CUTTER CONSORTIUM Business Architecture: Part I — Why It Matters to Business Executives by William Ulrich, Senior Consultant, Cutter Consortium Business architecture is gaining recognition as a game- changing discipline that enables businesses to address major challenges in new and unique ways. Simply put, business architecture allows a business to establish a common vocabulary, shared vision, and a degree of transparency that facilitates initiatives ranging from M&As to the reversal of customer attrition. But even as business architecture success stories emerge, the message has been slow to penetrate the executive suite. This Executive Update, the first in a series, discusses why business leaders should embrace business architecture as a means of addressing complex business challenges in ways that senior leadership can no longer ignore. Consider some real-world cases: A pharmaceutical firm uses business architecture to expedite a large- scale merger. An international airline follows suit. A finance and insurance company uses business architec- ture to investigate and reverse customer loss. A govern- ment agency uses business architecture to establish a vision to enable customer self-service. An international finance company uses business architecture to align the enterprise to a new business model. And finally, a large financial institution leverages business architecture to streamline its complex, postmerger portfolio. THE BENEFITS OF BUSINESS ARCHITECTURE In each of these scenarios, business architecture is sponsored by business leaders. This is essential because business architecture is owned by — and most benefits — the business. The most effective and impactful business architecture teams are comprised of business professionals representing a cross-section of business units, and this requires senior business sponsorship. Unfortunately, the business architecture message is just beginning to reach business leaders who are account- able for the success of these types of initiatives. To build executive support for business architecture, the benefits must be communicated in business terms. Common benefits include: Delivers transparency and clarity to enable stake- holder collaboration, issue analysis, and problem resolution Provides transparency across business units, product lines, and outsourced teams to enable cross-functional planning and ensure that funded initiatives are not working at cross-purposes Aligns business processes across business units and product lines, delivering stakeholder-focused benefits far beyond traditional “lean” or similar process- streamlining exercises Offers management teams a holistic view of the business that extends to outsourced, customer, and other stakeholder domains Establishes a framework of concepts that allows the business to clearly communicate current-state busi- ness challenges and articulate a business-centric vision for the future Allows the business to take ownership and drive transformation strategies through business-centric roadmaps and funding models Offers IT a way to recast project-funding discussions in terms of business capabilities and stakeholder value, streamlining often difficult IT budget discussions A COMMON VOCABULARY Business architecture’s main benefit is that it delivers a common vocabulary for communicating and reconciling critical business issues across a wide variety of stake- holders. Miscommunication is rampant across business. Terms as seemingly straightforward as “customer,” Enterprise Architecture Advisory Service Executive Update Vol. 14, No. 7
Transcript
CUTTER CONSORTIUM
Business Architecture: Part I — Why It Matters to Business Executives
by William Ulrich, Senior Consultant,Cutter Consortium
Business architecture is gaining recognition as a game-changing discipline that enables businesses to addressmajor challenges in new and unique ways. Simply put,business architecture allows a business to establish acommon vocabulary, shared vision, and a degree oftransparency that facilitates initiatives ranging fromM&As to the reversal of customer attrition. But evenas business architecture success stories emerge, themessage has been slow to penetrate the executive suite.This Executive Update, the first in a series, discusses whybusiness leaders should embrace business architectureas a means of addressing complex business challengesin ways that senior leadership can no longer ignore.
Consider some real-world cases: A pharmaceuticalfirm uses business architecture to expedite a large-scale merger. An international airline follows suit. Afinance and insurance company uses business architec-ture to investigate and reverse customer loss. A govern-ment agency uses business architecture to establish avision to enable customer self-service. An internationalfinance company uses business architecture to align theenterprise to a new business model. And finally, a largefinancial institution leverages business architecture tostreamline its complex, postmerger portfolio.
