They can’t therefore see the wood (the ‘Enterprise’) for the trees (a project), let alone the helicopter view…

Enterprise architecture is in reality one of the most powerful management approaches that can be used by an organisation. It is not intended to be used (only) at a solution or project level but for the big decisions that an organisation’s leadership team have to make. The leadership (i.e. the C-level executives, and heads of divisions etc.) have to make the decisions based on the facts and knowledge base (the Enterprise Architecture repository) delivered by the enterprise architecture function. Those decisions are supported by the enterprise architecture function planning their execution in the EA roadmap. Each initiative in the EA roadmap is typically a new or changed Capability or Capability Increment (see MODAF and http://www.mod.uk/NR/rdonlyres/E43D93F6-6F43-4382-86BD-4C3B203F4AC6/0/20090217_CreatingCapabilityArchitectures_V1_0_U.pdf).

Typically the focus of Enterprise Architecture is on:

• Increasing the return on business and IT investments by more closely aligning them with business needs.
• Identifying areas for consolidating and reducing costs
• Improving executive decision making
• Increasing the benefits from innovation
• Delivering strategic change initiatives
• Managing business transformation activities

The Enterprise Architecture is also characterised across the following multiple dimensions:

• Direction: Enterprise Architecture is focused on strategic planning (i.e. business transformation, strategic change programmes) and not on operational change (i.e. run the business, six sigma, lean processes)
• Scope:  Enterprise Architecture is focused on the whole of the business (i.e. the Business Model and Business Operating Model) for all business and IS/IT functions, and not just on the IS/IT components.
• Timeline: Enterprise Architecture is focused on the long term view of the future scenarios (up to 3/5 years in the future) and not just on a short term view of current state. Enterprise Architecture is focused on a roadmap of changes to an organisation’s capabilities.
• Value Chain: Enterprise Architecture is focused on the whole of the enterprise (i.e. the extended organization and value chain) and not just on the scope of a delivery project
• Stakeholders: Enterprise Architecture is focused on the needs and concerns of the C-level executives (CEO, CIO, COO etc.), business executives, corporate and business strategists, investors, strategic planners.

(ps. I tried to draw a diagram to illustrate where Enterprise Architecture lies on these dimensions but couldn’t visualise a multi-dimensional space…)

So overall, the primary purpose of Enterprise Architecture is to support strategic change such as :

• The introduction of new customer and supplier channels such as  eCommerce
• The consolidation of the existing portfolio of people, processes, application and infrastructure etc.
• The reduction of costs and risks, ensuring the enterprise will remain viable and profitable
• The design of a new organisation, business model and business operating model.
• The due diligence for mergers and acquisitions and management of the resulting integration programme.
• The development of smarter and more effective systems (not just IT systems).
• The introduction of shared services and applications.
• The introduction of new technology, platforms and infrastructure such as SaaS, Cloud etc.
• The introduction of regulatory and legal changes such as Basel 3

In my future blog entries I will explore how Enterprise Architecture supports some of these areas.

The first one will be about how Enterprise Architecture is used to support Due Diligence activities prior to mergers and acquisitions.

A business strategy is a long-term plan of changes for the whole enterprise which will address things like offering new products an business services, dealing with new customer or market segments, opening up niche opportunities, growth via mergers & acquisitions, cost consolidations and increased efficiencies. See http://en.wikipedia.org/wiki/Strategic_planning  and http://en.wikipedia.org/wiki/Business_transformation

Enterprise Architecture primarily focuses on what an enterprise needs to do in order to stay viable, efficient and profitable in the future. In Viable System Model (VSM) terms, Enterprise Architecture is a System 4 type of system. See http://en.wikipedia.org/wiki/Viable_system_model

Enterprise Architecture bridges the gap between new strategy ideas and the execution of those ideas, in the same way that the intelligence corp in the military provide intelligence about current and future capabilities to the generals and ensure that the appropriate planning takes place in order to win the military campaigns.
Many organisations without an Enterprise Architecture function will risk failing to properly implement or deliver the on their business strategy.

It is frequently reported that many strategic ideas and initiatives identified by C-level executives are never properly implemented or seen through to full operation by the business units. That big picture of the business strategy on the white board in the CEO’s office or a high level presentation can look deceptively simple in a board meeting, but as they say ‘the devil is in the detail’. The C-level executives are responsible for seeing that the strategy is implemented, but it will be the Enterprise Architect that works out the detail.

