Based on the functionality of an organization, a business reference model (BRM) depicts the organizational structure and operations of the business in a hierarchical manner. Typically, the reference model will demonstrate the functioning of operations, independent of division of labor in the organization that carries out the actual functions. Some parts of the business model, however, are designed specifically to make room for other aspects of the organization to include specific business processes and functions. The purpose of these emphases in the construction of a BRM allows for analysis of those specific components of a business, such as information technology or data flow. In addition, such focus also allows for the alignment of new projects to specific functional areas of the business or organization.
Serving as a foundational conception, the business reference model allows for deeper understanding of how the business or organization functions. Designed purposefully for easy understanding, governments will typically use the model so citizens can better navigate how the government functions. Leveraging three main components to outline the model to include business areas, business lines and business capabilities, the objective is to demonstrate the operations and functions of the entire organization and its parts. Using the BRM, both internal and external actors can align initiatives with specific areas of the business or organization to gain a better understanding of parts potentially involved in that initiative.
With the outline of the business reference model, business areas will usually describe all activities and functions with which the business or organization is involved. Lines of business, on the other hand, will elaborate on specific functions within each individual business area. Business capabilities will expand on the lines of business to explain how the objectives of the lines of business are accomplished. Aside from these core components to the BRM, the business areas section will also branch out to describe the common attributes often shared by each business area. For example, all components might share in the management of the organization's resources.
Covering the entire organization is the specific purpose of the business reference model. There are additional models meant to serve various components though, which are usually meant for internal use. Such models may include technical reference models, service reference models, or performance reference models. Each model, however, ties into the business reference model, where the process for designing the target model begins. Therefore, once a business reference model is designed, all functional aspects tend to flow from and revert back to it.