So, why do we do it differently with IT, software and digital systems in our companies?
We discuss what digital transformation is and how the production of an organisation-wide information systems plan (or Enterprise Architecture) is a brilliant first step. The so-called “Information Age” is well and truly upon us; the importance of IT as a business enabler is growing rapidly across public and private sector organisations.
Things are different. Digital is not just about new startups and buzzword bingo, it really does make your company more efficient and profitable.
What is Digital Transformation?
Whilst digital transformation looks a bit different in every company, the core idea is that businesses can become more competitive by adopting digital technologies. Technology applications can range from internally-facing programmes to externally-facing programmes.
The internal view is about improving business operations and processes. Recently businesses have become focused on survival or being robust and resilient in the face of disruptive events e.g. cash flow issues, inventory management, fluctuation in supply and demand processes.
Whereas the external view represents a transformative improvement in products, services and customer experience. Whether that’s the creation of new or improved sales and marketing channels, greater customer experience which capitalises changing in market requirements (e.g. customer expectations) or technology opportunities.
Whilst digital transformation covers both internal and external issues, Enterprise Architecture (EA) itself has traditionally focused on more internally facing aspects. Although digital transformation is intentionally organisational-wide, it’s essential to have a specific goal to ground priorities. Having a solid why is important for establishing the appropriate drive in leadership and culture – these should come directly from business planning and strategy.
What is going wrong with Digital Transformation?
Huge sums of money are being spent under the guise of digital transformation. Few programmes demonstrate clear ROI. Often organisations become so preoccupied with doing digital transformation that they neglect to build a clear picture of how they can use that technology to create and capture value upfront.
Whilst digital technology offers great potential, it needs to be properly identified and integrated with the organisation – a vision for the future of the organisation must drive technology. The main challenge for organisations that are committed to digital transformation is going from vision to execution.
- Start with why – a Business Plan or Strategy must be defined first. This helps identify which digital technologies could be adopted in order to meet these aims.
- Take a hybrid approach – Combine outside technology consultancies who have technical expertise with your best insiders – the staff members who have intimate knowledge of your company's processes, people and culture.
- Establish your Enterprise Architecture – build an as-is, current-state model of how your organisation is made up. How does your business plan or strategy change this model? What is the future state?
- Acknowledge and respond to staff concerns about digital automation – companies with the greatest potential for digital technology have employees that may consciously or unconsciously resist change. In reality, it is an opportunity for employees to level up into higher value work in the workplace of the future.
- Foster a transformative culture – digital technology thrives in an iterative, continuous improvement culture, characterised by rapid prototyping, experimentation, pilot trials, agile decision making, and flatter organisational structures.
A digital-first organisation is one with two capabilities. Digital awareness, which enables the identification of technology to improve the business and leadership capabilities that can drive organisational change.
At Razor, we believe a long term roadmap that directly connects your digital programmes with your business goals, dropping value along the way, is a sure-fire way to becoming hyper competitive over the next few years. Enterprise Architecture gives a framework for doing exactly that.
So what is Enterprise Architecture, and why does Razor believe in it?
John Zachman is widely acknowledged as the founder of EA in 1987 with his “Zachman Framework”. Enterprise Architecture provides an enterprise-wide model of how information is generated, communicated, stored and consumed. In the most simple terms, it’s about linking strategy, business and technology. Sounds incredible, right?
EA sits somewhere between business strategy, enterprise modelling, system architecture and information systems. It’s a set of models or descriptions that establishes a relationship between the business processes and its supporting IT infrastructure. This model shows you the set of current capabilities, the set of future requirements and the resulting gaps or duplications between these two sets. This allows you to optimise the quantity and distribution over time of business change, financial and technology resources into a roadmap.
Enterprise Architecture can provide a strategic competitive advantage by making companies who adopt it more efficient and agile.
At its very best it can essentially ‘engineer’ your organisation for performance; once designed, the building and running of technology support this in the same way we as employees do – individually contributing or managing those that do.
It is not just a document; in order to drive long term business value you need to use it as your digital transformation roadmap, and continuously update and refine it as the enterprise itself evolves. The initial pass however, can be time consuming and slow to get started. Over the years EA has developed further and further – Razor sees the techniques of EA being a highly valuable tool in digitally transforming business.
What's the business case for EA?
Conducting an EA sprint and maintaining the EA incurs cost and resource. So, where does the bottom-line advantage come in? In short – why bother?
IT has not traditionally been seen as a strategic asset, so IT planning typically revolves around developing individual technology solutions that meet particular requirements of the organisation for whatever is seen as a priority at the time. In many companies a lot of their systems are built or bought as individual projects based on what, at the time, were unique or mutually independent requirements. Over time, functionality is duplicated across systems and the business process changes required for best use of new systems are poorly delivered. And because new systems are requested sequentially, little interest is paid to where capability overlaps which greatly harms business change, financial and technology resources.
EA is designed to address this problem directly by evaluating all requirements and proposed solutions across the whole enterprise with clear relationships to the objectives and goals. Most companies in good health will have a strategic plan for goals and initiatives, and EA can help make this plan come to fruition.
Legacy Technology ROI Top Tips
- Existing systems can be budget killers. The operation and maintenance of legacy systems can severely eat into a fixed budget, which could otherwise be applied to new opportunities. Look out for high cost, enterprise-wide, blue-chip software from big name companies, and ask whether its business value justifies its cost.
- Being objective and critical of existing systems (and their respective impact on budget) is a key dependency for efficient EA. Look at each department's systems and try to objectively understand what features you're using.
What's gone wrong before in EA?