Organisations need to know where they are now and create a baseline Enterprise Architecture model of their current state, then create a future target Enterprise Architecture model and do impact and gap analysis between them. The future state Enterprise Architecture model often needs to contain not just one single future target model but multiple complementary or competing models of  the many future scenarios that are likely to have  been developed using Scenario Planning techniques. See http://en.wikipedia.org/wiki/Scenario_planning

Strategic business transformation can be hard. Enterprise Architecture makes it far easier to answer questions such as:

• What Strategic initiatives are needed to fill the gaps found and address risks and issues?
• What new or changed business capabilities will be needed?
• What needs to be done when?
• How does one prioritise the different strategic business initiatives on an Enterprise Architecture roadmap?
• When are these investments in change going to be delivered?
• How will the initiatives be funded?
• What are the dependencies between the strategic initiatives?
• How will the business model be changed?
• How will the target Business Operating Model be changed?
• What organisation units and business functions need to be changed?
• What value chain and value streams need to be changed?
• What are the costs and potential revenues?
• How feasible is the business strategy?
• What feedback mechanisms between ‘systems’ will be needed?
• How will change be governed and how will compliance be assured? (i.e. how do we overcome resistance from difficult stakeholders, and the ‘Not invented here’ anti pattern?)
• What controls, KPI’s, CSF’s, incentives, bonus structures will be needed?
• What changes to the principles and standards will be needed?
• How do we align people, processes and technology?
• What other things have we forgotten?

I recommend reading the books:

• ‘Making Strategy Work: Leading Effective Execution and Change’ by Lawrence Hrebiniak and
• ‘Enterprise Architecture As Strategy: Creating a Foundation for Business Execution’ by Jeanne Ross and Peter Weill.

The Business Architect identifies the future demand for changes to the enterprise business model and associated business operating model and plans the change initiatives on the business part of the enterprise architecture roadmap.

The Business Analyst works in the here and now on how to satisfy the current business requirements for a single change project, where the project realises part of the supply schedule whereas the EA roadmap represents the future demand schedule of strategic changes.

The demand /supply distinction is clearer if the Business Analyst works in the IS/IT division since IS/IT  often represents itself as a business (‘IT as a business’).

Interestingly the very concept of ‘running IT as a Business’ is counter productive and creates an unnatural barrier within an organisation. The IS/IT division is part of the business after all. Several commentators see this concept as a train wreck waiting to happen.

See  http://www.infoworld.com/d/adventures-in-it/run-it-business-why-thats-train-wreck-waiting-happen-477  and http://www.itskeptic.org/dont-run-it-business-run-it-part-business

One could argue I suppose that if IS/IT is run as a business then the so called ‘Business’ will appreciate what IS/IT does for them.

But the problem with that (as seen in Chris Potts excellent story ‘FruITion’) is that IS/IT will not be invited to the top table where strategic decisions are made. See – http://www.amazon.co.uk/fruITion-Creating-Corporate-Information-Technology/dp/0977140032

Broadly speaking I see the difference as being similar to the difference between an Enterprise Architect and a Solution Architect. i.e. one works at a Strategic level across the whole enterprise and the other works at a project level on a specific business domain or capability area in detail.

However the distinctions for Business Architects and Business Analysts are often far less clear.

This is because the terminology used by different organisations to describe a Business Analyst ‘s roles and responsibilities varies considerably from one organisation to another, and even fewer organisations have fully defined the role of a Business Architect.

Very often someone called a Business Analyst may in fact be working either as a Business Strategist, or as a Business Architect or as a Systems Analyst or as all three roles.

The following table illustrates the generic differences as I see them.

The Viable System Model has been around for many years, coming out of Stafford Beer’s work  http://en.wikipedia.org/wiki/Anthony_Stafford_Beer

This diagram looks complex at first but you can also read a very accessible description of the Viable System Model at http://www.scio.org.uk/resource/vsmg_3/screen.php?page=0cybeyes and at http://en.wikipedia.org/wiki/Viable_system_model

An excellent book to read is Patrick Hoverstadt’s book  ’Fractal Organization: Creating Sustainable Organizations with the Viable System Model’  See http://amzn.to/mjHz6F

But what is the Viable System Model?

The Viable System Model is a recursive view of five main systems within an organisation.

The word ‘System’ here doesn’t mean an IT system or an information system but has the more generic meaning of the word ‘System’. See http://en.wikipedia.org/wiki/System

Those five systems are concerned with the following functions and capabilities:

System 1 systems within an organisation are realised by those organisation units that actually make products, deliver business services and create value.

System 2 systems are those organisation units that provide the coordination functions.

System 3 systems are those that provide the audit and operational control functions.

System 4 systems are those that look forward to the future and the external environment.

System 5 systems provide the strategy and business direction.

The Viable System Model is recursive so that the same five systems appear at all levels within an organisation, but it’s easy to see equivalent VSM systems at various levels in an organisation.

At at the top level it is possible to see that the Executive Board is a level 5 system, the general management are mainly level 3 systems, the system 2′s are the programme managers, project managers and solution architects. The system 1′s are the operational service delivery units and project teams.

