The age of enterprise architecture?
Jeanne Ross, Former Research Director and a Principal Research Scientist, at MIT Sloan School of Management, proclaimed recently that the digital economy has finally arrived. She suggests for this reason that this should be the moment for enterprise architects. She says winners in digital disruption have integrated channels, seamless end-to-end transactions, real understanding of customer data, and real tight security. And these all require an organization with enterprise architecture. Jeanne believes one thing has becoming clear–enterprises will not be successful if they are not architected to execute on their firm’s business strategies. And she has found something scary in her research regarding legacy organizations. There are many successful companies that do not believe their success is guaranteed in the transition to a digital economy.
What is holding these orgs back?
Many have not completed the digitization of their business processes or automated all their company’s core business capabilities. For others, enterprise silos still prevail in their organization. Individually their applications work. Together, they limit efforts to coordinate customer, supplier, and even employee processes into more uber business capabilities.
It has become abundantly clear that silos do not provide a foundation for execution needed to withstand what Geoffrey Moore says in his book Zone to Win will be waves of digital disruption. One part of this foundation to win is clear—having the pristine data to power predictive analytics. Jeanne Ross has found for many businesses that data “one of a business’ most important assets is patchy, error prone, and not up to date”. Meanwhile, integration of business processes which is essential is a real business limiter. Jeanne tells the story of one investment banking company executive that told her 80% of his company’s programming code was dedicated to linking disparate systems, as opposed to creating new business capabilities. This may have linked his current applications and processes but this kind of brittle, rigid code does not provide the agility needed to succeed in the digital era.
While operating models clearly differ between businesses and may necessitate different levels of process integration across business units, a legacy enterprise that has cobbled together their systems and processes year after year runs the risk of having an architecture that looks much like the famed Winchester House in San Jose. If you haven’t been there, the wife of the Winchester Riffle founder felt she was haunted by those that had died from her husband’s famous riffle. To remedy this, she kept building onto her house. There are rooms that go nowhere or do not make sense because they lack basic amenities. Architectures like this cannot stand the effective ‘perfect storm’ of the digital age.
Fixing architecture can no longer be deferred. And enterprise architects are for the most part clear headed that integrating the enterprise is not done. Many suggest that data architecture has become a theme for their businesses. They believe that application consolidation takes concerted effort as does improving enterprise architecture.
The CIOs that I know like to call their legacy systems, their ‘technology debt’. With the size of the technology debt at many legacy businesses, it should come as no surprise that ¾ of business transformations efforts fail. Businesses that fail in their transformation efforts have one thing in common – they view their technology stack segmentally as individual pieces to implement and connect. These businesses have pervasive application sprawl and disconnected business silos. In a recent survey by MIT, they found that 51% of businesses suffering from silos and complexity that ensues from it (“Is your company ready for the digital future, Dec 2017).
Creating a survivable enterprise architecture
Enterprise architects are digital transformers because they know what needs to be fixed. Simply put they want an enterprise architecture that can respond to digital change but also fits their company’s operating model. To create an enterprise architecture that works for their businesses, they need to do many things. Here are just 8 that they need to get done are soon as possible.
- Enable business change by doing technology more effectively, by increasing business efficiencies, driving business continuity, and improving customer experience.
- Speed-up time to market by enabling plug and play business process modules, by creating reusable business process components; and by facilitating strategic business process integration
- Digitize and integrate key processes, systems, and data composing the core of the company’s operations
- Provide the integration needed to enable end to end processing and single face to customer, supplier, and employee
- Make high quality enterprise data available to stakeholders so they can drive the modeling necessary to automate the enterprise and drive customer experience
- Provide traceability into the relationship between business strategies and business services including the linkage between the business processes to business capabilities of the organization
- Create the business modularity needed to manage and reuse loosely coupled business process components and business capabilities
- Instantiate their organizations digital business model and the organizing logic for business processes and standardization
Winning demands a connected business
Jeanne Ross claims in the digital era competitive advantage is not going to be as much about strategy but instead it is going to be about execution. She stresses that no longer will competitive advantage come from a single business capability. These are too easily exploited by outside market entrants. To be fair, PWC/Booz & Company always discussed the notion of competitive advantage coming from 3-6 mutually reinforcing business capabilities where a capability “enables your company to consistently outperform rivals” (The Essential Advantage, Paul Leinwand, Harvard Business Review Press, pg 14). For legacy companies, advantage will come from an integrated their established set of business capabilities. Competitive advantage, according to Jeanne Ross, involves taking capabilities that others may or may not have and integrating them in ways that create something extraordinarily powerful. Integrating business capabilities provides a whole value proposition that is hard for others to copy. The success of any digital transformation effort, therefore, depends on the ability to create a ‘connected business’ at scale.
This stresses how you interconnect business capabilities and processes together. Point to point connections or band aide connections are hindrances to digital transformation. What is needed instead is systematically connected business that can bring people, process, and technology investments together to gain the advantage that Jeanne describes.
A connected business does three things that are critical to digital disruption:
- It connects everything –It can connect cloud applications, on-premise legacy systems, and data stores including people and things.
- It can engage everywhere –It can put in place automate business processes and deliver an engaging experience to customers, employees or partners omnichannel.
- It can run anywhere – It deploy its applications wherever it makes the most business sense: public cloud, private cloud, hybrid or on-premises.
Most importantly, a connected business can allow businesses to adapt their business model at will and achieve the integration capabilities that Jeanne Ross describes.
Digital disruption requires businesses increasing compete on business capabilities including on data and analytics. Doing this well, demands advancement in architectural maturity. Jeanne Ross has been calling for this for over 10 years but now it really matters. Clearly, legacy businesses do not need to change (their enterprise architecture), but, as Deming wrote, “survival is not mandatory”.