of risk to be evaluated, and there are relationships between risks and the consequences of risk that call for modeling these interactions and dependencies. The risk model should generate a net assessment to provide an enterprise risk profile for top management, the governing board, and other stakeholders to evaluate.

Risk assessment is a fundamental requirement for effective governance. Risk management develops and manages the catalog and implements measures for mitigation. Risk assessment reviews the catalog for complete and appropriate identification and mitigation of risks, and consideration of the risks exceed the enterprise level of tolerance.

Risks associated with business operations and information systems represent a major issue. Security risks, in particular, have increased as a result of the connectivity of business systems to the Internet. These were discussed in Chapter 7. In addition, concerns have increased regarding other risks as a result of internationalization of business operations and markets.

The design of the agile enterprise provides a framework (VDM modeling) for identification of operational and information systems risks, as well as analysis of the propagation of effects and interactions of disruptive circumstances.

Current work in OMG is focused on operational risk. This may be a foundation for development of a full spectrum, risk modeling capability.

Business leaders must decide when actions or initiatives offer sufficient benefit to offset the risks. Changes in technology, business practices, or other factors, both within or outside the enterprise, can increase existing risks and may require additional mitigation.

A discipline and computer-based risk modeling capability are needed to more effectively determine an enterprise risk profile.

Regulations and Policies Management

A regulations and policies directory should capture all information relevant to the identification and interpretation of regulations in the context of the business. The database should include the policies that support regulatory compliance as well as other policies, including the purpose of each policy, rules expressing the policy and identification of the VDM activity(s) where the policy must be applied.

Note that there has been work in some jurisdictions to express regulations in a formal language to remove ambiguities. Formal expression could help identify overlaps and inconsistencies between regulations, particularly regulations from different jurisdictions. However, it is still necessary to interpret the regulation as it applies to a particular business and define an appropriate policy for enforcement.

The specification of policies and their application to the business could also benefit from the capability of the multiple vocabulary facility.

Multiple Vocabulary Facility

At this writing, OMG has initiated development of a Multiple Vocabulary Facility specification. The purpose of this specification is to define a standard way of extending OMG modeling languages to enable different users to interact using their own, particular natural language or vernacular. This is important, particularly for enterprises with operations in multiple countries, and would enable modeling tools to be more suitable for use in non-English-speaking countries.

VDML has highlighted the need for this capability since VDM will touch many people throughout an enterprise, potentially in different countries. They could each view a shared model expressed in terms from their own natural language.

As currently envisioned, a term and a definition will be expressed in alternative user languages for each concept in the modeling language and each concept defined by a user in creating a model. A term in the user's language will be used in the displays and user inputs to identify the appropriate model element, and the user may access the associated definition, expressed in the preferred language, to clarify the meaning of the term in the context of the model. A set of terms and definitions might also be defined for a vernacular where special terms are used in a particular industry or profession.

The standard will enable the development and sharing of concept definitions and terms by industry and professional groups.

Performance Monitoring

Performance monitoring should be integrated with VDM to provide a model-based context for consideration of performance. Measurements of contributions of individual capability method activities are aggregated to feed value propositions, so users can see performance from a customer perspective, and then dive into the detail to see where the positive and negative values are coming from. The measurements must be captured in the measurements database discussed in Chapter 6. The monitoring service should also support triggers for selective monitoring of performance or exceptions.

If the operational processes are automated, then the automated processes can generate notices, and value measurements may be computed based on product configuration, duration, and the action performed. If the processes are not driven by business process automation, then measurement reporting will require sensors of various forms or manual data entry to capture and communicate events and measurements. Information on the context of the measurements (business metadata), at least time stamp and source, should also be available with the measurements.

Management Dashboards

Management dashboards typically provide monitoring of key process variables. Dashboards should be developed as a general monitoring capability based on web technology where managers at all levels can determine what they want to monitor and how they want it displayed.