Where does that leave Enterprise Architects? Well the Enterprise Architect function is essential a system 4 system with it’s focus on strategic planning for the long terms view and creation of roadmaps of strategic initiatives.

The strategic Enterprise Architects (system 4) with their long term, external and strategic focus work in co-operation with the Solution Architects (system 3) with their immediate operational, internal, lean, design and delivery focus.

It’s clear to see with our Viable System Model lens that solution architects and enterprise architects are not doing the same job but a completely different job.

From an Architecture Continuum perspective (TOGAF9  http://pubs.opengroup.org/architecture/togaf9-doc/arch/chap39.html) then the Viable System Model is an example of a generic Foundation Architecture. and a thus a key architecture to reuse when designing organisation specific target enterprise architectures.

The SCiO group has developed the SCiO Organisational Maturity Model http://www.scio.org.uk/OMM which is based on the Viable System Model.

This can be used for assessing the strengths and weaknesses in your enterprise, looking at how efficiently it is working today, both in the immediate operational perspective but aslo the log term viability of your enterprise in the face of changing external market and business environment.

The on-line questionnaire for the SCiO Organisational Maturity Model addresses six aspects of the Viable System Model:

• Operations
• Co-ordination
• Resource and Performance Delivery
• Monitoring
• Development
• Managing strategy

The outcomes are expressed in terms of  a measure of maturity across those six dimensions and a diagnosis of which Archetypes (i.e VSM anti-patterns) apply to your enterprise and which need to be addressed.

Unlike Lean manufacturing which only focuses on operational efficiencies in the the lowest level System 1, System 2 and System 3 systems within an organisation, the Viable System Model looks at the whole enterprise from a recursive perspective which is more sound and holistic.

In some ways it is surprising that it hasn’t yet reached a tipping point within organisations or their enterprise architects. Maybe this is because everyone is too focused on the day to day need for operational efficiency and approaches such as Lean Manufacturing (http://en.wikipedia.org/wiki/Lean_manufacturing) and forgets about planning for the future. This is the difference between being reactive and proactive.

Further reading at http://coherencyarchitect.com/2011/01/29/the-fractal-organization-in-an-enterprise-architecture-point-of-view/

and the excellent book: The Service-oriented Enterprise by Tom Graves,  http://amzn.to/kAzR7F

The next time you are challenged on the purpose and value of Enterprise Architecture, then answer that it’s the difference between the external and future oriented perspective of the VSM system 4 as opposed to the inside and now, operational efficiency perspective of system 3 and service delivery perspectives of  system 1 and 2.

As a system 4 system, the enterprise architecture function focuses on:

• Supporting the business strategy developed by system 5
• Analysing strategic change initiatives
• Planning and creating strategic road-maps
• Scenario analysis
• Assessment of future risk, agility and viability of the enterprise
• Coordinating with system 3 systems (i.e. portfolio and programme management, project management and solutions architecture)
• Governing the realisation of those strategic changes and development of new business capabilities.

The more one looks at the Viable System Model, the more it looks like the unifying theory behind Enterprise Architecture.

• A big bang approach
• A gradual iterative incremental approach

I favour the big bang approach. This is for several reasons:

1) a big bang send a clear and confident message to everyone in the organisation that things WILL be done differently

2) a big bang provides a clear mandate, mission, vision and positioning for the Enterprise Architects, sidetracking threats and challenges from others who feel threatened by the emergence of EA

3) a big bang ensures that the Enterprise Architecture function is given a solid budget and is established through a strategic change programme, complete with programme manager

4) a big bang has clear reporting to the CEO or appropriate C-level executive (since responsibilities vary from company to company) and clearly defined outcomes

5) a big bang needs clearly visible and continuous [sic] executive support

6) a big bang must have clear goals, objectives, measures, performance targets etc. Enterprise Architecture must be part of the business strategy to improve the organisation’s effectiveness and profitability.

7) a big bang ensures that proper effort is made choosing an appropriate EA framework, Meta Model, Process and EA tool

8) a big bang is JFDI on a large scale – get the whips and carrots out and get it done right first time ! Make it So !

Don’t get me wrong, iterative approaches do work well with established processes such as software development, but not for the introduction of new functions and processes that haven’t previously existed.

Establishing an EA function in small iterations is giving ammunition to challengers and doubters. There tends to be no mandate, no or limited budget, a quick and dirty mindset, limited access to experienced consultants, no EA tools, overall limited maturity.

It sends a message to the staff that the executive management is not sure, is not confident, and won’t invest in the success of Enterprise Architecture.

It’s a bit like changing governments, you don’t do that iteratively do you?

As Niccolo Machiavelli once said ‘Tardiness often robs us (of) opportunity, and the dispatch of our forces’.

The book ‘Enterprise Architect as Strategy’ (http://www.architectureasstrategy.com/book/eas/ ) gives us the right way of thinking and talking about what enterprise architecture is for – creating a foundation for the execution of the Business Strategy.

