Five Reasons to Model Your Company's Value Chain
One of the select few techniques explicitly prescribed by the Business Agility Manifesto 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.
- It provides the best basis to explore, analyze, and explain large-scale opportunities for integration.
- It provides a framework to challenge priorities and to rationalize project scope.
- It lets you plan your escape from organizational silos and non-integrated applications and channels.
- It's essential to understanding and motivating business knowledge as a shared company asset.
- It helps show why business vocabulary and business rules are inherently cross-functional.
 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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