IT Architecture

1. IT Architecture Chapter 3 AJ Raven

2. 2 Architecture 1 Strategy Governance Payoffs 3 4

3. Agenda Architecture as DNA Why It’s Often Blind to Strategy Inside the Blackbox – apps, infrast, data How Non-IT Adds Strategic Firepower

4. Jargon Decoder • IT architecture: A blueprint of IT assets in your IT portfolio describing what they do and how they interact • Enterprise architecture: How a firm’s corporate IT apps, infrastructure, and data are organized • Operational performance: An IT asset’s fitness of purpose, security, and maintenance costs • Evolvability: How easily an IT asset can do unplanned things • DNA analogy: Architecture is irreversible and constrains how it can be changed over its life. • Architectural tradeoff: Operational performance now versus evolvability later • App architecture: How an app is divvyed between a user’s device and a more powerful “server” machine • Data architecture: How your firm’s data assets are organized

5. Corporate IT’s Long Tooth • $1 spent on an IT system  $7 on lifetime running costs • Outlive their intended lifespan by up to 200% • Most firms obsess over initial spending that first dollar wisely • Yet they overlook how today’s IT choices hurt their strategy later • IT architecture = technological DNA: Irreversible and preordaining • Predicates evolvability before first line of code is written • IT not designed to evolve = handcuffs strategy • Consequences: Operational and strategic • IT architecture choices today sow seeds of tomorrow’s strategy • Shortcutsdebtpaid in maintenance costs and business agility • Without non-IT managers’ contributions, strategic consequences escape firms’ radar screens • Otherwise choosing to delegate to your IT unit • Can make IT catalysts for competitiveness • Must know just enough to converse with IT folks

6. Illustrations I • Facebook versus Skype: • A new user costs Facebook 100 times ($5; 30k servers) Skype • The difference keeps rising • Skype’s architecture embeds cheap scalability in its DNA • Secret to Siri’s smarts • 1950s idea DOA until Siri took it mainstream • Siri’s architecture quit trying to get a user’s machine to do voice recognition • Instead hooked phones to the brainpower of a remote supercomputer • Obamacare’s debut crash • $2 billion system for 320 million Americans unable to handle 1100 • Architecture faux pas killed scalability • How Netflix streams to 100 million viewers without a hiccup • 190 countries • 1/3rd of all Internet data flow uses a “distributed” data architecture

7. Illustrations II • How Delta turned around without retraining its 80,000 employees • Architectural choice in $1.5 billion Delta Nervous System left employees’ screens untouched while replacing everything under the hood • How UPS grows the size of FedEx every Christmas without losing a package • A data architecture decision made in the 1980s • Also owns the largest fleet of jets and cellular networks • Why Apple, not Napster dominates the music industry • Poor architecture sued it out of business • How Target lost 110 million customers’ data around Christmas • Architecture choice left its refrigerator repair crew vulnerable • Why Google’s million servers need to keep growing • and consume the power of 250,000 homes

8. Architecture as a Universal Translator Homeowner’s intent Strategic aspiration Envisioned home Operational strategy Homeowner Line functions Prioritized needs Prioritized business needs Architecture Matches IT architecture Costs constraints possibilities Costs constraints possibilities IT unit Builder IT project Constructed home Reconciles desirable vs achievable

9. Architecture as DNA • Imprints traits of IT systems • Largely irreversible • Influences how they can and cannot evolve • Lurks in blind spot of non-IT managers ~ a technical decision • But IT specialists are unschooled in its strategic consequences • IT architecture is a choice among tradeoffs • Business-IT conversations put them on the table early on Sole focus without non-IT involvement Immediately visible Strategic • Scalability • Evolvability Operational • Fitness of purpose - Fast, reliable • Security • Maintainability Now Short-term Visible later Long-term Costs ~ 700% Bakes in inflexibility Business units should define 75% tweaking 25% bug-fixing

10. Good Architecture • Balances economical performance today and economical changeability later • Fulfils today’s requirements but plans for tomorrow’s expectations • Explains why some… • firms’ IT is more adaptable archrivals’ • can harness new innovations faster • Non-IT managers can help preserve enough of both

11. Corporate IT Architecture: The Big Picture • Describes how they fit together • Firmwide organizing logic of the three classes of IT assets Apps 3 Shapes Enterprise IT architecture 2 Data Constrains 1 IT Infrastructure

12. How IT Complexity Paralyzes Agility • Business processes increasingly embedded in IT • Patchwork over decades, generations of technologies • Connected in idiosyncratic, poorly documented ways • Unpredictability of ripple effects impedes change • Brittleness  a competitive liability • Inflexible IT  inflexible business processes • If not a catalyst for business agility, it is an impediment Try tweaking this! App 1 App 2 App 2 App 3 App 3 App 1 ? Later ? Earlier

13. Simplicity is the Ultimate Sophistication • Antidote to complexity = simplicity • Good enterprise architecture makes complexity manageable by • Increasing the autonomy of IT assets • Easing integration • Key idea: Lump things that change for same reasons and at similar speeds • Apps that change faster to foster business agility • Infrastructure that changes slower lowers costs Needs rapid change Apps (faster) Needs cheap reliability Infrastructure (slower)

