Data Architecture for Business Architects

1. Data Architecture for Business Architects Ken Orr Chief Scientist, The Ken Orr Institute April 16, 2008

2. Ken Orr • Chief Scientist, The Ken Orr institute • Fellow, Cutter Business Technology Council • Senior Consultant • Enterprise Architecture • Business Technology Trends and Impacts • Business-IT Strategies • Business Intelligence — Database/Data Warehousing/Business • Agile Software Development and Project Management Ken Orr is a Principal Researcher with the Ken Orr Institute, a business technology research organization. Previously, he was an Affiliate Professor and Director of the Center for the Innovative Application of Technology with the School of Technology and Information Management at Washington University. He is an internationally recognized expert on technology transfer, software engineering, information architecture, and data warehousing.

3. 1. What is Data Architecture?

4. So you want to be a Data Architect

5. What is Data Architecture? • An Enterprise View of Data (Information) • A Distinction between Operational and Informational Databases/Systems • An Data (Information) Architecture Based on Business Architecture • A Mechanism (Approach) for Implementation Business and Technology Strategies

6. An Enterprise View of Data • Data Architecture means looking at all of the information (data) in the enterprise in a structured fashion, even the “unstructured data” • Data Architecture means working to make it easier to bring key information about the same real-world entities and transactions together

7. A Distinction Between Operational and Informational Databases/Systems • Operational and Informational Databases • Operational Database Strategies • Informational Database Strategies

8. Operational and Informational Databases Left Brain Right Brain • Operational Databases are databases that support the basic operational processes (e.g., order processing, manufacturing, purchasing, etc.) • Informational Databases are databases that support management control, analytical and research functions (e.g., market planning, product planning, R&D, etc.) Operational Informational

9. Operational Database Strategies (optimize for update) • Historically, Operational databases have had a variety of implementations: • Network databases • Hierarchical databases • Inverted file databases • Relational databases • Object databases

10. Informational Database Strategies (optimize for access) • Informational Databases have gone through a number of stages: • Report Generators • 4th Generation Languages • Executive Information Systems • Multi-dimensional Database • Data Warehouses • Master Data Management • Data Virtualization

11. Data Architecture Based on Business Architecture • The Enterprise Architecture Stack • How the Various Architectures Fit Together • Business-Driven vs. Technology-Driven Architecture • The Role Enterprise Architects Play

12. B Business Architecture D Data/Info Architecture A Application Architecture T Technology Architecture Security Architecture Methods and Tools Organization and People Enterprise Architecture Stack

13. Enable Decisions Execute Processes Manage Information Enable Applications How the Various Architectures Fit Together Drivers Drivers Business Processes, Organizations (People) Internal Internal Business Business Information • • Objectives, Objectives Data + Context • • Goals, Goals • • Strategies Strategies External External Application • • IT Technologies IT Technologies Portfolio of IT tools (programs) • • Economic Environment Economic Environment • • Regulatory Environment Regulatory Environment Technical Infrastructure Network, Servers, Workstations, Databases Source: T. Petz, GSK

14. Business Change drives change down into each layer enables changes at the higher levels Technology Change at the lower levels Business-Driven vs. Technology-Driven EA Drivers Drivers Business Processes, Organizations (People) Internal Internal Business Business Information • • Objectives Objectives, Data + Context • • Goals, Goals • • Strategies Strategies External External Application • • IT Technologies IT Technologies Portfolio of IT tools (programs) • • Economic Environment Economic Environment • • Regulatory Environment Regulatory Environment Technical Infrastructure Network, Servers, Workstations, Databases Source: T. Petz, GSK

15. Another View of the EA Stack Xerox 2000

16. Building Inspector Master Planner County Agent (Mentor, Trainer, Consultant) The Roles Enterprise Architects Play

17. Business Architecture • How do Business and Technology fit together? • Business Modeling • Business Architecture in the Enterprise • BPM, UML and Model-Driven Architecture

18. Business and Technology Strategies • Michael Porter • Competitive Forces • Competitive Strategies • Benson and Parker’s Square Wheel • Alignment • Innovation • Technology Roadmapping • Problems and Opportunities • New Ways of Looking at Business • Disruptive Technologies • The Long Tail • Delayed Differentiation • Extreme Differentiation • Product Architecture

