IMMTM

INTEGRATED MODELLING METHOD Function Modelling
John Owens
The development of IMM™has brought Business Modelling into the 21st Century

A business mo del l ing method for pr ofessi on al ana l ysts and business per sonnel a l i ke.

Copyright © John Owens 2009 All Rights Reserved

Copyright © John Owens 2009
No part of this document may be reproduced, photocopied, stored for retrieval by electronic means or made available to (or transferred to) any third party without the express written permission of the author

Trademarks
The term IMM™ and the IMM™ Logo are both registered trademarks.

Copyright © 2009

CONTENTS
1 INTRODUCTION
1.1 1.2 1.3 IMM Elements of IMM First Things First

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2 WHAT IS A BUSINESS MODEL?
2.1 2.2 Sketch or Model? Which Model?

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3 DEFINITIONS
3.1 3.2 3.3 What is a Function? Misuse of the Term Function What is Function Modelling?

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4 4 5

4 THE STAGES OF FUNCTION MODELLING
4.1 4.2 4.3 4.4 4.5 Information Gathering Analysis and Investigation Modelling Feedback Implementation

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6 8 8 8 8

5 IDENTIFYING FUNCTIONS
5.1 5.2 5.3 Technique First Step Example

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6 MECHANISMS
6.1 6.2 6.3 Technique Examples of Mechanisms for Functions Exercise 1

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7 NAMING FUNCTIONS
7.1 7.2 Suitable Verbs Nouns in Function Names

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8 CREATING FUNCTIONS
8.1 8.2 8.3 Worked Example Removing Duplicates Exercise 2

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9 ADDITIONAL FUNCTIONS
9.1 9.2 Example Exercise 3

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10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8

FUNCTION CATALOGUE
Simple Function Hierarchy Hierarchy Definitions Hierarchy Layout The Standard Business Life Cycle Function Hierarchy Based On SBLC What order should the Functions be in? Grouping Functions Naming Grouping Functions

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10.9

Building the Function Catalogue using Grouping Functions

13 13 13 13 13 13

10.10 How Many Levels in a Hierarchy? 10.11 Tuning the Function Catalogue 10.12 More on the SBLC 10.13 Function Catalogue and Scope 10.14 Function Catalogue and Planning

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11.1 11.2

ELEMENTARY FUNCTIONS
Atomic or Elementary Example of Elementary Function

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COMMON FUNCTIONS

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FUNCTION CATALOGUE BASED ON ORGANISATION STRUCTURE 13 DEFINING FUNCTIONS
Function Objective Function Description Frequency and ‘Growth’ Data Usage Fixed Mechanisms Business Units, Locations, Job Roles Technology Function Logic Business Rules

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14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8 14.9

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13 13 13 13 13 13 13 13 13

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MODELS BASED ON THE FUNCTION CATALOGUE

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16.1 16.2 16.3 16.4 16.5

SOLUTIONS TO EXERCISES
Solution to Exercise 1 Solution to Exercise 2 Solution to Exercise 3 Solution to Exercise 4 Solution to Exercise 5

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GLOSSARY

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1

INTRODUCTION
Welcome to this book on Function Modelling. Function modelling is the foundation of the Integrated Modelling Method (IMM™) and, indeed, of all good business modelling.

1.1

IMM
The Integrated Modelling Method is an approach to business modelling, that I have developed over many years, as a means of empowering analysts and business managers alike to develop models that bring real business benefits. The method brings together the best practices in business systems modelling across a whole range of practical techniques. The purpose of IMM™ is to enable elegant, accurate, integrated models to be produced for all or part of a business quickly with accuracy and rigour and, at the same time, avoid the shortcomings and pitfalls of conventional modelling methods.

