CHAPTER TWO

1. Dr. Rami Gharaibeh CHAPTER TWO MODELING FUNDAMENTALS

2. Dr. Rami Gharaibeh CHAPTER TWO Model Fundamentals Every model we have ever created is wrong, as is every model you will ever build.

3. Dr. Rami Gharaibeh CHAPTER TWO Model Fundamentals Being wrong is part of the nature of a model. The world that we model is much richer, much more complex, and much stranger than the models that we build of it.

4. Dr. Rami Gharaibeh CHAPTER TWO Model Fundamentals statistician George Box said it best: “All models are wrong. Some models are useful.” Sometimes people discuss whether a model is right or wrong, but that discussion is pointless since all models are wrong. Instead people should discuss whether the model is useful.

5. Dr. Rami Gharaibeh CHAPTER TWO Model Fidelity The fidelity of a model is a measure of how closely the model approximates the real world. Fidelity is an inverse measure of wrongness: a high-fidelity model is less wrong than a low-fidelity model.

6. Dr. Rami Gharaibeh CHAPTER TWO Model Fidelity Fidelity is all about shades of gray. A model can be a sort of accurate reflection of reality (for its purpose), and another higher-fidelity model can be more accurate.

7. Higher-fidelity models But higher-fidelity is sometimes worse thanlower-fidelity. Higher-fidelity models take longer for people to understand all the extradetail. They are more expensive to build because extra detail must be created andextra time spent to check that the model is right. As the world changes, models must be maintained, to keep them up-to-date with the world they model. Higher-fidelity models are more expensive to maintain: there ismore detail thatmust be kept aligned with the changing world.

8. Dr. Rami Gharaibeh CHAPTER TWO Model Validity( org chart example reporting relationship ) A model is valid if it meets all the constraints, and it is invalid otherwise. Validity is a property of the model itself. Does the model meet the constraints? Then it is a valid model. All models have these two qualities: validity and fidelity. Validity is true or false. Either a model meets the constraints or it doesn’t. There is no middle ground. Validity is very different from fidelity in this respect. Fidelity is all about shades of gray. A model can be a sort of accurate reflection of reality (for its purpose), and another higher-fidelity model can be more accurate

9. Dr. Rami Gharaibeh CHAPTER TWO Classical business models • 1.organizational chart • The org chart focuses on the employees and the reporting relationships.The org chart he shows is a kind of business model, a model of his business. It is certainly a simple representation; you can understand it all in a few minutes.

10. Dr. Rami Gharaibeh CHAPTER TWO Organizational chart

11. Dr. Rami Gharaibeh CHAPTER TWO Classical business models • 2.Balance sheet • The financial statements focus on how much money the restaurants are earning and what financial assets and liabilities they have. The two business models serve different purposes, and they are complementary.

12. Dr. Rami Gharaibeh CHAPTER TWO Balance sheet

13. Classical business models • Financial statements and org charts are classic business models.

14. Dr. Rami Gharaibeh CHAPTER TWO Four new model disciplines Recently four newer business models have become important, models that complement the classic models. Instead the four new models focus on some different parts of the complex reality of business. These new models open up some new views of business —new views for new purposes.

15. Dr. Rami Gharaibeh CHAPTER TWO Four new model disciplines The four new models are business motivation models, business organization models, business process models, and business rule models. Each of these four kinds of models is a model discipline.

16. Dr. Rami Gharaibeh CHAPTER TWO Four new model disciplines A model discipline includes a set of constraints for determining whether a model is valid. The constraints are different from one model discipline to another.

17. Dr. Rami Gharaibeh CHAPTER TWO Four new model disciplines Each model discipline has a different focus, different questions that it can answer, and different analyses that it supports. When modeling a business, you usually build models in several different model disciplines, to look at the business from different angles.

18. Dr. Rami Gharaibeh CHAPTER TWO Four new model disciplines The four model disciplines also complement the classic accounting and organizational disciplines. If you wait long enough, everything important eventually shows up in the accounting, but sometimes not until it is too late to fix.

19. Dr. Rami Gharaibeh CHAPTER TWO Four new model disciplines example a restaurant can have good books this year but be slow to seat and serve guests. This will lead to customer dissatisfaction and lower demand. Accounting will show this next year, as the revenues decline. A business process model of how people are seated and served will illuminate the problem today.

20. Dr. Rami Gharaibeh CHAPTER TWO Four new model disciplines example a restaurant can have good books this year but be slow to seat and serve guests. This will lead to customer dissatisfaction and lower demand. Accounting will show this next year, as the revenues decline. A business process model of how people are seated and served will illuminate the problem today.

