Five Reasons to Model Your Company's Value Chain

Ronald G.  Ross
Ronald G. Ross Co-Founder & Principal, Business Rule Solutions, LLC , Executive Editor, Business Rules Journal , and Co-Chair, Building Business Capability (BBC) Read Author Bio       || Read All Articles by Ronald G. Ross

One of the select few techniques explicitly prescribed by the Business Agility Manifesto[1] is value chain models. The Manifesto defines a value chain as follows:

value chain: the business knowledge and work needed to deliver products or services to a market organized according to their natural dependencies

Why does the Manifesto consider value chains so important?

Most of us are well aware of the problem of organizational silos and non-integrated applications and channels. The question is how can we plan to eliminate them?

The notion of a value chain is to take a 10,000-foot view of the business based on how value is created incrementally toward final delivery of products to end-customers. In other words, a value chain model looks holistically at the value-adding capabilities of an organization end-to-end, irrespective of organization lines of responsibility or existing functional activities.

The Manifesto makes several crucial points about value chains:

  • The role of each stakeholder in a value chain must serve the best interests of the entire value chain, including accommodating constraints of other stakeholders.
  • Measurements, targets, and incentives for stakeholder roles should be aligned to the value chain outcomes that best serve customers.

The latter point is part of the Manifesto's take on the all-important issue of customer centricity.

As a unified, business-oriented tool for eventual planning of application development, a value chain model provides the following:

  • A basis to explore, analyze, and explain opportunities for integration.
  • A framework to challenge priorities and to rationalize project scope.

In other words, value chain models provide a means to bring sanity to what often seems like a chaotic and irrational world of application development.

Value chains are also essential to understanding and motivating business knowledge as a shared company asset. Unless you can justify how business vocabulary and business rules are inherently cross-functional, I'm afraid we're doomed to a world of silos, both organizational and semantic.

Why should you model your organization's value chain? In summary, here are five great reasons.

  1. It provides the best basis to explore, analyze, and explain large-scale opportunities for integration.
  2. It provides a framework to challenge priorities and to rationalize project scope.
  3. It lets you plan your escape from organizational silos and non-integrated applications and channels.
  4. It's essential to understanding and motivating business knowledge as a shared company asset.
  5. It helps show why business vocabulary and business rules are inherently cross-functional.

References

[1] The Business Agility Manifesto: Building for Change, by Roger T. Burlton, Ronald G. Ross and John A. Zachman, 2017 https://busagilitymanifesto.org/

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Standard citation for this article:


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Ronald G. Ross , "Five Reasons to Model Your Company's Value Chain" Business Rules Journal Vol. 19, No. 11, (Nov. 2018)
URL: http://www.brcommunity.com/a2018/b973.html

About our Contributor:


Ronald  G. Ross
Ronald G. Ross Co-Founder & Principal, Business Rule Solutions, LLC , Executive Editor, Business Rules Journal , and Co-Chair, Building Business Capability (BBC)

Ronald G. Ross is Principal and Co-Founder of Business Rule Solutions, LLC, where he actively develops and applies the IPSpeak methodology including RuleSpeak®, DecisionSpeak and TableSpeak.

Ron is recognized internationally as the "father of business rules." He is the author of ten professional books including the groundbreaking first book on business rules The Business Rule Book in 1994. His newest are:


Ron serves as Executive Editor of BRCommunity.com and its flagship publication, Business Rules Journal. He is a sought-after speaker at conferences world-wide. More than 50,000 people have heard him speak; many more have attended his seminars and read his books.

Ron has served as Chair of the annual International Business Rules & Decisions Forum conference since 1997., now part of the Building Business Capability (BBC) conference where he serves as Co-Chair. He was a charter member of the Business Rules Group (BRG) in the 1980s, and an editor of its Business Motivation Model (BMM) standard and the Business Rules Manifesto. He is active in OMG standards development, with core involvement in SBVR.

Ron holds a BA from Rice University and an MS in information science from Illinois Institute of Technology. Find Ron's blog on http://www.brsolutions.com/category/blog/. For more information about Ron visit www.RonRoss.info. Tweets: @Ronald_G_Ross

Read All Articles by Ronald G. Ross

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