Alignment IT to business using OODA loop

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1 ISBN Alignment IT to business using OODA loop António Gonçalves 1, Natália Serra 1, José Serra 2, Pedro Sousa 3 leonardo@est.ips.pt, nserra@est.ips.pt, jose.serra@olisipo.pt, pedro.sousa@dei.ist.utl.pt 1 Escola Superior de Tecnologia de Setúbal, 2900 Setúbal, Portugal 2 Olisipo, 1000 Lisboa, Portugal 3 Instituto Superior Técnico, 1000 Lisboa, Portugal Abstract: In this article is proposed a new approach, framed under enterprise architecture, it guarantees a high level of response to the applications development or configuration as improves its alignment to business by solving some limitations of traditional software development solutions namely: difficulty in gathering clients requirements, which should be supported by the applications, difficulty to connect the organisation processes used to answer the client, which must also be integrated in the applications and the difficulty to develop the applications that can follow the business cycle. To test the approach, this was applied to a real case study consisting in the configuration of an application that manages the relationship with clients. Keywords: enterprise architecture; alignment model; aggregation of value; Information Systems Enterprise Architecture; Applications; business processes; information. 1. Introduction The use made by the Information Technology (IT) is recognised as crucial to the good performance of an organisation (Laudan, Laudon, 2003). Different factors have been promoting and conditioning the changes on the IT namely (Spewak, S., 1992), (Henderson, 1999): minor duration of the company s business cycle; markets globalisation and group activities, competition and technologies revolution. Pressure for changing (Fig. 1) may occur due to different reasons. For the new IT to be efficient, their development must be done in an organised way. The strategy of change of the IT must be consistent with the business strategy. This is the only way to justify the investments on IT (Amor, D, 2002) (Maes, R., 2000). The framing of new technologies in the business offers great possibilities for the organisations that are able to benefit from the advantages of their use but it also means challenge to the IT management as the organisations become more dependent on them and their management specificity. In this complex scenario, the challenge means to identify the risks and the benefits that the IT represents to the organisation targets. In principle aspects, which are always present, are identified (Lankhorst, M., 2005): administrative automation, rationalization of means and processes remodelling. This article proposes the introduction of some principles promoting the success of applications, namely (Reich, B., 2000): Simplify; Automatize and Integrate. As such, we use an

2 462 Proceedings of the CENTERIS 2009 Conference on ENTERprise Information Systems approach to the development of applications that enable a continuous and fast increase in opposition to more complex and more expensive solutions whose development is prolonged over the time and represents a major risk of failure. Figure1 - Alignment between Business and IT This article follows the sequence of others previously done namely Strategic Planning under Enterprise Architecture (Serra, N., Gonçalves, A., Serra, J., & Sousa, P., December 2008) and Enterprise Architecture and Dynamic Alignment (Gonçalves, A., Serra, N., Serra, J., & Sousa, P., February 2008). The first work established the alignment between the company s IT with its business strategy. The results obtained were: definition of a business strategy and choice of a tool to control the information complexity (Figure 2). Here the innovation consists in relation strategy and IT through the connection between Hoshin Kanri matrix (Jackson, T., 2006) and the CRUD matrix. OWNER RELATION 5 RELATION 1 STRATEGIC PROJECTS PROCESS RELATION 3 STRATEGIC OPTIONS BUSSINESS PROCESSES RELATION 2 INDICATORS RELATION 4 Figure 2 - Matrix Hoshin Kanri In the second work two concepts were described: Static Alignment and Dynamic Alignment between business strategy and IT. In the formulation definition phase, the alignment is made just once and sets the components of business planning and the IT components. In the next development phase, the alignment often occurs through the use of revision and control methods of execution of the plan components defined in the previous phase.