1.2

ELEME NTS OF I MM
IMM™ provides you with a full suite of totally integrated modelling techniques, each of which is designed to maximise accuracy, effectiveness and productivity when modelling a particular aspect of a business. The full suite comprises the elements: Function Modelling At the heart of IMM™ is the Function Catalogue, which is built using Function modelling, the subject covered in this book. The Function Catalogue is a unique description of the activities that a business must perform in order to meet its objectives and continue in existence. These activities are formally called Functions but commonly just “Functions”, the term we will use throughout this book. All other business models are based on the Function Catalogue. This is the technique to use when you need to model the precise order in which Functions need to be carried out in response to some triggering event in order to arrive at a predefined outcome. For example, “what steps must we take in order to sell a product to a new customer and issue their first bill?”

Process Modelling

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Data Structure Modelling

This is the technique to use in order to identify and model the data needed to support the Functions and the way in which the elements of data are related to each other and used by the Functions. This is an essential exercise to carry out before building any computer system – no matter how big or small. This is the technique to use when you need to model how information flows into, out of and around the business. This is the technique to use when you want to model how business processes ought to be implemented on a day-to-day business. Some data objects can exist in many states. This technique allows you to model these data objects and identify the Functions needed to move them from one state to the next. For example how to change be a theatre booking from “provisional” to “confirmed” to “transferred” to “cancelled” or “collected”. This technique allows you to model how business objects are related to each other, for example, Functions to business units, Functions to data objects, Functions to technology, etc.

Data Flow Modelling

Procedure Modelling

Data State Modelling

Matrix Modelling

Because each of the models in IMM™ is built using elements from the Function Catalogue, all of the models are fully interrelated, which provides a richness, rigour and consistency not offered by any other modelling method.

1.3

FI RST THI NGS FI RST
The starting point for all modelling in IMM™ is the Function Catalogue as it acts as the unique catalogue of Functions that will be used in all other models. Does this mean that you have to model all of your business and build the Function catalogue in its entirety before you can start any other models? The answer is no! Although the Function Catalogue lies at the core of IMM™, it does not have to be created in its entirety in advance of all other models. The more you can do on the Function Catalogue prior to starting other modelling the easier your task will be. But the “I” in IMM™ can be thought of as standing for “Integrated” and “Interactive”. Whatever facet of IMM™ you are using you will always be interacting with the Function Catalogue. This interaction will not be limited simply to using Functions from the catalogue in your models but also adding to and modifying it.

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WHAT IS A BUSINES S MODEL?
A business model is a means of representing some facet of a business in a way that allows that facet to be better understood, altered or improved. There are two major parts to any business model: 1) a diagram that pictorially represents the facet of the business 2) textual descriptions of each of the elements on the diagram. Both of these parts must exist for the model to be complete. A diagram on its own is not a model!

2.1

SKE TCH OR MO DEL?
Can a sketch be used as a diagram in a model? The only diagrams that can be used as a part of a formal model are those that use standard conventions and follow rigorous standards. Sketch diagrams by their nature do neither of these and so cannot be used.

STAND ARD CONVEN TION S
The term “convention” here means “a way of representing an object on the diagram”. So a “standard convention” simply means objects will be represented on diagrams in a consistent manner. For example, a step in a business process will not appear as a circle in one place, as a triangle in another place and as a fluffy cloud in yet another!

RIGOROU S STANDAR DS
Rigour is vital in modelling. In its simplest form it means “always employ the standard conventions”, but over and above that, it means to do so in a manner that is always the same. Standards will also tell you those things that can appear on a model and those that can not.

2.2

WHI CH MO DEL?
Any model can only represent a part of the item it is trying to model. If we were trying to model the human body we would need to ask “what facet of the body are we trying to represent?” and then chose the most appropriate modelling technique. If we were trying to model the bone structure then using an x-ray would be a suitable technique, but if we were trying to model the nervous system it would be less suitable.

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Similarly, in business modelling we must ask the question “what facet of the business are we trying to represent?” and then choose the most appropriate modelling technique for that facet. Using the wrong technique can give quite the wrong results, for example, using Information Flow Diagrams to map Business Processes. This is a mistake that has often been made in the past with dire commercial results for the businesses concerned. IMM™ provides modelling techniques for all facets of a business and, over and above this, enables all of the techniques to be integrated through the Function Catalogue.