The primary source of dashboard variables should be the measurements database, discussed earlier and in Chapter 6. A user should also be able to set alert criteria to trigger an action when a particular threshold or combination of variables occurs.

A dashboard should enable the user to examine the metadata and detail behind measurements and browse the VDM model to understand the context and explore dependencies.

CMMN Resource Management

CMMN supports the collaboration and coordination of a group of people working together to accomplish a shared purpose. Each case will involve the same roles but a different combination of personnel and activities in different sequences. A number of active cases may require participants with similar qualifications drawn from a shared pool. Some personnel will be qualified for multiple roles. A mechanism is needed to manage the allocation of resources to optimize the utilization of scarce qualifications and observe operating priorities.

CMMN Project Management

A case may start with a typical sequence of activities and dependencies that can be adapted and dynamically refined as the case evolves. In addition, when the situation changes, some sequences of activities may be repeated for rework or corrective action. These characteristics are capabilities needed in project management, particularly adapting to evolving plans and modeling rework. A CMMN project could start with a complete (tentative) plan, knowing that it will probably change as the project evolves.

The adaptation to CMMN for project management would require the resource management capability described above with some extension. CMMN could define an enhanced project management modeling capability for dynamic resource/workload balancing and rework management that could also support planning and evaluation of the cost of project changes and rework. With CMMN, all work is part of the record even though some of the work is redone or abandoned as a result of defects or changes in requirements or design.

VDML Simulation

During the development of VDML, the representations of activities, stores, deliverable flows, and collaborations were refined for compatibility with potential support for simulation.

The VDML and companion SMM (Structured Metrics Metamodel) accommodate statistical measures so variances in measurements can be represented statistically for Monte Carlo simulation and analysis of variances. This requires an enhanced form of implementation to display the measurements and perform statistical computations.

Discrete event simulation would represent the flow of individual deliverables and key characteristics to represent variations in workloads and resource consumption. This is important for capacity planning, identification of bottlenecks, and analysis of value contributions including time and cost. This would require a significant enhancement of the VDML specification.

Business dynamics (or system dynamics) is a mathematical modeling technique for simulation of system behavior over time in terms of stocks and flows of items. The flows define the rates at which stocks are depleted or filled.

For example, Sturman reports a system dynamics model of the impact of leasing on the North American new and used vehicle market developed by General Motors (Sturman, J. Business Dynamics: Systems Thinking and Modeling for a Complex World, McGraw-Hill/Irwin, 2000). System dynamics could be useful for analysis of flows in a VDM model.

Business dynamics could be an important approach to analysis of risks of both the propagation of effects of internal disruptions and the instability of the global economy arising from the interdependencies of businesses and markets. VDML represents the stocks (stores) and flows (deliverable flows) to support business dynamics. Further analysis is required to determine the best way to support system dynamics.

Culture Modeling

Culture is a collection of intangible, informal forces, and ideas that influence how and why people collaborate for a shared purpose. It includes the interests, beliefs, experiences, and patterns of work that extend beyond any formally defined roles and responsibilities of the participants.

The agile enterprise provides the context for a culture of individual initiative, dedication, and collaboration that drives an exceptional enterprise. The culture must embrace change as an opportunity rather than a threat. Individuals should be inspired to participation in the delivery of new values to the world.

In Appendix B, we discuss a preliminary conceptual model of culture. This illustrates the multiple dimensions of culture, and the impact of culture on productivity, creativity, and inspiration to go beyond the formal requirements of business activities.

This model is a potential extension to VDML, aligning to collaborations, capabilities, roles, activities, deliverables, and organizations. The agile enterprise architecture, supported by VDML, enables the creativity and initiative of the knowledge workers and leaders of the service units to improve the service unit contribution to its value streams. Additional incentives and supports should encourage individuals to contribute to a broader range of improvements to products, services, or business operations.

In the future, effective development of a culture of inspired participation will be essential for an enterprise to be an industry leader.