19. Barriers to Entry Rivalry Determinants Determinants of Buyer Power Determinants of Supplier Power Determinants of Substitution Power Porter’s Competitive Forces (1985) Michael Porter, Competitive Strategy, 1985

20. Competitive Advantage Differentiation Lower Cost Broad Target Cost Leadership Differentiation Competitive Scope Narrow Target Cost Focus Differentiation Focus Competitive Strategies Michael Porter, Competitive Strategy, 1985

21. Aligning Business with Technology opportunities Aligning Technology with Business Strategy Benson and Parker’s Square Wheel The role of IT Architects and Planners is not just to “align” IT to the business, but to help business managers and planners use technology to “innovate” new business solutions!

22. Enablers: Internet, Wireless, Google, iPod, Podcasting, Drivers: SOX, Globalization, Downsizing, Aging Workforce Benson and Parker’s Square Wheel

23. Markets/ Outcomes Products/ Services Market Pull Technology Push Systems design execution Research Resources $ $ $ $ Roadmapping Planning Approach

24. Could Should Opportunity Problem Actual Problems and Opportunities: Should and Could “A problem is the difference between the ‘should’ and the ‘actual’ “ Kepner and Tregoe “An opportunity is a difference between the ‘could’ and the ‘actual’ “ Ken Orr value, cost time

25. New Ways of Looking at Business • Disruptive Technologies (Christensen) • The Long Tail • Making money from the other 80% • Extreme Differentiation • Delayed Differentiation • Product Architecture • Late Binding • Network Warfare

26. Disruptive Technologies 5 ¼" Disks 3 ½" Disks Performance Time

27. Disruptive Technologies (Christensen) • In 1995 Christensen and Bower published a paper based on Christensen’s PhD thesis, which was based on the study of why none of the major manufacturers of 5¼” disks became big players in the 3½” market. • What intrigued Christensen was the fact that none of the companies who failed to “catch the next big wave” were unaware of the technology or badly managed. Indeed, the 3½” disks were pioneered by folks in the labs of the 5¼” disk manufacturers. • As Christensen explored the problem, he found more and more instances of this phenomenon • Discount stores • Steel Mini-mills • Hydraulic Shovels • Japanese autos • This led to the concept of “disruptive technologies” • Introduced at the bottom of the product chain • Introduced a product that was “just good enough” • Competition as seen initially for a small, unprofitable market, so the dominant players go upscale (e.g., U.S. Automakers opting for SUVs and BIG TRUCKS and ceding sedans and economy vehicles) • This provides the new (disruptive) entrant the opportunity to get a foothold to expand into larger and larger market segments • Finally, the sustaining vendor is unable to adapt

28. Disruptive Technologies Current Technology Current Users Current Uses Current Margins Current % Growth Technology Options New Users New Uses New Margins New % Growth Performance Time

29. The Long Tail • Most people are familiar with Pareto’s Law which says that 80% of the effects of a large number of phenomena are the result of only 20% of the causes. In business, this is usually reduced to the fact that 80% of revenue comes from only 20% of the products or 20% of the customers. • In recent years, the Internet has caused people to reexamine Pareto’s law. The Internet makes it possible in many of businesses to make money out of what is called “the Long Tail”. • Proponents of the Long Tail point out that a number of vendors have emerged on the Internet that make a significant amount of their revenue from products that traditional vendors in a given space (e.g., book stores, record stores, etc.) don’t even stock. • Chris Anderson’s Long Tail Blog: longtail.typepad.com/the_long_tail/

30. Wired Magazine Oct, 2004

31. Extreme Differentiation: What can we learn from Steve Jobs? • How you can leverage technology to create new class of product • iPod • iPhone • How you can create new markets • iTunes • How you can exploit style • Steve Jobs is not interested in following. He is a master in differentiation based on available technology, appearance and slick user interfaces Apple iPhone

32. Delayed Differentiation — Product Architecture • In recent years, because of increased fluctuation in product demand, more and more organizations have focused on creating a product architecture that will allow them to respond more rapidly to changes in product demand: • Benetton (clothing/sweaters) found that the most important variable in fashion sweater demand was color. As a result, Benetton fabricates a large portion of its sweaters out of “grey goods” (i.e., without color) and then, based on demand, dyes the sweaters and ships the finished product • Black and Decker has created a product architecture that allows it to create a wide variety of drills (and other products) out of recombinable components • Dell computers has perfected a system for “just-in-time” manufacturing that allows it to build products based on customer demand

