Notes from the Field: The Value of an Enterprise Architecture

I’ve written before on the importance of an enterprise architecture, but during the engagement that is driving this series of articles (Notes from the Field), it has come to my attention that this topic really needs to be revisited. I’m going to cover some topics I’ve written about before, and in a later post I’ll fold in some content on developing an enterprise architecture. This will tie together with another article I’m working on with the principles and design rules for my customer’s new adaptive/extended enterprise. Thanks for bearing with me.

Establishing effective IT governance is critical to the success of an adaptive/extended enterprise. However, that governance in itself does not make an enterprise adaptive. In addition to IT governance, an adaptive/extended enterprise has an overarching enterprise architecture to show how all of the components of the enterprise are related and to guide the decisions that affect IT. With effective IT governance and enterprise architecture in place, and working closely with an enterprise program management office to drive IT initiatives, it becomes possible to achieve the level of business and IT synchronization that characterizes an adaptive/extended enterprise.

An enterprise architecture structures the systems that constitute the extended enterprise. It lays out how information and IT enable the realization of the enterprise strategy, and it provides a framework for supporting and automating business processes—within the enterprise as well as across the entire supply chain—using IT capabilities. Together with the IT strategic planning process, an enterprise architecture helps align IT initiatives more effectively with strategic business imperatives. It identifies both the current and desired state of the enterprise, and it enables business and IT managers, including the IT governance team, to see how the enterprise can transform itself in stages from the current state to the envisioned future state.

An enterprise architecture is not simply a static document. It is a dynamic, ongoing, disciplined process. As depicted in my graphic below, its central focus is on evolving the key operational processes of the enterprise (the enterprise business architecture) and the information systems that support them (the enterprise IT architecture). At the intersection of these two distinct architectures are the architectures for supporting the enterprise business process execution and the enterprise information/data.

nested-architectures

By describing the essential, overall design of these architectures as a holistic “system of systems,” and by providing the context, guidance, and discipline for the development of the more detailed, system- and service-specific architectures, the enterprise architecture provides a way to translate between business needs and IT capabilities. It shows how the business needs are to be met by the enterprise’s information systems and the information services they provide, thereby creating a bridge that ensures alignment of business and IT.

Taking a holistic, architectural view of the enterprise helps strike an effective balance between business and IT imperatives, with a particular emphasis on agility. It helps my customer’s planners see how the enterprise currently works, and how it could and should work in the future.

  • The strategy provides the overall direction (vision, goals/objectives, and measures) for the enterprise and the IT capability, while the architecture describes the operational and information systems as they are, and as they should be to realize the strategy.
  • The IT investment planning aspect of strategic planning (often referred to as project portfolio management) uses the architecture to identify initiatives with high strategic value and acceptable risk and adds them to a committed plan of record.
  • The program management office then drives execution of the initiatives in the plan of record, with reviews against the architecture at appropriate points in the initiatives’ lifecycles.

I have long been a promoter of the idea that an enterprise architecture is a key tool in bridging the gap between business and IT. In the past, the practice of enterprise architecture has failed to deliver on the hype, causing many to lose interest. Several factors have combined to once again bring enterprise architecture to the fore:

  • The discipline of enterprise architecture has matured, learning from past mistakes of over-reaching, not paying enough attention to benefits vs. costs, and focusing too much on IT considerations.
  • The costs to operate and maintain information systems have continued to grow, providing a large payback for architecture-led efforts to rationalize processes and consolidate systems.
  • Architecture methods and tools have advanced significantly, including improvements in modeling of business strategies, processes, and metrics, and in relating them to IT capabilities.
  • Many partial models and other architectural elements are widely available, greatly lowering implementation costs and significantly improving the ability to provide automated, flexible, real-time linkages between enterprises.
  • The advent of the Internet has made it much easier to incorporate partners in the value chain. The competitive imperative now is to focus on areas of strategic competence, partnering for specialized but non-core capabilities. Having accurate models of enterprise processes and systems is a critical requirement for executing this new business model.

Properly envisioned and implemented, an enterprise architecture is a fundamental tool that anticipates future needs and enables my customer to implement change rapidly in response to evolving business priorities. It enables its IT organization to respond rapidly to changes in business strategy, processes, and environments. It provides the supportive framework that enables its business units to realize critical business goals and strategies by providing a framework that supports all the processes, information, and IT systems that those goals and strategies require.

