business by design

C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 1

BUSINESS BY DESIGN

DRAFT – V0.1.0 – NOVEMBER 2014 – FOR PUBLIC

Craig Martin

Chief Architect, Enterprise Architects


ABOUT

zeroHOURS A DAY

BACK OFFICEVENDOR ALIGNMENT

MORE THAN 1600 PEOPLE

TRAINED IN ARCHITECTURE

PRACTICES (AND RISING)

12YEARS IN BUSINESS 8

GLOBAL OFFICES1600

MORE THAN 10,000 DAYS OF

ARCHITECTURE SERVICES

DELIVERED LAST YEAR

10,000

one COMMON METHOD

20four

sixOPERATING IN

6 CONTINENTS


OUR SERVICES

Servicing the Strategy

and Architecture needs

of Global Organisations

STRATEGY CONSULTING

› Business Architecture

› Strategic Services & Operating Model

Design:

» Business Services & Capabilities

» IT Services & Capabilities

› Segment Strategies and Roadmaps:

» Customer Experience & Digital

» Enterprise Information Management

» Big Data Analytics

» Applications

» Cloud & Infrastructure

» Security, Risk & Resilience

» Innovation Management

PRACTICE DEVELOPMENT

› Architecture Service Model Design

› Architecture Operating Model Design

› Service and Capability Readiness

Assessment

› Professional Training and Certification

(Business Architecture, Information

Management, TOGAF®, CDMP®,

ArchiMate® and Design Thinking)

› Project Architecture Resources

› Architecture Talent Strategy and

Professional Development

› Architecture Back Office Services


AN IMPERFECT

PLANNING

MOVEMENT

THROUGH THE

KNOWLEDGE FUNNEL

There are still a number

of failures across the

vision realisation space

Strong disciplines are

required to address

some of these failures

One-third of firms

fail to achieve

expected results

from annual

strategic plans.

More than half of

all business projects

fail.

Forty-six percent of

business failures stem

from misguided

strategies.*Corporate Executive Board


THE VALUE / MANDATE CONUNDRUM

*Infotech executive research

Catch 22:

The CEO is looking for more value, but the CIO has a

mandate of diminishing value that’s often focussed on

keeping the lights on


THIS

ACCELERATIO

N IS PUTTING

PRESSURE ON

CURRENT

BUSINESS

MODELS

Technology

commoditising

from below

Business roles taking on

more architecture

accountabilities


Utility

(Foundation)

Innovate

Build

Advantages

Assemble

Prolong

Advantages

Mix

Reduce

Disadvantages

WHAT'S BUSINESS ABOUT?T H E B U I L D I N G B L O C K A N A L O G Y

DIF

FERENTIA

TIO

N


COHERENCY REQUIRES A BALANCE OF

GOALS AND THINKING TYPES

The challenge is identifying the right skills in the organisation that are able to traverse the domains of innovative intuitive thinking, and reliable analytical thinking.

Unresolved

Business

Challenges

Robust, Repeatable

And Replicable

Processes

NPV

EVA

Operation

Management

Quality

Management

Corporate

Governance

Enterprise

Patterns

Portfolio

Analysis

IT Governance

Value

Engineering

PRINCE2

Six Sigma

& Loan

Business

Intelligence

Strategic

Traceability

Financial

Modelling

Innovation

Management Business

Analysis

Data

visualisation

Talent

Management

System

Thinking

Mission

Business Model

Design

Stakeholder

Value

TOGAF

Cost

Engineering

Solution

Architecture

Knowledge

Ecosystem

Six Thinking

Hats

Collective

Intelligence

Gamification

Crowdsourcing

Change

Management

Perception

Management Wicked

Problems

Environmental

Scanning

Brand

Management

Integrative

Thinking Goals

Capability

Five Forces

Root Cause

Analysis

Product

Management

HEURISTICS

RULES OF

THUMB

ANALYTICAL

THINKING

INTUITIVE

THINKING

* From Roger Martin (2009) The Design of Business

GOAL: Exploitation;

Reliability

Produce consistent,

predictable outcomes

GOAL:

Exploration; Validity

Produce outcomes that meet

an objective

A reliable system will

produce the same test

results every time

W H O I S B E S T Q U A L I F I E D T O

O P E R A T E H E R E ?