33. Product Architecture • Product Architecture involves thinking about classes of products for the future • Product Architecture involves thinking about designing flexible product architectures so that the enterprise can produce different products to meet predictable market trends with minimal change • Product Architecture involves Thinking about where our products and our manufacturing organizations are on the product lifecycle curve • Data Architecture is analogous to Product Architecture for IT. How can we design our data so that we can produce more and more data products faster and cheaper? Think Data Warehouses and Data Marts

34. Product Architecture and the S-Curve

35. Product Architecture — How Dell Does It • Product is highly modular • Suppliers own inventory until assembly starts • Order takers know what is in stock • Order takers know what modules are mutually compatible • Customers are lured to what is in stock that meets their needs using short delivery time • There are runners and expediters scouring the earth for parts • Inventory turns were only 6 only 4 years ago vs. 20 now • “Why can’t Detroit be like DELL?” — Daniel E. Whitney, 2004

36. The Key Elements of Semantic Based Business Architecture • Business Context (which leads to Business Semantics and Information (Data) Architecture) • Business Value and Value Streams (which lead to Business Processes) • Business Process Identify Activities (which lead to Data Requirements)

37. Architectural Implications • Common processes • Lifecycles

38. Common Processes • Across Application Areas (within a Business Unit) • Across Business Units (within Enterprise) • Across Customer Chain (Enterprise + Customers) • Across Supply Chain (Enterprise + Suppliers) • Across Industry

39. 2. Business Architecture and Data Architecture

40. Applications (Services) Information (Data) Applications, Business Process, Data Business Process (Workflow)

41. 4-tier Architecture

42. Business Architecture Modeling • Business Conceptual Modeling Approaches • Business Systems Models • Business Context Definition • Business Value Chain Definition • Business Value Stream Definition • Business Process Modeling

43. Business Conceptual Modeling Approaches • Porter’s Business Value Model • Jackson’s Lifecycle Model • Rummler and Brache’s Systems Model

44. Supporting Activities Customers Firm infrastructure HR Management R & D Procurement Inbound Logistics Marketing and Sales Operations Outbound Logistics Service Primary Activities Porter’s Business Value Model

45. Firm infrastructure Firm infrastructure Firm infrastructure HR Management HR Management HR Management R & D R & D R & D Procurement Procurement Procurement Inbound Logistics Inbound Logistics Inbound Logistics Marketing and Sales Marketing and Sales Marketing and Sales Operations Operations Operations Outbound Logistics Outbound Logistics Outbound Logistics Service Service Service Supplier Value Chain Channel Value Chain Enterprise Value Chain Inter-enterprise Value Chain Porter’s model was one of the foundations for the explosion of interest in business processes and led to the whole area of chains (e.g., “supply chains”, etc.)

46. Disintermediation: The Search for the Consumer and the Producer

47. Entity Lifecycles • In the 70s, Michael Jackson (the software guru) developed the concept of “entity lifecycles” as a way of thinking about major concepts • Lifecycles describe a birth (origination) to death (termination) cycle of an given actor, object, subject, message or event • Most Business Value Chains are based on one of the following: • The Lifecycle of a Product (e.g., an Auto Loan) • The Lifecycle of a Client (e.g., a Trust Client)

48. Compliance Evaluation Administration Management IT Management HR Management Financial Management Supporting (Financial, HR, IT, …) Assets Process Management Servicing Sales Origination Capital Markets Product quality Customer quality Customer / Product Data Value Chain Supporting Processes Supporting Activities Support Asset Information Process Management loans Core Business Processes Primary Activities marketable securities Quality Management Product/Service Information

49. Business Value Chain • Business Value Chains reinforce the notion of “primary business process” • Business Value Chains + Systems Model provide a framework for discussions of product and customer quality • Business Value Chains have proven valuable in providing a “base map” for the entire Enterprise Architecture

50. Enterprise Market (customers) Sources(business partners) product usage (outcomes) products/ services (outputs) resource (inputs) customer (outcome) feedback product (output) feedback The Extended Enterprise Systems Model