1. Modeling and Simulation of Business
Dr. Rami Gharaibeh
1

2. Understanding Reality
PREFACE
2

3. Understanding Reality
PREFACE
3

4. Understanding Reality
PREFACE
4

5. Understanding Reality
PREFACE
5

6. Understanding Reality
wrong understanding of reality leads to wrong
expectations
PREFACE
6

7. Understanding Reality
PREFACE
7

8. What is a business model?
A business model is a simple representation of
the complex reality of a particular organization.
Business models are useful for understanding
how a business is organized, who interacts
with whom, what goals and strategies are
being pursued, what work the business
performs, and how it performs that work.
PREFACE
8

9. Business Modeling
We need to learn how to create a business
model that represents the reality of a business.
PREFACE
9

10. Business Modeling Vs. Software Modeling
A software model is a model of software
applications and databases and other
information technology artifacts.
PREFACE
10

11. Business Modeling Vs. Software Modeling
A business model is a model of a business, a
model of what people do and how they
interact.
Dr. Rami Gharaibeh
PREFACE
11

12. Business Modeling Vs. Software Modeling
in both cases we are modeling the actions and
interactions among several elements.
• Different elements
• Different techniques
• Different tools
Dr. Rami Gharaibeh
PREFACE
12

13. Business Modeling
Creating a good business model is a complex
skill, and like any complex skill, it requires
time, knowledge, practice, and patience to
learn.
Dr. Rami Gharaibeh
PREFACE
13

14. Modeling Disciplines
Four distinct business modeling disciplines
• Business process models
• Business motivation models
• Business organization models
• Business rule models
Dr. Rami Gharaibeh
PREFACE
14

15. Modeling Disciplines
Business process models
capture how a business performs its work, the
step-by-step activities that are performed.
Dr. Rami Gharaibeh
PREFACE
15

16. Modeling Disciplines
Business motivation models
Capture the goals and strategies of a
business. what a business is attempting to do
and how those attempts fit into its changing
environment.
Dr. Rami Gharaibeh
PREFACE
16

17. Modeling Disciplines
Business organization models
capture who performs the work in an
organization and who they interact with, both
inside the organization and outside.
Dr. Rami Gharaibeh
PREFACE
17

18. Modeling Disciplines
business rule models
capture the constraints on a business the
external constraints from regulations and laws,
and the internal constraints from policies,
rules, and other guidance.
Dr. Rami Gharaibeh
PREFACE
18

19. Integrating the four disciplines
To be more effective, business modelers need
to understand all four disciplines.
They need to create models that include
multiple disciplines.
Dr. Rami Gharaibeh
PREFACE
19

20. Integrating the four disciplines
A business process is useful, but it is more
useful when accompanied by details about the
goals of the business, the organizations that
participate in the process, and the rules and
policies that guide the process.
Dr. Rami Gharaibeh
PREFACE
20

21. Integrating the four disciplines
The four disciplines represent four dimensions
that should be reflected in the model:
What is the process, how does it serve my
goals, who should do what, what rules govern
the people while implementing the process
Dr. Rami Gharaibeh
PREFACE
21

22. Integrating the four disciplines
example
any hospital includes the business process of
emergency admission. To completely model this
business process the BPM will model all activities:
• taking patient information
• Patient examination
• Patient referral to labs and ray
• Ray imaging
• Ray image reporting
Dr. Rami Gharaibeh
PREFACE
22

23. Integrating the four disciplines
example
any hospital includes the business process of
emergency admission. To completely model this
business process the BMM will show the link with the
hospital goals :
• taking patient information
• Patient examination
• Patient referral to labs and ray
• Ray imaging
• Ray image reporting
Dr. Rami Gharaibeh
PREFACE
23

24. Integrating the four disciplines
example
any hospital includes the business process of
emergency admission. To completely model this
business process the BOM will link each activity with
the department that should perform it :
• taking patient information (emergency nurse)
• Patient examination (emergency physician)
• Patient referral to labs and ray (emergency physician)
• Ray imaging (ray imaging technician)
• Ray image reporting (ray image physician)
Dr. Rami Gharaibeh
PREFACE
24

25. Integrating the four disciplines
example
any hospital includes the business process of
emergency admission. To completely model this
business process the BRM will show the laws, policies,
procedures and rules in performing each activity:
• taking patient information (privacy rules)
• Patient examination (clinical procedures)
• Patient referral to labs and ray tests (referral
procedures)
• Ray imaging (safety policies)
• Ray image reporting (privacy + timing policies)
Dr. Rami Gharaibeh
PREFACE
25

26. Modeling standards
Standards are important in business modeling. A
model created by one group of people should be
understandable by others.
Others should be able to update the model when
business circumstances change. Models created in
one modeling tool should be readable and changeable
by other tools.
Dr. Rami Gharaibeh
PREFACE
26

27. CHAPTER ONE
WHY BUSINESS MODELING
Dr. Rami Gharaibeh
27

28. Answer two questions
what is a business model?
why create one?
CHAPTER ONE
Dr. Rami Gharaibeh
28

29. what is a business model?
A business model is a simple representation of the
complex reality of a business.
Dr. Rami Gharaibeh
CHAPTER ONE
29

30. ALERT
By business model we do not mean “how the company
makes money”.
we mean a model that describes the details of a
business: its goals, organizations, business processes,
or business rules.
Dr. Rami Gharaibeh
CHAPTER ONE
30

31. what is a business model?
example
Any city has a complex reality that includes locations of
places, thousands of roads, thousands of pipe routes,
thousands of cable routes, etc.
Dr. Rami Gharaibeh
CHAPTER ONE
31