3

DEFINITIONS
This section will define all of the terms you will need to know in order to identify and model Functions and successfully build the Function Catalogue. The Glossary in Section 0 contains definitions that cover all of the IMM™ modelling methods. It also has definitions for business analysis in general and some elementary systems design.

3.1

WHA T I S A FUNCTIO N?
A Function – more commonly called a Function – is a discrete activity or a coherent set of activities that a business must perform in order to meet its business objectives and continue in existence. Functions are what the business ought to be doing. Examples of Functions are: • Sell Product to Customer • Maintain Stock of Material for Manufacture of Product • Charge Customer for Product Supplied • Recruit Employees • Collect Payment from Customer

3.2

MI SUSE O F THE TE RM F UNCTI O N
The term “Function” is often incorrectly used to mean an organisation unit within a business. People will refer to the “Finance Function” when they really mean the “Finance Department”. This misuse of the term should be avoided. The term “Finance Function” is only a valid term if it is used to mean “all of the finance activities required to support the business”.

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3.3

WH A T I S FUNCTI O N MO DEL LI NG?
Function modelling is all about identifying, analysing and modelling Functions, independently of: • how they are currently done • who currently does them. • the current organisation structure

“ WHAT ” N O T “ HO W ” !
The real power of Function Modelling is realised by concentrating on what the business ought to be doing as opposed to how things are currently done. The main reason for this is that how things are done in a business can change dramatically over time (due to changes in such things as policy, technology, etc.) whereas what has to be done, by and large, remains the same. An example of this might be in the hotel industry where “Establish Client Creditworthiness” is a “what” that would have needed to be done 50 years ago and still needs to be done. But, the how it was done then and now are entirely different: The how of 50 Years Ago Has client got a title, e.g. Lord or Sir? If so, accept reservation. If not, does the client’s dress and luggage suggest he has money? If yes accept reservation, if not decline. The How of Now Swipe the client’s credit card. If accepted proceed with booking, if not reject.

“ OUGHT ” NO T “ DOE S ”
It is also a common misconception that you need to model all the things that a business currently does in order to know what the business ought to be doing. On the contrary, how a business currently operates is often as far from where the business needs to be as one could get! Many months (in large organisations, years) can be wasted in doing this. This approach also introduces many layers of unwanted complexity due to modelling current Mechanisms and procedures (how things are currently done) as opposed to what ought to be done. Always go straight to modelling what the business ought to be doing, this will enable the business to go straight there too!
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THE STAGES OF FUNCTI ON MODELLING
So let’s start with the five distinct stages of Function Modelling: • Information gathering • Analysis and investigation • Modelling • Feedback • Implementation All of these stages are detailed in the following subsections and should be followed whether you are doing modelling in an organisation with 5 employees 5,000 employees or 25,000 employees. If you are doing work in a small organisation you might think that it all seems too much! But it is not. All of the stages described should be thought of as stages of thinking that you need go through during business modelling. They do not need to take a great deal of time. If you go through these stages (in the right order and skipping none!) you will always achieve quality results and get the right answer first time, every time! I have tested IMM™ in all sizes of organisation from 5 to 30, 000 and it works – every time!

4.1

INFO RMA TIO N GA THE RIN G
This stage consists of finding identifying the key people or other sources within the business that can tell you: • What the business OUGHT to be doing. • The order in which it ought to be done. • The information required to do it. • What the business modelling project ought to achieve. • Whether or not they support the project. • Who else you ought to be interviewing.

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Information gathering can be done in three main ways: 1) Using existing documents. 2) Running strategic interviews. 3) Running modelling workshops. These methods are not mutually exclusive! In a well run business modelling project each of them will be used as appropriate.

