Ea As Strategy Ver1 1

Enterprise Architecture as Strategy – Unpacked ver. 1-1 Creating a Foundation for Business Execution

Think Change What seems like only a ripple today... Can become the wave of the future

Overall Model – Foundation for Execution The operating model is the necessary level of business integration and standardisation for delivering goods and services to customers The Enterprise Architecture is the organising logic for business processes and IT infrastructure, reflecting the integration and standardisation requirements of the organisations operating model The IT engagement model is the system of governance mechanisms that ensure business and IT projects achieve both local and company wide objectives

Implementing the Operating Model via Enterprise Architecture

Enterprise Architecture for a Unification Model Automating Technologies Linking Technologies Required Optional Business Process Data Technology Customer Types Process Outcome Linking and automating technologies Shared Data Linked and standard (core) processes Key Customers

Enterprise Architecture for a Diversification Model Technology Stack Required Optional Business Process Data Technology Customer Types Process Outcome Business-unit-specific customers Business-unit-specific data Shared Processes Shared Technologies

Enterprise Architecture for a Coordination Model Required Optional Business Process Data Technology Customer Types Process Outcome Linked Processes Integrating Technology Shared Data Shared Customers

Enterprise Architecture for a Replication Model Required Optional Business Process Data Technology Customer Types Process Outcome Business-unit-specific customers Business-unit-specific data Automating and linking technologies Standardised Processes

Navigate the Stages of Enterprise Architecture Maturity

Stages of Enterprise Architecture Maturity Business Silos Architecture: Where companies look to maximize individual business unit needs of functional needs Standardised Technology Architecture: Providing IT efficiencies through technology standardisation and, in most cases, increased centralisation of technology management Optimised Core Architecture: Which provides company wide data and process standardisation as appropriate for the operating model Business Modularity Architecture: Where companies manage and reuse loosely coupled IT-enabled business process components to preserve global standards while enabling local differences

Changes in organisational flexibility through Architecture Stages

Learning requirements of the Architecture Stages Business Silos Standardised Technology Optimised Core Business Modularity IT Capability Local IT applications Shared Technical Platforms Companywide standardised processes or data Plug-and-play business process modules Business Objectives ROI of local business initiatives Reduced IT costs Cost and quality of business operations Speed to market; strategic agility Funding Priorities Individual applications Shared infrastructure services Enterprise Applications Reusable business process components Key Management Capability Technology enabled change management Design and update of standards; funding shared services Core Enterprise process definition and measurement Management of reusable business processes Who defines Applications Local Business Leaders IT and Business unit Leaders Senior Management and process Leaders IT, business, and industry leaders Key IT Governance Issues Measuring and communicating value Establishing local /regional/global responsibilities Aligning project priorities with architecture objectives Defining, sourcing, and funding business modules Strategic Implications Local / Functional optimisation IT Efficiency Business Operational Efficiency Strategic Agility

How to apply Architecture Maturity Stages in Your Company Focus architecture on strategic organisational processes No company can afford to eliminate all its silos Move incrementally Skipping stages leads to either failures or delayed benefits Recognise that complex organisations have enterprise architectures at multiple levels Architectures at different levels of the company support different business objectives Build an architecture capability-in-house Business Strategy and IT Architecture requires a close relationship Aim for Business Modularity More-mature architectures reported greater success in achieving strategic goals

Reduced IT Costs IT Operations unit costs Application maintenance costs Increased IT Responsiveness Improved Risk Management Reduced business risk Increased disaster tolerance Reduced security breaches Increased Management Satisfaction Greater senior management satisfaction Greater business unit leader satisfaction Enhanced Strategic Business Outcomes Better operational excellence More customer intimacy Greater product leadership More Strategic agility The Benefits of Enterprise Architecture

Enterprise Architecture Management Practices Rating Processes 1 2 3 4 5 Centralised funding of enterprise applications Enterprise Architecture guiding principles Standard Project management Methodology Business Cases for architecture investments Formal Compliance Process Annual Infrastructure renewal funding One-page enterprise architecture graphic Formal Architecture exception process Formal Technical Research and Adoption Process Post-Implementation Assessment

Enterprise Architecture Management Practices Rating Roles 1 2 3 4 5 Full-time enterprise architecture team IT Architects on project teams IT Program Managers Full-time centralised technology standards team Business Leadership of Project Teams Enterprise-level process owners IT steering committee Senior Business Executives architecture oversight

How Architecture Management Practices Evolve Business Silos Standardised Technology Optimised Core Business Modularity Business Cases Project Methodology Architects on Project Teams IT Steering Committee Architecture exception Process Formal Compliance Process Infrastructure renewal Process Centralised Funding of enterprise applications Centralised standards Team Process Owners Enterprise Architecture guiding principles Business Leadership of project teams Senior Executives oversight IT Program Managers Enterprise architecture core diagram Post-Implementation assessment Technology Research and adoption process Full time enterprise architecture team

Build the Foundation One Project at a Time

The IT Engagement Model Companywide IT Governance : Decision rights and accountability framework to encourage desirable behaviour in the use of IT Project Management : Formalised project methodology, with clear deliverables and regular checkpoints Linking Mechanisms: Processes and decision-making bodies that align incentives and connect the project-level activities to the overall IT Governance

The IT Engagement Model Companywide IT Governance Company strategy and operations Enterprise Architecture Business unit strategy and operations Business unit architecture Project Plan Project IT architecture Project Management Business IT ALIGNMENT CORDINATION Linking mechanisms Company Level Business unit Level Project team Level

