Filip Stachecki: /* Business Policy vs. Business Rule⌘ */

2015-12-08T17:44:04Z

Business Policy vs. Business Rule⌘

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[[Category:OCEB2]]
==Module 1. Intermediate Business Motivational Modeling⌘==
===References⌘===
* Business Motivation Model Specification, V 1.1
* John Hall, Overview of OMG Business Motivation Model: Core Concepts.
===Business Motivational Model⌘===
* The Business Motivation Model is neutral with respect to methodology.
* Organized business plans should be a fundamental deliverable.
* The Ends, Means, and Influencers are related to each other in order to answer the following two fundamental questions:
#'''What is needed to achieve what the enterprise wishes to achieve?''' This question is answered by laying out the particular elements of the business plans — in other words, the Means necessary to achieve the desired Ends.
#'''Why does each element of the business plan exist?''' This question is answered by identifying the particular Ends that each of the Means serves, and the Influencers that underlie the choices made in this regard. This is what is meant by '''motivation'''.

===BMM elements⌘===
:[[File:ClipCapIt-140801-094753.PNG]]
John Hall, Overview of OMG Business Motivation Model: Core Concepts

===Ends⌘===
Ends define what an enterprise wants to be – the states it desires to be in. There are three levels:
* '''Vision''' (optional): an easily-understood summary of what the enterprise considers itself to be, or aspires to be. All objectives and goals should support (or, at least, not contradict) the vision.
* '''Desired Results''':
** '''Goal''': an enterprise state or condition to be maintained or approached in the medium to long term, e.g. “To be one of the top three suppliers (by turnover) in our market”.
** '''Objective''': a measurable, time-targeted step towards one or more goals, e.g. “To increase year-on-year turnover by 2% in the current financial year”. Required or expected values of key performance indicators are recorded as objectives.

===Means⌘===
Means define what an enterprise has decided to do to achieve its ends. There are three kinds:
* '''Mission''' (optional): the enterprise’s primary activity. How it is carried out is defined in its courses of action.
* '''Course of Action''': defines what the enterprise will do in support of one or more of its goals. There are two kinds:
** '''Strategy''': a major part of the plan to accomplish the mission, usually long-term and with a significant impact on how the business operates
** '''Tactic''': a course of action that supports one or more strategies - narrower in scope than a strategy and may be short-term.
* '''Directive''': governs what courses of action can and should be adopted, and how they must or may be realized:
** '''Business policy''': a broad directive that needs further interpretation (in business rules) in order to be put into practice
** '''Business rule''': reference to a rule in the operational business. Business rules make business policies practicable, and guide business processes.

====Directives⌘====

*Represent encoded (i.e., written down) knowledge that ensures the highest possible chances of success for the Courses of Action
*A '''Directive''' always has to do with '''governance or guidance'''
*A CoA, in contrast, identifies an '''active approach in moving toward''' the Ends
*A CoA is always '''action-dominated (action-oriented)'''

=====BMM Directive⌘=====

*Directives indicate how the Course of Action should, or should not be carried out – in other words, they '''govern Course of Action.'''
*Specifically, a Directive defines or constrains or liberates some aspect of an enterprise.
*It is intended to assert business structure or to control or influence the behaviour of the business, and is stated in '''declarative''' form.

=====Directive Diagram⌘=====
[[File:BMMDirectiveDiagram.png|950px]]

=====“Governs” relationship⌘=====

*Directives govern Courses of Action
**e.g. the Business Rule "Pizzas may not be delivered beyond a radius of 30 miles" governs the Strategy "Deliver pizzas to the location of the customer's choice."
*This governance applies to Tactics as well
**e.g. the Tactic "Encourage rental extensions" is governed by the Business Policy "Allow extension of rentals by phone."


=====Business Policy vs. Business Rule⌘=====

*'''Business Rule''' is highly structured and is carefully expressed in terms of standard vocabulary
*'''Business Rule '''should be discrete and atomic — that is, represent only a single aspect of governance or guidance
*'''Business Rule '''is a single Directive that does not require additional interpretation.
*'''Business Policy''' tends to be less structured, less discrete, and usually not atomic — that is, not focused on a single aspect of governance or guidance
*'''Business Policy''' tends to be less compliant with standard business vocabulary, and less formally articulated

=====Business Policy vs. Business Rule⌘=====
* '''Business Rule''' is derived from business policy, '''Business Policy''' is basis for business rule.
*'''Business Policies''' provide broader '''governance or guidance''' that is '''not directly practicable.'''
*'''Business Rules''' provide specific, '''practicable governance or guidance '''to implement Business Policies
*''''Practicable'''' means that a person who understands a Business Rule could observe a relevant situation (including his or her own behaviour) and '''decide directly '''whether or not the business was '''complying''' with the rule

=====Business Rule Enforcement Level⌘=====

*A Business Rule has an enforcement level.
*Enforcement levels represent alternatives in a graded or ordered scale, each of which indicates the severity of action imposed to put or keep a rule in force
*Deciding what enforcement level is to be applied to a Business Rule is often a Tactic within business plans
*In the Model, '''Tactic effects''' enforcement level of Business Rule
======Enforcement Levels⌘======
[[File:ClipCapIt-151202-184512.PNG]]

======Enforcement Levels Examples⌘======
[[File:ClipCapIt-141212-122022.PNG]]



=====Directive as Regulation⌘=====
*Regulation is an official rule prescribed by an authority such as government body or the management of an enterprise.
*A Directive may act as some other Organization Unit's Regulation
*The Business Rules and Business Policies determined at one level in an organization may be effectively the law (Regulation) for lower-level organizations.