32. what is a business model?
example
to be able to deal with the complexity of a city, we make maps.
Maps of roads and locations. Maps for electrical cable. Maps
for water pipes, etc.
Each of these maps is considered a model. The model will
help us make good decisions on how to go to places, or where
to dig to find the electrical cable or water pipe.
Dr. Rami Gharaibeh
CHAPTER ONE
32

33. what is a business model?
Businesses have complex reality. To be able to
manage this reality and solve business problems, we
need to create business models.
Dr. Rami Gharaibeh
CHAPTER ONE
33

34. The rise of business modeling
Businesspeople are increasingly using models to
communicate. Over the last fifteen years, increasing
numbers of people have built business models: models
of the business processes of their organization, the
goals and strategies, or the policies and rules.
Dr. Rami Gharaibeh
CHAPTER ONE
34

35. The rise of business modeling
What’s driving the growth of business modeling?
1
IT organizations are using business models to
align IT initiatives with business needs.
Dr. Rami Gharaibeh
CHAPTER ONE
35

36. The rise of business modeling
What’s driving the growth of business modeling?
2
Models help with the implementation of
change.
If nothing changes, you don’t need models,
just as you don’t need a street map if you
never travel anywhere.
Dr. Rami Gharaibeh
CHAPTER ONE
36

37. The rise of business modeling
What’s driving the growth of business modeling?
3
the need to manage increasing complexity.
Complexity is the key problem in business
today. Decisions are harder now because
there is more to consider.
Dr. Rami Gharaibeh
CHAPTER ONE
37

38. The rise of business modeling
What’s driving the growth of business modeling?
3
Businesses have become more complex.
Twenty years ago, businesses were easier to
understand. There were fewer business
processes, fewer products and services, less
data stored in databases, fewer business
partners, and fewer lines of business.
Dr. Rami Gharaibeh
CHAPTER ONE
38

39. Business value of business models
Dr. Rami Gharaibeh
CHAPTER ONE
•Communication between people
•Training and learning
•Persuasion and selling
•Analysis of a business situation
•Compliance management
•Development of software requirements
•Knowledge management and reuse
39

40. Business value of business models
Dr. Rami Gharaibeh
CHAPTER ONE
Communication between people
Business is a communication-intensive activity.
Business people give presentations about company
performance. Business people talk to their clients and
their suppliers about new products and services.
Business colleagues talk to each other about the
changing competitive environment. Much of business
is communication.
Business models are better for conveying complex
business information.
40

41. Business value of business models
Dr. Rami Gharaibeh
CHAPTER ONE
Training and learning
People learn in two ways. They learn from their own experience,
via trial and error, and they learn from other people’s experiences,
via conversations, books, or classroom material. Learning from
other people’s experiences is of course cheaper, faster, and less
risky. We allow others to make mistakes instead of making our
own. Business models are one way of learning from other
people’s experience. First, a model is built of the expert’s
knowledge of the business rules or the business process. Then
many novices can study the model to learn what the expert
knows.
41

42. Business value of business models
Dr. Rami Gharaibeh
CHAPTER ONE
Persuasion and selling
In business, persuasion is ubiquitous. When we sell a
customer on a product, we are persuading. When we
pitch a new initiative to our management, we are
persuading. When we convince employees to embrace
a business process change, we are persuading.
Persuasion is communication, of course, but it is
communication in service of a goal: convincing
someone to take action favorable to us, to our
organization, or to themselves. Business models are
useful for persuasion.
42

43. Business value of business models
Dr. Rami Gharaibeh
CHAPTER ONE
Analysis
insight is power. Analyzing a business model is particularly useful
when you have a decision to make. The different alternative
scenarios can be modeled and the models then analyzed and
compared. For example, you may compare different business
process scenarios to see which is the lowest cost. That low-cost
scenario can be compared to today’s business process so that
you can understand what activities need to change, what new
activities need to be performed, what activities should be
automated, and what skills you will need to learn.
43

44. Business value of business models
Dr. Rami Gharaibeh
CHAPTER ONE
Compliance management
Businesses must comply with law, government regulations, and
other guidance. They must comply with terms of contractual
agreements with their lenders, suppliers, and customers.
Corporate employees must comply with corporate policies.
Compliance often impacts financial results. Sometimes the impact
is larger than money; noncompliance can lead to jail. A business
needs to design processes to ensure compliance. And when
regulations change, it needs to understand the impact of the new
regulations on its business.
44

45. Business value of business models
Dr. Rami Gharaibeh
CHAPTER ONE
Requirements for software development
Requirements provide a description of what a proposed software
application should do. Without detailed requirements, application
development projects fail. Business models capture this detail in a
way that is understandable to both the business users and the
software developers. Business users do not need to understand
how the system will be created; they need to understand how it
will support their need. Business models are a better form of
requirements for end users.
45

46. Business value of business models
Dr. Rami Gharaibeh
CHAPTER ONE
Knowledge management
Knowledge management is the practice of systematically
capturing knowledge from some people in an organization so that
the knowledge can be used by others elsewhere in the
organization. But knowledge management practices today
capture only half the relevant knowledge. Typical knowledge
management practices capture the explicit knowledge found in
existing documents but not the tacit knowledge found in people’s
heads. Tacit knowledge includes what people do and how they do
it. Tacit knowledge includes when each document is used and
why.
46

47. CASE STUDY
Dr. Rami Gharaibeh
CHAPTER ONE
an implementation of an ERP system
47