A valid system will produce a

result that is shown, through

the passage of time, to be

correct


FINDING THE RIGHT BUSINESS MIXES

The Challenge is reducing the time it takes to move from the unresolved business challenges space to the repeatable formulas space.

Unresolved Business

Challenges

Rules of thumb

Robust, repeatable

and replicable

formulas &

processesUltimately all innovative

algorithms will become utility.

* From Roger Martin (2009) The Design of Business

MYSTERY

HEURISTIC

ALGORITHM

T h e K n o w l e d g e F u n n e l

This is the lean startup space

This is the exploitation and

industrialization space


THE KNOWLEDGE

FUNNEL

Non-core but complex

- Outsource

Innovation, chaos &

unresolved mysteries

HIGH

HIG

H

LOW

LO

W

Must be done but adds little value

to product or services

Very important to success, high value

added to products and services

STRATEGIC IMPORTANCE & VALUE

CO

MP

LEX

ITY

AN

D D

YN

AM

ICS

Complex

negotiation, design,

or decision process

Many business rules;

expertise involved

Some business

rules

Procedure or

simple algorithm

Non -Core

Competencies

Core Differentiating

Competencies

Everyday, highly

repeatable and

automated

Make repeatable and

reliable to gain

efficiency

Core Competitive

Competencies

CERTAIN BUSINESS DISCIPL INES ARE REQUIRED

TO REDUCE THE T IME TO CODIFY

Key disciplines are required to reduce the time taken to move unresolved business challenges into reliable and repeatable processes.

Source: Adapted from “Business Process

Change” by Paul Harmon

GOAL: Reliably

produce consistent,

predictable outcomes

GOAL: Validity-

Produce outcomes

that meet desired

objectives


THE RESULTS OF DISRUPTION

T H E C O M M O D I T Y S PA C E I S G R O W I N G , M A K I N G T H E D I F F E R E N T I AT I O N

S PA C E M O R E C O M P E T I T I V E

Non-core but complex

- Outsource

Innovation, chaos &

unresolved mysteries

HIGH

HIG

H

LOW

LOW

Must be done but adds little

value to product or services




CO

MP

LEX

ITY

AN

D D

YN

AM

ICS

Complex negotiation,

design, or decision

process


expertise involved

Some business rules

Procedure or simple

algorithm

Non -Core

Competencies


Competencies

Everyday, highly

repeatable and

automated

Make repeatable and

reliable to gain

efficiency

Core Competitive

Competencies

Non-core but complex -

Outsource

Innovation, chaos

& unresolved

mysteries

HIGH

HIG

H

LOW

LOW

Must be done but adds little

value to product or services




CO

MP

LEX

ITY

AN

D D

YN

AM

ICS

Complex negotiation,

design, or decision

process


expertise involved

Some business rules

Procedure or simple

algorithm

Non -Core Competencies


Competencies

Everyday, highly repeatable and

automated

Make repeatable

and reliable to

gain efficiency

Core Competitive

Competencies

OPPORTUNITY

OR THREAT?

C A U D I T 2 0 1 4 - E N T E R P R I S E A R C H I T E C T S | PAGE 12K

WHO?


DISCIPLINE CONFUSIONC O N F U S I O N R E I G N S A R O U N D W H I C H D I S C I P L I N E S A R E U S E D

F O R W H AT S I T U AT I O N S

STRATEGIC PLAN

MARKETING PLAN

OPERATIONAL PLAN

DELIVERY & EXECUTION

OPERATIONS

Planning Delivering Operating

PORTFOLIO, PROGRAM AND PROJECT

MANAGEMENTBUSINESS ARCHITECTURE

ENTERPRISE ARCHITECTUREPRODUCT & SERVICE DESIGN

BUSINESS PLANNING SOLUTIONS ARCHITECTURE

SOLUTIONS DEVELOPMENT

ENTERPRISE DESIGN

BUSINESS ANALYSIS

Environment analysis / SWOT,

competitor / Business motivation /

Product and portfolio analysis /

Strategic Options

Market analysis and forecasting Model the business / Evaluate and

select strategy / Risk and funding

analysis

Project, portfolio and program

management, solutions delivery

Daily operations, run the business


WHAT WE HAVE FOUND IN LARGE ACCOUNTS

An ownership gap for business architecture exists - Lines of responsibility around coherency and business architecture, are often unclear