This book is an essential read for senior executives, business leaders and enterprise architects.

Many people within an organisation will understand the big picture view of the business strategy, such as the CEO of course, but perhaps only at a shallow level of detail.

Would the C-level executives understand all the potential nuances and wrinkles that come with that business strategy? Perhaps not unless they were a ‘details’ person.

What does the CEO do? They will spend time in evaluating ideas, formulating the mission and vision of their orgnaisation, innovating the business model to ensure the company remains competive in their market, looks for future opportunities for expansion and carving out a niche market.

It is the Enterprise Architect who has the job of maintaining the big picture on the behalf of the CEO, in sufficient detail to ensure that it becomes a knowledge base to support the executive’s decision making and help them to realise the business strategy and govern the implementation of that strategy.

In this way the Enterprise Architecture function is effectively the Office of the CEO,  providing strategic support to the CEO and the other C-level executives. It’s also worth stating here that effective companies focus on enterprise architecture and don’t jump straight into IT architecture. Enterprise Architecture is not the same discipline as IT Architecture.

We can look at the the Enterprise Architecture function in terms of Deming’s Plan-Act-Do-Check process improvement process:

PLAN

The CEO and other C-level executives will stablish the mission, vision, goals, objectives, principles and metrics to identify the main outcomes of the business strategy.

The Enterprise Architect will help executives, business leaders and strategic planners to develop the business model, operating model, and other enterprise architecture models supporting business model innovation

DO

The CEO and other C-level executives will evolve and innovate the Business Model.

The Enterprise Architect will take the business strategy and business model and support the development of the target operating model,  communicate the business strategy, model the target and interim enterprise architecture models, plan an EA roadmap of strategic initiatives, identify and define the required capabilities, define the mandates for the investment programmes and key projects, define standards and process improvements. They will usually define the IT strategy to ensure that it fits with the business strategy rather than being developed in isolation (as unfortunately often happens).

CHECK

The Enterprise Architect will perform EA governance, compliance and design assurance against those programes & projects implementing the strategic changes and new capabilities. They will perform gap analysis and impact analysis, measuring the performance and compare the results against the expected outcomes.

ACT

All the while the Enterprise Architect will report to the CEO and act as their trusted advisor. They will analyze the gaps, risks, costs, issues, assumptions and dynamics to determine their cause and determine where to apply further strategic changes in the next iteration of the cycle and improve the overall maturity level of the enterprise.

The mission of Enterprise Architecture is to improve the implementation and excecution of the business strategy, ensuring that the enterprise will survive, continue to develop and remain profitable in the future.

An interesting example to look at is the US Department of Health and Human Services which has established an Office of Enterprise Architecture as part of the Office of the CIO.  http://www.hhs.gov/ocio/ea/index.html

Activities of the Office of Enterprise Architecture

As the the book ‘Enterprise Architect as Strategy’ says – ‘When it comes to executing your Business Strategy your Enterprise Architecture may matter more than your strategy itself… ’

Enterprise architecture (EA) is about change – strategic change in an enterprise.

But not exogenous change – reactive change forced on the enterprise by outside exigencies – although that sort of change and those external forces may be taken into account. No, enterprise architecture is about endogenous change – directed, planned, strategy-driven change within the enterprise.

Enterprise architecture is about describing the desired future state of the enterprise and plotting a course towards that position in enterprise ‘state space’ known as the Target Architecture.

Recently there was a long and fruitful discussion on LinkedIn, between practitioners, of the proposition that “EA is not the glue between IT and “The Business”. EA is the glue between Strategy and Execution.”. Aside from the questions of whether “glue” is the right metaphor and the possible mereological fallacy of considering IT and “The Business” as separate entities in need of glueing, the proposition is also something of a false dichotomy.

The two aspects – Business-IT Alignment and Strategy Formulation-Strategy Execution are neither mutually exclusive nor independent from each other. So, as with many false dichotomies, the ‘correct’ answer is “both and neither”. But in terms of importance to the business or enterprise, being the glue between strategy formulation and its (presumably) successful execution is critical whereas getting IT aligned to the business needs is only a very useful and desirable outcome.

But the question this immediately raises is what exactly it means to be the glue between strategy formulation and strategy execution – which despite the lengthy discussion was not really answered.

How exactly does EA help strategies get executed – and executed well?

The standard ‘authorities’  [like “Enterprise Architecture as Strategy” by Ross, Weill and Robertson] actually don’t help all that much – offering general aphorisms like “First build your foundation for execution” and “Define your operating model”. Well, yes – but what does that mean and how does that get your strategy off the drawing board and put into effect?

In recent weeks I’ve been reading a somewhat ‘non-standard’ EA textbook, by a professor at Wharton Business School which addresses exactly this problem.

