The Corporate Strategy, Business Architecture and IT

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The Corporate Strategy defines the mission, vision and long-range objectives for conducting the business and achieving enterprise success. The Business Architecture (BA) is a blueprint of the enterprise built using architectural disciplines to improve performance. Development of the Business Architecture is a strategic initiative, not a departmental undertaking, not the pet project of a middle manager nor the latest priority of the week. The purpose of the BA is simple and clear; it is a tool used to improve enterprise wide performance as required by the strategy. The current or “as is” BA describes “what the enterprise is made of,” while the strategy defines “what the enterprise needs to make” and “how to evolve” the future or “to be” BA.  As one can see, the Strategy and the BA are integrated and connected, not loosely coupled.

The Business Architecture model represents the integration of all enterprise value streams (sometimes referred to core cross-functional processes), along with the appropriate metrics and measures defined by the strategy that determine success. These are not subjective measures, but ones found in proven statistical and recorded data, for example, as those found in a Balance Scorecard.  Optimally, each value stream should align with at least one long-range objective. For example, one objective may measure the success of the “Order-to-Cash” value stream as “96% of orders delivered within 3 days.” If this value stream’s results are delivering only “90% of orders within 3 days,” then a new strategic initiative is developed and its priority determined.

Frequently today, the priorities of many initiatives are based on the “size of the ox” and the “depth of the ditch” in which it is found!  In other cases, managers end work each day, bravely describing all of the “fires they put out.” Usually fires are destructive and costly. Managements’ behavior and sometimes their recognition are based on containing and stopping the “fire” before it does “too much damage.”  These disturbing behaviors crowd strategic planning and analysis. The managers are too busy on fire fighting activities to think strategically. Consider another approach; prevent the fire from ever happening!  Anybody can run around the enterprise with a fire extinguisher looking for a crisis to solve.  But what we really want are leaders throughout the enterprise carrying a telescope, looking ahead and creating the future, a new era, anticipating and preventing problems. This is appropriate and responsible strategic behavior.

Initiatives do not stand alone, even when aligned with the strategy. They may complement other initiatives and synergistically influence one another. The sequencing of initiatives may also optimize the expected results and leverage the investment. How can you comprehend this without a Business Architecture? In the early days of the Internet, an amusing TV advertisement showed the employees of a new dot.com company watching the first web orders growing faster than expected. Their excitement and enthusiasm quickly turned into anxiety as they realized that it was impossible to respond to the enormous demand!  Perhaps their strategy should have considered how to expand their production and supply chain capacities along with increasing demand for their products and a rapidly expanding world wide customer base. They may have focused on just one or two functions, such as facilitating web ordering, but failed to understand the impact on the rest of the enterprise. This simple example illustrates the paramount need for a sound strategy; one that is truly focused on the future of the whole enterprise, and not just on the function of web ordering. The strategy has objectives, which when met; achieve the vision defined in the strategy.

How do you align the BA value streams, initiatives and objectives? To base the alignment on the functional organizations is extremely difficult and usually hard to track. Some enterprises use a hierarchical business function/process model that contains a set of organized processes that are not necessarily integrated, but merely catalogued. Generally speaking, ownership is easily associated with the functional departments and organizations. Viewed independently, these functions and processes do not satisfy a customer need. One must integrate these into a “value stream like” capability in order to satisfy a customer need. Since IT is usually aligned with functional departments and organizations, and not the value stream capability, aligning IT with customer needs becomes even tougher.  Perhaps this may explain some of the business/IT alignment problems.  IT is an easy target for blame, cost overruns and project delays if solely aligned with typical business functions.  As a consequence, IT as a “value add” is seldom recognized, many times much less appreciated. The solution to this problem is to align IT with value streams and to associate IT with contributions that improve the measures of success expected in the strategy. In this manner, IT is linked to the value streams in the BA, and the value streams are linked to strategic initiatives. While not a “cure all” for IT credibility, it does improve the reality of IT as a value contributing organization and its visible alignment with the strategy.

Well defined and integrated value streams also enable value chain analysis as defined by Michael Porter in his timeless book Competitive Advantage. A competitive advantage is obtained by creating distinctiveness or value that encourages the buyer to choose the enterprise’s products and/or services, and encourages the supplier to provide preferential treatment for the enterprise. Here again, value chains are linked to the strategy, designed and built with the value streams in the Business Architecture.     

Using well defined values streams that are integrated in the Business Architecture as the basis for strategic alignment and value chain analysis provide you with ways to lead and direct any visionary or tactical initiative. The value stream has a focus on the customer and the end result the customer experiences.  Measuring the impact on the customer is extremely important to the enterprise.  Enterprises that continue to succeed have this kind of strategic focus. Some enterprises develop into world-class corporations with this kind of thinking. However, none of these world-class corporations achieved success because of a focus on some independent, unaligned, functional initiative. Rather the opposite occurred. They understood how to lead and direct the enterprise from a customer-centric and holistic view, and not an isolated view of just the more critical functional departments.  With the Business Architecture and its integrated value stream view of the enterprise, one can gain the insight necessary to achieve better IT alignment with the Corporate Strategy, greater performance improvements and a competitive advantage.

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