Business architecture incorporates the structure of an organization and demonstrates how elements including processes, capabilities, and information fit together. The Federation of Enterprise Architecture Professional Organizations (FEAPO) defines business architecture as a discipline that “represents holistic, multidimensional business views of: capabilities, end-to-end value delivery, information, and organizational structure; and the relationships among these business views and strategies, products, policies, initiatives, and stakeholders.”
Understanding business architecture
The Federation of Enterprise Architecture Professional Organizations (FEAPO) defines business architecture as a discipline that “represents holistic, multidimensional business views of: capabilities, end-to-end value delivery, information, and organizational structure; and the relationships among these business views and strategies, products, policies, initiatives, and stakeholders.”
Once applied, business architecture bridges the gap between an enterprise business model and strategy on one side, and the business functionality of the enterprise on the other. The relationship amongst elements from each side dictates and specifies what the organization does and how it can realize value by achieving its goals.
Business architecture can be applied to a plethora of situations where it is vital corporate strategies are cohesive and aligned across and between business units.
These applications include:
Defining a new market.
Supply chain streamlining.
Divestiture.
Business capacity outsourcing.
Driving legacy modernization.
New product or service rollouts in the marketplace.
The integration of processes, people, capabilities, culture, and technology during a merger or acquisition.
Applying a customer-centric business model to a large enterprise, and
Reinventing who a company is or what it does.
Components of a business architecture framework
Business architecture frameworks help the organization connect strategy with operations in a clearly defined way. These frameworks do not impose restrictions on the business architecture itself. Instead, they serve as a foundation that organizations can build upon and customize based on their unique needs and real-world challenges.
Here are a few vital components of the business architecture framework:
Business blueprints – these blueprints enable streamlined and transparent business transformation across multiple business units, stakeholders, and capabilities. Transparency is important in maximizing solution-related investments while ensuring that the success of a business unit does not create problems for the enterprise as a whole. Consider the example of a company requiring users from the same customer base to separately enroll for multiple products. While each product might have succeeded in principle, the lack of a transparent blueprint resulted in a convoluted process and high user dissatisfaction.
Business architecture scenarios – these also provide transparency on specific business initiatives and are applied differently according to the situation at hand. For example, a team tasked with reducing customer churn rate would require different information from one involved in a merger and acquisition. Business architecture scenarios define the collective set of programs, projects, and initiatives that leverage business architecture. Importantly, every scenario has a suggested roadmap for action.
Business architecture knowledgebase – a repository that stores and organizes concise information about the business relevant to its environment. Most corporations have divisions and departments, while governmental agencies may be structured differently and use different terminology. As a result, there are generalized approaches to knowledgebase structure in addition to organizational or industry-specific approaches.
Key takeaways:
Business architecture incorporates the structure of an organization and demonstrates how elements including processes, capabilities, and information fit together. Essentially, it bridges the gap between an enterprise business model and strategy on one side, and the business functionality of the enterprise on the other.
Business architecture is useful in a multitude of scenarios where corporate cohesiveness and alignment are beneficial. These include defining a new market, streamlining a supply chain, driving legacy modernization, and business capacity outsourcing.
Business architecture frameworks serve as the basic foundation upon which a firm can build according to its specific needs and real-world challenges. However, most frameworks incorporate three components: business blueprints, business architecture scenarios, and a business architecture knowledge base.
A Blockchain Business Model according to the FourWeekMBA framework is made of four main components: Value Model (Core Philosophy, Core Values and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics/incentives through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the businessmodel. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
A transitional business model is used by companies to enter a market (usually a niche) to gain initial traction and prove the idea is sound. The transitional business model helps the company secure the needed capital while having a reality check. It helps shape the long-term vision and a scalable businessmodel.
The minimum viable audience (MVA) represents the smallest possible audience that can sustain your business as you get it started from a microniche (the smallest subset of a market). The main aspect of the MVA is to zoom into existing markets to find those people which needs are unmet by existing players.
Business scaling is the process of transformation of a business as the product is validated by wider and wider market segments. Business scaling is about creating traction for a product that fits a small market segment. As the product is validated it becomes critical to build a viable businessmodel. And as the product is offered at wider and wider market segments, it’s important to align product, businessmodel, and organizational design, to enable wider and wider scale.
The market expansion consists in providing a product or service to a broader portion of an existing market or perhaps expanding that market. Or yet, market expansions can be about creating a whole new market. At each step, as a result, a company scales together with the market covered.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
In the FourWeekMBA Revenue Streams Matrix, revenue streams are classified according to the kind of interactions the business has with its key customers. The first dimension is the “Frequency” of interaction with the key customer. As the second dimension, there is the “Ownership” of the interaction with the key customer.
Revenue model patterns are a way for companies to monetize their business models. A revenue model pattern is a crucial building block of a business model because it informs how the company will generate short-term financial resources to invest back into the business. Thus, the way a company makes money will also influence its overall business model.
A pricing strategy or model helps companies find the pricing formula in fit with their business models. Thus aligning the customer needs with the product type while trying to enable profitability for the company. A good pricing strategy aligns the customer with the company’s long term financial sustainability to build a solid business model.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
