Role of Business Architecture In Business Strategy

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1 Role of Business Architecture In Business Strategy Parin Kothari Head, Business Architecture and Insights Digital Channels North America TD Bank Group

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3 US Automobile Sales by manufacturers country of origin Oil embargo Fuel Efficiency Standards US Japan Europe Korea

4 1980s CompeSng Business Models General Motors Corp. Chevrolet Cadillac Buick PonSac GMC Hummer As an industry matures and as its offerings become more commodiszed, OperaSonal Components become the primary drivers creasng business value. It also enables focusing on the customer rather than products/brands.

5 CompeSSve Response of US manufacturers Chevrolet Buick GMC General Motors Corp. Saturn Cadillac PonSac Hummer Opel Daewoo 20% in Suzuki, Fiat, Fuji Launch of a new low- cost brand Saturn AcquisiSon of low- cost manufacturing base with Daewoo Financial stakes in compesng auto companies No change in their core operasonal structure & cost

6 Taking it to the next level Product Develop- ment Manufact - uring Sales & MarkeSng Volkswagen Group Procure- ment Distribut- ion Aeer- Sales Service Product Develop- ment Procure- ment Manufact - uring Development of global plagorm MQB Greater degree of plug- and- play modularity Greater degree of flexibility & commonality of parts Fewer unique parts leading to economies of scale in sourcing Lower cost of parts Lower complexity of supply chain Similar manufacturing processes leading to simplicity Larger factories supplying mulsple markets Easily exportable processes

7 One company stands out PercepBon of cheap Excellent Value America s Best Warranty Return your car with no penalty for a year

8 Comprehensive Business Model Overhaul + Customer Focus Hyundai Motor Group 1991 Hyundai is the first automaker to provide buyers with regularly scheduled maintenance on top of a standard warranty at no addisonal cost Product Develop- ment Manufact - uring Sales & MarkeSng Procure- ment Distribut- ion Aeer- Sales Service 1994 Hyundai introduces the Hyundai Protec/on Plan to protect customers against the cost of repair aeer a vehicle s standard warranty expires 1998 Hyundai launches the innovasve Hyundai Advantage, America s Best Warranty 2002 Hyundai breaks ground in Montgomery, Alabama for our first U.S. automobile assembly plant 2003 The $30 million Hyundai Design and Research Center opens in Irvine, California 2009 Hyundai spins off our parts division to form Mobis Parts America

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10 Determining the value chain of an internal IT organizason Customer Segments Full Service Full Service Minus Customer Interface Enterprise Services Only

11 Determining its own business objecsve!

12 ArSculaSng strategies for business objecsves!

13 Mapping capabilises to strategies Most IT divisions of large companies tend to get closed in this loop with only informal and inconsistent Performance Management and Strategy func/ons

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15 Is this the moment for banking? New Banking Models Technology in Banking RegulaBon in Banking

16 Bank- in- a- box Consumer Credit Consumer Deposits Home Lending Wealth Manage- ment Healthcare Services Commercial Lending Treasury Trade Finance Investment Banking Branch Banking Phone & ATM Banking Online & Mobile Banking Enterprise Payments

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18 Bank with TD

19 155 year old banking & financial organization AAA Rated

20 From a Canadian company

21 To a Global company

22 Business Architecture at TD Digital Channels Excerpts

23 Cross Channel Risk Ecosystem

24 Ecosystem to Capability Map Visual presentation of a complex, multi-faceted business problem (an ecosystem of systems, skills & organizations) for comprehensive strategy & solution building Understanding the DNA of a capability that provides FIs a sustained competitive advantage Decomposing a broader vision into components, each having its people, process & technology dynamics and different maturity cycles Understanding the vendor industry dynamics in terms of product design & innovation incentives

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26 Business Architecture guiding investments & maturity Focusing on practical business architecture that can drive results today through (a) easy understanding among stakeholders, (b) faster application to current business & systems environment Product Capabilities Allocation Bottomline builder 36% Topline builder 30% Reflects the fact that online banking is a combination of two different industries banking & e-commerce with different characteristics and maturity Walletshare builder 34% Three dimensional decomposition of each building block customer, functional and operational perspectives 26

27 Strategic Architecture is a high level blueprint for the deployment of new func9onali9es, the acquisi9on of new competencies or the migra9on of exis9ng competencies, and the reconfiguring of the interface with customers. Gary Hamel & CK Prahalad in 1989 HBR ar9cle 9tled Strategic Intent.

28 THANK YOU Contact InformaSon