3 ALIGNMENT IT TO BUSINESS USING OODA LOOP 463 Once both works were finished the tools were applied in the organisation it was noted that business demand to the IT increased, new development requested occurred and changes to the existing applications. This is due to the IT exposition. In fact, the requests always existed but only now are justified and supported by a strategy and an alignment control model: the need for new applications development is based upon the trust the models give to those requesting them: the business or the infra-structure of the organisation. All this implies an increase of pressure on the IT and consequently on the computing professionals that will be liable if the business doesn t go as expected. The way a business specification which must be supported by applications is communicated as well as their framing on the company processes have now an important role in the IT development. 2. Description of the Approach Used The contribution of this work proposed an approach composed by a method, a development strategy (OODA LOOP) and a set of participation principles of the collaborators in the method (figure 3). The approach embraces some factors, which are considered as differentiate factors to the configuration or the application development under the context of an Enterprise Architecture, namely: Emphasizes the client needs, the organisation capacity and the application potential; Promotes continuous development by involving all organisation collaborators. The cooperation between people that understand business and those who configures the application is constant. It tries to contour the natural difficulty in writing procedures; Adopts a development approach, which implies a continuous evolution and allows a fast adaptation to changes. The goals to be reached have the tendency to change with time; It is efficient because it tries to achieve its goals that is the necessities of the costumers and the organisation capacities considered in the application; It is effective because economically uses the organisation resources to please a certain clients satisfaction level. Figure 3 Approach Description

4 464 Proceedings of the CENTERIS 2009 Conference on ENTERprise Information Systems The method was described by Don Awalt (Awalt A., McUmber R., 2004) and uses some concepts gathered from ArchiMate Modelling language (Lankhorst, M., 1998). The method is composed by three layers (table 1): Context: Represents the client s vision and point of view about what he wants from the organisation and signifies the external stimulus to answer to, understand and improve the organisation internal behaviour; Business: Represents the organisation s vision and point of view and allows to identify and promote the use of the capacities the organisation has to answer to the client stimulus; Logic: Represents the vision of the application and its point of view and permits to define the development strategy or configuration of specific software. Each layer represents a vision of the problem with a certain detail and a diverse refining described under a form of behaviour, information and functions. Each layer encapsulates the behaviour and the information of the previous layer. Each layer is described as following: Behaviour: Describes the activities, tasks and events related to a service rendered; Information: Fragment of relevant data for a certain behaviour. It may be informal or conceptual or both; Function: Represents the responsibility it has under the behaviour of an entity (person or company department). Table 1 Method Description Layer Description Behaviour Information Function Context Describes the demand of the costumer that is what he expects from the organisation The demands the client makes to the organisation Information Model that needs to be understood by the costumer to complete a transaction. Which are the organization department involved with client Business Describes the interaction of the client with the organisation collaborators Describes the activities performed due to the interaction between the client and the organisation. Model of the information that must to be understood by the client and the collaborators to complete a transaction. Which are the organization department that are involved and that have a relationship with the client Logical Describes the mapping of behaviour and information in the application components Describes how the activities are mapped in the application Mapping between information and data application How and whom maintain the application The strategy adopted was developed by John Bloyd (Angerman, S., 2004), known by the cycle O-O-D-A (Figure 4). Boyd said that, in a competitive environment, the entity capable of guiding the decision process formed by the cycle observe; orient; decide and act in a faster and efficient manner shall perform his task more successfully than his opponents.

5 ALIGNMENT IT TO BUSINESS USING OODA LOOP 465 Figure 4 Strategy O-O-D-A Cycle Initially designed for military applications the concepts developed from Boyd ideas became used in several other areas. As example of the use of this methodology in project management field can be found in (Rosa, Marcelo, 2005) and was used as a source to choose this strategy. It was necessary to frame the phases of the O-O-D-A cycle (Figure 5) in the chosen method: 1. Observation includes acquisition and data and information compiling: CRUD matrix, Hoshin Kanri matrix, processes diagram, entities related to the expected development, new orders made by business and the organisational frameworks, external data on existing technology to support development, background knowledge of solutions to problems raised as well as the knowledge of the organisation weakness and strengths; 2. Guidance consists on analysing scenarios based upon observations, experience, organisational vision, organisational culture, points of view, etc. Guidance results on the construction of mental diagrams that show reality in a way that the actions possible to be performed make sense. Guidance is dependent from existing view. This also means dependent from the tacit knowledge that each element has on the organization. This phase helps the team to observe and obtain a global sense of what is observable respecting the vision each element has. Guidance consists in a way to promote sharing of knowledge each individual has and which is usually difficult to be formalized or explained to third parties, as it is subjective and inherent to each individual capacity. Guidance orients decision but also considers observation and action thus allowing alternative solutions. 3. Decision is made from the image produced in the Guidance process and defines which adequate answer for the situation in question is. The decision will be implemented by a selected action; 4. Action consists in materializing the decision made. Once performed the results and their alignment towards the business, namely in what regards processes must be evaluated periodically by different collaborators with distinct visions within the organisation especially at the level of the entities supported and also in the communication with the

