Component Business Model (CBM)
Component Business Model (CBM) is a technique developed by IBM to model and analyze an enterprise. It is a logical representation or map of business components or "building blocks" and can be depicted on a single page. It can be used to analyze the alignment of enterprise strategy with the organization's capabilities and investments, identify redundant or overlapping business capabilities, analyze sourcing options for the different components (buy or build), prioritize transformation options, and can be used to create a unified roadmap after mergers or acquisitions. The model is organized as business components along columns and "operational levels" along rows. The Business components are defined partly as large business areas with characteristic skills, IT capabilities, and processes. The three operational levels are "Direct", "Control" and "Execute" - they separate strategic decisions (Direct), management checks (Control), and business actions (Execute) on business competencies.
A Business Component is a logical view of part of an enterprise. It has discrete boundaries, defined by the business services that it offers and the business services it uses. It includes the resources, people, technology, and know-how necessary to deliver some value and is a ‘black box’ in the sense that the users don’t need to see the business activities that are inside. The Business Component can have attributes, such as cost, revenue, and importance to the business. Business services are goods or services that a business component offers to other business components and possibly to external parties.
CBM is not simply a way to imagine the future of the organization. It can also be used to put theory into action and drive the evolution toward a specialized enterprise, both internally and externally. This process involves three dimensions: one, developing a component view of the existing organization based on analysis of the business and the market environment; two, evolving toward specialization based on a reinvention plan within the context of changing industry dynamics; and three, advancing the organizational and operational infrastructure toward component-based enterprise optimization.
The key concepts of CBM are business components and accountability level:
- Business components are the essential and unique non-overlapping building blocks that make up the business and mission of an enterprise. They have the potential to operate independently, in the extreme as a separate unit, shared service, contractor-managed, or outsourced component.
- The accountability level characterizes the scope and intent of activity and decision-making at three levels:
- Directing is about strategy, overall direction, and policy.
- Controlling is about monitoring, managing exceptions, and tactical decision-making.
- Executing is about doing the work.