Enterprise Architecture: Key to Successful Business Transformations

Enterprise Architecture: Key to Successful Business Transformations

In a recent article by McKinsey, they eloquently argued the importance of enterprise architecture for digital transformations. But they also provide some important criticism of the state of practice. To be really effective at supporting digital transformations, many enterprise architecture practices need to change their behavior.

Some EA practices are concerned first and foremost with documenting the current state of the enterprise in detail. Often this is the result of the risk-averse and bureaucratic culture we encounter in many large, IT-intensive organizations. This kind of bookkeeping will never be complete, given the increasing pace of change organizations have to deal with. Of course, there is value in having a sufficiently accurate view of the business processes, applications and infrastructure of an organization. You need enough insight to keep these complicated environments running, and on to aid the enterprise architects and others who design the future direction of the enterprise.

But key to a successful EA practice is a focus on change. On the one hand, this requires rapid, iterative development and realization of processes with feedback loops to design, implement and measure enterprise-wide change. Classical, feed-forward, waterfall-like approaches simply won’t work in today’s volatile business environment. Using agile practices is an important way to foster this focus on change. On the other hand, EA products need to realize organizational and technical systems that are easy to reconfigure, adapt and extend when the need arises.

Together, such agile processes and agile systems create a foundation for the adaptive enterprise: using your ability to change as an essential part of your strategy, outmaneuvering competitors with shorter time-to-market, smarter partnering strategies, lower development costs and higher customer satisfaction.

This focus on change involves all disciplines contributing to business transformation.  Successful enterprises manage their transformations from an integral perspective in which EA is a key player, strongly interlinked with other fields. The difficulties many organizations have with strategy execution show that this is not a sinecure.

A number of important connections between EA and other disciplines help in putting the architecture to work in effecting  business change with a holistic perspective:

• Strategy development: Of course, it all starts with strategic direction. Many organizations have great strategies, but lack the ability to execute them. A sound EA practice bridges the gap between abstract, high-level strategies and concrete operational decisions, and provides feedback on the feasibility and impact of strategic choices.
• Capability-based planning: Business capabilities are a pivot between strategy and realization. They provide a high-level view of the current and desired abilities of an organization, in relation to the organization’s strategy and its environment, and they are a starting point for more concrete developments in the enterprise.
• Enterprise portfolio management: Managing investments in your capabilities is essential in effecting business change. Enterprise portfolio management provides the instruments to select areas for investment and change initiatives to realize the enterprise strategy. Enterprise architecture provides the necessary information about current and required capabilities and their dependencies to support a coherent portfolio management practice.
• Program management: Managing change initiatives from the perspective of business outcomes is the core task of program management. The overview provided by EA is key in managing change in an integral manner, taking account of various dependencies and interactions within the enterprise and across its boundaries.
• Risk management: Better alignment between enterprise strategy, architecture and implementation helps the organization to spend its risk and security budget wisely, focused on business-relevant risks. This may lead to both cost savings and lower risks at the same time, because you invest to protect the things your enterprise really cares about.
• Regulatory compliance: Implementing standards and policies such as SEPA, Solvency II, Basel III and others requires enterprise-wide coordination, visibility and traceability from boardroom-level decisions on e.g. risk appetite of the organization, down to the implementation of measures and controls in business processes and IT systems. Enterprise architecture is indispensable to manage the wide-ranging impact of such developments.
• Continuous, collaborative delivery and improvement: Modern approaches to realization manage the assets that make up your enterprise across their entire life cycle, doing away with the artificial distinction between ‘development’ and ‘maintenance’. Moreover, this is a collaborative effort, where many disciplines work together in realizing change and providing a steady stream of business value, in close interaction with customers and other stakeholders. Enterprise architecture connects these value streams, to ensure a coherent approach to change and to avoid building ‘agile silos’.

In all of these areas, EA functions as an ‘enterprise knowledge hub’, integrating  and sharing information on various structures across the enterprise and the business transformation value chain. It provides you with relevant input for prioritizing and planning transformations. It gives you program-level coordination across value streams to realize these changes in a coherent manner. It helps you to track the realization of the expected benefits, and hence to correct your course if necessary.

Enterprise architecture as knowledge hub

At BiZZdesign, we help our clients in establishing such an integrated change capability, supported by our Enterprise Studio software platform. This allows you to collaborate on change and integrate information from various sources and disciplines, providing business leaders, architects, portfolio managers, process analysts, data managers, software developers and many others involved in change with the necessary insights to design the future of their enterprise.