Are you a business architect or striving to become one? An experienced business analyst exploring business architecture as the next step in the career? A consultant that was asked to “help set up our business architecture”?
You may have practiced creating capability maps and facilitating value chain workshops, cataloguing business processes and mapping requirements to strategic goals, but…
How do you start? What should be your first question to your new client, the logical start to your business architecture engagement? “Do you have a business capability map?” “What are your strategic goals?” or “Which architecture notation would you like me to use?” Good questions, but that should come later.
You need to start with:
Tell me how your business makes money.
Businesses exist to create value that can be exchanged for money. Money comes from selling products, charging fees for services, shareholder contributions, donations, or public funding. To understand the organization as an architect, you have to first understand its business model.
So, where does the money come from?
It may be a simple question for a small business that manufactures one product or provides one service. But these types of businesses do not usually engage business architects.
Organizations that need business architecture services are complex. Their structure can be quite intricate. Resources and funds can move via many convoluted paths.
For example, when gaming companies let you play for free, how do they make money? How much of Amazon’s profit comes from business other than selling stuff online? What did movie theatres make most of their money on – at least before the pandemic? What really sustains Tesla’s cash flow?
The answers are not simple, and often not obvious. And we haven’t even started talking about the financial industry. This is where things get really tricky.
So before you dive into interviewing stakeholders about business capabilities and propose SWOT analysis, understand the fundamentals: who are the customers, what products and services do they buy, and how does it make money for your client.
Getting an answer to this question will depend on the nature of your engagement. If you are hired as a consultant, you will need to do some background research first. It will provide a partial answer, to be analyzed deeper as part of the consulting engagement.
If you are an employee, you may know quite a lot about some aspects of your company. Sometimes this knowledge is limited to the line of business or the projects you were involved in – you may have been oblivious to other aspects of the business that had nothing to do with your daily responsibilities.
And if you happen to meet a prospective client at a social a professional event, and don’t know much about their business yet, you may simply ask them to tell you the story of their company: where does it come from, and where it is going.
Even if you have researched the company extensively before, it may be revealing to hear this as a story. You can ask more than one person to tell you the story to learn more. Ask stakeholders from different levels of hierarchy – an executive, a middle manager, and someone from operations, distribution, or customer service. Hear the main themes. And start building a mind map.
To illustrate this, let’s create a little case study for the Humble Software Company. The company takes pride in its financial independence and does not rely on any venture funding.
The company is promoting itself as an up-and-coming niche player in the marketing software domain. It’s selling a software product for nurturing and managing leads. How does it make money from this software? There are multiple income streams from this product and related services. Is that all? It may turn out that this product is not bringing in any profits yet, with all the design and engineering costs that went into creating the software. Then how does the business survive?
If you ask for a story, you will learn that it all started with a small search engine optimization (SEO) consulting gig. In fact, the company’s CEO and founder still personally manages relationships with many long-term customers. While this is no longer broadly advertised, a small team is still providing SEO consulting to old customers, in addition to some charity work for environmental start-ups. A recent new hire also started creating educational videos for these customers that might turn out to be a good business proposition at some point in the future.
This, however, cannot be the whole story. It still does not explain how the Humble Software Company stays afloat. There are two more lines of business that bring in most of the money and finance the new product development. Humble Software is also an authorized service provider for a major ERP software company and has built a lucrative QA-as-a-service side business.
An early mind map of the Humble Software business model may look like this:
Of course, there is much more to business architecture.
The money question will naturally lead to follow-up conversations. Who are the customers? What are the different types of customers? How are they different? What markets is the product targeting? Where do the products that the business is selling come from? What is the supply chain that the business relies on? What resources are required? Who engineers new products? Who makes them? Who is selling and servicing everything?
Essentially, these are the questions of a management consultant on a new engagement, or an MBA student working on a business case. Business architecture starts with understanding the business.
This article is only about getting started – starting to think like a business architect. For more, explore:
- How to Start Business Analysis for a new Project – with strategic analysis and business architecture
Yulia Kosarenko is the author of Business Analyst: a Profession and a Mindset. She is a speaker and the business analysis community activist, and offers online courses, personalized coaching and corporate training for business analysts and architects.