6 October 2016
What is an Operating Model?
The term Operating Model is a fuzzy one. What does it really mean? What is in an Operating Model?
It appears that often some consultants totally go out of their way to avoid mentioning Enterprise Architecture and instead focus solely on the term Operating Model.
This may well be a side effect of the misunderstanding of Enterprise Architecture as only concerned with IT Architecture. Or may be because those consultants want to invent new terminology to make their services sound unique?
And by Enterprise Architecture of course I don’t mean just the IT Architecture domains, but all the EA domains which now include:
- Strategy & Motivation
- Business Architecture
- Information/Data Architecture
- Application and Application Service Architecture
- Technology & Infrastructure Architecture
- Physical Architecture (I.e. Archimate 3 Physical Elements)
Why do we need an Operating Model?
- Business Model (BMC)
- Business Motivation Model (BMM)
- Wardley Model
- Strategic Map/Balanced Score Card (SMBSC)
- Business Capability Models
– The business processes that needs to be performed
Organisation and people
– The people and roles performing the processes and how they are grouped into organisation units
Locations, buildings and other assets
– The places where the work is done and the technology, infrastructure and physical equipment in those places needed to support the work
– The Information, data and applications needed to support the work
Sourcing and partners
– External entities, people and organisations outside the enterprise also performing the work
– the management processes for planning and managing the work
A secondary question that I always ask myself is why don’t Business Masters (MBA) courses teach executives and management about Enterprise Architecture?
This may indeed be the source of the fuzziness and lack of preciseness of the term Target Operating Model?
Target Enterprise Architecture Model
Strategic Architecture Domain
Business Model (BMC)
Business Motivation Model (BMM)
Strategy Map / Balanced Score Card Model
Value Chain Model
Customer (Outside In) Domain
Business Scenario Model
Customer Journey Model
Business Services (value proposition) Model
Business Events Model
Business Service Flow Model
Business Capability Model
Capability Dependency Model
Component Business Model
Governance and Compliance Domain
Business Rules Model
Organisation Structure Model
Business Locations Model
Business Roles Model
Business Process Domain
Business Process Flow (Value Streams) Model
Knowledge/ Information/ Data Domain
Business Information Flow Model
Business Information Object Model
Logical Data Object Model
Physical Message Model
Physical Data Storage Model
Application Landscape Model
Application Integration Model
EA Roadmap Model
Project Roadmap Model
Programmes and Project Portfolio Model
8 August 2013
I’m reading a great new book called Intersection: How Enterprise Design Bridges the Gap Between Business, Technology, and People by Milan Guenther
The book discusses modern Enterprise Architecture perspectives like the Outside In approach and provides a holistic design lead approach that is focus more on the customer than on the underlying applications, technology and infrastructure.
The book also addresses the corporate branding of an enterprise. A successful brand is grounded in the strategic future vision of an enterprise. This strategic vision is also what drives the enterprise architecture initiatives, so it is clear that the enterprise architecture discipline must then provide the key support for understanding what contributes to the brand, what makes the brand successful and what must be done to sustain the brand. This is a refreshing perspective that tends to get lost in most organisations.
The knowledge of messages, business events, interactions with stakeholders, outside in scenarios, business services and value streams that are defined and designed as part of the business architecture domain will all enable senior executive to understand and develop their brand. A brand is not just the value proposition, the set of products and services offered, but includes the development of the reputation of the enterprise, the customer experience it provides and the trust the customers develop. The book describes this in terms of the form, appearance, communication and behaviour of the enterprise and much more
Enterprise Architecture will have a profound impact on the brand and ultimately on the financial success of the business.
This book is a must read that should be on the bookshelf of every true Enterprise Architect.
24 June 2013
How often do you see customer journeys, customer events and scenarios modelled in an Enterprise Architecture model? Not often, if at all I suspect.
In my opinion, the ‘Enterprise’ in Enterprise Architecture should include all those stakeholders that are engaged with an organisation. This include all those suppliers and service providers to the left hand end of the Value Chain, and the Customers at the right hand end. In this post I’ll be focusing on the Customers that are consuming the products and business services that are the outcomes of the Value Chain.
This is the view that the Customers have from the outside of an organisation looking in. This perspective should drive what a business does.
In most organisations however, the Enterprise Architecture is usually focused on the organisations internal workings, the inside out view of how an organisation can become more efficient, leaner and reduce cost, as a way of making more profits. The focus is on delivering better software faster, improved processes, commoditised infrastructure, reusable IT services, providing a self-service internet to replace face to face contact with the customer and so on.
The business strategy may look at the customer and market segments and the drivers for strategic change, but this is often as far as it goes. The rare organisation models the customers journey and the customers perspective and if they do then its rare to find the customer journey modelled in the Enterprise Architecture.
Organisations often try to reduce the direct interaction they have with their customers by removing phone numbers from their web sites, and providing limited set of services and FAQs. Customers are forced to waste many minutes on the telephone, selecting endless options in an attempt to get a human voice to speak to. Companies are afraid of this because of the costs of complaint handling. To be fair, a number of organisations have implemented a live chat IM service on their web sites and high value customers do often get a live account manager to speak with. But what about the rest of us everyday customers? It still seems like businesses are lacking a good understanding of their customers behaviour.