Even while in principle EA is worth doing, the time in which it takes to reach a credible EA model is something that can prevent it from ever happening, especially when new capability is required immediately. The only way around this is to reduce the scale of your first EA by focusing on the particular segments of the organisation that needs the new capabilities, so that only the strategic drivers, business services, and technology solutions that apply to those segments are modelled.
Tackling legacy systems and infrastructure is expensive, complex and nearly impossible to justify with conventional ROI models. The organic development of an enterprise's technology architecture leads to the accumulation of multiple overlapping applications, different technology stacks and bespoke solutions that are costly to operate and difficult to maintain.
EA can be viewed as an overreaching layer of control over what would be traditionally managed by individual department program managers and executives who previously had a lot of independence for scoping out requirements and developing solutions to meet their needs. Centralising this function into an EA programme means relinquishing some of that control and responsibility away from these managers which can cause friction.
EA also brings new language and planning processes which are seen as opaque and thus resisted. Becoming familiar with the language and processes takes time and an appetite for change that some companies struggle with. The cost of creating EA momentum for analysis and modelling depends on the amount of existing information and the degree of cooperation that is achieved with stakeholders.
The majority of the information technology industry is driven by trends, new terms, buzzwords, ideas and themes. This focuses our own attention towards what they perceive constitutes current market demand, which is typically a promising technology. The reality is that while new technologies appear, some aspects of the way they are selected, deployed and implemented within an organisation must be the same. EA can help reduce risk and give structure to these implementations.
Further, there is an overall trend that sees software technology being a panacea for all problems. Whilst at the same time, many dismiss the value of strategic development, engineering and architecting, the practice of modelling and methodologies for more long-term programmes. There is a fine line here – at Razor, we’re consciously aware that whilst technology is a powerful tool, people and the business must come first. We have strategic consulting engagements for this purpose, to give a higher level view of what technology can do for your organisation.
The term of Enterprise Architecture itself is divisive. Many have scrutinised the concept, with myths proliferating, poor dissemination of best practices and the classic of ‘over promise and under deliver’. Many providers, such as consultants and integrators, aggressively promote EA because of commercial motivations. Much of these provide face-value advice and trendy concepts without acknowledging the practical realities or due-diligence around Enterprise Architecture modelling. For these reasons, we have taken the principles of EA and applied our experience of programme management, engineering, research and change management to help address its shortcomings.
How should an EA programme work?
Razor is constantly striving to be more analytical and descriptive, and EA gives us a high-level framework that can operate over a set of departments, or the entire organisation itself. We love the fact our clients can see how technology solutions directly impact their business strategy. A key process of EA is the effective translation of the organisational business strategy, using enterprise modelling towards deployable system architectures of specific information systems, or solutions as they are more commonly known.
When it comes to a description at the implementation level, we need to use richer models that are composite in nature. Often people make the mistake of jumping towards implementation level detail too early and get bogged down in software architectural decisions. In short, start by thinking top-down, and the details can be filled in later. Having a map of all the possible software solutions means we can understand how these solutions work together to make up your business's technology landscape and critically, do it efficiently with the greatest business impact and value. This means that EA should operate at a business and technology planning level or strategy-oriented enterprise level rather than a systems and process level. Knowledge of these is only really necessary when it comes to implementation.
In organisations from large to small, capital investments or expenditure requests are combined with a business case. Often this business case will include some analysis of the life cycle, investment and payout model. Estimating these accurately can help get stakeholders to buy into the EA programme more fully.
Once the respective segments are modelled in terms of functionality, the requirements can be customised, by adding features or modules to existing systems or investing in new systems where appropriate. This approach can save thousands to millions in investment, in addition to the management overhead inherent in implementing new systems. The value of EA then starts to be acknowledged and efforts to model the organisation in EA are renewed.
Always start small but end BIG
EA should start with a pilot that focuses on a partial segment of the organisation that describes the current capabilities and desired future requirements. This may be a handful of the business departments that form the main business model. This forms the basis of a plan and business case. If this proves to be successful, the EA may be extended into further aspects of the organisation until the complete enterprise is modelled.
Getting the critical buy in from senior leadership
The EA function needs to be fully backed by senior leadership and properly resourced in order for it to have influence over how the organisation is run. EA should be seen as an authoritative reference that offers more than one-time or occasional value – it’s a living architecture that directly contributes to high levels of agility, performance and profitability.
Part of the process of getting started with EA is by establishing a far more comprehensive communication between business leaders (including management) and the IT departments. This relationship becomes self-reinforcing; once the business acknowledges the value of digital transformation projects, inertia decreases and further investment follows.
The alignment supports more ambitious programmes and projects, particularly those that are outside the scope of classical IT functions, e.g. digital departments, new business models, product development, operations or mergers and acquisitions.
It’s not just about technology, it’s business transformation
EA has a massive leadership advantage for the business itself. Decision-making is raised above departmental level – where there are significant differences in how things are done and high potential for overlapping or duplicative functions and resources that leads to waste.
Leadership can generate clear, consistent views of the business, and an understanding of the dependencies, interrelationships and comparisons of different business units or functions that are possible. This high-bandwidth, efficient communication at the top has been something organisations are in critical need of.
For larger companies, EA has a role in supporting mergers and acquisition opportunities in both directions (being acquired or acquiring another company). A typical stumbling block with M&A efforts is the lack of understanding around culture and capabilities between the companies that are being brought together. Enterprise Architecture helps to rationalise and align their strategic, business and technology-based plans, respective resources and business processes. This will clarify the capabilities, assets and value of respective companies and reduce risk in the post-merger/acquisition period.
At its best, EA can support the creation of a culture of continuous improvement, controlled adaptation and iterative optimisation in response to external and internal drivers. This is essential if a company is serious about exploiting the business opportunities of digital technology – a creative, innovative and continuously improving organisation goes hand in hand with digital transformation.