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A.3.1. Operating Model

The desired level of business process integration & standardization.

The capability Operating Model (A.3.1) is part of the capability area Business Enablers in the Business Pillar.

The desired level of business process integration & standardization.

Operating Models1 are the foundations of execution, in support of an enterprise's strategy. Enterprises use operating models to organize and coordinate their activities in order to most effectively engage with their customers and business partners.

At its simplest, an Operating Model enables an Enterprise to realise its vision and strategy at the level of everyday execution --- business operations.

An operating model --- or lack of it --- has a profound impact on how a company implements its business processes and organizes supporting technologies. Depending on an enterprise's Business Models, multiple operating models, at corporate and unit/divisional levels, could co-exist, in pursuit of the business strategy.

In order to define an operating model at any of these different levels, Enterprises need to answer the following two questions:

  1. To what extent is the successful completion of one business unit’s operations/transactions dependent on the availability, accuracy, and timeliness of other business unit’s information?
  2. To what extent does the enterprise benefit by having business units run their operations in the same way?

The first question determines integration requirements while the second one covers the standardization requirements of an Enterprise.

Note

80% of CEOs in one study claim to have transformations in place to make their businesses more digital; 87% expect to see a change in their operating models within three years.

In today's modern dynamic economic environment, Enterprises have to contend with a variety of choices in the selection, ongoing evaluation and transformation of their operating models. Such choices are necessitated by a fast-changing competitive landscape and the accompanying need to constantly align the workforce capacity and capabilities to business tactics. Typical triggers of consideration include comparative metrics such as higher-than-peer Cost-to-Income Ratios in key product portfolios, costs per transaction, Net Promoter Score/CSI, time-to-market for new products et al.

While practices around specifics of Operating Models vary across Enterprises, we highlight below a few key focus areas in the setup and transformation of their operating models and in such a context, how EKGs can act as effective enablers:

Integration

Effective coordination across silos of activities with disjoint goals in any given external interaction (customer or stakeholder)

In the Introductory section, we have introduced the idea of using Contracts as an intuitive anchor for coordinating activities in an enterprise, towards its engagements with customers and stakeholders. An Operating Model can leverage the context of "why" and "what" in the contracts and specify the "who" and "how" to align and link various activities within a business unit, across business units and across enterprise boundaries. Many enterprises are using the concept of "User/Customer Journeys" to align and link cross unit activities in their Operating Models --- such User/Customer Journeys can be considered to be instance models of Contract execution, enabling Enterprises to assess and select appropriate features in their Operating Models.

Standardization

Trade-offs between Individual Efficiency and Overall Effectiveness in the business processes

A key challenge many enterprises face is in the choice between improving efficiencies focused on individual business processes and effectiveness of the overall end-to-end business flow. In the introductory section, we have introduced the idea of using Business Identities as intuitive anchor for an Enterprise’s engagement with its stakeholders. To address the trade-off challenge on individual vs collective efficiency in its business processes, an Enterprise’s Business Identity can help in (a) aligning the guidance of the enterprise's vision/mission/values to the trade-off and (b) ensuring consistency in practices and tools, through standardization, in the execution of business processes.

In order to best support a company's strategy, a foundation for execution is necessary. Such a foundation is the operating model of an organization.

See article Operating Model for a summary of the theory around business operating models.

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Work in progress, this is just the results of an initial brainstorm session, needs to be worked out

  1. Has the organization identified its integration needs? Scale 1-5
  2. Has the organization identified its standardization needs? Scale 1-5
  3. To what extent is the above reflected in business glossaries? Scale 1-5
  4. Has the organization identified and documented all its business processes? Scale 1-5
  5. Have you identified for each business process how it enables/supports any given business capability? Scale 1-5
  6. What’s the coverage of your operating model in relation to your capability map? Scale 0-100%
  7. Is your Operating Model an executable model (and is it actually executed)? Scale 1 to 5.
    • Note: this is “just” about the operating model itself, not about executing all related models as well.
  8. To what extent is your operating model related to digital transformation? Scale 1-5

The maturity levels of developing an operating model with an Enterprise Knowledge Graph can be described as follows:

  1. EKG Initiation: At this stage, the organization is just beginning to explore the use of an Enterprise Knowledge Graph to represent its operating model. The focus is on understanding the potential benefits and limitations of using a knowledge graph, and on developing a basic understanding of how to create and maintain a knowledge graph. This might involve conducting research and pilot projects to test the feasibility and effectiveness of using a knowledge graph.

  2. Extensible Platform: At this stage, the organization has implemented an Enterprise Knowledge Graph and is using it to represent key components of its operating model, such as processes, systems, and resources. The focus is on expanding the scope and complexity of the knowledge graph, and on developing the skills and capabilities needed to maintain and update the graph as the operating model evolves. This might involve integrating the knowledge graph with other systems and processes, and training employees on how to use the graph.

  3. Enterprise Ready: At this stage, the Enterprise Knowledge Graph is being used to represent the full scope of the organization's operating model and is integrated with other systems and processes. The focus is on optimizing the use of the knowledge graph and on developing advanced skills and capabilities in using the graph to support decision-making and strategy execution. This might involve implementing advanced analytics and machine learning algorithms to extract insights from the knowledge graph, and using the graph to support real-time decision-making.

  4. Strategic Asset: At this stage, the Enterprise Knowledge Graph has become a key strategic asset for the organization, and is being used to drive innovation and differentiation. The focus is on leveraging the knowledge graph to support business growth and to create new value for customers. This might involve using the knowledge graph to develop new products and services, or to differentiate the organization's offerings from those of its competitors.