21. Dr. Rami Gharaibeh CHAPTER TWO model discipline maturity Accounting is mature, with a long history and hundreds of thousands of professional practitioners around the world, accountants who focus their efforts on creating and interpreting accounting models.

22. Dr. Rami Gharaibeh CHAPTER TWO model discipline maturity Business process modeling is not mature enough yet. Until then, we must content ourselves with degrees of fidelity, without any professional consensus about how much fidelity is enough. Until consensus is achieved we must rely on our own judgments. **Generally Accepted Accounting Principles (GAAP), a framework for how to create accounting models for different real-world situations. GAAP is a standard for accounting fidelity, for judging when an accounting model is an accurate enough reflection of the company modeled. No such business process GAAP exists. Business process modeling is not mature enough yet.

23. Dr. Rami Gharaibeh CHAPTER TWO model usefullnessWRONG BUT USEFUL “All models are wrong. Some models are useful.” To be useful, a model must have enough fidelity for the intended purpose. But fidelity alone is not sufficient. Models are read and interpreted by people, sometimes by the same people who built the model, and usually by others as well. An overly large model is not useful; it cannot be comprehended, and so the purpose of the model will not be achieved.

24. Dr. Rami Gharaibeh CHAPTER TWO model usefullness The following diagram shows strategy alternatives for Adelina restaurant and the consequences of the different alternatives. There are 14 model elements in and 18 associations among these model elements. If a model is too big and complex to be understood, it will be ignored.

25. Dr. Rami Gharaibeh CHAPTER TWO model usefullness

26. Dr. Rami Gharaibeh CHAPTER TWO model usefullness Beginning modelers often build models that are too big and too complex; they often ignore the limits of human comprehension. If a model is too big to be understood, it will be ignored. If you hope to train some people with the model, they will fail to learn what you are teaching. If the model is to be analyzed to transform your business, the analysts will ignore the model and rely on their own judgments and biases. If the model is to serve as requirements for software development or implementation, the resulting systems will not match the business need. An overly large model is a bad model: It cannot be comprehended,

27. Dr. Rami Gharaibeh CHAPTER TWO model usefullness How big is too big? A useful rule of thumb is that a model should have no more than nine elements. Nine is about how many things a typical person can keep in her head on a good day. Beyond nine, people often get confused. And if the model you built confuses the people who read it, the fault is yours, not theirs. Your model is not easy to understand.

28. Dr. Rami Gharaibeh CHAPTER TWO model attractiveness Attractive models are easier to understand and more readily accepted than ugly models. Attractive models are therefore more useful.

29. Dr. Rami Gharaibeh CHAPTER TWO model attractiveness The following example shows the activities performed by a server, a bartender, and a cook in taking drink and dinner orders in a restaurant, preparing them, and serving them. This is a valid business process model, and it is simple enough, but it is ugly.

30. Dr. Rami Gharaibeh CHAPTER TWO model attractiveness

31. Dr. Rami Gharaibeh CHAPTER TWO model attractiveness the following example shows the same business process model after a makeover; it has the same modeling elements and flows, but they are arranged in a manner that is visually appealing.

32. Dr. Rami Gharaibeh CHAPTER TWO model attractiveness

33. Dr. Rami Gharaibeh CHAPTER TWO model attractiveness The unconscious emotional response to an attractive model has another effect: It makes the model more persuasive. As described in Chapter 1, models are not just used for communication. They are also used for persuasion. attractive models are much easier for people to understand and accept than ugly models.’ Attractive models are therefore more useful

34. Dr. Rami Gharaibeh CHAPTER TWO Modeling tools Some models use special-purpose modeling tools that exist just for creating business models. Other modelers use general-purpose diagram drawing tools (such as Microsoft Visio™) that are used both for creating business models and for many other diagramming uses. Both provide functionality to make models attractive: fonts, colors, and model element layout.

35. Dr. Rami Gharaibeh CHAPTER TWO Modeling tools Visio offers no special support for recording the typical duration of an activity or for noting the sub-process behind an activity. Visio understands the activity as a rectangle in a drawing, not as an activity in a business process. The special-purpose modeling tools are better for business modeling. These tools understand business activities as activities, not as rectangles.

36. Dr. Rami Gharaibeh CHAPTER TWO Modeling tools Special-purpose modeling tools also make it easier to build valid models. Many tools support business process simulation, allowing you to experiment with prospective business processes to see what happens. Some tools support direct execution in a business process engine, allowing you to turn your business process model into executable workflow. HW#.1 googel it for 3 modeling tool products ?

