The Creation of Business Architecture Heat Maps to Support Strategy-aligned Organizational Decisions Ben Roelens, Geert Poels Department of Management Information Science and Operations Management Faculty of Economics and Business Administration, Ghent University, Gent, Belgium [email protected] [email protected] Abstract: The realization of strategic alignment within the business architecture has become increasingly important for companies. Indeed, it facilitates business-IT alignment as a well-designed business architecture helps both to identify the appropriate requirements for IT systems and to discover new business opportunities that can be realized by IT. However, there is a lack of alignment techniques that support organizational (re)design decisions during the operation phase as the actual performance of business architecture elements is neglected. Capability heat maps provide a useful starting point in this respect as they focus on the creation of a hierarchy of prioritized capabilities, which are characterized by a performance measure. In this paper, these techniques will be extended to support strategy-aligned decisions within the business architecture. The identification of the relevant business architecture elements is based on state-of-the-art enterprise modelling languages, which enable the development of enterprise models on distinct layers of the business architecture. Strategic alignment between these elements will be realized by using prioritization according to the Analytic Hierarchy Process (AHP), while performance measurement will enable the creation of a proper decision support system. Afterwards, the proposed heat map will be applied on a case example to illustrate its potential use. This results in the completion of a first build-and-evaluate loop within the Design Science methodology. Keywords: Business architecture, Heat maps, Enterprise modelling, AHP, Performance measurement 1. Introduction and background The realization of strategic alignment within the business architecture of an enterprise is important to understand the complex business context, which is sustained and possibly enhanced by information systems to realize Business-IT alignment (Pijpers et al. 2012). Indeed this ensures that information systems contribute to processes, which support the organizational goals, and to the resulting value creation for the company and its various stakeholders (Andersson et al. 2009). The business architecture concept originates from the enterprise architecture field, which is a holistic approach offering an integrative view on the company. This includes the use of models, besides other principles and methods, to design and realize the business architecture, information systems architecture, and technology architecture (Lankhorst 2009). Enterprise models contribute to the design of the business architecture by three types of models: goal, value, and process models (Andersson et al. 2009, Pijpers et al. 2012). While goal models address the why perspective within a company, value models focus on what a company must do to implement organizational goals with the aim of value creation. Process models specify how value should be created by defining process activities and individual responsibilities at the operational level. Related research (see review in Roelens and Poels (2013a)) tried to realize strategic alignment between goal, value, and/or process models. Most of these efforts focus on top-down strategic alignment by developing transformation rules based on mappings between the meta-model constructs of the different model types. Other authors (see Buder and Felden (2012)) used annotation to enrich process models with value or goal information to establish a bottom-up strategic alignment. Although all these approaches ensure the consistency between enterprise models, they only offer a static view on the enterprise as the actual performance is neglected. As such, these techniques are useful during the design phase of the business architecture, but they do not support organizational (re)design decisions taken during the actual operation of the company. This research gap will be addressed by the development of a business architecture heat map, which combines the use of AHP, to ensure top-down strategic alignment between the business architecture elements by prioritization, with performance measurement principles to facilitate the support of organizational (re)design decisions. The paper is structured as follows. Section 2 describes the creation of the business architecture heat map based on literature about business architecture elements and the creation of heat maps. Section 3 provides a demonstration by a case example, while section 4 briefly discusses future research.
2. Business architecture heat map 2.1 Business architecture elements The meta-model model elements (figure 1) are related to the perspectives within the business architecture. Goals (i.e., the why perspective) are classified as either financial, customer, or internal indicators (Kaplan and Norton 1992). Learning and growth objectives are not included as the developed heat map supports strategy-aligned decisions within the existing business architecture, rather than changing it through innovation. To address the what perspective, a literature review was used about the constituting elements of the business model concept (Roelens and Poels 2013b). The financial structure of a company is a representation of the costs from acquiring resources and the revenues earned from the offered value proposition (Roelens and Poels 2013b). Hence, the value stream starts from the financial goals via the financial structure to the value proposition of a company. Since the value proposition is the set of products and services, which provides value to the customers of a company (Roelens and Poels 2013b), this concept is the implementation of the customer objectives in the business architecture. The value stream continues from both the value proposition and the internal objectives to the core competences and the value chain. The value chain is an aggregation of the elementary value-contributing activities of an organization. These activities address the how perspective in the business architecture and are the end of the value stream.