THE BENEFITS OF BUSINESS ARCHITECTURE
In each of these scenarios, business architecture issponsored by business leaders. This is essential becausebusiness architecture is owned by — and most benefits— the business. The most effective and impactfulbusiness architecture teams are comprised of business
professionals representing a cross-section of businessunits, and this requires senior business sponsorship.Unfortunately, the business architecture message is justbeginning to reach business leaders who are account-able for the success of these types of initiatives. To buildexecutive support for business architecture, the benefitsmust be communicated in business terms. Commonbenefits include:
� Delivers transparency and clarity to enable stake-holder collaboration, issue analysis, and problemresolution
� Provides transparency across business units,product lines, and outsourced teams to enable cross-functional planning and ensure that fundedinitiatives are not working at cross-purposes
� Aligns business processes across business units andproduct lines, delivering stakeholder-focused benefitsfar beyond traditional “lean” or similar process-streamlining exercises
� Offers management teams a holistic view of thebusiness that extends to outsourced, customer, andother stakeholder domains
� Establishes a framework of concepts that allows thebusiness to clearly communicate current-state busi-ness challenges and articulate a business-centricvision for the future
� Allows the business to take ownership and drivetransformation strategies through business-centricroadmaps and funding models
� Offers IT a way to recast project-funding discussionsin terms of business capabilities and stakeholdervalue, streamlining often difficult IT budgetdiscussions
A COMMON VOCABULARY
Business architecture’s main benefit is that it delivers acommon vocabulary for communicating and reconcilingcritical business issues across a wide variety of stake-holders. Miscommunication is rampant across business.Terms as seemingly straightforward as “customer,”
“representative,” “product,” “margin,” “vendor,”“broker,” and “partner” are generally assumed butoften misconstrued. Miscommunication is particularlycommon when discussions cross product lines andbusiness units, which can lead to major problems,including a misstatement of expenses or angry cus-tomers. Poor communication stymies a wide varietyof initiatives, such as improving basic business capa-bilities, creating common customer views, aligningprocesses across business units, and delivering accuratefinancial and regulatory reporting. Consequently, busi-nesses have created modern-day versions of the Towerof Babel, which was never finished because the speechof the builders was confounded.
Consider two cases highlighting how lack of a commonvocabulary can stymie progress, while a common busi-ness vocabulary can overcome these roadblocks. In thefirst case, teams responsible for creating coherent viewsof business information struggled for years to create acommon view of enterprise data. The teams lacked anagreed-upon set of business definitions, and numerousinitiatives stalled. The business wasn’t engaged andcouldn’t see why this mattered. In the second case, abusiness architecture team created a capability mapthat identified what the business does in complete,concise ways. Capability definitions provided to thedata architecture team allowed the team to craft acommon data model that fully aligned to the businessvocabulary. While teams in our first case continued tostruggle with creating priority management initiatives,teams in our second case created a common informationmodel that expedited projects across business units, cus-tomer initiatives, product lines, and complex processesand technologies.
The lesson learned here is that the lack of a commonvocabulary has far-reaching effects and is the basis formany failed projects. Misperception and miscommuni-cation stem from and further compound widespreadredundancy and inconsistency, which in turn can leadto customer losses, missed opportunities, lost revenues,and millions of dollars in failed initiatives. The sameissues are rehashed meeting after meeting due to a lackof transparency across business units and product lines.This process repeats itself year after year, stalling majorinitiatives, leaving business opportunities on the table,and running up spending on failed projects.
Business architecture addresses these issues byestablishing a common language that planningand deployment teams can use to establish a routineunderstanding of issues as the basis for crafting robust,long-term solutions with demonstrable business bene-fits. Figure 1 provides an overview of the four mainaspects that create the foundation for your businessarchitecture: business capability, information assets,organizational view, and value streams. While businessarchitecture includes other categories, these four com-prise the baseline that business uses for issue analysis,planning, strategy planning, budgeting, and solutiondeployment. Each category represents a unique viewof the business but all are connected through a commonvocabulary. The following summarizes this founda-tional view:
1. Business capability. Capabilities provide a com-plete view of “what” a business does. CustomerManagement, for example, is a capability. Capabilitiesare organized into the business capability map, a hierar-chical topology of what the business does. This mapserves as a foundational view of the business thateliminates the inherent complexity involved in dis-cussing “how” something is being done or “who” isdoing it. Capabilities provide the basis for craftingbusiness-driven transformation strategies, which ofteninclude improved or new, automated solutions.
2. Information assets. Business information assetsclearly define the information required to ensure thateach capability is robust, viable, and acceptable to thebusiness from a strategic perspective. For example,the definition of the “Account Management” capabil-ity must correspond to the definition of the informa-tion asset “Account.” Information assets, along withcapabilities, form the foundation for the businessvocabulary and data architecture.
3. Organizational view. Organizational view createsa structural overview of the business. This includestraditional business units and subunits but can beextended to include collaborative teams, outsourcers,and other external stakeholders. Organizational viewscan be enhanced by mapping business units to strate-gies, capabilities, and initiatives.
4. Value streams. Value streams depict the activitiesinvolved in how a business delivers end-to-end
stakeholder value. While the capability map is saidto show the business “at rest,” value streams showthe business “in motion.” Common value streamexamples include Manage Customer Portfolio,Update Account, and Build Product. Value streamsare always triggered by a stakeholder, shown as end-to-end views, and represent an aggregated view ofcross-functional business processes. Value streamsare the main aspect of business architecture used toalign and consolidate business processes and deliverautomated solutions with a high degree of stake-holder visibility.