That book is “Making Strategy Work – Leading Effective Execution and Change” – and even though Dr. Hrebiniak never mentions the term, I would contend it is a book about Enterprise Architecture because it is about change, strategic change, in an enterprise.

Towards the end of chapter six he provides a very plausible answer to the question of how strategy execution is glued to strategy formulation in the form of a “Strategy Review Process – Planning, Execution, and Controls” [Figure 6.2]. See http://www.amazon.com/Making-Strategy-Work-Effective-Execution/dp/013146745X

In essence the process is an adaptive closed-loop feedback control (socio-technical) system that seeks to bring actual business performance towards that demanded by the ‘control’ input of strategic objectives through the following six steps:

1) Strategy Formulation – including resource capabilities and constraints, strategy and goals, industry forces and competitor analysis

2) Strategy Planning and Execution – including meeting the demands of strategy, [changing] organisational structure, Integration Requirements and Methods, Information Requirements, Hiring and Training People [Developing organisational skills and knowledge] and Appropriate Incentives

3) Review of Actual Business Performance – including emergent deviations from the planned strategy

4) Cause-Effect Analysis and Learning

5) Feedback / Change – including changes in strategy and changes in the capabilities of the organisation

6) Continuation and Follow-Through – including integration and review of strategy changes, resource (re)allocations and agreement on business performance objectives and measures

Where step 6 feeds back and leads back into step 1, closing the loop. Dr. Hrebiniak asserts “Every organisation must fashion its own strategy review process. It’s not a luxury but a necessity. It’s that important. …It supports execution”. I’m not sure how much the professor is hyping his own process – but if the strategy review process is the enterprise’s only formal link between formulation and execution, I‘d say there is little hyperbole – it really is that important. Execution is delivery, formulation is just structured aspiration.

So what has this to do with Enterprise Architecture?

Step 1 is strategy formulation – and it is the usual process of matching internal and external analyses of the enterprise for the future. Enterprise Architecture is *the* key contributor to the internal analysis – the resource capabilities and constraints are (should be) described by the EA model, the strategy and goals are the EA (model) Motivation Decomposition.

Step 2 is essentially the strategic planning of change – including people, processes and technology wrapped up as  organisational ‘capabilities’, or business architecture, information architecture, functionality (or ‘applications’) architecture and technology architecture. Many would regard this as definitively Enterprise Architecture. Not only that, the changes are described by the Target and Current Enterprise Architectures (models) and a number of intermediate Transitional Architectures and the differences between them. The planning process is the EA gap analysis process.

This is EA as a strategic planning for change function for the enterprise.

In step 3 – the intended target or transitional enterprise architecture (model) provides the baseline against which actual achievement can be objectively measured.

In step 4 – well, correlation is not causation; it is actually remarkably difficult to determine the contributory causative factors to any particular outcome or effect. EA has a role in assessing how much of the (change in) business performance achieved is down to what changes in the enterprise.

This is EA as the basis for impact analysis of change. Did investing in that software development really cause the increase in sales of snow-shovels or was it that the weather was more inclement than most people anticipated this year?

Step 5 brings in capabilities again. EA should describe the relationship between the organisational capabilities and the resulting business performance. EA is there to help assess what returns investing in particular capabilities is likely to achieve – and therefore find the optimum investment pattern.

And step 6 is again into describing the architecture of the enterprise as it is now and how we want it to be – and how we are going to measure the progress towards the ‘to-be’.

From this perspective, Enterprise Architecture can be seen to suffuse the entire Strategy Review Process, making it systematic, rigorous and cohesive – like a resin glue.

So if you are the CEO of a company that does not have an Enterprise Architecture function or a Strategy Review Process, presumably you think all you need do is formulate and promulgate a strategy and the execution will take care of itself?

No?

Me neither – I think you need some glue.

by Ian Glossop, Enterprise Architect.

Successful organisations are those that improve and innovate their Business Models to find a profitable niche against their competitors.

But a new Business Model alone is not enough. It needs to be implemented and executed. This is where an Enterprise Architecture comes in.

If organisations do not align their Business Model and their Enterprise Architecture then how can they be certain of making it work?

The first step is integrating the Business Model with the Business Architecture part of the Enterprise Architecture. This is described below.

Business Model Canvas

Business Model innovation is rapidly becoming a hot topic and especially with the release of the book ‘Business Model Generation’ by Dr Alexander Oesterwalder. http://www.businessmodelgeneration.com/

This book introduces a standard way of developing a Business Model called the Business Model Canvas. If you are an Enterprise Architect highly recommend you read it.

Up to now most organisations had their own informal and idiosyncratic way of defining a business model that was unique just to themselves. This is the first time a standard for developing a business model has been defined and published.