======Directive as Regulation Example⌘======

*''Production'' and ''sales'' divisions both have to comply with company ''policy on safety at work''
*These units in turn have to determine their own ''local policies and rules ''for their particular compliance with the 'law' (company policy) imposed from above.
*Furthermore, the rules and policies they come up with will most likely be unique; rules for safety within the production division are different from those in sales.

===Influencers on the Ends and Means⌘===

*An Influencer can be anything that has the capability to ‘produce an effect without apparent exertion of tangible force or direct exercise of command, and often without deliberate effort or intent.’
*Influencers '''are always neutral'''
*Influencers '''must be assessed''' to determine implications for business plans

====Categories of Influencers⌘====
BMM categorizes influencers for analysis of the kinds of changes and resulting assessments and decisions

It provides:
*Two broad Influencer Categories:''' External''' and '''Internal'''
*A set of '''general''' '''categories'''
It suggests that each Influencer is categorized as (at least) one of the general categories and as either internal or external

====Influencers Categories⌘====
<table border="1" cellpadding="10" cellspacing="0" width="550">

<tr bgcolor="#BDBDBD">
<td colspan="2" style="height:28px; width:366px">
'''Internal/External'''
</td>
</tr>
<tr bgcolor="#F2E0F7">
<td style="height:27px; width:168px">
external influencer
</td>
<td style="height:27px; width:198px">
internal influencer
</td>
</tr>
<tr bgcolor="#A9E2F3">
<td style="height:95px; width:168px">
competitor

customer

environment

partner

regulation

supplier

technology
</td>
<td style="height:95px; width:198px">
assumption

corporate value

habit

infrastructure

issue

management prerogative

resource
</td>
</tr>

</table>

====External Influencers⌘====
:[[File:ClipCapIt-141212-123937.PNG]]



====Internal Influencers⌘====
:[[File:ClipCapIt-141212-124008.PNG]]



===Assessments⌘===
* When an influencer causes a significant change, the enterprise makes an assessment of its impact, identifying risks and potential rewards.
* There may be multiple assessments, perhaps from different stakeholders.
* Assessments are supported by whatever business intelligence and risk analysis systems the enterprise has.
====Assessments⌘====
[[File:ClipCapIt-151202-192426.PNG]]

Concepts for Assessments of Influencers on Ends and/or Means

===Externally-referenced Business Model Elements⌘===
:[[File:ClipCapIt-140731-184902.PNG |600px]]
===Externally-referenced Business Model Elements⌘===
* Four concepts: '''Asset''', '''Organization Unit''', '''Business Process''', and '''Business Rule''' have roles in the structure of the Business Motivation Model but actually belong in other standards where they are defined

====Organization Unit⌘====
Organization Unit has two roles:
* As a concept in the Business Motivation Model it:
** defines Ends,
** establishes Means,
** makes Assessments,
** recognizes Influencers,
** may be defined by a Strategy,
** may be responsible for Business Processes.
* It is usually the basis for defining the '''boundaries of the enterprise''' being modeled. The '''decomposition''' of Business Policies, Courses of Action, and Desired Results and assignment of responsibilities within the enterprise is often guided by the definition of units within the organization structure.
=====Organization Unit diagram⌘=====
[[File:ClipCapIt-151130-230511.PNG]]

====Business Process⌘====
Business Process
* '''realizes Courses of Action''' (provide processing steps, sequences, structure, and connection to events that trigger the processes)
* is governed by Business Policies (like CoA),
* may be guided by Business Rules,
* is the responsibility of one or more Organization Units.

===How BP relate to Goal and Objective⌘===
[[File:BMMMissingRelationships.png]]


===Asset and Liability⌘===
:[[File:ClipCapIt-140801-102435.PNG]]

====Asset⌘====

*“Asset” in BMM is NOT used in the sense of accounting (economic value owned by a company that may be converted into cash)
*Assets are ‘things’ that are used in operating the enterprise
*In BMM they have an operational perspective i.e. refer to the real things in the business - the actual equipment, buildings, and stocks of materials rather monetary values in accounting
*They are represented in the Model as Assets, of two kinds:
**Fixed Assets: things that are kept long-term, maintained, reused (tangible - equipment and buildings, or intangible - patents and licenses)
**Resources: things that are consumed and replenished, such as raw materials, parts, finished goods, and cash.

====Asset and Offering⌘====

*Asset, Resource, and Fixed Asset are only placeholders – defined outside its BMM
*Only those that are relevant to governance decisions need be included.
*There is no requirement for a coherent, complete structure of Assets within a BMM
*Asset that is often explicitly referenced is the enterprise’s products and services, called “'''Offering'''” in the Model.
*An Offering is a '''specification of a product or service''' - an intangible Fixed Asset.
*Instances of Offering, such as quantities of finished goods, would be a Resource.

====Liability⌘====
* As well as Assets, enterprises also need to consider Liabilities - again, not in an accounting sense (company's obligations arising from its normal operations).
* A Liability is a reservation of Resource(s) to meet commitments, such as materials needed to fulfill a contract, or cash to pay taxes.


===Module 1. Questions⌘===
* What is the difference between Business Process and Course of Action?
* According to BMM, what is the connection between Business Process and Goal?
* List 3 internal and 3 external influencers categories.
* What are three referenced elements of business model defined externally?

OCEB2BI 01 Intermediate Business Motivational Modeling - Revision history

Filip Stachecki: /* Business Policy vs. Business Rule⌘ */