EXISTIN G DOCU MEN TS
In order to avoid unnecessarily repeating the work previously done by other analysts or business managers the first thing you should do is to identify all relevant existing documents that will help you to build up a meaningful “picture” of the business before you go into one-to-one strategic interviews (see below). Such documents would include: • Business strategy document for the business as a whole or for that part of the business being modelled. • Previous analysis documents produced by business managers or by the Information Systems departments as part of previous systems development. • Strategy documents produced by outside consultants as part of recent work. The main reason for using existing documentation is to avoid wasting the time of busy people during one-to-one interviews; they are not to be used instead of one-to-one interviews. They allow you to go to the interview properly prepared. Using existing documents can be fraught with danger for many reasons: • The documents can be out of date, with little relevance to what the business ought to be doing now and in the future. • They can be vague. Strategy documents are all too often written in vague “mission statement” terms with the real business strategy locked in the heads of directors and senior executives. • Documents written by outside consultants can be also be vague and written in such a manner that, without having the consultant who wrote the document present to explain what they mean, could be open to several interpretations. • Analysis documents produced by the Information Systems / Computing Department are all too often written in jargon or in terms of perceived or existing system solutions as opposed to meaningful business terms.

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So, before getting too embroiled in existing documents, you should evaluate their quality and, if they pass evaluation, use them to prepare for one-to-one interviews. You must also make sure that the documents and models that you produce during this business modelling project do not end up joining the rest of the unused and unusable documents produced up until now. Using the elements of IMM™ in the way that we recommend, plus your skills as an analyst and some common sense will ensure that the likelihood of that happening is very, very low!

ONE TO ONE IN TERVIE W S
The one-to-one strategic in-depth interview is the most effective means of gathering information from senior directors and senior executives. The purpose of these interviews is to find out from these key people what their opinions are regarding the business area in question and the project itself. Such interviews will give you a feel for, provided you listen to what is said (sometimes what is unsaid), what is most important to the interviewee and, as he or she is a key member of the business, it is vital that you know this before proceeding with the project. This is the type of information that you cannot gather from documents alone. All of the knowledge you gather here will help you to formulate a forward strategy for the business modelling project. Who To Interview Effective strategic interviews with appropriate senior executives are the essence of the success of any business modelling project. The term “appropriate” means that the person: • Is knowledgeable about the business area in question. • Is a key player in that area. • Is empowered to define and implement strategy for that area. • Has a vision of the way forward. • Supports the objectives of the business modelling project

<Break in extract>

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FUNCTION CATALOGUE
In Section 4.1 we covered the information gathering stage of Function Modelling. In Sections , and we covered the Analysis Stage of business modelling. Now we come to the modelling stage itself. In a project of any size, by the end of the analysis stage we will have built up a long Consolidated Function List. Such a large list is not easy to work with and does not readily make apparent the nature and “shape” of the business being modelled. A simple, yet powerful means of modelling such a list is to give it an hierarchical structure. In IMM™ we call Functions in hierarchical form the Function Catalogue. This is a very powerful model in its own right but is also the foundation for all other models in IMM™.

10.1 SI MPLE FUNCTIO N HIE R A RCH Y
Sell Books to the General Public

Determine Which Books to Order

Order Books from Publishers

Receive Books from the Publishers

Sell Books

The above hierarchy tells us that selling books to the general public comprises four activities: • Determining which books to order • Ordering books from publishers • Receiving books from publishers • Selling the books

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10.2 HIERA RCH Y DE FI NI TIO N S
Below is a diagram defining various terms used with regard to Function hierarchies.

Root Function Atomic Function Grouping Function Parent Function Child Function

This is the Function at (paradoxically) the top of the hierarchy. It got this name because people saw hierarchies as “upside-down” trees. These are the Functions at the bottom of the hierarchy. They have no other Functions hanging below them. This is a Function in the middle of the hierarchy with Functions both above and below it. The use of Grouping Functions is described in more detail in Section 0. This is a Function with Functions beneath it. It is seen as the parent of the Functions beneath it; they are its “children”. Functions below a Grouping Function are sometimes called Child Functions; the Grouping Function being their “parent”. Every Function, apart from the root Function, is a Child Function. This is a very special type of Function described in detail in Section 0. The term “Atomic” or “Leaf” is often incorrectly used for Elementary Function.