The Business Model Canvas is a powerful approach for business model design and innovation.

It captures the 9 most essential elements of a business model in a simple way, enabling the design of a ‘business model on a page’.

The 9 different segments are

• Customer Segments
• Customer Relationships
• Channels
• Value Proposition
• Key Activities
• Key Resources
• Key Partners
• Cost Structures
• Revenue Streams

You can see some example Business Models developed with the business Model Canvas at http://www.businessmodelalchemist.com/ and on an associate web site where you can view a variety of example Business Models and try creating your own can be found at http://bmdesigner.com/ .

So what does all this have to do with Enterprise Architecture?

Enterprise Architecture exists to provide a path between strategy and execution, identifying the current state and the desired future state and plot a roadmap of strategic changes between them.

See book ‘Enterprise Architecture as Strategy’ –  http://www.architectureasstrategy.com/book/eas/

Enterprise Architecture provides the organising logic and architectural thinking needed to design the appropriate business capabilities need to implement a Business Model. To get the right outcomes, organisations must focus on Enterprise Architecture and Business Architecture not try and jump straight to IT architecture and solution design.

After setting the overall mission and enterprise vision, the first Enterprise Architecture domain that we need to model and align with the Business Model is the Business Architecture.

Business Architecture Model

A Business Architecture model is used further elaborates the 9 high level concepts segments that have been populated with conceptual themes and business strategies in the Business Model Canvas. A number of techniques and approaches, views and artifacts are used to explore the themes and strategies in each Business model canvas segment.

Customer Segments

Create a Porter’s Five Forces model to explore the market and the general business environment in which the organisation exists. Also conduct a SWOT analysis.

Create a VPECT model to explore the Values, Policies, Events, Content (outcomes) and Trust relationships from the perspective of each different customer segment.

For details of VPECT read the book ‘Lost in Translaton’ by Nigel Green and Carl bate – http://www.lithandbook.com/

Customer Relationships

Create a Business Event model, further elaborating the Business Events identified with the VPECT model.

For each current and especially the future Events, create a Business Scenario. This should explore he what if questions that will effect the business model in the future.

Channels

Create a model of the various channels that exist between the organisation and its customer segments as well as between the organisation and its partners and suppliers.

Don’t forget those new social media channels, such as iPhone or Android phones and other devices and applications such as Twitter and Facebook. Partners can also be channels as well.

Create a model of the flow of business information between the organisation and its customers and between the organisation and its partners and suppliers (use the Actor Co-operation Viewpoint in Archimate).

Value Proposition

Use VPECT to explore what Value you provide to each customer segment and what problems you solve for them.

Create a Value Proposition Model of the Products, Business Services and associated Values (using the Product Viewpoint in Archimate).

Value Propositions drive Business Strategy, so create a Business Motivation Model to understand all the relationships between Vision, Goals, Objectives, Strategies and Tactics associated with the Value Proposition.

See http://www.businessrulesgroup.org/second_paper/BRG-BMM.pdf for details of the Business Rules Group’s Business Motivation Model.

Key Activities

Key activities includes any model of behaviour,

This should include both internal Business (organisational) Services, Business Functions, Business Processes and Activities as well as the external behaviour of your customers, partners and suppliers.

In some cases it is useful to think about behaviour in terms of external services (the what) and the internal behaviour (the how).

Create a Business Function Model (using the Business Function Viewpoint in ArchiMate). A useful approach to use here is the Component Business Model approach from IBM. See http://www-935.ibm.com/services/uk/igs/html/cbm-bizmodel.html

IBM’s Component Business Model provides a good basis for visualising the Target Operating Model in terms of Business Functions or in terms of Business Capabilities (they’re not the same thing…).

Create a Business Process Model (using the Business Process Viewpoint in ArchiMate). Business Process Models are not just Process Hierarchy Models but include Value Chains and Value Streams.

Create Value Stream models for each Event/Outcome pair (use the Business Process Viewpoint in Archimate) identified in the customer relationship segment above.

Create a Value Chain model at a high level for each customer segment (also using the Business Process Viewpoint in Archimate).

See http://www.opengroup.org/archimate/doc/ts_archimate/ for details of modelling the Business Architecture Layer in Archimate.

As they are high level abstract views, Value Chains are often specified more in terms of Business Functions than the more specific Business processes or Activities.

Key Resources

Resources in this segment can be further elaborated by the other Enterprise Architecture domains or Information Architecture, Application Architecture (and Application Service Architecture) and Infrastructure Architecture.

However before jumping to the IT Architecture it is better to start more conceptually and create an Enterprise Vision Model and a Business Capability model.

Enterprise Vision models are those high level one page models described as ‘core’ models in the book ‘Enterprise Architecture as Strategy’ (http://www.architectureasstrategy.com/book/eas/) and also in TOGAF Phase A.

