![]()
PART 1: Business Models
Prepared by The Open Group Architecture Forum
![]()
1 Introduction
This TOGAF® Series Guide to Business Models provides a basis for Enterprise Architects to understand and utilize business models, which describe the rationale of how an organization creates, delivers, and captures value.1 Business models provide a powerful construct to help focus and align an organization around its strategic vision and execution. In this Guide we cover different forms of business models and approaches to modeling, from the conceptual down to a practical example.
There is a direct relationship between the business innovation captured in these models and the approach to implementing that innovation through Enterprise Architecture. We explore that relation through Business Architecture methods such as value streams and business capabilities, then provide a specific example based on a generic retail company undertaking a Digital Transformation. An appendix delves deeper into the structure of one of the most commonly used business model frameworks for architects interested in working with business leaders to execute their strategy.
1.1 Overview
The world’s top C-suite leaders know that the effective management and exploitation of information is a key factor for business success, and is critical to developing and maintaining competitive advantage. An Enterprise Architecture supports this objective by providing a strategic context for the evolution of technologies in response to the constantly changing needs of the business environment.
As stated in the TOGAF Standard – Introduction and Core Concepts, a key goal of Enterprise Architecture is to create or enable the alignment of the business operations with the overall business direction (vision and strategy). Furthermore:
“… a good Enterprise Architecture enables you to achieve the right balance between business transformation and continuous operational efficiency. It allows individual business units to innovate safely in their pursuit of evolving business goals and competitive advantage. At the same time, the Enterprise Architecture enables the needs of the organization to be met with an integrated strategy which permits the closest possible synergies across the enterprise and beyond.”
To achieve this alignment, the architect must develop a fundamental understanding of the core elements that make up a business and how they relate to the ways in which it creates, captures, and delivers value. However, it is not always clear what the business direction is, or how the business intends to create, capture, and deliver value to customers and stakeholders. If we don’t fully understand what a business does or what it intends to do; why it exists; or how it works to produce something of value to stakeholders (while making money in the process), then how can architects devise an appropriate target-state environment that realizes the business objectives?
One effective way to achieve alignment between an organization’s strategic objectives and the target-state architecture is to employ the concept of the business model. Business model artifacts are used to:
• Provide a common understanding of what the organization is, or looks like, today
• Portray what it intends to become in the future
• Create a critical link between the business strategy and the required blueprints of the Enterprise Architecture that define what the business needs to transform to, along with the plans that describe how to do it
The rest of this Guide describes what business models are and how business model artifacts are constructed; their purpose and benefits; how to use modeling frameworks to create a business model artifact and perform business model innovation; and where to apply them within the realms of Enterprise Architecture and the TOGAF Architecture Development Method (ADM).
1.2 Objectives
The objectives of this Guide are to:
• Familiarize architects with the concept and purpose of business models
• Illustrate the concept and purpose by looking in some detail at one particular technique for creating and leveraging business model artifacts: the Business Model Canvas™
• Explain how business models relate to and influence the TOGAF ADM
The goal is for practitioners to be able to use business models to frame, scope, and define the boundaries of their architecture work, particularly in relation to creating current and target states for the Phase B: Business Architecture part of the ADM process. A key practice we apply to help achieve this goal is to follow Business Architecture principles from the best practices in the Business Architecture Guild®, such as the Guild White Paper that provided the basis for this Guide.2
![]()
2 What is a Business Model?
A business model describes the rationale for how an organization creates, delivers, and captures value. This may refer only to an abstract concept that may exist in a leader’s mind. Or it may be more concrete, whereby business model artifacts provide specific views of an instance of a business model, defining the structural elements of the business model as well as the relationships between each element.
Business models can be represented in different ways. The three-element framework shown in Figure 1 describes the structure of a business model in its most abstract form.
(Source: The Business Model Innovation Factory, Saul Kaplan, 2012)
Figure 1: Abstract View of a Business Model
Other well-known framework examples include the Four-Box Framework (Figure 2) and the Business Model Cube (Figure 3).
(Source: Seizing the White Space, Mark W. Johnson, 2010)
Figure 2: Four-Box Framework
(Source: The Business Model Cube, Peter Lindgren, Ole Horn Rasmussen, 2013)
Figure 3: Business Model Cube
The theoretical arguments supporting different representations of business models have been in play for many years, yet it was Alexander Osterwalder and Yves Pigneur’s simple-to-use methods and tools described in their book Business Model Generation that popularized the Business Model Canvas (see Figure 4) and established it as the baseline for business model innovation. We use this form to show business model alignment between strategy and Business Architecture, followed by a deeper look in Appendix A. Note this type of business model has been introduced in earlier work of The Open Group through the IT4IT Forum.3
(Source: Business Model Generation, Alexander Osterwalder, Yves Pigneur, 2010)
Figure 4: The Business Model Canvas
![]()
3 The Impact and Benefit of Business Models
Business and IT leaders can obtain powerful leverage using business model artifacts in conjunction with other strategic planning artifacts, Business Architecture views, and organizational change methods to accelerate strategic execution and alignment. Business model artifacts highlight the critical relationships between the various elements that constitute a business in ways that:
• Are not fully covered by other approaches or techniques and, therefore, contribute to a more complete examination of costs, revenues, and other business perspectives
• Are covered by other approaches or techniques – but through a different method or viewpoint – in which case business modeling helps cross-check other points of information and assu...
