A business function is also defined as any set of activities performed by the department that is initiated by an event, transform information, materials or business commitments, and procedures an output (e.g. order fulfillment, invoicing, cash management, manufactured batch, customer response tracking, regulatory submissions, etc).
Categories of Business Functions
Business Functions can be divided into core functions and support functions.
- Core business functions are activities of an enterprise yielding income: the production of final goods or services intended for the market or for third parties. Usually the core business functions make up the primary activity of the enterprise, but they may also include other (secondary) activities if the enterprise considers these as part of its core functions.
- Support business functions are ancillary (supporting) activities carried out by the enterprise in order to permit or to facilitate the core business functions, its production activity. The outputs (results) of support business functions are not themselves intended directly for the market or for third parties. Support business functions can be further subdivided into:
- distribution and logistics: transportation activities, warehousing and order processing;
- marketing, sales and after-sales services: market research, advertising, direct marketing services (telemarketing), exhibitions, fairs and other marketing or sales services; also included are call center services and after-sales services such as help-desks and other customer support services;
- information and communication technology (ICT) services: information technology (IT) services and telecommunication (IT services including hardware and software consultancy, customized
- software data processing and database services, maintenance and repair, web-hosting, as well as other computer-related and information services, but excluding packaged software and hardware);
- administrative and management functions: legal services, accounting, book-keeping and auditing, business management and consultancy, human resources (HR) management (e.g. training and education, staff recruitment, provision of temporary personnel, payroll management as well as health and medical services), corporate financial and insurance services; also included are procurement functions.
- engineering and related technical services: engineering and related technical consultancy, technical testing, analysis and certification; also included are design services; research & development (R & D): research and experimental development.
Types of Business Functions
(illustrated in Figure 1. below)
- Internal functions are those which are part of the company.
- External functions are those which are supplied by an outside agency.
Figure 1 source: University of Kent
Basic Business Functions that Run a Business
Businesses regardless of their type (private, government, not-for-profit), size or financial position they all consist of three basic functions that run the business. Those three functions are operations, finance and marketing. Whether the business type is manufacturing, retail, hospital or others, whether the business size is small, medium or enterprise, whether the business financial position is different they all have these three basic functions (Fortlewis, 2015).
The operations function is the key function of the business, it concern about producing goods and services. Goods are something tangible (physical) which created form raw materials and parts such as motherboard that is part of the computers, as well as phone and, cars and TV. Services are something intangible (not physical) that provide some sort of psychological value or mixture of time or location value such as education and healthcare. There are so many examples of goods and services that surround our day to day life that remind us about operations function, every time we use the phone to call someone, read a book, or watch a video it remind us about operations function of one or more of firms. The aim of the business is to equalize between the supply of the materials and achieving the customer demand. Having a lot of the supply consider a waste for the firm resources and having a little of the supply might lead into customer dissatisfaction. The business through the operations function needs to manage and control the supply chains, work with sales and marketing to make sure they meet the customer demand. Although the operations function is accountable for producing goods and services, the operations function needs the help and support from other parts or function areas of the organization such as finance and marketing (Fortlewis, 2015).
The finance function of a business concern about securing the financial resources and allocating those resources to different part of the organization. Also, finance function concern about budgeting and providing the required funds to the other functions of the organization such as operations and marketing. The finance function is responsible of providing all the required materials by operations and marketing to make them able to complete the activities related to their function. Finance needs to perform so many critical tasks to make sure the success of organization such as managing the cash flows, budgeting, assets management and financial statements. Finance has a major role in success of the business, for instance in Amazon.com the company stated first making their money not from selling books only but from sales revenue short-term investment. The company utilized the time between purchasing the book to the time the actual payment happen to the seller, and use that time which was between a month or two to make a return from short-term investment (Youngfinanceguy & Fortlewis 2015). Heizer & Render (2011) commented that finance/accounting, which tracks how well the organization is doing, pays the bills, and collects the money.
The marketing function of a business concern about promoting goods and services and ensuring the availability of the customers for the business. The marketing function have so many roles, one of this role is understanding the needs and requirement of the customer and making sure that the organization’s goods and services meets the customer needs. Making the organization’s goods and services well-known in the target market as well as meeting the required standard of the target market is another role of marketing function. Also, the marketing function has to come up with a strategy to increases the awareness of the organization’s product to the community such as promoting the products during community events, advertising the products using advertising media, printing T-shits, sponsoring charity or sponsoring sport team (Youngfinanceguy & Fortlewis 2015).
Business Function Vs. Business Process
Whereas a Business Function is a major organizational unit of a business which has specific responsibilities and performs activities on a regular basis to enable the business to carry out its mission (the function refers to both the organizational unit and the types of activities it performs); a Business Process is a set of activities, which draw on one or more business functions to help carrying out the organization’s mission. The business process often cuts across organization and functional lines. It may involve multiple organizations and business functions.
