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Importance of the Business Model

Why is the Business Model important?

Virtually every major IT solution can be thought of as having two components: a set of business processes and an underlying business model.

As an example, a Customer Relationship Management (CRM) solution may support business processes such as account targeting and account management, product marketing, revenue forecasting, and sales performance reporting. In order to implement these processes the CRM solution must also contain the business model including information about customers, products, competitors, rebates, and internal sales organization and reporting structures. The business model is defined by these business objects and their descriptive properties, and by their relationships to each other.

How the underlying business model is organized and managed within the IT application has a profound impact in several important areas:

• Application flexibility
• Application extensibility
• Maximizing business value/ROI
• Minimizing total cost of ownership (TCO).
  

Traditionally, the business model components are hard-coded by the software developers. The business objects and their properties are carefully pre-defined and then built up in the database layer using a database management system. As an example, at the early stages of your project your developer will find out from you that in your current business model you need to have an object called "Sales Office", another called "Customer", and another called "Sales Order". They in turn code these into your application with the properties that define them such as "Name", "Address", and "Phone Number", or "Product Type", "Price", and "Quantity".

The relationships that the objects have to each other are then also hard-coded in the business rules. As an example, the developer would take care in writing the software code so that the "Sales Order" object has a hierarchical relationship to the "Customer" object and the "Customer" to the "Sales Office". This way the application will be able to properly aggregate and report sales orders by customer and then also by sales office.

The Problem with the Traditional Approach

Your business environment is always changing and your business requirements change with it. Continuing with our example, let us say your company has diversified and now each of your sales offices are divided into two departments — one of them sells service contracts instead of products. Your IT department carefully reviews your new requirements and determines that you need to change your business model and add a "Department" object and a "Service Contract" object.

In the traditional approach where your business model (objects, properties, and relationships) are hard-coded, these changes will have time-consuming and costly impacts throughout the software code that has already been written. Changes to the database layer can have far-ranging impacts throughout the application code and the new relationships required may force a complete audit and rewrite of the business rules.

Your choice at this point is to defer the changes — accepting the fact that your application no longer matches your business requirements and faces obsolescence — or to implement an expensive, time-consuming upgrade project.

Today, using the Equinox Enterprise Model, this problem is avoidable!

The Equinox Enterprise Model is a powerful, standards-based database platform that incorporates metadata technology to maximize the flexibility and extensibility of the business model and, as a result, the application as a whole. An application administrator can make changes to the business model without necessarily impacting the database layer or the functionality of existing business rules in the software code.

While adding new functionality still requires the services of the software developer, the costs and risks of implementing the overall upgrade have been dramatically reduced. Now you can continually and economically maintain your application so that it always matches your business requirements.

Maximize the business value of the application. Maintain ongoing ROI. And minimize TCO. That's the Equinox Enterprise Model.