Leaf Function This is another name for an “Atomic Function”. Elementary Function

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10.3 HIERA RCH Y L AYOUT
There are three basic ways in which a Function Catalogue can be arranged: Vertical layout, Horizontal layout or Hybrid layout.
Sell Books to the General Public

VERTICAL L AYOU T
Vertical layout is where the Child Functions are hung under each other vertically. An example of a small vertical layout is shown on the right. This layout is sometimes acceptable for small hierarchies or for parts of a larger hierarchy but is generally unworkable on a hierarchy of any significant size.
Determine Which Books to Order

Order Books from Publishers

Receive Books from the Publishers

Sell Books

HORIZON TAL L AY OU T
The Function hierarchy shown below has a “horizontal” layout. This is where the Child Functions on each level of the hierarchy are positioned alongside each other. Once again, this is fine for small hierarchies but not as good for large ones as they quickly become very wide and unwieldy.
Sell Books to the General Public

Determine Which Books to Order

Order Books from Publishers

Receive Books from the Publishers

Sell Books

Scan Best Selling List by Author

Scan Best Selling List by Title

Establish Family Favourites

Accept Delivery of Books

Stock Shelves with Books

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Sell Books to the General Public

HY BRID LAYOU T
A better layout for hierarchies, and the standard in IMM™, is the “hybrid” layout. It is a combination of vertical and horizontal layouts and is shown on the right.

Determine Which Books to Order

Order Books from Publishers

Receive Books from the Publishers

Sell Books

Scan Best Selling List by Author

Accept Delivery of Books

Scan Best Selling List by Title

Stock Shelves with Books

Establish Family Favourites

In the Hybrid Layout, if the Functions on a leg of a hierarchy have no Child Functions then they are drawn vertically, one under the other. If any of the Functions have children then the leg is drawn horizontally, with the Child Functions drawn vertically below – as long as they do not have children, otherwise they are drawn horizontally, and so on.

10.4 THE STA NDA RD BUSI NE S S LI FE CYCLE
The Standard Business Life Cycle (SBLC) says that in order to operate properly, effectively and efficiently a business should first plan what it is going to do. It must then perform what it has planned. Finally, it must monitor what it has done against the plan, re-planning if necessary to take account of variances from the plan. So all Functions in a business can be grouped under the headings of: Plan Perform Monitor Define what needs to be done, when it needs to be done, how it ought to be done and the resources needed to do. Do what was planned using the defined resources and the method prescribed by the plan.

Check that what was done is what was planned and if not take appropriate action. This represents the Standard Business Life Cycle, which can be drawn as in the diagram below.

PLAN

PERFORM

MONITOR

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10.5 FUNCTI O N HIE RA RCH Y B A SE D O N SBL C
The Standard Business Life Cycle is a powerful starting point for building a Function Catalogue.
Manufacture Parts for the Motor Industry

Plan the Manufacture of Parts

Perform the Manufacture of Parts

Monitor the Manufacture of Parts

The “root” Function, the one at the very top of the hierarchy, will be a short, succinct statement of the overall business objective for the business area. Immediately under that will come Plan, Perform and Monitor from the Standard Business Life Cycle as shown below. The rest of the hierarchy is built by adding the Functions from the Consolidated Function List to this hierarchy. Those Functions that are “planning” in nature go under the “Plan” leg. Those that are “monitoring” or “analysis” in nature go under the “Monitor” leg. Those that are not “planning”, “monitoring” or “analysis”, i.e. are “doing” Functions go under the “Perform” leg. After all the Functions have been added to the hierarchy, full descriptions (see Section 0) should be given to the Atomic Functions, i.e. those Functions at the bottom of the hierarchy that have no “Child” Functions beneath them.

10.6 WHA T O RDER SHO UL D THE FUNCTIO NS BE I N?
The order in which Functions are listed on a Function Catalogue is the order in which one would normally expect them to be executed under normal circumstances. However, some of the Functions on the Function Catalogue may not be performed all of the time and, even if they are, they may not always be performed in the same order. If it is important to know and model the precise order in which Functions are executed under particular conditions then you will need to build a Process Model. How to do this is described in details in my book IMM Process Modelling available from our on-line store at www.integratedmodelling.co.nz
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