37. Modeling tools Some of the existing tools support a single modeling discipline. For example, there are numerous tools that support only business process modeling and not the other three disciplines. Some tools support multiple disciplines. These discipline-crossers have the right primitives to create models from two business model disciplines, three disciplines, or even all four, allowing you to create a business process model, a business motivation model, a business organization model, and a business rule model. Most of the tools check for model validity. Validity checking can be done by highlighting invalid parts of a model either as it is built or as a command that can be run to find all the invalid parts. Some modeling tools actually prevent modelers from creating invalid models at all.

38. Dr. Rami Gharaibeh CHAPTER TWO Application interface and publication Business modelers work with a modeling tool to create models and analyze the models they create. But every model built by a modeler will be consumed by others, probably a great many others: business analysts who analyze the models, managers who use the models to make decisions, and trainees who read the models to understand the business. These consumers of business models do not have any modeling tools loaded on their desktops, and even if a tool is installed, they do not know how to use it.. to make models accessible to this wider audience, many of the business modeling tools have publication functionality. A model can be published to a variety of accessible formats: HTML, PDF, Microsoft Word

39. Dr. Rami Gharaibeh CHAPTER TWO Simulation Sometimes it is difficult to understand the implications of a business model, particularly complex business models and models that have many interacting elements. Simulationis a technique for running a model to get a deeper understanding. Many business modeling tools support simulation. A model that simulates is more useful than one that does not.

40. Dr. Rami Gharaibeh CHAPTER TWO Simulation what is simulation, really? First, simulations are based on models. Within SimCity is a model of a city: houses, neighborhoods, roads, rail, parks, and malls and the

41. Dr. Rami Gharaibeh CHAPTER TWO Simulation First, simulations are based on models. Within SimCity is a model of a city: houses, neighborhoods, roads, rail, parks, and malls and the interactions of people who live in those houses, travel on those roads and trains, play in those parks, and shop in those malls.

42. Dr. Rami Gharaibeh CHAPTER TWO Simulation Second, a simulation shows how a model behaves over time. Things happen in SimCity over time: houses are built, existing roads become congested, crimes are committed, and neighborhoods improve or slide in disrepute. These changes are not scripted; the decline of a neighborhood in SimCity is not preordained by the application. Rather, things happen the way they do because of the gradual interaction of all the elements of the city model over time.

43. Dr. Rami Gharaibeh CHAPTER TWO Simulation Some business simulations are also playable, like SimCity. But most business simulations are not playable. They are simulated purely for understanding behavioral results of a new process or strategic environment. Simulation becomes another method of analysis. Usually many different simulation runs will be made of a non-playable simulation, to explore a space of possibilities, and the results will be summarized in graphs or statistics.

44. Dr. Rami Gharaibeh CHAPTER TWO Simulation For example, you might create a business process model of how Portia customers experience the restaurant. A customer arrives, perhaps waits for a table, is seated, orders a meal, pays, and departs. Of course, the customer’s quality of experience will be affected by the food, but it will also be affected by delays and customer service. Simulating the process model will reveal where delays are present and allow us to experiment with alternative techniques—more servers, fewer reservations, etc.— to reduce those delays.

45. Dr. Rami Gharaibeh CHAPTER TWO Simulation No one is playing this Portia simulation. Rather, this non-playable simulation allows us to better analyze and understand the process.

46. Dr. Rami Gharaibeh CHAPTER TWO Traceability In examining a model, it’s always useful to ask about the purpose of individual model elements. Why do we enforce this rule? Why do we perform this business process task? The answers to the questions of purpose are usually model elements in other models. We enforce this rule because of a particular strategy we are working.

47. Dr. Rami Gharaibeh CHAPTER TWO Traceability Traceability is connecting model elements between models, explaining a model element in one model by referring to a model element in another. Traceability answers “why” questions—questions about rationale, purpose, and intent. Some business modeling tools support traceability.

48. Dr. Rami Gharaibeh CHAPTER TWO Traceability At fast-food restaurants, takeout restaurants, and many other places, food and beverages are ordered together. Why do the servers at our restaurant work first on the drinks and only then on the food?

49. Dr. Rami Gharaibeh CHAPTER TWO model attractiveness

50. Dr. Rami Gharaibeh CHAPTER TWO Traceability One reason is that customers will drink more if they are served drinks first, and drinks are high-margin items for the restaurant. Another reason is that at more sophisticated restaurants, taking the drink order and dinner order at the same time is considered to be rushing the customer and is inconsistent with a high-end image.