8 Foundational Concepts you should know in the Digital World
We hear lots of concepts especially when you are dealing with transformation, business advisory, and the digital community in general. Lots of concepts from business scenarios, business cases, use cases, digital capabilities, business function, and lots of other words that sometimes people understand differently and find a bit confusing what are those concepts really mean, especially since there are no widely accepted definitions and you can have lots of perspective around that.
Today, I would like to go through some of them as I found that many people even professionals are struggling in finding the difference between many of those concepts. Count me one of them as well, especially when they are misplaced and people consider them like tacit known concepts.
I would love to hear your perspective of how do you perceive those terminologies as well, maybe we can set the ground definition ;)
My recommendation is if you feel there is confusion, try to agree on the definition with your working group, your customer, or your employees that will help a lot to make sure that you have a common understanding when mentioning a specific concept that this is what meant by it.
Let us explore those terminologies
1- Business
It is an organization that makes, buys, or sells products or services. Yes, simple like that.
The government, for example, is making and providing services for citizens, and banks are making services, such as loans, saving accounts, …etc. Those can be called out as the business side which defines the core of that organization is doing and performing every day. Its core can be policy-making, agriculture, manufacturing, retails, software development, …etc.
In the enterprise architecture world, Business is the enterprise, it can be the whole enterprise or a sub-unit or department as well. You can define the scope and its limitation.
2- System
Those kinds of businesses need a set of interactions between different people, components, or things in a specific context under a set of rules to operate together to produce the required services or products.
It is not about digital at all, it can be like making a sandwich, you need a set of steps to do, some people may be involved at each step, do things together until having the sandwich. You may need the ordering step, packaging step, and delivery step.
Those steps as well can compose a separate mini-system that is part of the whole system to enable the business to do its main offered products or services. A system can be depicted as an entity that performs functions, that have inputs, outputs, processing, boundaries, and surrounding environment.
3- Business function
The breakdown of the system we described before is composed of a set of functions, like placing an order, for example.
The function is a set of activities that need to be done by the business to deliver a service or product. So, the normal organization has lots of business functions inside its working system.
Business functions need a role (a person or a thing) to perform this function as well. The function describes what an organization can do (the What) not how well the organization is doing that or how it is done from a process perspective.
4- Business process
A set of business functions in specific order to get a specific outcome or achieve a goal. Normally, it has input and output, a set of actors that perform that process from individuals or equipment. It also may need a trigger for that process.
For example, the ordering process needs someone to place an order to trigger the process. Then, it can go to a set of steps, like checking inventory, calculating cost, sending orders to the back office, …etc. each step is a business function(s) or it can be another process as well.
The process describes the how and who, more than the what. You can relate that to the software development process, as a set of business functions to analyze the software, develop it, test it, …etc. also you can say that testing is another process as well to describe the how and who will perform the testing. But in the end, for the organization to develop software it needs to have the process and know what to do for each step in the process and who is involved.
5- Business capability
Capability is mainly about what a business needs to perform and succeed in its business. Yes, it looks like the business function. The difference is the business function is only depicts the “What” the business doing now not what the business needs to perform and achieve its goals.
A business capability can be something that businesses do today or something that is required to enable a new direction of the business.
For example, to become a software company, you need to have software development capability, software testing capability, talent acquisition capability, and lots of other capabilities as well. To perform its capabilities, you need people, processes, and technology.
Now, you are thinking that is easy but each combination of the people, process, and technologies can make a differentiation in that capability. For example, you can do software development using a waterfall process, using visual studio to code, you don’t have automation for testing or code analysis, you have a set of basic skills. This can make this capability a non-mature one. You still do the process of software development and perform an outcome as working software but not efficient from a capability perspective. You may need to add another capability of automated code testing for example.
Adding the maturity level to the business capability can visualize a good picture of where are the gaps in business and what needs to be focused on to align with strategic direction.
Below is an example of the BIAN Business Capability model, this is the top view capabilities but each one can contain more sub capabilities as well.
Now, that we are done with basic definitions and concepts, make sure that you got them well before moving to the next set of concepts.
So, now imagine you want to buy new technology, software, a device, or equipment to improve your business capability. So, you want to understand how this new thing will improve your business capability and what will be the usage when embedded in your day-to-day business. And this is what we call a business use case.
6- Business use case
It describes mainly how the different actors will possibly use the new set of technology, product, or thing in a new context. It is mainly to imagine how this new thing will be used. For example, you may want to embed artificial intelligence in the business process. This is a new technology and you want to figure out how this technology can be used to achieve a business goal (more efficient business process execution) with interaction with actors like individuals, equipment, process, solution, or system.
AI can is used in many ways, like help in fraud management in banking, or cross and up-selling in retail and banking. So, having the technology alone doesn’t illustrate its usage and in which context.
Use cases are known in software engineering to explain the interaction between actors and software, this is related but here it is a broader definition of what are the applications of that added new technology or that thing
This will make us discuss the next concept the business scenario.
7- Business scenario
The scenario is mainly illustrating the possible future when we apply the business use case of the technology. So, it describes the change in business capabilities in terms of processes, technologies, and people related to each capability.
Scenarios are mostly described by narrative text or visual diagram to show that possible future, for example, the use case of AI in the cross and up-selling, we can describe that by. The AI model will analyze the retail account data according to their latest transactions activities, the outcome of the model will list the bank products with relative probability scoring for what product can be cross-sold or up-sell to the customer. This list will be integrated with the customer relationship management system and send a notification to the sales team with the highest scoring customers to initiate the conversation. When the target customer accepts the offer, changes will be applied to his account and the data will be fed again to the AI model to educate the model about the results for better accuracy.
This is the simplest way to illustrate the business scenario but for sure it may require some additional details, like goals and objectives, roles impacted, prerequisites, requirements, objectives, skills needed, …etc. as this is mainly done for strategic planning purposes to imagine the possibilities.
So, what is the business case?
8- Business case
When you have a new strategic direction and your organization may want to proceed with implementing new changes, you will have many potential use cases, initiatives, or scenarios that you want to evaluate and educate the business decision-makers on their value proposition and their benefits to convince them to invest as a company in implementing this initiative.
That was the business case where it justifies undertaking a new direction, project, initiative, or decision in general. It evaluates the benefit, cost, business value & Impact. It is important if the business case can include numbers in that impact as well, like what will be the return on business after the investment, for example, in the AI example mentioned above, when the bank implements the scenario, this can reduce the fraud by 10%, reducing this fraud percentage can increase revenue by 1%. The business can have a payback period of 6 months with a $100K investment.
I hope that I contributed to making these concepts a bit clearer now. You may hear them every day and have them mentioned in different contexts, it is good that you make yourself familiar with the meaning and when do you need to use the right concept from current or future context. When you have different opinions, it is better to agree on the common definitions to facilitate communication and ensure understanding of your ideas.
This is the end of this article but not the end of the list, there are lots of concepts or buzzwords that I will mention in a follow-up article, for example, NFT, Web 3.0, the art of possible, the future ambition, core, customer journey, rainmaker, though leadership, gamification, and many others that used differently.
Cite this article as: , (June 27, 2022). “8 Foundational Concepts you should know in the Digital World,” in Mohamed Sami — Personal blog. Retrieved June 27, 2022, from https://melsatar.blog/2022/06/27/8-foundational-concepts-you-should-know-in-the-digital-world/.
Originally published at Mohamed Sami.
