Business Modeling


A visual model of a business can provide important insights into whether it is doing the right thing and how it might be improved. The Unified Modeling Language (UML), the de facto standard visual modeling notation for the analysis and design of software systems, can be used effectively to create such a model.

The detail associated with a business use case is documented in a business use- case specification. This will include text as well as one or more UML activity diagrams and possibly system use-case diagrams. The following items are normally included in a business use-case specification:

* Name
* Brief Description
* Performance Goals
* Benefit / Value
* Workflow / Flow of events
* Special Requirements
* Extension Points
* Relationships
* Activity Diagrams
* Use-Case Diagrams

The key item is the workflow/flow of events, which describes what the business does to deliver value to a business actor, not how the business solves its problems. The description should be understandable by anyone within the business.

A business model describes the rationale of how an organization creates, delivers, and captures value[1] (economic, social, or other forms of value). The process of business model construction is part of business strategy.

In theory and practice the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. Hence, it gives a complete picture of an organization from a high-level perspective.

Whenever a business is established, it either explicitly or implicitly employs a particular business model that describes the architecture of the value creation, delivery, and capture mechanisms employed by the business enterprise. The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit: it thus reflects management’s hypothesis about what customers want, how they want it, and how an enterprise can organize to best meet those needs, get paid for doing so, and make a profit.[2]

Business models are used to describe and classify businesses (especially in an entrepreneurial setting), but they are also used by managers inside companies to explore possibilities for future development. Also, well known business models operate as recipes for creative managers.[3] Business models are also referred to in some instances within the context of accounting for purposes of public reporting.