Enterprise Architecture

Enterprise Architecture Luay Assidmi IS 3100 Lecture 1-2

Outline • What is architecture? • Why don’t organization have the right architecture? • Why does aligning IT with strategy makes things worse? • What decisions do organizations have to make? • How do you transform your architecture (and legacy systems)?

Organization Structure • Inside any organization is a base foundation of work processes and IT systems that processes thousands of daily transaction • Enterprise Architecture is the organizing logic for the work process and IT systems in an organization.

How do architectures get designed? • Architecting: • The activities of defining, documenting, maintaining, improving and certifying proper implementation of an architecture

Why don’t organization have the right architecture? • Change in environment • Lack of order and predictability • Management and administration disconnected strategic actions. • No plan • Siloed architecture and short-term cost focus lead to long term cost increases

Without a plan • Redundancy • Lack of integration • Lack of standardization

How alignment should work • Senior managers define strategic priorities • Project teams identify and implement business changes and IT support • The resulting IT- supported processes help the organization achieve its strategic objectives

How alignment really work • Strategic statements are often promises • Strategy provides little information on long-term direction of organization • By the time IT finishes its work, the strategy has changed • Reduced Flexibility • The resulting IT legacy makes the organization less flexible in the future

Building Capabilities

Operation Model • The operational model answers: • What are the core activities in your organization? • How standardized and integrated do they need to be? • The operational model • Focuses on the core activities that should mastered. • Provides a stable view of the organization • Is more useful for guiding IT efforts.

How to know what core activates are • What activities do you want to perform repeatable, flawlessly, and efficiently? • What activities did you preform yesterday, and will today and tomorrow?

How much standardization do you need? • Standardization • Simplifies operations, reduces costs, and increases efficiency • Allows measurement, comparison, and improvement • Can accelerate innovation • But • Can limit local flexibility • May require local units to replace perfectly good systems and processes • May be politically difficult to implement.

How much integration do you need? • Integration • Links efforts through shared data • Provides transparency across the organization, and seamless flow of information a cross activities • Allows an organization to present a single face to a customer, supplier, or partner • But • Requires common data definitions • Can be time-consuming and difficult to implement • Unnecessary if units are organized around unique customer groups.

Operational model Airline Bank

The problem with strategic alignment • Strategic statements are often promises • Strategy provides little information on long-term direction of organization • By the time IT finishes its work, the strategy has changed • Reduced Flexibility • The resulting IT legacy makes the organization less flexible in the future

How Enterprise Architecture helps Operating Model Process Integration & Standardization requirements Enterprise Architecture • Defines Solutions • Update architecture • Reduced Flexibility • The resulting IT legacy makes the organization less flexible in the future

Enterprise architecture maturity stages • What is Enterprise Architecture? • Is the organizing logic for work processes and IT systems in an organization • A capability maturity model: • defines four stages of architecture maturity. Each stage involves organizational learning about how to apply IT and business process discipline as strategic capabilities. • As companies move through each stage they can realize benefits ranging from reduced IT operating costs to greater strategic agility.

Stage 1: Business silos • Organizational silos are when individual people, departments, or companies, conduct business in a vacuum, without taking into consideration the impact their actions have on the entire organization. • In this stage companies focus IT investments on delivering solutions for local business unit or functional needs and do not utilize technology standards. The role of IT in this stage is to automate or facilitate specific business processes. • One off solutions • Bottom-up. IT led by local business units • Poor integration with other IT systems • Poor server utilization • Little shared data

Stage 2: Standardized Technology • moving some IT investments from local applications to shared infrastructure. Technology standards are now established intended to increase reliability and decrease the number of technology platforms to manage. Fewer platforms means lower cost (around 15% less) but also less choice, • Rationalization, standardization, and consolidation of the IT infrastructure • Achieving a reliable, cost-effective IT infrastructure shared services model • Focus on quick wins

Stage 3: Optimized Core • move from a local view of data and applications to an enterprise view. IT staff eliminate data redundancy by extracting transaction data from individual applications and making it available to all processes. In this stage companies are also standardizing business processes and It applications. • Standardizing core business processes • Local managers and units lose control over discretion over processes and IT • Consolidating redundant applications into a single global instance of ERP and CRM • Rationalization of processes and applications with the objective of standardizing processes and consolidating applications. • Build re-usable data and business process platforms • Top-down. Business processes and IT investments are made by central IT department

Stage 4: Business Modularity • This stage allows strategic agility through customized or reusable modules. • when IT systems can be decomposed into a number of components that may be mixed and matched in a variety of configurations. • The components are able to connect, interact, or exchange resources (such as energy or data) in some way, by adhering to a standardized interface. • Unlike a tightly integrated product whereby each component is designed to work specifically (and often exclusively) with other particular components in a tightly coupled system, modular products are systems of components that are loosely coupled. • Move from local flexibility to global flexibility

Overview of the four stages

Key findings • The transition from one stage to the next is difficult and time consuming • Moving from one stage to the next requires a business transformation as well as technical one • Companies that try to skip a stage are usually unsuccessful • Each stage involves a very different view of the value of IT and the role of IT in the organization • The leadership challenges are very different for each transition.

Chief Information Officer (CIO) Key skills during stages

Management Practices by stage

The challenge of transformation • The business: • 19 different country business units, each independently managed, with separate systems and processes. • Business units sell approximately the same products • The challenge • Slow to change • Expensive to run • Global customers taking advantage

The challenge of transformation • The business: • 19 different country business units, each independently managed, with separate systems and processes. • Business units sell approximately the same products • The Solution • Ripped out all systems in county BUs • Replaced with standard systems centrally designed and controlled

The Challenge of transformation

EA benefits as through the stages

Summary • EA is the organizing logic for the foundation of your organization: your work processes and IT Systems • In most organization, architecture is hindering execution and preventing innovation • Defining your operation model is the first step in choosing the right architecture for your organization • Transforming architecture is a difficult, time consuming process, but the benefits begin immediately

No classes next week • There will be home work • Thank you

Enterprise Architecture