Confused about Enterprise, Business, and Organization? Read on.
When one reads through BABoK, one comes across many terms related to an entity structure. We come across terms like enterprise, business, organization, organizational unit, project etc. Unfortunately, these terms also get used interchangeably quite a bit and create a humongous confusion in a person’s mind. Another challenge with entities naming convention is that the naming convention is not uniform across the world. Especially if you see the American way of calling their entities versus the British way.
In this article, I have attempted to explain the entities I have understood and how do they differ from each other. I, of course, invite other business analysts to make a comment on the concepts that I have presented.
In my opinion, the top-most level that we discuss in the business entity the business group. In American terminology, this is usually called “Corporation” and in British terminology, it may be called “Enterprise”. So in the US, we would call GE group “General Electric Corporation” and in the UK we would call “Virgin Enterprises” respectively. Both are business entities, may be also called “Industrial houses” or “Business houses”. Some businesses may be diversified, some may not. GE is a diversified business with an interest in energy, aviation, finance etc. IBM is not. At this level, business groups usually do not exercise control over IT activities of the group companies.
The next level would be companies. In BABoK language, this is called an enterprise. I trust the term enterprise resource planning probably came from the same. ERP is a software which can manage operations across the company. At this level, companies allocate budget for IT activities and may try to impose standardized IT approach.
Next level, we see divisions or lines of business. For example, IBM has a hardware line of business, software business and IBM is into services also.
Then comes the term called organization which handles a certain aspect of lines of business, for example, delivery aspect or human resources aspect or IT aspect. Most American companies call their IT department as IT organization. In British English, people call the company itself is an organization. I have heard terms like TCS / Infosys / Wipro as organizations.
Within the organization, we will have organizational units. These may be functions or projects. It is possible that an organizational unit is also a temporary unit like a project. Department, organization, and enterprise are permanent entities.
I am summarizing this using the following table.