Business-Driven, IT Transformation 1 William Ulrich President, TSG, Inc. Partner, Business Associates President, Business Guild Fellow, Cutter Consortium Co-chair, OMG -Driven Modernization Task Force
2 Today s topics Defining business vs. IT architecture, alignment and transformation Business risks, challenges and assessing technical debt Role of business architecture, from strategy definition through solution deployment Leveraging the business architecture / IT architecture transformation framework Framing IT architecture transformation through a business perspective Shifting to a business-driven, IT transformation approach
3 Terminology Level Setting: Business / IT Alignment & Transformation Business Definition Business architecture represents holistic, multidimensional business views of: capabilities, end-to-end value delivery, information, and organizational structure; and the relationships among these business views and strategies, products, policies, initiatives, and stakeholders. 1 IT Definition Blueprints of the technologies, data structures and applications that collectively comprise the information technology (IT) environment of an enterprise. 2 Business / IT Alignment State in which automated systems and data architectures fully enable business strategy, business capabilities and stakeholder value Business / IT architecture transformation is the means of achieving alignment (1) Source: Federation of Enterprise Professional Organizations, adopted on January 14, 2017, after passing a vote by FEAPO Member Organizations. (2) Source: Business : The Art & Practice of Business Transformation, MK Press, 2010
4 Business Domain Overview: Mapping the Business Ecosystem Stakeholders Policies, Rules, Regulations Capabilities Vision, Strategies & Tactics Organization Information Products & Services Value Streams Initiatives & Projects Metrics & Measures Business Source: A Guide to the Business Body of Knowledge (BIZBOK Guide), v6.0, Part 1, Business Guild
5 Business Differentiators Business architecture is foundational, transcending a given initiative or scenario Business architecture is reusable Business architecture scales horizontally and vertically Business architecture is not constrained to internal views Business architecture improves other disciplines Business architecture is politically agnostic *Source: Business Guild, Business Quick Guide, 2017 Consider one value stream example: Take a Trip value stream traces entire customer end-to-end journey
6 Breaking Down IT Blueprints of data structures, applications and technologies that represent current and / or target state of IT deployments Application architecture Applications, services & orchestrations IT Physical & logical data deployments & representations Data architecture Monthly Processing Cycle Technical architecture Shadow systems IT architecture should not be confused with the IT organization The IT organization is just another business unit in a business ecosystem Desktop & business systems out of IT s control Underlying platforms & technologies
7 Quickly Sorting through the Jargon: Why it Matters Business View Business Enterprise Business Automation & Services View Data View Application Data Technical Source: Business Guild BIZBOK Guide, v6.0, Part 1 Platform & Enabling Technology View Solution Initiative or Portfolio Perspective Ability to deliver real business value is realized and enhanced through formal integration of business and IT at the architecture level *Source: Business : Putting Business into Enterprise, Ulrich, W. & Soley, R., May 2016, CIO Review
8 How a Business Accrues Technical Debt Technical Debt Results from applying IT architecture changes that degrade data and application architectures over an increasingly elongated timeframe Each set of changes increases time and cost of applying future changes, curtailing a business s ability to accommodate strategic objectives and business vision Technical debt is driven by: IT architectures that have grown increasingly misaligned to business model Continuous pressure to apply more changes to IT architectures never meant to support rapidly shifting business models Lack of executive understanding that technical debt is being incurred and that it presents a significant and growing risk to the business
9 Technical Debt Results In: Inability to address customer discontinuity across business units and product lines Diminished capacity to manage risk, regulatory compliance, change management and crises* Business costs escalate as the business works around core IT systems IT solutions result in more business disruptions than they resolve Essential requirements are applied inconsistently or missed altogether Ongoing IT investments appear fully disconnected from priority business challenges and objectives, creating significant business risks *Business Now, Not Later? A Lesson from Crisis Management BrightTALK Recorded 13 April 2017 https://www.brighttalk.com/webcast/12231/253795
10 Evaluating Technical Debt From a Business Perspective Matrix represents IT architectures as a whole or portions thereof Application systems are plotted on this matrix Initiatives may use this plotting approach based on the applications impacted Continuous business / IT architecture alignment, with minimal disruption and capital investment Level of IT & business architecture misalignment Degradation of data, application and technical architectures Source: Business Associates, Inc. Complete IT architecture replacement required, which triggers major, highly disruptive capital investment Major IT portfolio investment needed to align business & IT architectures & address IT architecture degradation
11 IT Investments Must Look Beyond Technical to Address Technical Debt, Business Challenges Current State / Target State Transformation Paths Solution value grows when you move up architectural stack Business Data Application Technical SOA, Cloud, Virtualization Rainbow Model represents transformational journey that concurrently transforms business architecture and data, application, application and technical architectures When journey only travels across technical architecture, business value is highly constrained Current-to-target state transformation comprises many individual initiatives moving towards common business objectives, in cohesive fashion, over extended period of time Source: -Driven Modernization: Transforming the Enterprise, Dr. Vitaly Khusidman, William Ulrich, 2008, http://www.omgwiki.org/admtf/doku.php
12 Implications of Rainbow Model on IT Budget Allocation & Business Funding At many organizations, IT will spend 10 s or 100 s of millions of dollars annually, whether those investments are business-driven or not It is incumbent upon the business to ensure that these investments are business-driven and deliver business value by: Framing investments in business terms that clearly articulate and reconcile business objectives and investment focal points within the business, before the discussion shifts to IT Ensuring that all IT investments have traceability back to business objectives and impacted business focal points IT spending is a constant; but can the business directly trace dollars spent back to the improvement in customer and related stakeholder value and overall improvement in business capabilities?