You can also use the Layered Viewpoint in ArchiMate to produce Enterprise Vision Models.

Create a Business Capability model. This is usually a hierarchy model similar to a Business Function Model but remember that a Business Function and a Business Capability are two different concepts.

A Business Function is a high level view of existing internal behaviour from an organisational perspective, where the business functions are closely associated with the organisation units.

A Business Capability is defined by TOGAF9 as ‘A business-focused outcome that is delivered by the completion of one or more work packages’. A Business Capability is defined as the ability to execute a specified course of action, to achieve specific strategic goals and objectives. A Capability is defined in terms of the outcome of the course of action, one that has a business value. The concept of Capability is used in the military context and the MODAF framework where it is described in the abstract. See http://en.wikipedia.org/wiki/Capability_management and http://tinyurl.com/2vge39e

See also my previous post on Modelling Behaviour.

Create an Organisation model (using the Organisation Viewpoint in ArchiMate) to capture the human resources and their roles and responsibilities.

Create a Business Information Model (using the Information Structure Viewpoint in ArchiMate) to understand the knowledge, information and data resources within the organisation. Outcomes identified as Content in the VPECT model and in the Value Stream models are also modelled here as Business Information (represented by Business Object, Meaning and Representation object types in ArchiMate).

Key Partners

Identify your key partners, suppliers as carefully as you do your customer segments and customer relationships.

Don’t forget that Enterprise Architecture includes the extended environment as well as the organisation itself. This extended environment includes the Suppliers and Partners (use the Actor Co-operation Viewpoint in Archimate).

Cost Structures

Explore the costs with a Total Cost of Ownership (TCO) model.  This can be a spreadsheet.

Create a System Dynamics Models to fully explore and understand the cause and effect relationships between different stocks and flows, and run simulations.

See http://en.wikipedia.org/wiki/System_dynamics

Revenue Streams

Also explore revenues with a TCO model as with the Cost Structures

Remember that revenue doesn’t always mean profits in terms of money, but can be other non-monetary outcomes of value, (especially relevant for Government departments, non-profit and charity organisations who seek outcomes in terms of benefits to citizens and indirectly, votes).

It is again very useful to produce System Dynamics Models to understand the cause and effect relationships between different stocks and flows.

I think it’s surprising that more organisations don’t use System Dynamics as part of their enterprise architecture modelling. More on that subject in a future post…

Other Enterprise Architecture models

Starting from the Business Model Canvas, the Business Architecture views described above are used to further elaborate the details of the business model and to understand what needs to be realised from a business perspective.

After that the Business Architecture model is aligned to the Information/Data Architecture model, the Application Architecture model and finally the Infrastructure Architecture model pretty much as usual.  I mostly develop these models using Archimate combined with other concepts from TOGAF 9 as needed, using tool such as Avolution Abacus and BiZZdesign Architect.

Note that other variations of Oesterwalder’s Business Model Canvas are starting to emerge. This is a sure sign that the concept is an important one that is reaching a tipping point.

These other business model approaches include:

• The Enterprise Canvas described in the book ‘Mapping the enterprise: modelling the enterprise as services with the Enterprise Canvas’ by Tom Graves. See http://tetradianbooks.com/2010/11/ecanvas/
• The Startup Canvas. See http://thestartuptoolkit.com/Nfd68Us5EnDa/

For example the TOGAF ADM or ISEB definitions don’t help as much as they could.

TOGAF quite reasonably defines Capability as ‘A business-focused outcome that is delivered by the completion of one or more work packages. Using a capability-based planning approach, change activities can be sequenced and grouped in order to provide continuous and incremental business value’.

However elsewhere TOGAF says that ‘The term “function” is used to describe a unit of Business Capability at all levels of granularity, encapsulating terms such as value chain, process area, capability, business function, etc.’. This confuses Business Capability with a Business Function.

ISEB says that a Business Function is ‘An idealised or logical subdivision an enterprise’s capability.’ and also that a Business Capability is ‘A business function whose performance is the subject of management attention … It is usually a high level and cross-organisational business function.’ Other methods I have encountered confuse Business Functions with Activities and have Business Processes decomposing into Business Functions.

ArchiMate has the most clarity about Business Functions and Business Processes but doesn’t as yet define a Business Capability.

One of the first artifacts to be produced as part of a Business Architecture model is a Target Operating Model. This is where definition issues are often first seen.

A Target Operating Model is usually a view of the organisation structure showing the Business Functions that each organisation unit is responsible for, but often these are also rather casually referred to as Capabilities.

Even more casually, it’s not uncommon to find the Target Operating Model actually contains a mixture of Business Processes, Business Functions and Business Capabilities with some Business Services thrown in for good measure.