6 466 Proceedings of the CENTERIS 2009 Conference on ENTERprise Information Systems remaining applications. If the result is not satisfactory or it ceases to satisfy the organisation, measures to amend eventual failures and to improve quality and efficiency must be made. Boyd presumes that the major factor to obtain the expected results does not consist in observe, guide, decide and act in the best way. The most important thing is observe, guide, decide and act quickly that is the speed reached to interact. The interaction speed wins the quality of interaction meaning the improvement on the continuous process of the solutions found. Figure 5 O-O-D-A Cycle: Adapted The method also comprises a set of principles, which intend to promote: motivation, participation, decision capacity, autonomy and collaborators participation in the development of applications. These principles are (Weill, P.& Ross., 2004): 1 Participation It means that associated processes must be participated by elements dispersed in the organisation. This may occur in a direct or indirect way. The participation implies the capacity to express the strengths and weaknesses of the applications and the capacity of association in groups, with different opinions on same application and the relevant context namely how to support the processes intervening in the business and their integration with the remaining applications. The principle is viable since there are clear and specific rules assuring the proposed terms and there are initiatives within the organisation tending towards the sustenance of the terms; 2 Transparency The decisions taken and their supervision are made by known rules and regulations. All data is available and directly accessible to those affected by said decisions; 3 Commitment The applications and the way they are managed aim to serve the organisation as a whole. The management processes must be prepared to answer the collaborators needs within a reasonable time; 4 Consent The development decisions and applications management must consider that the best solution for collaborators is the one looking for consensus among the different interests. The aim in reaching consensus must be obtaining an agreement about the best

7 ALIGNMENT IT TO BUSINESS USING OODA LOOP 467 solution for the organisation as a whole. This way of obtaining decisions implies a longterm perspective so that a sustainable applications development occurs; 5 Consensus - The applications development must assure the equality of all groups of collaborators in view of the application targets within the organisation. The proposed path shall promote satisfaction of all groups; 6 Capacity - It must be assured that the applications are adequate to the organisation processes and the result goes towards its needs and, at the same time, make the best use of the available resources. This means that recourses are used in a sustainable way and in a controlled environment. The use of these principles and actions assures that the collaborators needs and different opinions are taken into consideration. This means the needs of all participating in the organisation are considered in the decision of IT management. Thus, it contributes to maintain the alignment of the IT towards business, to promote the capacity and agility for new business or to make adjustments in the present ones; it makes the relation between investment in IT and the return of the data value; it maintains the risks of business under control; makes transparent the importance of the continuity of IT in the business and, at last, is a measure that promotes the constant improvement of the IT performance. 3. Case Study Due to the nature of the proposed techniques their validation was done in the configuration of a real software. The chosen software was Client Relationship Management CRM by the following reasons: 1. It allows to test the processes related to the interaction with the client; 2. CRM, more than a tool is a philosophy though it is necessary the commitment of all the organisation; 3. It allows to test the participation of the administration in the project; 4. It allows to test the communication of the collaborators within the team; 5. It allows the incorporate the collaborators skills in the development of the application they are going to use; 6. It allows the use of the O-O-D-A cycle as the development of the functionalities is progressive and it will be necessary to adapt the system to support the business changes. The team agreed to initiate the development of the CRM by the module regarding the sales force: Accounts and Contacts Management: permits the access to all clients data and their relationship with the contacts namely: information on clients, contacts, the role each contact has in commercial relationship, the relationship contacts have between themselves and their relationship towards the management of proposals; Commercial Proposals Management: permits the control of proposals type (layout), automatic generation of invoicing, treatment by period of proposal, automize the ing of proposals and the control of the composition of the price of each item; Invoicing Management: once a commercial proposal is accepted it is possible to create an invoicing order and manage the other relevant aspects such as placement of orders and invoicing; At last the modules allowing the Products Management and the Price Lists Management of products for each client were also implemented.

