Value destruction happens when the company takes an action that has a smaller economic
benefit than the cost of the action. Similarly, building some models incur more cost than the benefits that can be generated out of them, thus resulting into model value destruction. It can be avoided by using Model Value Analysis.
Simply put, model value analysis is a summary of the expected costs and the expected benefits, and a comparison of the two, as described in a spreadsheet. One sheet of the spreadsheet should list all the possible benefits of business modeling against which both estimated one-time and annual time savings should be recorded. There are eight benefits of business modeling as given below.
- Compliance Checking
- Requirements for software development
- Direct Execution
- Knowledge Management and reuse
- Constructing the model
- Socializing the model
While this technique looks so simple, it may consume considerable amount of time and efforts if one employs it for making decision regarding complex business modeling exercise. A good rule of thumb is to spend 1% of the total anticipated modeling time on the model value analysis, to decide whether the other 99% makes economic sense.
BTW, after reading this excerpt, I am now awaiting the release of this book as it seems to have useful content on business modeling. Since it is being published by OMG itself, the quality has to be very good!