  5. Operational Ecosystem: At this stage, the Enterprise Knowledge Graph has become an integral part of the organization's operational ecosystem and is being used to support a wide range of business functions. The focus is on continuously improving the use of the knowledge graph to support the organization's goals and objectives. This might involve using the knowledge graph to support automation and digital transformation, or to enable real-time monitoring and response to changing market conditions.

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Work in progress, describe the 5 maturity levels of this capability

Contribution to the EKG

Since an operating model reflects the business needs for standardization across a company and its business units, it could be a great input for the development of reusable business vocabularies as part of the data infrastructure of an enterprise as later explained in the data part of this work. These vocabularies may, in turn, be converted to machine-readable models. Such machine-readable models are called ontologies.

Contribution to the Enterprise

The operating model could help organizations define their requirements and expectations in terms of standardization and integration across business units. This would be useful to harmonize business capabilities and glossaries across companies and their business units.

Furthermore, an operating model may serve as input to the development of an Enterprise Architecture that serves as the organizing logic for business processes and IT infrastructure based on the company’s standardization and integration requirements.

The development of an operating model without an Enterprise Knowledge Graph would typically involve the following steps:

  1. Identify the key components of the operating model: This might include processes, systems, resources, and roles and responsibilities.

  2. Determine the relationships between these components: For example, a process may depend on a particular system or resource, or a role may be responsible for a particular process.

  3. Document the operating model: This might involve creating a written description or a visual representation of the operating model, such as a flowchart or diagram.

  4. Communicate the operating model to relevant stakeholders: It is important to ensure that all relevant parties within the organization are aware of and understand the operating model. This might involve holding meetings or presentations to explain the model and its components.

  5. Refine and update the operating model as needed: As the organization evolves and the business environment changes, it may be necessary to update the operating model to ensure that it continues to support the organization's goals and objectives.

Without an Enterprise Knowledge Graph, the development of an operating model may involve more manual effort and may be more prone to errors or inconsistencies. It may also be more difficult to update and maintain the operating model over time, as it may be scattered across various documents or stored in different locations.

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Work in progress, describe how this capability is possibly being delivered today in a non-EKG context and optionally what the issues are that EKG could or should improve

An Enterprise Knowledge Graph is a type of database that stores and organizes information about an organization's operations, processes, systems, and relationships in a structured way. It can be used to create an operating model by representing the various components of the model as nodes in the graph and the relationships between them as edges.

The development of an operating model using an Enterprise Knowledge Graph would typically involve the following steps:

  1. Identify the key components of the operating model: This might include processes, systems, resources, and roles and responsibilities.

  2. Determine the relationships between these components: For example, a process may depend on a particular system or resource, or a role may be responsible for a particular process.

  3. Create nodes in the graph for each component: Each node in the graph represents a component of the operating model.

  4. Add edges between nodes to represent the relationships between components: Edges in the graph represent the relationships between components, such as dependencies or responsibilities.

  5. Refine and update the graph as needed: As the operating model evolves, the knowledge graph can be updated to reflect changes in the model.

Using an Enterprise Knowledge Graph to represent the operating model can help organizations to visualize and understand the various components and relationships within the model, and to make more informed decisions about how to optimize and improve their operations. It can also help to ensure that all relevant information about the operating model is centralized and easily accessible to those who need it.

Warn

Work in progress, describe how this capability would be delivered or supported using an EKG approach, making the link to the "how" i.e. the EKG/Method.

There are several use cases for an operating model, including:

  1. Driving strategy execution: An operating model provides a roadmap for how an organization will operate and execute on its plans. It helps to ensure that resources are being used efficiently and effectively, and that the organization is able to adapt to changing market conditions and customer needs.

  2. Improving efficiency and effectiveness: By outlining the processes, systems, and resources that an organization uses to produce and deliver its goods or services, an operating model can help to identify inefficiencies and areas for improvement.

  3. Facilitating communication and collaboration: An operating model can help to clarify roles and responsibilities within an organization and promote better communication and collaboration between teams and individuals.

  4. Enhancing transparency and accountability: An operating model can help to increase transparency within an organization by outlining how decisions are made and how resources are used. It can also help to promote accountability by clearly defining roles and responsibilities.

  5. Facilitating change management: An operating model can provide a framework for implementing and managing changes to an organization's processes, systems, and resources.

  6. Supporting business continuity: An operating model can help to ensure that an organization is able to continue operating in the event of unexpected disruptions or challenges.

  7. Aligning business and IT: An operating model can help to align the business and IT functions of an organization by outlining how they work together to deliver value to customers.

  8. Managing risk: An operating model can help to identify and mitigate potential risks within an organization by outlining the processes and controls in place to manage those risks.

  9. Enhancing customer experience: An operating model can help to optimize the delivery of goods or services to customers by outlining the processes and systems that support customer interactions.

  10. Enabling digital transformation: An operating model can help to support the implementation of new technologies and digital processes by outlining how they will be integrated into the organization's existing operations.

Supporting compliance and regulatory requirements: An operating model can help to ensure that an organization is able to meet various compliance and regulatory requirements by outlining the processes and controls in place to support those requirements.

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Work in progress, list examples of use cases that contribute to this capability, making the link to use cases in the catalog at https://catalog.ekgf.org/use-case/..

  1. See appendix Operating Models ↩

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