Ontology-based View on Architecture of Business Organisation

When people ask: “What is an Architecture of Business?”, we can give several explanations – formal and informal. An informal explanation can sound like this: it is an architecture of an organisation – a company or an enterprise – that defines what the business in this organisation does and what information it consumes and produces. An Architecture of Business (AoB) consists of the fundamental, independent and cohesive elements of the organisation; it defines what the market uses to quickly explain what the company is doing.

A formal explanation is a definition, not a description. The difference is in that any description always includes elements of subjectivity; there may be many descriptions of the same things from different viewpoints, but only one definition exists though it may be unknown. One of the form of formal representation of a system that any company or enterprise forms is its ontology. For simplicity, we will use an explanation of ontology provided by Wikipedia for information science: “an ontology is a formal naming and definition of the types, properties, and interrelationships of the entities that really or fundamentally exist for a particular domain”. Indeed, if we formally name all elements (entities) of something, define each element and specify inter-element relationships, we will find what this ‘something’ is.

Four Types of the AoB Elements

The four types of elements AoB are:

  1. Contextual
  2. Conceptual
  3. Logical
  4. Physical

and the overall system of elements is illustrated in the Figure 1.

Figure 1. Ontology view on Architecture of Business Organisation

Contextual Type

A notion of context or execution context is a cornerstone in AoB. An enterprise or organisation changes its behaviour in different execution contexts; the same elements of organisation may behave differently depending on the context specifics. There are elements tolerant to the contexts and others that should adopt to it. If such elements do not adopt, they may not only lose their values, but also can harm the organisation. For example, a such simple element as company’s reception should be constructed in one way in Europe and Americas, and in a totally different way in S. Korea and Japan.

A contextual group of AoB ontology includes:

  • Business Company/organisation, which is a Formal Organisation. In this sense, it also can be called an Enterprise. The latter exists in the Business environment that is frequently called a market.  Every formal Business Company/organisation forms a System, which comprises different elements.
  • The elements can be architectural and non-architectural. The latter elements depend on, or derived from, or exist because required by the former elements. We have attributed architectural elements to the conceptual group.

A Business environment requires a special explanation. A Business environment is a combined element – it includes: laws and regulations in all geographies, under which the organisation operates, as well as contracts – implicit and explicit – that impact the organisation’s behaviour, social structures and customs of all related geographies. Market trends and dynamic of market changes are also parts of the execution context.  

Conceptual Type

A conceptual group of AoB ontology includes:

  • A definition of Architecture;
  • Architectural elements of the System of Business Company/organisation. These elements are: Business functionality and Business information
  • An Intrinsic Architecture of the System of Business Company/organisation. This architecture appears at the moment of creation of the Formal Organisation and represents the Architecture of the business System.

An Intrinsic Architecture is one of four aspects of the concept of an Architecture of Business. Other three aspects of Architecture of Business are: Practice, Governance and Implementation. An Intrinsic Architecture comprises Business functionality and Business information. An architecture of a business system may contain other elements that fit with the requirements to architectural elements such as:

  • Being fundamental for the system’s existence
  • Being independent from any other internal or external elements (self-consistent)
  • Serve the same purpose and share the same principles (coherent).

 If any one of these requirements is not met, the entire system can be in trouble. In many alternative views called ‘business architecture’, an organisational structure of the company is included in the set of architectural elements. These views reflect an inertia of technology-orient mindset: if we have a structure, it is likely to be an architecture. Actually, an organisational structure depends on many internal and external factors, which change independently from this structure, but can cause a total reshuffling of the latter. For instance, for a Target Operating Model (TOM), a company has a set of new business capabilities and needs such organisational structure that would be optimal for them. The more there is a mismatch between the organisational structure and required capabilities, the less effective the TOM will be. That is, an organisational structure is a result of implementation or optimisation of other objective factors; the business organisation can perform the same functionality and process the same business information utilising quite different organisational structures.

Logical Type

The logical type contains all aspects, factors, entities and activities that transform corporate strategy in the requirements for TOM design and implementation. Also, a logical group includes all means that govern definition, design and implementation of aforementioned requirements and the TOM itself.

A logical group of AoB ontology includes:

  • Practice of AoB
  • Architectural Governance
  • Business Capabilities
  • Architectural Solutions
  • Documentation of architectural solutions
  • AoB Implementation.

Also, the logical group includes supplemental Strategy Decomposition methods as well as methods of Modelling Architectural Solutions. A notion of Business Capability consists of Business Functionality and different Resources needed for the capability realisation and execution. An availability of Resources should be constantly monitored because Business Capability does not exist if it is not supported by necessary resources. The Business Capability may have Inter-relationships and can form Compositions used in the architectural solutions.

Physical Type

The physical type aims to design and creation of TOM. The TOM is the outcome of the Implementation aspect of AoB.

A physical group of AoB ontology includes:

  • TOM
  • Architectural Solutions approved by Organisation Executives
  • Requirements for implementation in TOM
  • Architectural Solution-Deployment Plan or Capability-Deployment Plan, which contains:
    • Customer factor
    • Location factor
    • Time factor
  • Business Transformation Plan(s)
  • Implementation Blueprints
  • Operating Managers
  • Business Architects or Architects of Business.

The TOM also includes:

  • Key Operational Activities
  • Organisational structure
  • A structure of Locations and Assets
  • Human resource change management
  • Decision & delegations
  • Information Technology and Data.

For the sake of the article size, we do not provide definitions of the described ontology entities and count on common sense and English expressions. The relationships and dependencies between entities are indicated by arrows in the diagram.

Conclusion

The article depicts and describes elements of the Architecture of Business concept in their inter-relationships and dependencies. This constitutes an ontological view on the concept. Operating with observed elements is enough for consistent and comprehensive organisation of the Practice of AoB and following architectural design of TOM. The details of “how to do” are also available from our training courses.

2017.

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