8 468 Proceedings of the CENTERIS 2009 Conference on ENTERprise Information Systems Three groups were formed, one for each model layer: context, business and logic. To facilitate the communication and the passage of models between the groups collaborators were shared. A profound analysis of each model layer by each group being the following layer the only one able to initiate its activities after receiving the model of the previous layer. As such the business layer only initiated its work after receiving the models of processes and the entities of the context layer and, the logic level only started his work after receiving the models of the business layer. Table 2 Mapping of the Levels for the sales force Description Behaviour Information Function LAYER I CONTEXT The client intends to contract consultants specialised in IT. Organisation processes to perform the client request. Describes the high level components of the application and the way it is related to the previous levels. The client request the services of consultants specialized in technology IT; Client selects the consultants and closes the business, Client pays the organisation the experts services. LAYER II BUSINESS The client sends the request to the collaborator of its own account; The collaborator researches in the catalogue and tries to find a consultant offer; The collaborator sends the commercial proposal in accordance with the agreed prices schedule; The costumer accepts the consultants; The collaborator updates the consultant catalogue; The collaborator requests the contract agreement with the selected consultant and sends data to the Human Resources department. The following modules are using and map to other layers behaviour: Accounts; Contacts; Opportunities; Products; Price Books; Quotes; Activities & Calendar. LAYER III LOGIC Mail request with the information that describe the IT skills that they need;. Receive curriculum vitae from organization consultant; catalogue; account; commercial proposal; item; request; Invoice order; Order form. Map for each application module each piece of information as data There are two departments involved in the client: Outsourcing department- who make the request; financial department- who make the payment There are four departments in the organization that collaborate with client: Recruitment department. That is responsible to manager curriculum vitae database; sales department that communicate with the client Outsourcing department and account department that send invoice to client and the HR department that manage the user that will work in the client. The infrastructure of the application is support by the provider of service on demand. Internally the IT department will make the necessary changes as being requested by users Each work session, of each group, followed the loop O-O-D-A strategy: existing data collection for analysis; preparation of new scenarios; analysis of different scenarios under a new information or development of models. In case there is a changing proposal in each layer (new behaviour or new information) it must be communicated to the other layers. The final changes will only be accepted after all layers include the proposed changes. The model resulting from work is briefly presented in table 2. The activities developed by each group of work allowed detailing, specifying and checking the models thus creating a solid base for the development of a system lined up with business. The

9 ALIGNMENT IT TO BUSINESS USING OODA LOOP 469 group communications was supported by use case that describes the problems and validate the solutions regarding the changing proposals. The changing of models has created some difficulties but we understand change as a natural thing in this process. The chosen platform supporting the logical development in the model was ZOHO CRM (Figure 6), due to the positive analysis made of the following aspects: i) the platform is available as a service software thus it stimulates the Information System Department to be constituted as a unit that passes from development and maintenance of the application to support the services that the platform offers; ii) the price of each license is substantially more economic than the other considered solutions; iii) the capacity of interaction with other applications through the REST communication that allows the use of a web interface using XML and HTTP, without the additional abstractions of the protocols based on patterns of exchanging messages, as the web services protocol SOAP; iv) the easiness to form a multidisciplinary team for the development of a solution by using O-O-D-A strategy. Figure 6 - CRM Platform 4. Conclusions and Obtained Results The Enterprise Architecture is constituted by a set of artefacts, which describe the details, the business, information, application and the role people must have within the organisation at different layers. Its use is important to understand an organisation and can be a support tool to the continuous improvement we intended to achieve due to business changes. In this work a method, a strategy and guidelines that help to integrate an application under the scope of an Enterprise Architecture.