Cohesion Mandate

Undefined - Enterprise Planning Ownership

En

terp

rise

Perf

orm

an

ce

Capabilit

ies

X-F

un

ctio

nal C

apabilit

ies

Fu

nct

ion

al C

apabilit

ies

CONTEXT

Markets

Industries

Customers

Market Segment

Channels

Customer Relationships

Value Proposition

Offering:

Services/Products

Processes/ Value Chains

Capabilities

Business Service

Functions

Data

Applications

Technology

MARKET

MODEL

OPERATING

MODEL

SERVICE

MODEL

Strategic

Architecture

Mandate –

Business

Ownership

IT Architecture

Mandate –

IT Ownership

Business

Architecture

Mandate

Undefined


WHAT


Improve project

performance

Improve enterprise wide

investment performance

Improve Business Performance

Improve Market Performance

A

B

VA

LUE

MANDATE

C

E

Improve Product and & Service

PerformanceD

I M P R O V I N G A R C H I T E C T U R E VA LU E

By EA is often stuck with an old mandate with diminishing utility value

*Adapted from Ruth Malan, Dana Bredemeyer

EA = IT Architecture

EA = Enterprise-Wide

IT Architecture (EWITA)

Improve IT performance

EA = Business Architecture

(BA) + EWITA


EA = Strategic Enabler

+ BA + EWITA

(Shareholder Value)

EA = Product Architecture

+ BA + EWITA

Improve Product/Service

Performance

Reduce

Operating Costs

Positioned For Growth & Change

Focus on Strategic Imperatives

Enhanced

Adaptable

Frontier

Influential

Utility Predictable


STRATEGIES FOR MOVING UP THE CURVE TO

OPEN THE OPPORTUNITIES

Mandate: Improve

enterprise wide program

and portfolio performance

STRATEGIC THEMES

Initiative 5

Initiative 6

STRATEGIC THEMES

Initiative 1

Initiative 2

STRATEGIC THEMES

Initiative 3

Initiative 4

Business Unit 1

Program 1

Program 2

Business Unit 1

Program 1

Program 2

Business Unit 1

Program 1

Program 2

Initiatives straight from strategy often

results in loss of cohesion.

SCENARIO 1: BUSINESS IMPROVEMENT - SPAWNING INITIATIVES FROM THE STRATEGY MAP.




PMO drives the

architecture efforts

S T R AT E G I C P L A N N I N G

B U S I N E S S P L A N N I N G

P O R T F O L I O A N D P R O J E C T

M A N A G E M E N T

B U S I N E S S A R C H I T E C T U R E

S O L U T I O N A R C H I T E C T U R E

S O L U T I O N D E V E L O P M E N T

B U S I N E S S A N A LY S I S

SCENARIO 1: BUSINESS IMPROVEMENT - SPAWNING INITIATIVES FROM THE STRATEGY MAP.




Creating a single unified business model helps build cohesion across the enterprise.

Mandate: Improve

Business Performance

SCENARIO 2: BUSINESS TRANSITION - DEVELOPING THE UNIFIED BUSINESS MODEL

STRATEGIC THEMES

Initiative 5

Initiative 6

STRATEGIC THEMES

Initiative 1

Initiative 2

STRATEGIC THEMES

Initiative 3

Initiative 4

Business Unit 1

Program 1

Program 2

Business Unit 1

Program 1

Program 2

Business Unit 1

Program 1

Program 2




As business architecture provides more value, its is being positioned above the delivery and execution space.





M A N A G E M E N T







Injecting Business Architecture into the strategic scenarios will Improve the Strategic Decisions as well as the execution of that strategy.

Mandate: Improve

market performance

Mission Vision VISIONARY

Str

ate

gie

sG

oals

ST

RA

TEG

IC

Tactics Objectives TACTICAL

Semi

Integrated

Universal

Bank

Product

Specialist

Customer

Owner

Infrastructur

e Provider

SCENARIO 3: PLANNING AND PERFORMANCE - DEFINING THE BUSINESS MODEL FOR CANDIDATE STRATEGIC SCENARIOS

.




Facilitating Business Architecture as a strategic tool in the planning process is where the greatest value lies.





M A N A G E M E N T





E N T E R P R I S E D E S I G N



Combining business architecture with design thinking provides a much broader value proposition where customer experience and value is linked directly to the architected components of the business.