Business Services: The Building Blocks of an Enterprise Architecture

One of the important innovations in enterprise architecture is the focus on business services. Business services are well-defined, automated components that provide the enterprise with information essential to delivering goods and services to customers and to coordinate and perform work as part of an operational process.

What constitutes a business service? At the highest level, business services are services provided to customers, such as the online support for shopping: finding, ordering, and paying for products; tracking their delivery; and perhaps coordinating returns. At a lower level, business services are finer-grained services that automate or orchestrate individual steps in the enterprise’s business processes: add a part into inventory, look up a customer, check credit, check availability, look up order status, note a problem, notify an interested party of a change in status. High-level business services are built on lower-level services, without the higher-level services knowing anything about the implementation details of the lower-level services they use.

By evolving the enterprise to become service-oriented, and modeling it using a service-oriented architecture (SOA), an adaptive enterprise can respond quickly to key business needs. Imagine having a set of building blocks with a standard “snap-together” interconnection mechanism. An SOA enables the enterprise to use and reuse business services from a variety of sources in new ways, without a lot of development or integration effort or knowledge of the service’s location, enabling a rapid response to new opportunities and business priorities.

Along with its emphasis on services, an enterprise architecture identifies relevant service events. These events are viewed through business activity monitoring tools; they can also alert the appropriate people or trigger automated processes to handle conditions associated with the event. By enabling support for near–real time processing of service-related events, the enterprise’s information systems become, in effect, the digital nervous system of the enterprise.

The enterprise architecture also translates between the business services and the underlying IT infrastructure services that are the foundation of business operations. More and more of this translation takes place without the need for procedural programming; instead, service designers provide an operational model defining the key parameters of the service, and the service delivery management system automates the delivery of service based on those parameters. This approach is known as model-based automation, and it plays an important role in enabling the agility that characterizes an adaptive enterprise. Because it’s easy to change a parameter value in a model—much easier than it is to rewrite a hard-coded service—it becomes much easier to adapt a service quickly to changing needs.

This new adaptive/extended enterprise that we have been working on comes with a set of models, principles, and design rules that my customer can use to stimulate the establishment and evolution of an enterprise architecture designed to strike the right balance across its needs to enhance agility, maximize financial return, improve performance, and minimize risk. In concert with IT governance and the ongoing business-IT synchronization processes discussed earlier, it can help guide the customer on its journey toward that adaptive/extended enterprise.

Its business objectives and strategy define its portfolio of product and service offerings, and the overall process by which these are delivered. That process is not entirely internal, of course. An enterprise consumes business services from its suppliers; transforms, augments, or otherwise adds value to them; and in turn delivers business services to its customers (remember the post on the economic discussion?) An airline, for example, consumes airplanes, gates, fuel, and other business services from its suppliers. It delivers a value-added transportation service through its people, processes, and technologies (using facilities, equipment, and other resources). Indeed, there are many component business services involved in this delivery process. We prefer that our bags arrive when and where we do, for example; we like our frequent flyer benefits; and so on. An effective enterprise architecture will help my customer map its business objectives and strategies to its new or current delivery process, value chains, people, and IT services, and all the other resources that its operational processes require.

business-process-modeling-alignment

As you look at the graphic above, you’ll see that the customer’s adaptive/extended enterprise architecture links the enterprise’s business objectives and delivery processes. It also identifies how these processes must be managed from a business perspective. This customer, like all the others, has business objectives, defines business strategies to achieve them, and establishes management processes to assure its delivery process execution aligns with the strategy and objectives. The bidirectional arrows linking business objectives and strategies (at the top of the graphic) to the business process model (in the center of the graphic) indicate that alignment of strategy and delivery processes depends on information flowing both ways: the business strategy must be informed by the actual performance of the delivery processes, and can in turn set targets for their future performance.

The business process model is crucial to realizing this alignment. It defines the flow of work and the associated key performance measures. The model is refined into a series of more detailed levels and ultimately transformed into an executable model that shows how people and automated systems combine to perform work. The executable model is used to define how the component business services are combined to deliver high-level business services to customers and other users of the customer’s information systems. The performance measures are used to establish policies that automate the management of the services. When this customer invests in modeling its business processes and using model-based automation, it now puts itself in a position to make changes quickly and easily.

Thanks again for bearing with me. In the next series of articles, I’ll explore how a conversation around solutions fits into the design principles and design rules of this adaptive/extended enterprise and how to develop this new adaptive/extended enterprise architecture.

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