From Business Model Canvas to Target Operating Model – Business Architecture for Planning Digital Transformation
How to plan Digital Transformation, through evolving from idea through Business Model Canvas to Business Architecture design.
Planning Digital Transformation is a process of cascading down from the top level organizational objectives through the changes to enterprise and IT architecture necessary to achieve those goals.
From Idea to Canvas
Having sketched out your world changing idea on a napkin, the most popular tool for expanding it to a next level of detail that articulates the commercial mechanics is the Business Model Canvas.
As a Google search highlights there is a plethora of articles, tools and templates for how to go about building a canvas.
Innovate UK provides this general introduction as to the important why and how questions of defining your business model.
From Canvas to Blueprint
The main detail of this article then looks at the second stage, how to progress from the canvas stage to a detailed business transformation plan, articulated in terms of Business Architecture.
This stage in particular highlights how the overall life-cycle is relevant to existing businesses too, not just startups, indeed it is an ideal framework for enterprise innovation, as much as it is a powerful enabler for new ventures. In short it’s a process of innovation that existing businesses can use for planning the successful launch of new products within their portfolio, as much as conceiving new startups.
The primary difference is that startups are building atop an entirely green field, whereas the enterprise innovation process has to address change management, how the new product or service will be overlaid across their existing IT and processes.
Using Business Architecture to Realize Your Target Operating Model
Business Architecture can be then be utilized to expand this inital model to a detailed level of Enterprise Architecture, resulting in the ‘To Be’ design, the Target Operating Model.
This process is described through this presentation from ABN Amro: Using Business Architecture to Realize Your Operating Model. In this excellent slide deck they describe the deepening process of expanding a business model canvas into a detailed operating model, and producing a more involved set of documentation to achieve this detail.
This deepening is basically a cascading process, that breaks down the top level executive goals and business model objectives, into the level of detail of new enterprise capabilities required to achieve them and ultimately how they should be achieved across the IT systems.
First on slides 5 and 10 they explain the basic definitions and what role BA plays in building out a plan from a Business Model Canvas, describing the key artifacts the process creates:
On slide 16 they begin the cascading process by showing the first step of beginning with the organizations Strategy, and the key Business Model elements needed to achieve that Strategy:
On slide 17 this is compared to the organizations current Capabilities and Operating Model:
Slide 23 then explains how from this analysis the organization can identify what new (Target) Capabilities are therefore needed, showing how a process of Value Stream Mapping can identify the new service models needed, such as a ‘Field Service Request’.
and on Slide 20 how those Capabilities would be overlaid across enterprise IT systems:
Utilizing BA for this Canvas to Blueprint modeling processes is ideal for large organizations, as it maps the desired new service design across the existing legacy estate, meaning it now only defines how to implement the new service but also exposes key insights such as opportunities for consolidation, generating further efficiencies, as described on slide 16.