November 10, 2008

Enterprise Architecture as Strategy

A while ago I read the book Enterprise Architecture as Strategy (by J. Ross, P. Well, and D. C. Robertson. See the book's website for more information). This book presents an interesting perspective on Enterprise Architecture provides useful tools for "doing EA" in practice. 

The basis for the books is the foundation for execution which is defined to be the IT infrastructure and digitized business processes automating a firm's core capabilities. Three steps in defining this foundation for execution are:
  1. Operating model: the necessary level of business process integration and standardization
  2. Enterprise Architecture: organizing logic for business processes and IT infrastructure, reflecting the operating model
  3. IT engagement model: system of governance mechanisms that alignment with strategic objectives
The following figure outlines the general approach

The operating model is characterized using two dimensions: the level of business process integration and the level of business process standardisation. This leaves room for four types of operating model, most notably:

seamless access to shared data
standardized integrated processes
independence with shared services
standardized independence

Each cell (i.e., each type of operating model) has unique characteristics. For example, for replication it holds that there are few shared customers between businesses,  business units are operationally similar, and there is centralized control over business process design, etcetera.

The next step is the definition of an enterprise architecture, which is defined to be the organizing logic for business processes and IT infrastructure reflecting the integration and standardization requirements of the companies operating model. The key to defining an effective EA is presumed to be the identification of process, data, technologies and customer interfaces that take the operating model from vision to reality. An EA is documented using a core diagram in a semi-formal language. This diagram is a one-page overview of process, data, and technologies constituting the desired foundation for execution. For example:

This diagram is intended to show the "operational pipeline" of Delta at the top. This maps, to some extent, to the notion of a value chain. The middle part of the diagram shows  the supporting "nervous system" which consists mainly of the databases that Delta uses. It also shows some of the interfaces to this data. Finaly, the bottom part of the figure shows different aspects of the "customer experience". I like this type of picture, as it is easy to make and easy to understand. However, since it is so informal it may also lead to confusion (this is where tools like Archimate come in handy).

One of the more interesting aspects of the book are the EA maturity models which are defined as follows:
  • Business silos: maximize individual business unit needs or functional needs
  • Standardized technology: provide IT efficiencies throgh technology standardization and centralization of IT management
  • Optimized core: companywide data and process standardization
  • Business modularity: manage and reuse loosely coupled, IT-enabled business process components while enabling local differences
The underlying assumption is that firms will go through these different stages as follows

For each of these levels / stages, learning requirements are defined. I'm all for maturity models, as it gives managers and architects some guidance in figuring out how to let the organization evolve in a natural way. In this case, however, I'm not convinced that this will actually work for all/most companies. On the upside, the authors acknowledge that companies ought to think out a maturity strategy for themselves. E.g., some companies belong in the diversification quadrant of the above table. Others will want to grow from diversification via replication to unification, whereas others will want to grow via coordination to unification. It all depends on the unique situation of a firm. 

Last but not least, the engagement model is discussed. A very useful section as it is nice to have a good theory, but more interesting to actually implement it in practice. The engagement model is outlined in the following figure:

The nice thing of this engagement model is that it relates business and IT on the horizontal axis, while distinguishing between the project / business / enterprise level on the vertical axis. As such, it paves the way for a enterprise-wide governance model for IT. IT governance encompasses major decision areas related to the management and use of IT in a firm and should be driven by the operating model.

In my opinion, the good aspects of this book are:
  • the authors have combined their extensive theoretical knowledge with their experiences from practice 
  • there is a strong focus on governance
  • the book leaves plenty of room for adaptation to the individual situation in firms
Somewhat less positive points of this book are:
  • the book is written solely from the IT-perspective / discusses IT-related topics
  • the book but seems to miss the point about strategy (in the sense of strategic management) at times. For example, discussions on synergy, competitive advantage etc. are missing. 

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