Figure 1: Meta-model of the business architecture heat map
2.2 Heat map To create the heat map, the value stream relations between the elements are characterized by an importance (figure 1). This allows specifying distinct priorities in case an element supports different upper elements (e.g., a process contributing to two core competences). AHP is proposed to prioritize between the different business architecture elements as it deals with inconsistencies that are inherent to subjective judgements (Hafeez et al. 2002). To obtain the priorities, pairwise comparisons are made between those elements that have the same upper element in the value stream. This
comparison is performed on a 9-point scale (Saaty 2008), ranging from 1 (i.e., two elements
contribute equally to the above element) to 9 (i.e., the evidence of favouring one element over another is of the highest possible order of affirmation), and results in the creation of a comparison matrix. The resulting priorities are given by the real eigenvector of this matrix. Afterwards, the lowest priority is rescaled to 1 to account for differences in the number of child elements of a certain upper element. The colour of the value stream relationship depends on whether it is characterized by a high (i.e., ≥ 5 visualized in (solid) red), medium (i.e., ≥ 3 and < 5 visualized in (dashed) orange), or low importance (i.e., < 3 visualized in (pointed) green). The use of performance measurement enables the analysis of the actual performance of the business architecture elements. This includes the specification of a measure for each of these elements. Measures are characterized by a description, a performance goal, a deviation %, and the actual performance (figure 1). Depending on the actual performance, the colour of the business architecture elements is either (solid) red (i.e., < performance goal x (1 – deviation %)), (dashed) orange (i.e., ≥ performance goal x (1 - deviation %) and < performance goal x (1 + deviation %)), or (pointed) green (i.e., ≥ performance goal x (1 + deviation %)). By a proper use of the measure attributes, it is possible to deal with both quantitative and qualitative measures (table 1). Table 1: Measures supported by the business architecture heat map
Type Example Performance goal
Deviation % Actual performance
Positive quantitative measure Profit g d a
Negative quantitative measure Loss 1/g -d/(1-d) 1/a
Qualitative measure Satisfied criterion
1=yes 0 0=no or 1=yes
3. Case example This case example describes the business architecture of a fictitious bakery, facing a declining customer loyalty. Based on the data model (figure 2), it is possible to develop the business architecture heat map (figure 3) according to the described procedure. Due to limited space, the comparison matrices of the AHP are omitted and only the resulting priorities are given.
Figure 2: Data model supporting the case example Several insights emerge from the developed heat map. The critical path to increase customer loyalty is constituted by value stream relations that are characterized by a medium or high importance. Within this path, attention must be given to elements with a bad performance (i.e., the activity of preheating). In practice, a buzzer indicates when dough can be put in the oven. However, due to the time that is needed to put the dough in the oven, the temperature gets too high. This increases the number of collapsing breads after baking. By adapting the preheating activity, improvements can be made to offer higher quality products and to increase customer loyalty. Another analysis is based on elements with a bad performance that are not on a critical path (i.e., fill in evaluation forms). As this activity is not the main driver for the core competence of resource sourcing, it should be questioned whether to perform this activity in-house. A solution includes asking suppliers to perform the quality checks themselves and to provide certificates. Another improvement is to incorporate quality checks in the performance evaluation of the responsible employees. This should improve the awareness for this activity in the workplace.
Figure 3: Business architecture heat map applied on the case example 4. Discussion This paper completes a first step in the development of a strategic decision support system. Future research includes applying the proposed heat map by practical case study research to evaluate the meta-model and its visualization. This evaluation will provide support for the claimed benefits of the business architecture heat map in comparison to the existing techniques. An important benchmark in this respect is the Business Intelligence Model (Horkoff et al. 2014), which also uses performance measures to align activities with strategic objectives. However, the approach is different as performance measures are exclusively used on the level of activities, which prevents the creation of visual heat maps. The evaluation also requires the development of tool support, which facilitates the large-scale creation of business architecture heat maps that can easily be exchanged between business users.
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