Enterprise architecture as a strategy (Ross & Weill, 2006)
Build your foundation for execution
The foundation for execution digitizes the routine processes to provide reliability and predictability in
processes that must go right. The best companies go beyond routine processes and digitize
capabilities that distinguish them from their competitors. It is the IT infrastructure and digitized
business processes automating a company’s core capabilities. Paradoxically, digitizing core business
processes makes the individual processes less flexible while making a company more agile. Digitizing
business processes requires making clear decisions about what capabilities are needed to succeed. It
gives companies more time to focus on how to increase profits and growth. Digitized processes also
provide better information on customers and product sales, providing ideas for new products and
services. The foundation for execution provides a platform for innovation. ‘Should be used as a
compass’
Indicators for a bad foundation for execution:
- Different parts of our company give different answers to the same customer questions
- Meeting a new regulatory or reporting requirement is a major effort
- Business lacks agility
- IT is consistently a bottleneck
- Different business processes are completing the same activity across the company, each with
a different system
- Information needed to make key products and customers decisions is not available.
- A significant part of jobs it to take data from one set of systems, manipulate it, and enter it to
other systems
- Senior management dread discussing IT agenda items
- We don’t know whether our company gets good value from IT.
Companies with a solid foundation had higher profitability, faster time to market and lower IT costs.
Companies without an effective foundation for execution face competitive and regulatory threats. An
effective foundation for execution depends on tight alignment between business objectives and IT
capabilities. Otherwise companies build IT solutions rather than IT capabilities.
The foundation for execution results from carefully selecting which processes and IT systems to
standardize and integrate. To build an effective foundation for execution, companies must master
three key disciplines:
- Operating model: The necessary level of business process integration and standardization for
delivering goods and services to customers.
- Enterprise architecture: The organizing logic for business process and IT infrastructure,
reflecting the integration and standardization requirements of the company’s operating
model. Companies go through four stages in learning how to take an EA approach to
designing business processes: Business silo’s, Standardizes technology, optimized core,
business modularity.
- IT engagement model: It is a system of governance mechanisms that ensure business and IT
projects achieve both local and company-wide objectives. The IT engagement model
influences project decisions so that individual solutions are guided by the enterprise
architecture.
, Define your operating model
An operating model describes how a company wants to thrive and grow. A stable view of the
company’s strategy helps to drive the foundation for execution. The operating model is a choice
about what strategies are going to be supported.
Operating model has two dimensions: Integration and standardization. Standardization is about
defining exactly how a process will be executed regardless of who is performing the process or where
it is completed (throughput and efficiency). Integration links the efforts of organizational units
through shared data. This helps with presenting a single face to customers (increased efficiency,
coordination, transparency and agility).
An operating model represents a general vision of how a company will enable and executive
strategies. Each operating model presents different opportunities and challenges for growth.
Companies adopt an operating model at the enterprise level and may adopt different operating
models at the division, business unit, region or other level. This stable foundation enables IT to
become a proactive force in identifying future strategic initiatives. There are four types of operating
models:
- Diversification (low integration, low standardization): Companies whose business units have
few common customers, suppliers or ways of doing business. Is based on synergies from
related but not integrated business units (may create demand for each other or increase
brand recognition).
- Coordination (high integration, low standardization): Share one or more of customers,
products, suppliers and partners. Here autonomous business heads execute their processes
in the most efficient manner possible, but corporate directives and negotiations focus on
providing the best service to the customers.
- Unification (high integration, high standardization): Maximizing efficiencies and customer
services by presenting integrated data and driving variability out of business processes
- Replication (low integration, high standardization): Grant autonomy to business units but run
operations in a highly standardized fashion. Success is dependent on repeatable business
processes.
Transforming to a new operating model: Shifting from one operating model to another is
transformational. A transformation disrupts a company, imposing new ways of thinking and
behaving.
Implementing the operating model via enterprise architecture
Enterprise architecture is the organizing logic for business processes and IT infrastructure reflecting
the integration and standardization requirements of the company’s operating model. These are often
represented in principles, policies and technology choices.
The IT infrastructure is a part of the enterprise architecture. IT infrastructure contains: Business
process architecture, data or information architecture, applications architecture and the technology
architecture.
The enterprise architecture can be capsulated in a core diagram. The role of the one-page core
diagram is to help facilitate discussions between business and IT managers to clarify requirements for
the company’s foundation for execution and then communicate the vision. It helps with creating a