Key Issues for each IT Decision IT Principles How does the operating model translate to IT principles to guide IT decision making? What is the role of IT in the operating model? What are IT-desirable behaviours? How will IT be funded – by company or by business units? Enterprise Architecture What are the company’s core business processes? How are they related? What information drives core processes? How must this information be integrated? What technical capabilities should be standardised companywide to support IT efficiencies and facilitate process standardisation and integration? What activities must be standardised companywide to support data integration? What technology choices will guide the company’s approach to IT initiatives? IT Infrastructure What infrastructure services are most critical to achieving the company’s operating model? What infrastructure services should be implemented companywide? What are the service-level requirements of those services? How should infrastructure services be priced? What is the plan for keeping underlying technologies up to date? What infrastructure services should be outsourced? Business Application Needs What are the market and business process opportunities for new business applications? How can business needs be addressed within architectural standards? When does a business need justify an exception to the standards? Who will own the outcomes of each project and institute organisational changes to ensure value? What strategic experiments should we take on? How should we measure success? IT Investment and Prioritisation What process changes or enhancements are strategically most important to the company? What is the distribution in the current IT portfolio? Is the portfolio consistent with the company’s objectives? What is the relative importance of companywide versus business unit investments? Do actual investment practices reflect their relative importance? What is the right balance between top-down and bottom-up projects to balance standardisation and innovation?

Types of Linking Mechanisms Business Linkage Program Prioritisation Business sponsors for projects Early stage involvement of people representing companywide objectives (e.g. Hot housing) Regular project reviews conducted by company level office Post-Implementation review tied to company goals Bonuses and incentives tied to company goals Process owners Alignment Linkage Business-IT relationship managers Project Management Office Project Management Training Architecture Linkage Project Teams including architect Architecture exception management Architecture Training Project Funding and continuation dependent upon architecture compliance Companywide IT Governance Project Management Business IT Enterprise Level Business unit Level Project Level

Continuous Architecture Improvement & Engagement Model

Use Enterprise Architecture to Guide Outsourcing

Outsourcing Objectives Efficiency Objectives Cost Reduction Variable Capacity / Expertise on demand Architectural Improvement Objectives Re-engineering internal business processes Increase business process discipline Strategic adaption objectives Management focus on competencies Strategic Agility Leverage new IT Mitigate technology risks Technology / expertise transfer

Three Outsourcing Models Three mutually exclusive outsourcing Models Strategic Partnership Co-sourcing Transaction What is outsourced Broad responsibility for operational activities Project Management and implementation Narrowly defined, repeatable process Key Metrics Bottom-line impact Project success Quality and/or cost per transaction Client-vendor relationship Negotiated accountability Joint project management Arms length Client Expectations Cost savings; variable capacity; management focus on core competencies Cost savings; access to expertise on demand World-class processes; variable capacity; management focus on core competencies Vendor offerings Capability to deliver broad range of specialised services; integration expertise; disciplined practices; economies of scale Labour arbitrage; project management expertise; expertise on specialised technologies Standard best practice process components; economies of scale; distinctive platforms or assets

Different outsourcing relationships are suited to different stages Business Silo Standardised Technology Optimised Core Business Modularity What to outsource Easily Isolated processes IT infrastructure management Project Management of major systems implementations Process design and operation with supporting technology Ideal Relationship Narrowly focused transaction outsourcing Strategic Partnership Co-sourcing alliance Transaction outsourcing Achievable outsourcing objectives Cost Savings IT Management discipline; cost savings; cost savings; risk reduction; management focus Technology / expertise transfer; process discipline and re-engineering; management focus; cost-effectiveness; variable capacity; risk sharing Strategic agility; leverage IT and process expertise for world-class business processes; variable capacity; management focus; cost effectiveness; risk sharing

Exploit Your Foundation for Profitable Growth

Leveraging the Foundation for Profitable Growth

The Fifth Stage of Architecture Maturity – Dynamic Venturing In the fifth stage business components will be based on the unique intellectual property of the owner and have at least the following elements: Business Rules : How to conduct the business of the component Business Process : Optimised business process steps exposed to potential partners Data : Key data to be shared and data to be kept private for competitive or legal reasons, accessible through standard modular interfaces. Interfaces : Standardised ways to connect to the components of many other partners, including customers, governments, joint ventures, vendors, outsources, service providers, and regulators Security : Rules for connecting, encryption, self-diagnostics, defence against attacks, and the like Rules for Coupling : Strategic, negotiated, and legal rules embedded into the component

Learning requirements of all five architecture stages Business Silos Standardised Technology Optimised Core Business Modularity Dynamic Venturing IT Capability Local IT Applications Shared Technical platforms Companywide standardised processes or database Plug-and-Play business process modules Seamless merging with partners’ systems Business Objectives ROI of local business initiatives Reduced IT costs Cost and quality of business operations Speed to market; strategic agility ROI of new business ventures Key Management Capability Technology-enabled change management Design and update of standards; funding shared services Core enterprise process definition and measurement Management of reusable business processes Create Self-Contained business components Who defines applications Local business leaders IT and business unit leaders Senior Management and process leaders IT, business, and industry leaders IT, business, and industry leaders and partners Key IT Governance Issues Measuring and communicating value Establishing local / regional / global responsibilities Aligning project priorities with architecture objectives Defining, sourcing, and funding business modules Joint Venture Governance Strategic Implications Local /Functional optimisation IT efficiency Business / Operational Efficiency Strategic Agility Organic Reconfiguration

Sources of Reference J.W.Ross, P. Weill, D.C. Robertson, Enterprise Archictecture as Strategy , 2006, Havard Business School Press. ISBN: 1-59139-839-8 http://www.architectureasstrategy.com

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Ea As Strategy Ver1 1

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