BUSINESS ARCHITECTURE PLANNING, ROADMAPCREATION, AND BUDGETING
Business architecture provides a basis for transform-ing how business communicates and collaborates toachieve its goals across business units and product lines.One of the most fundamental benefits, however, is thatbusiness architecture enables a more business-focusedinvestment strategy in major initiatives. Most noninfra-structure-focused IT spending is typically aligned to agiven set of software applications. This approach limitsthe business vision to a siloed, technology-centric pointof view and leaves critical capabilities not part ofan IT solution today off the table, virtually ignoring
horizontal views of how to deliver stakeholder value.Positioning investments in terms of business capabilitiesand value streams allows the business to focus on busi-ness value and not on IT centricities.
Using business-focused roadmaps and related budget-ary models does not imply a “big bang” or “boil theocean” approach. Having visibility across more thana single business unit does not mean that all issues ortechnologies will or should be addressed in a singleproject. Delivering a business-driven vision, strategy,roadmap, and related funding model through the useof the capabilities and value streams provided by thebusiness vocabulary means that all aspects of a givencapability and/or value stream are considered whenmaking major initiative investments. However, this israrely the case today because such visibility is sorelylacking.
For example, consider a bank that implemented areplacement system for a small portion of its risk-ratingenvironment with no understanding of how it wouldreplace the two systems already enabling this capabil-ity. Millions of dollars were spent, leaving the bankwith three redundant, yet fragmented, applicationsenabling this capability. Little business value wasachieved, and now the bank has three systems imple-menting the same capability in different ways, using
three different views of business information. Con-sequently, the business has destabilized a portionof its business model. This could have been avoidedhad the business provided a capability-focused man-date to streamline and consolidate risk rating, alongwith a common strategy, vocabulary, and vision forthe risk-rating capability and related information assets.
Thus, business architecture represents a philosophicalshift in how we discuss business challenges, communi-cate across business lines, establish deployment plans,and allocate funding to improve business capabilitiesand stakeholder value. This shift will take time formany organizations and involves the transition fromsilo-based infrastructures, where every business unithas its own language, to a business ecosystem, whereinterdependencies — particularly where it impactsstakeholder value, risk management, and bottom-lineresults — are addressed in cohesive ways throughstreamlined approaches.
With business architecture, ineffectiveness and ineffi-ciencies that drive up costs and contribute to failedprojects will fade as a common business vocabularytakes hold. There is no need to wait for results. Manyof the organizations introduced at the beginning ofthis Update began benefitting from business architecturein a very short period of time. As the business architec-ture matures, the use of it will mature as well. It onlytook a short time after rolling out the first capabilitymap from one business team to begin using it to alignstrategies, transformation planning, roadmaps, andbudgetary funding. Senior business leadership andsponsorship is essential to this effort.
In Part II, we will continue our discussion of the busi-ness architecture and examine business-driven trans-formation strategies, roadmaps, and budget models.
ABOUT THE AUTHOR
William M. Ulrich is a Senior Consultant with Cutter’sBusiness-IT Strategies, Enterprise Architecture, andGovernment & Public Sector practices and President of TSG,Inc., a management consulting firm that specializes in businessand IT planning and transformation strategies. Mr. Ulrich hasmore than 30 years’ experience in the business-IT managementconsulting field. He serves as strategic advisor and mentor onbusiness-IT alignment initiatives and continues to work as aworkshop leader and author. He has the unique ability to crossbusiness and IT boundaries to facilitate and streamline busi-ness-IT transformation strategies. Mr. Ulrich’s workshops onbusiness-IT architecture alignment have been widely attendedby organizations worldwide. His ability to communicate flu-ently with business executives and professionals and IT execu-tives and professionals has enabled him to help organizationscraft transformation strategies that deliver incremental andongoing business value while managing risk and costs at eachstage of deployment.
Mr. Ulrich currently serves as Cochair of the OMG BusinessArchitecture Special Interest Group, Editorial Director ofthe Business Architecture Institute, Director-at-Large ofthe Business Architecture Society, and is a member of theEA Advisory Board for Penn State. His latest books includeBusiness Architecture: The Art and Practice of BusinessTransformation and Information Systems Transformation:Architecture-Driven Modernization Case Studies. The approachesoutlined in these two publications provide a balance to thechallenges inherent in delivering business-driven, business-ITtransformation. He can be reached at [email protected].
IT Executive Education +ARQUITECTURA DE NEGOCIO TALLER DE INMERSION.
Con William Ulrich
25 y 26 de Mayo, 2016 Ciudad de México
Executive Education on IT leadership and emerging trends. Continuous professional development and personal enrichment
through the year.