In other words; the entire enterprise is architected to improve the experience the end customer has with the organization.

Outside in, as opposed to inside out.


S E R V I C E D E S I G N


P O R T F O L I O A N D P R O J E C T M A N A G E M E N T



B U S I N E S S A N A L Y S I S

S T R A T E G I C P L A N N I N G


Enterprise Planning and

Performance space

Business Improvement space

Business Transition space

Improve project

performance

Improve enterprise wide

investment performance


Improve Market Performance

A

B

VA

LUE

MANDATE

C

E

Improve Product and &

Service PerformanceD

WHAT ARE THE DOMINANT SKILLS

ACROSS THE MANDATE?

The required skills will therefore vary across the mandate.

Elicitation

Business Analysis

Performance

Recommendation

of Improvements

Enterprise analysis

Determine business

processes

Requirements

analysis mngmnt

and comms

ADDRESSED

BY SFIA

ADDRESSED

BY SFIA

Lean thinking

Six Sigma

TQM

TOC

Planning and

monitoring

Solution assessment

and validation

Program and

Portfolio mngmnt

and Governance

Risk mngmnt

Change Mngmnt

Benefit Realisation

GAP IN

SFIA

Shareholder Value Analysis

Value Maps and Driver trees

Strategic Planning

Organisation Design

Economics and Accounting

Systems Thinking

Corporate Governance

Quantitative Analysis

Product Strategy

Design Thinking

Enterprise Planning


HOW




Organizational Rhythms: Closer alignment to the planning cycle.




Creation of a Unified Team of cross enterprise disciplines.

Change Manager

Finance

PMO

Business Improvement

Strategy

Technology

A combination of People,

Process & technology to

drive out an outcome

through projects


STRATEGIES FOR MOVING UP THE CURVE

TO OPEN THE OPPORTUNITIES

Aligning to value.

WHAT VALUE IS CREATED?

HOW IS VALUE

CREATED?

HOW IS VALUE

MEASURED?

Senior managers

must have a solid analytical

understanding of which

performance variables drive

the value of the company.

An important part of VBM is a deep

understanding of the performance

variables that will actually create

the value of the business – the key

value drivers.

Such an understanding is essential

because an organization cannot

act directly on value. It has to act

on things it can influence –

customer satisfaction, cost, capital

expenditures, and so on.

The problem

lies here


Business Unit Business Unit Business Unit Business Unit Business Unit

Process Performance

Indicators

STRATEGIES FOR MOVING UP THE CURVE A L I G N I N G V A L U E T O P E R F O R M A N C E

Product

DevelopmentRetail SalesRetail PlanningSourcing

Objectives Drive Key Performance Indicators (SMART)

Financial

Operational

Data Quality

Indicators

Business Flows

Flow of goods, flow of money, flow of information

Value Chains / Cross Functional Capability / Value Streams

Critical Success Factors

Strategic Business Goals

Value Monitoring

Valu

e R

ep

ortin

gPerfo

rman

ce R

ep

ortin

g

Performance

Monitoring

*Adapted from “Real world BPM in an SAP Environment”


STRATEGIES FOR MOVING UP THE CURVE A L I G N I N G VA L U E TO P E R F O R M A N C E


“ARCHITECTURE THINKING”


MASHUPS FOR

BUSINESS


PROCESS

Sign Up & Integrate

CAPABILITY

20. Information Services Management

CAPABILITY

15. Sales Execution

PROCESS

A1. Explore and compare potential providers and

services

PROCESS

B2. Sign up and activate account

PROCESS

C3. Integrate my store with Australia Post’s API’s

precedes precedes precedes precedes

BUSINESS SERVICE

Customer Sales

Management

BUSINESS SERVICE

Partner Collaboration

PROCESS

C1. Receive information on how the systems and processes will work

PROCESS

C2. Install the necessary hardware / software on

my systems

is realized by

LOGICAL

APPLICATION COMP.

Customer Sales

Management

LOGICAL

APPLICATION COMP.

Enterprise Resource

Planning

LOGICAL

APPLICATION COMP.

Partner Collaboration

Management

LOGICAL

APPLICATION COMP.