It’s time for a bit more preciseness, less fuzziness and better standard definitions. ArchiMate has helped enormously by providing a standard enterprise architecture language but it still allows some fuzziness.  See http://www.opengroup.org/archimate/doc/ts_archimate/

Below I’ve described the definitions I encourage the use of.

Behaviour concepts

Business Capability

A Business Capability is defined as the ability to execute a specified course of action, to achieve specific strategic goals and objectives. A Capability is defined in terms of the outcome of the course of action, one that has a business value. The concept of Capability is used in the military context and the MODAF framework where it is described in the abstract. See http://en.wikipedia.org/wiki/Capability_management and http://tinyurl.com/2vge39e

A Business Capability is not a Business Function, but is a concept that encapsulates other objects, in particular Actors (organisation units), Roles, Policies, Standards, Skills, Business Functions, Business Processes, Products, Business Services, Application Services, Application Components and Infrastructure. A Business Capability is therefore used for managing units of strategic business change.

A military example of a capability might be ‘2000 air freight sorties’, ‘1 Tonne heavy lifting’ or ‘Personnel Recovery under fire’ (but not ‘Helicopter’ or ‘Flight Management’). A business example might be ‘eBusiness’ (or the ability to sell new or existing products and business services to customers via the internet).

Business Capabilities can be decomposed into component business capabilities creating a capability hierarchy. A Business Capability is named after the desired outcome.

Business Function

Business Function is an organisational perspective on behaviour. It is not the same as a Business Capability. A Business Function defines the ‘what’ behaviour that is associated with an organisational unit and modelled in a target operating model. In many ways the Business Function is equivalent to all the behaviour that is modelled in an organisational specific swim lane in a Business Process Flow view (i.e. a BPMN diagram). A Business Function is typically named with a suffix of ‘management’ (i.e. ‘Customer Relationship Management’), but could also be a single noun (i.e. ‘Billing’).  Business Functions can be decomposed into component business functions, resulting in a business function hierarchy. A Business Function does not decompose into a Business Process or an Activity.

A useful example of a Business Function model is IBM’s Component Business Model, where the ‘components’ are (usually) Business Functions. See http://www-935.ibm.com/services/us/imc/pdf/g510-6163-component-business-models.pdf

Business Process

A Business Process is another perspective on behaviour and defines the behaviour from the ‘How’ (how work is done) perspective. It represents both a complete Business Process Flow and the elements in a Business Process Flow. A Business Process Flow view (i.e. a BPMN diagram) is a view that shows a sequence of sub-Business Processes or Activities that are triggered by  a Business Event. See http://en.wikipedia.org/wiki/BPMN

The sequence of Business Processes can represent a Value Chain at a macro level or the detail elements in a Value Stream that is triggered by a Business Event and results in an outcome of value to the source of the Business Event, usually a customer. See http://en.wikipedia.org/wiki/Value_chain and  http://en.wikipedia.org/wiki/Value_stream_mapping

A Value Stream is a more detailed version of a Business Scenario (TOGAF).  Business Processes are named with a Verb + Noun phrase.

A Business Processes representing a Value Stream is named after the Trigger + Outcome i.e. ‘Order to Cash’ or ‘Prospect to Customer’

The Enterprise Business Architecture book is highly recommended as a source of examples of a Business Process Model with Business Processes representing Value Streams.  See http://www.enterprisebusinessarchitecture.com/

High level Business processes are typically aggregations of more specific Business Processes (sub-processes) or Activities.

Business Processes can be decomposed into component business processes, i.e. into a business process hierarchy. At the lowest level of sensible decomposition (i.e. at one place, at one time, by one person or system) the elementary business process is usually called an Activity. Activities are what are modelled in a BPMN diagram and are realised by a person (providing an organisation service) or by an application service or application. An Activity doesn’t decompose into a Business Process or into a Business Function.

A macro level Business Process (i.e. representing a Value Chain, or a column in a Component Business Model) may be used to group a number of Business Functions. Note that there is a many to many relationship between Business Functions and Business Processes. One Business Function may group many Business Processes and one Business Process may be used by many Business Functions.

An example of this can be seen in the eTOM (Enhanced Telecom Operations Map) where Business Functions and Business Processes are orthogonal to each other.  See http://en.wikipedia.org/wiki/ETOM

Business Service

A Business Service represents an external view of the services an organisation provides or sells to its customers alongside the sale of a Product. A Business Service may be realised by a Business Function or directly by an Application Service, but is more usually modelled as being realised by a Business Process.

Business Services can be decomposed into component business services i.e. into a business service hierarchy. I’ve also found it useful occasionally to create a Business Service Flow view, which is similar to a Business Process Flow view but seen from an external customer’s perspective instead of the internal ‘How’ perspective of a Business Process Flow view.

Clarification of all these Behaviour concepts is an important step towards improving and evolving a common understanding of the business architecture layer within all enterprise architecture models.