In ArchiMate the difference between Business Process and Business Function. Both stand for behavior at the Business Level. Both generally encapsulate in the end the same activities. Choosing between a Business Function and a Business Process is sometimes difficult. Business Process in ArchiMate is seen as something that is directed at producing a result (service, product) and Business Function as a grouping of behavior based on resources. A direct composition of Business Functions and Business Processes as composite parts of each other would make this distinction less meaningful. So, what can be said is that the Business Process uses the Business Functions in some way (instead of both being aggregates of each other). In ArchiMate, how does a process use a function? It could be said that a Business Process can use a Business Service provided by the Business Function. But since a Business Service should be best modeled as the result of a Business Process and given that ArchiMate’s definition of Business Process (it is a process that leads to a result, not a function), it must then be asked: what process realizes the service? The answer to that would then be the internal process of the Business Function. The result is something like in Figure 2. below:
Figure 2. source: Mastering ArchiMate
Business Function Vs. Capability
The concepts of a Business Function and a Capability often tend to be blended together and often people confuse Function and Capability. Many enterprise architecture efforts don’t really focus much on either of these concepts and instead just focus on modelling business processes, applications and infrastructure. However since ArchiMate includes the concept of a Business Function and now TOGAF9 Capability-Based Planning includes the concept of a Capability it would seem more Enterprise Architects are using both these concepts more than they have previously.
- A Business Function is a concept used in the Organisation Architecture domain and represents what work is done by that organisation, organisation unit or business role. An organisation can be designed as a set of Business Functions and usually the structure of the organisation units within an organisation is closely based on the business functions. Those Business Functions are more stable than the organisation structure itself and often an Organisation Unit or Business Role may be responsible for multiple business functions. A Business Function is only ever carried out by a single Business Role/Organisation Unit within an organisation. Examples of Business Functions include: Sales, Mаrketing, Supply Chаin Management, Finаnciаl Mаnаgement, Operations,
- A Capability is a description of an ability to do something in terms of expertise and capacity. It is associated with strategic planning and not the Organisation Architecture or Business Architecture domains. A Capability is delivered through the establishment of a number of different changes usually at together as a group of changes delivered in an iteration.These changes are likely to include new or changed organisation units, business functions, business processes, business services, application services, application components, infrastructure services, infrastructure components (Nodes etc), business objects, data objects etc. A Capability is used as the unit of change in strategic portfolios and Capability Increments (TOGAF9) are used in programme and project portfolios. Examples of Capabilities include: Capability to sell a new Product, Capability for eCommerce, Capability for rapid merger and acquisition activities, Capability to survive the credit crunch, Capability to conduct research, Capability to achieve delivery objectives and be ready for future unknown challenges.
- ArchiMate defines a Business Function as: A business function is a unit of internal behavior that groups behavior according to for instance required skills, knowledge, resources, etc., and is performed by a single role within the organisation. A business function describes internal behavior performed by a business role that is required to produce a set of products and services. For a consumer the products and services are relevant and the required behavior is merely a black box, hence the designation: internal. There is a potential many-to-many relation between business processes and business functions. Informally speaking, processes describe some kind of ”flow” of activities whereas functions group activities according to required skills, knowledge, resources etc. Complex processes in general involve activities that offer various functions. In this sense a business process forms a string of business functions. In general, a business function delivers added value from a business point of view. Organisational units or applications may coincide with business functions due to their specific grouping of business activities.
- TOGAF9 defines a Function as: Function describes units of business capability at all levels of granularity. The term “function” is used to describe a unit of business capability at all levels of granularity, encapsulating terms such as value chain, process area, capability, business function, etc. Any bounded unit of business function should be described as a function. [a Function] Delivers business capabilities closely aligned to an organization, but not necessarily explicitly governed by the organization. Also referred to as “business function”.
- TOGAF9 defines a Capability as: A business-focused outcome that is delivered by the completion of one or more work packages. Using a capability-based planning approach, change activities can be sequenced and grouped in order to provide continuous and incremental business value.
The following diagram (Figure 3.) is an attempt to position the concepts Capability, Business Function, Service and Process in a way that is consistent with the TOGAF 9.1 Content Meta-Model.
Figure 3. source: EA Learning
Why Business Function Matters
Although capability-based planning and capability modelling are key elements of the Enterprise Architect’s toolkit, the more detailed business function and service perspectives also have a role to play. Capability modelling should be used to describe ‘what’ is required to meet enterprise objectives. Business function and service modelling should be used when describing the structuring and management of resources and processes to deliver outcomes. The concept of business function in particular is most relevant when we are interested in representing the control of resources, and management of process execution within an organisation. This view may be quite distinct from that of capability. For example, a capability view of Human Resource Management may include Payroll as a sub-capability. However, the functional view of the organisation may in fact have the Payroll function sitting within the Financial Management function. That is to say that it may make more sense from a resource management perspective to regulate the Payroll processes and resources together with financial management processes and resources, even though it is understood that they contribute to the organisation’s overall HR capability. Furthermore, it is the management aspect of business functions that makes them ideal candidates for representation as process model ‘swimlanes’, as the business function can be said to ‘own’ or manage the processes within a particular swimlane. One practical benefit of this approach is that process models developed in this way are likely to have greater longevity during periods of organisational transformation, as business functions unlike other swim lane alternatives (e.g., org units), are relatively stable over time and across organizations.
Business Activity Monitoring (BAM)
Business Capability Modeling
IT Strategy (Information Technology Strategy)
Business IT Alignment
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