Digital Businesses and Digital Customers
Every business is now a digital business. It’s the same for customers (i.e. all the consumers, customers, potential customers and contacts) who are also increasingly digital using technologies like smartphones, social networks and broadband. They are using their own devices (such as iPads and other tablets) to research potential products and business services that they wish to purchase from businesses. They browse social networks and conduct searches to determine what product or business service best suits them. They have mass access to huge networks of information such as Google to help them.
Customer behaviours are changing, but does your enterprise architecture model know that? Does it model what the customers’ own processes are? Does it model the events that originate from a customer? Does it model what the various scenarios that there are in the customer journey? In my experience the answer is typically ‘No’ to all these questions. In my experience even when an organisation is modelling the customer journey then it is never included in the future state enterprise architecture.
What is the customers’ processes? Customers will conduct a search and discovery process, engage with the business to select, negotiate and make a purchase. If the business is lucky then the customer will re-engage to make future purchases, but if they screw up the customer will get annoyed and tell all their contacts on social media about why they are no longer buying. Companies are seeing the increasing power of customers but how many are trying to understand them and model their behaviours?
Enterprise Architecture, or more specifically, the Business Architecture within the Enterprise Architecture discipline should cover the customers’ interactions with a business, understand what they are saying on social media.
An initial approach is to speak with customers and use a thinking framework such as VPECT to determine their Values, Policies, Events, Content, Trust Relationships.
They can also use the less engaged PEST analysis for strategic market research.
Results of conducting VPECT analysis and PEST analysis should be recorded in the enterprise architecture models and associated to a representation of the customers journey
How should we model the Customer Journey and the different customer scenarios?
For a start, each scenario in a customer journey will be triggered by one of more of the Events discovered by VPECT analysis and be concluded by something of Value delivered back to the customer (Content).
What does the Event trigger? For me the best representation is a sequence of Business Services, in what might be called a Service Flow diagram.
This is much the same as a Process Flow diagram but from the external perspective. For a customer interacting over the internet, the Business Services might involve a Browse Service, A Product Detail Service, A Product Price Service, A Payment Service and a Fulfilment and Delivery Service. The Outside In service flow view is later mapped to the Inside Out process flow view
It’s easy to see that an organisation may not itself directly provide all these Business Services (for example the Payment Service may be provided by PayPal or similar, and the Fulfilment service may be provided by DHL or similar)
What also need to be modelled are the Customers own goals and objectives and how the scenario of service based interactions supports the customers goals. Key measures should also include:
- How much did the customers have to invest in the interaction (in time, and navigating complex interfaces, breaks in the interaction, confusion) to complete it?
- How much they enjoyed the interaction (customer satisfaction feedback)?
- How many customers abandoned the attempt early?
- How many customers complained to their social media contacts afterwards?
- How many customers complained directly to the business?
Another question that needs to be addressed is what channels and multiple channels do customers use? Customer these days are much more likely to use multiple channels at different times, rather than just a single one:
- Search the internet with their iPad or smartphone at home
- Switch to using their desktop PC at work
- Use the telephone, email, IM message or SMS message for clarification on product details, prices and discounts
- Hand off the desired purchase to their purchasing department to use corporate discounts to make the actual purchase
- Expect an email or letter with their receipt, complemented by an SMS message to their mobile device and copy to the purchaser
Channel strategies don’t often allow for a customers’ use of multiple channels and for account information being passed around during an interaction with the customer. Businesses often manage different channels with different functions and organisation units. This results in confusing and frustrating transfers between departments. How often have you called a business, given your contact and customer account details, only to be handed off to another department who asks you all over again for that same information? It’s extremely annoying and it’s this kind of symptom that undermines the customers’ experience and sends them tweeting negative remarks.
One to One marketing
One-to-one marketing refers to marketing strategies that are designed as if they apply directly to an individual customer. Information is collected about customers’ needs, customer segments that they fall into, their preferred channel, their lifetime value to the business and which products and business services they are likely to purchase.
See the books by Don Pepper and Martha Rogers: The One to One Future and the One to One Field book.
What one-to-one marketing misses is more of an Outside In perspective, going much further in understanding the values that a customer needs and their own processes that customers follow (formally or informally).
The book I recommend is ‘Outside In: The Power of Putting Customers at the Center of Your Business’ by Harley Manning, Kerry Bodine et al.
Total Unified Customer Communication
Typically organisations still tend to communicate with their customers in a disjointed and unconnected way. Invoices, statements, receipts, marketing literature, pricing deals, discounts, marketing campaigns, letters, emails, IM messages, data streams etc.. are all sent from many different departments who have no idea about the incoming or outgoing communications that have already been received or are being made by other departments. The result is customer confusion. To be fair, the situation is not so bleak for business customers, as it is for individual personal customers, but increasingly it’s difficult to tell the difference and negative social media discussion will also impact the business customers.
Instead of just silo based incoming communication with customers we need to get a total view of all the customers interactions both incoming and outgoing to the business, and within social media, centralising all interactions, via multi channels, with a Customer Communication Management (CCM) system. Curiously I’ve never seen a Customer Communication System in any future state Enterprise Architecture model and the recommendation to include one has fallen on deaf ears. One to one marketing should become one to one multi-channel total customer communication.
Companies will want to differentiate their products and business services and to compete with other businesses and therefore they will need to innovate. Understanding their customers’ perspectives and their customer journey scenarios will be a key innovation for any business. This will require that the future target Enterprise Architecture model includes these views and connect them to the rest of the model.