Security Management

communicates with communicates with

communicates with

implements

is realized by

implements

ACTOR

Post Staff

DATA ENTITY

Sales Order

ACTOR

Post Staff

participates in participates in

is processed by

consumes

SAP - CRM SAP - ERP auspost.com.a

u

IAM - OIM

is processed by

ACTOR

Fiona

participates in

FOUR LEVELS OF MIXING:

AT THE RESOURCE LEVEL

The Process Layer Plays a Strong Role in assembling capabilities for different

outcomes

CAPABILITY

People

Process

Tools

Connecting these to projects provides valuable insight into coherency o the capex investment across the enterprise

Within each process flow, there are typically four to five capabilities that make up the process. These typically correspond to functional silos that complete each step.

Within each capability, the model identifies systems or applications that are used to execute the capability. This is where the model forms the alignment between business and IT.

Archimate Notation



AT THE RESOURCE LEVELA capability has many resources that require architecting


THE ENVIRONMENT

BUSINESS MODEL

Markets

Industries

Customers

Market Segment

Channels

Customer

Relationships

Value Proposition

Offering:

Services/Products

Processes/ Value

Chains

Competencies

Business Service

Functions

Data

Applications

Technology

FOUR LEVELS OF MIXING

AT THE CAPABIL IT Y LEVEL

Its at this point that business begins to see the true value of using capabilities

Standard functional capabilities can

be aligned to a value chain

Cross functional capabilities assemble and mix functional capabilities to

achieve outcomes in the value map or driver tree

Cross functional capabilities each drive out

different outcomes. Underlying functional

capabilities will have varying perspectives of

capability maturity and capability uplift

You can also use cross functional models as scenarios to

test the capability anchor model validity



AT THE BUSINESS MODEL LEVEL


Leading and Best Practice Research, 2011/2012Scope: 1765 CEO’s and 2936 business leaders representing all major countries and industries






Innovate

Build Advantages

Assemble

Prolong Advantages

Mix

Reduce Disadvantages

Aggregator Category Leader Consolidator Customizer Disintermediator

Experience Provider

Fast Follower Innovator Platform provider Premium Player

Regulation Navigator

Reputation Player

Risk AbsorberSolutions Provider

Value Player

Structure vs Behaviour - Utility Business Model Stereotypes provide a set of standard business model execution styles to work with

Standard assembly patterns of functional

and cross functional capabilities can be

leveraged as foundation business models to

kick-start your efforts

* Based upon “The Essential

Advantage” Leinwand & Mainardi


‘Enterprise Lifecycle's

2014 © Enterprise Architects PTY LTD

PER

OR

MA

NC

E

TIME

ENTERPRISE

BRAND PLATFORM

BUSINESS MODEL

BUSINESS CAPABILITIES

PRODUCT

O R G A N I Z AT I O N S … A N D A R C H I T E C T S N E E D T O B E A B L E T O P R O V I D E T H E

M E A N S T O E N A B L E T H I S C H A N G E


AT THE VALUE SYSTEM LEVEL



AT THE BUSINESS MODEL & VALUE SYSTEM

LEVELCompanies with a High Level of Cohesion affect EBIT Directly

4%

8%

12%

16%

20%

24%

28%

32%

0 20 40 60 80 100 120

EB

IT M

AR

GIN

, 2

00

3-2

00

7

CAPABILITIES COHERENCE SCORE

COCA-COLA

WRIGLEY

PEPSICO

KIMBERLY-CLARK

SARA LEE

CONAGRAMERCK

UNILEVER

H.J. HEINZ

KRAFT

GENERAL MILLS

CLOROX

CAMPBELL SOUP COMPANY

P&G

*Adapted From “The Coherence Premium” –

Harvard Business Review, June 2010

A coherent organization is one that is thought of

and executed as a whole


COHERENCY BETWEEN SERVICES AND VALUE

Example: Financial Information Management Journey

S C O R E K E E P E R S

D I S C I P L I N E D O P E R AT O R S

C O N S T R A I N E D A D V I S O R S

VA L U E I N T E G R AT O R SHIGH

HIGH

FIN

AN

CE

E

FF

IC

IE

NC

Y

B U S I N E S S I N S I G H T

Profitability

Analysis

Fulfilment

Operations

Time to

profitability

of xParcel

product with

Telstra

account

Provide

Statutory

Reporting


QUESTIONS?

business by design

Business

e n t e r p r i s e

r c h i t e c t s page

u d i t

t h e b u i

d i n g b

strategyand architecture

architecture accountabilitiesc

architecture practices