14. Thinking in Lego Blocks Business processes are hardwired into apps • Lego-like “modular” approach  simplicity and adaptability • Conforming to Lego studs allows freely changing any brick and attach to others to create more complex structures • Apps relatively independent, interoperate via explicit interfaces • Permits tweaking and gluing an app back into the portfolio • Plug-and-play plug-and-pray • ~ Electric outlet: Interoperates with a toaster, coffee maker, or vacuum Two advantages • Enables tweakability and guarantees interoperability • One app can be tweaked in blissful ignorance of others • Enables value-stream connectivity without disclosing IP • Makes complexity more manageable • Contains a glitch in one app from destabilizing others • Permits business-driven innovation in IT apps without forsaking firmwide integration Like traffic lights, useful only when all apps comply

15. Lessons from Paris’ Architecture Common challenge: Preserve viable old assets while adding new ones

16. Layer #1: IT Infrastructure Architecture • Firmwide digital plumbing used by all line functions and apps • IT infrastructure architecture is their firmwide arrangement • Relatively stable, generic commodity, and rarely a competitive differentiator • Consumes over 50% of corporate IT budgets • Must be reliable but economical – Key choice: Level of centralization • Non-IT contributions • Is frugality or tailoring more important for their units? • Define “good enough” operational performance? But underperformance liability • Costlier to build • Cheaper to run • Cheaper to build • Costlier to run Centralized Decentralized Scale economies Firmwide integrations Concentrates vulnerability Increases costs Tailoring to line functions Widespread vulnerability

17. Layer #2: App Architecture • App architecture = choosing where to locate the three pieces • Like arranging pieces on a chessboard • Has irreversible operational and strategic consequences • PCs • Smartphone • Cash registers • Thermostats • IoT devices User devices “Clients” Powerful Central “Server” Internet • Inputs • Display Three building blocks App’s core work Interaction App logic ? ? Data Storage that app uses & produces Most business innovation here

18. Three Arrangements ~ App Architectures • Cloud architecture • Client-server architecture • Peer-to-peer architecture Centralized Cloud Peer-to-peer Decentralized Client-server

19. #1: Cloud Architecture All heavy lifting is done on the server side via the “cloud” (e.g., Siri)  Clients can be feeble & cheap only input and display information • Reincarnation of 1960s mainframe architectures  Centralizes everything Easy maintenance only a central copy needs updating  Low upfront costs ~ utility-like model  Ongoing, variable operating costs replace upfront costs  A single point of vulnerability  Strategically undifferentiating (common providers) User devices “Clients” Central “Server” Internet Interaction App logic Capital-economizing for strategically unimportant apps Data Storage

20. #2: Client-server Architecture Centralizes only data; clients do heavy lifting Most common in corporate portfolios; predates cloud  Offers more potential for competitive differentiation  Costlier if custom-built ($15-$40 per line + 700% maintenance)  Burdensome upgrades Two newer cloud-inspired variants enable building cheaper, faster custom apps • Service-oriented architectures: Some server-side functionality purchased as a service, integrated into custom apps • Micro-services: Many discrete generic services cobbled into an app’s logic  User devices “Clients” Central “Server” Internet Data Storage Interaction App logic

21. #3: Peer-to-peer Architecture No central server  every client performs all app functions • Every client simultaneously acts as a little server for all other clients • Strength in numbers; every new client increases the hive’s collective capacity  Infinite, dirt-cheap scalability • Reason for 100-fold user cost difference between Facebook (cloud) vs. Skype (peer-to-peer)  Zero control over user devices relegates it to niche, eclectic uses • Why Netflix needing scalability avoids it • Recommended only for scale-hungry apps that demand no control Interaction User User App logic Internet User Data Storage User User User User

22. Figure 3-14 Every App Architecture is a Tradeoff • None optimal because every one of them involves tradeoffs • Non-IT managers must weigh in on… • Rank order operational priorities for your business activities • Acceptable tradeoff in operational performance to avoid a strategic penalty later? Speed None inherently more secure Reliability Operational Security Maintainability None inherently more evolvable Scalability Strategic Evolvability Client- Server Cloud Peer-to-Peer

23. Layer #3: Data Architecture Where is your firm’s data stored? • Integrated firmwide data is the foundation for automation and analytics • Widespread problem: Proliferation of duplicated, inconsistent data Two causes: • Fragmented across apps (app architecture is for individual apps) • All apps collectively determine how a firm’s data assets are organized and where they are located • Data warehouses assemble copies of data to integrate siloed data ~ Library of Congress for books • Geographic dispersion - Two solutions To pick appropriate data architectures, non-IT managers must decide: • What data should be centralized firmwide for executing your core business processes or for analytics? • What data must be shared across your markets?

24. Two Solutions to Geographic Dispersion of Data  Replication  Partitioning Copy Copy Copy Copy Copy

25. Summary • IT architecture is technology’s DNA • Irreversibly preordains tradeoff between operational performance and evolvability • Operationally: Fitness of purpose, security, and maintenance costs • Strategically: Scalability and capacity to evolve in not-yet-anticipated ways • Complexity causes brittleness; thoughtful architecture lowers complexity • IT architecture translates between business-speak and IT-speak to foster a shared purpose • Enterprise architecture spans all three classes of IT assets in a IT portfolio • Infrastructure architecture: Centralizing lowers costs but decentralizing helps tailor it to diverse business needs • App architecture is how its three building blocks are split across the Internet • Data architecture determines data consistency and accessibility • Without non-IT involvement, architecture is strategically blind • Disengagement causes the wrong tradeoffs

26. Operational and strategic consequences of IT architecture

27. Delta DNS Figure from Sidebar Flight ops Baggage Flight ops Baggage Tower Tower Gate Gate Operational apps Old Operational apps Delta Nervous System Old infrastructure New infrastructure Fragmented data Centrally-accessible data Old Delta IT portfolio New Delta IT portfolio