ACERCA DEL TALLER
Durante este taller de Inmersión en Arquitectura de Negocio, beneficia a gerentes y practicantes desde los novatos hasta a los expertos. El taller de inmersión desmitificará la arquitectura de negocio, proporcionando una introducción a diversos temas. El taller se enfoca en los conceptos fundamentales, el framework de arquitectura de negocio, la propuesta de valor, gobernanza, creación del blueprint, alineación interdisciplinaria y preparación de la práctica. Adicionalmente los participantes, habrán dado un primer gran paso en su preparación para el examen para Certified Business Architect (CBA)®. Después de su participación en este taller, los asistentes estarán en posición de asumir un amplio rango de retos y responsabilidades en el ámbito de la Arquitectura de Negocios.
OBJETIVOS DEL TALLER - Proporcionar a los participantes un claro entendimiento de lo que es Arquitectura de Negocio y lo que no lo es. - Amplia introducción a la Arquitectura de Negocio, para practicantes y usuarios. - Definir los beneficios y usos de la Arquitectura de Negocio. - Ofrecer un framework fundamental para la construcción de la Arquitectura de Negocio. - Definir los lineamientos y formas para iniciar con la práctica de la Arquitectura de Negocio.
TEMAS 1. Arquitectura de Negocio: Conceptos Fundamentales. 2. Propuesta de Valor de la Arquitectura de Negocio. 3. Rompiendo el Ecosistema de Negocio. 4. Estableciendo las bases: Capacidad, Valor, Información y Mapeo de la Organización. 5. Ampliando las bases: Estrategia a través de Mapeo de Iniciativas. 6. Alineación inter-disciplinaria a disciplinas relacionadas con el negocio. 7. Arquitectura de Negocio y Alineación de Arquitectura de TI. 8. Situación de la Arquitectura de Negocio y Análisis de Escenarios. 9. Definición del Rol de Arquitectura de Negocio, Gobernanza y Patrocinio. 10. Infraestructura y Herramientas de la Arquitectura de Negocio. 11. Iniciando: Incrementando sus habilidades y su práctica.
QUIEN DEBE PARTICIPAR EN ESTE TALLER
- Arquitectos de Negocio - Directivos de Areas de Negocio - Arquitectos Empresariales - Analistas de Negocio - Administradores de Portafolio y de Programas - Responsables de la Estrategia de Negocio
PRINCIPALES CLIENTES
Algunos Clientes a los que William Ulrich ha brindado su ayuda son: Allstate, Assurant Health, Blue Cross Life, CP Rail, Export Development Canada, DIRECTV, FDIC, Ford, Franklin Templeton, General Motors, US General Services Administration, Northwestern Mutual Insurance, Silicon Valley Bank, Southern California Edison, State Farm, Sun Life, US Patent & Trademark Office, US Internal Revenue Service y Wells Fargo, entre otras. ACERCA DE WILLIAM ULRICH
William Ulrich es Consultor Senior de Cutter Consortium y Presidente de TSG, Inc. Es reconocido como una autoridad en el ámbito de la Arquitectura de Negocio, Estrategia de Negocio y Transformación de TI. William es Presidente y Co Fundador del Business Architecture Guild, organización dedicada a la estandarización y promoción a nivel mundial, de la Arquitectura de Negocio. William Ulrich ha sido un motor de cambio detrás de la evolución de A Guide to the Business Architecture Body of Knowledge® (BIZBOK® Guide) y el programa de certificación global Certified Business Architect (CBA)®. Ulrich es un consultor, mentor y líder de talleres muy solicitado. Entre los clientes que Ulrich ha atendido se destacan diversas organizaciones de gran tamaño y de industrias diversas como servicios financieros, seguros, manufactureras, eléctrico y sector gubernamental. Es autor de Legacy Systems: Transformation Strategies (Prentice Hall) y co-autor de Business Architecture: The Art and Practice of Business Transformation (MK Press) y Information Systems Transformation: Architecture-Driven Modernization Case Studies (Morgan Kaufmann Elsevier). También se desempeña como Co-Presidente del Grupo de Trabajo de Modernización a través de Arquitectura del OMG. Antes de la fundación de TSG en 1990, William Ulrich se desempeñó como Director de Estrategias de Re-Ingenieria en KPMG. También colaboró con la
IT Executive Education +Arquitectura de Negocio Taller de Inmersión. Con William Ulrich
Northeastern Illinois University y ha facilitdo numerosos talleres, incluyendo sesiones para el Software Engineering Institute de Carnegie Mellon. Actualmente cont inua su trabajo impart iendo tal leres y entrenamiento en temas de Transformación de TI y del Negocio. INVERSIÓN* •Primer Participante $22,000.00 pesos más I.V.A. •Segundo Participante $19,000.00 pesos más IVA. •Tercer o más participantes $17,500.00 pesos más IVA.
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