10 470 Proceedings of the CENTERIS 2009 Conference on ENTERprise Information Systems The method aims to manage complexity through the analysis of the problem levels under different perspectives so that the application can contemplate all the organisation and client needs. The loop strategy O-O-D-A triggers the process in order to look for a continuous improvement of the application maintaining business alignment. The guidelines were introduced to promote the acceptance of the solutions found by collective responsibility of the collaborators that participated in the applications integration process. It was possible to test the model application due to the fact it was being used in a real situation, which consisted on the configuration of a CRM platform. By this study we conclude that: there is an increase in accepting the use of technology on business; the general satisfaction of the organisation is assured by fast delivery and continuous improvement of the CRM; promotes the alignment once the late changes are included in the development; the constant cooperation between the people, who understand the business, those who use the application and those who program it; focus on the individuals and interactions more than in tools. In a future work we intend to develop the following activities: 1. Specify in the method the artefacts used in each layer, their relationships, concepts, priorities and restrictions; 2. Systematize its usage in strategy; 3. And at last clarify the principles guiding the participation of people in the method. References Amor, D. (2001). The E-Business (R)evolution: Living and Working in an Interconnected World (2nd Edition) (2nd ed.). Prentice Hall PTR. Angerman, W. S. (2004). Coming Full Circle with Boyd's OODA Loop Ideas: An Analysis of Innovation Diffusion and Evolution. Storming Media. Awalt A., McUmber R., (2004). In Microsoft Architect Journal 3, 2004, Retrieved May 8, 2009 from Chan, J. O. (2005), Toward a Unified View of Customer Relationship Management, Journal of American Academy of Business, Cambridge, vol. 6, no. 1, pp Gonçalves, A., Serra, N., Serra, J., & Sousa, P. (2009). Arquitectura Empresarial e alinhamento dinâmico. CISTI Henderson (1999). Strategic alignment: leveraging data technology for transforming organizations. IBM Syst. J., 38(2-3), Hoogervorst, J. (2009). Enterprise Governance and Enterprise Engineering (The Enterprise Engineering Series). Springer. Retrieved May 8, 2009, from Jackson, M. (2000). Peter Checkland at 70 : a review of soft systems thinking. Chichester UK: John Wiley & Sons. Jackson, T. (2006). Hoshin kanri for the lean enterprise : developing competitive capabilities and managing profit. New York: Productivity Press. Lankhorst, M. (2005). Enterprise Architecture at Work: Modelling, Communication and Analysis (1st ed.). Springer. Maes, R. (2000). Redefining business: IT alignment through a unified framework. Amsterdam: Universiteit van Amsterdam Department of Accountancy & Data Management. Mithas, S; et al. (2007) Why Do Client Relationship Management Applications Affect Client Satisfaction? Journal of Marketing. vol. 69 (October 2007), pp

11 ALIGNMENT IT TO BUSINESS USING OODA LOOP 471 Reich, B. (2000). Factors That Influence the Social Dimension of Alignment Between Business and Data Technology Objectives. MANAGEMENT DATA SYSTEMS QUARTERLY, 24, Rosa, Marcelo (2005). O Ciclo de Decisão de Boyd e o Gerenciamento de Projectos, PMI-RS Journal, pp. 12. Serra, N., Gonçalves, A., Serra, J., & Sousa, P. (December 2008). Planeamento Estratégico no contexto da Arquitectura Empresarial. RISTI vol 2 pp Shpilberg, D., Berez, S., Puryear, R., & Shah, S. (2007). Avoiding the Alignment Trap in Data Technology. MIT Sloan Management Review, 49(1), 58, 51. Spewak, S. (1992). Enterprise architecture planning : developing a blueprint for data, applications and technology. New York ; Toronto: J. Wiley. Steenbergen, M., Berg, M., & Brinkkemper, S. (2009). A Balanced Approach to Developing the Enterprise Architecture Practice. In Enterprise Data Systems (pp. 253, 240). Retrieved May 8, 2009, from van Steenbergen, M., & Brinkkemper, S. (2008). Modeling the contribution of enterprise architecture practice to the achievement of business goals. In Data System Development: Towards a Service Provision Society (Vol. 2). Springer. Wikipedia. (2009). In Wikipedia, The Free Encyclopedia. Retrieved 04:27, April 2, 2009, from Winter, R., & Schelp, J. (2008). Enterprise architecture governance: the need for a business-to-it approach. In SAC '08: Proceedings of the 2008 ACM symposium on Applied computing (pp. 552, 548). Fortaleza, Ceara, Brazil: ACM. Retrieved May 8, 2009, from Zachman, J. (1997). Enterprise Architecture: The Issue of the Century. Database Programming and Design, 10(3).

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