13 Transformation Planning Leverages Business Based Technical Debt Metrics Business / IT Alignment Sample Metrics - Capability Instances Across IT Assets - Capability Automation Percentages - Capability Automation Percentages Across Value Stream Stages Metrics require businessto-it architecture crossmappings Level of IT & business architecture misalignment Quadrant II 1 Quadrant III 8 3 7 2 9 4 5 10 12 Quadrant I 6 Quadrant IV 11 Application IT Metrics - Reliability - Security - Maintainability - Performance Efficiency Metrics supported by work from Consortium for IT Software Quality (CISQ) Degradation data, application and technical architectures Source: Business Associates, Inc.
14 Using Technical Debt Matrix as input to Business- Driven, IT Transformation & Investments Decision matrix provides rapid analysis for executives to: - Invest wisely in business-aligned IT solutions (Q II / Q III) - Determine when technical architecture upgrade satisfies business needs (Q IV) - Avoid reinvesting in fully bankrupt IT assets (Q I) - Evaluate among business/it alignment scenarios, such as cross-business unit system consolidation, transform in place, migrate to new IT architecture Application Level of IT & business architecture misalignment Quadrant II 1 Quadrant III 8 Viability technology, misaligned to business model requires new functionality 3 IT architecture aligned to business, viable foundation for moving forward 7 2 9 4 Business/IT architecture misalignment, IT foundation requires major architectural investment 5 10 Business/IT architecture aligned, requires investment in IT architecture foundation 12 Quadrant I 6 Quadrant IV 11 Degradation data, application and technical architectures Source: Business Associates, Inc.
15 What Technical Debt Analysis from a Business and an IT Perspective Tells Us Capability mapping to IT architectures exposes major IT architecture challenges by exposing: Massive capability-related redundancies, where what the business does is implemented in hundreds or thousands of systems and technologies Fragmentation and inconsistencies in what the business does Redundancies, fragmentation and inconsistencies: Lead to poorly aligned and often conflicting information and related business challenges Destabilize IT architectures, making them particularly difficult to change in substantive ways Stymie investments to align IT architectures to business strategy and business architecture The good news: capabilities, and business architecture in general, provide insights into phased transformation options and related business-driven strategies
16 Business : Framing Strategy Definition through Solution Deployment Business Strategy Viewed Via Business Enables Actionable Results Establish / Refine Business Strategy Assess Business Impacts Architect Business Solution Establish Initiative Plans Deploy Solution Strategy Definition Business Scenario Definition Target State VIsualization Initiative Definition Deployment Team Engagement Business Performance Assessment Business Objective / Value Stream Impact Analysis Business Arch. / Case Management Design Actionable Objectives / Initiative Mapping Deliverable Development Policies, Rules, Regulations Organization Stakeholders Capabilities Information Vision, Strategies & Tactics Business architecture: - Informs strategy - Interprets strategy - Provides rapid business and IT architecture impacts prior to project definition Objective Definition Action Item Definition Objective / Action Item Matching Objective Tradeoff Analysis Business Objective / Capability Impact Analysis Business Objective / Information Impact Analysis Business Objective / Business Unit Impact Analysis Business Objective / Product Impact Analysis Business / Business Process Design Business-Driven IT Definition Current State / Target State Transformation Analysis Target State Option Analysis & Finalization Initiative Measurement Criteria Creation Initiative Tradeoff / Decision Definition Initiative Mapping Current State / Target State Transformation Management Success Evaluation Products & Services Value Streams Metrics & Measures Business Initiatives & Projects - Helps frame initiatives - Used end-to-end to scope requirements, frame IT deployments - Ensures link back to business objectives Objective Prioritization Strategy Dissemination Business / IT Impact Analysis Action Item Definiton Current State Visualization Source: Business Guild, BIZBOK Guide v6.0
17 Leveraging the Business / IT Transformation Framework Current Business Onboard Applicant Validate Application Stakeholders Business Positioned Vision Assess Risk / Eligibility Approve Request Acquire Product Process Payment Business Transformation Policies, Rules, Regulations Capabilities Vision, Strategies & Tactics Establish Account / Policy Notify Customer Organization Information Capability Map Products & Services Value Streams Initiatives & Projects Business / IT Current Mapping Information Map Synchronized Business / IT Transformation Metrics & Measures Business Synchronization of Target Business Perspective & Target IT IT Transformation Current IT Source: TSG, Inc. Target IT
18 To Maximize Value, IT Investments Must be Readily Traceable to Clearly Defined Business Objectives Steps to ensuring that IT investments are driven by business objectives: Business Strategy / Objectives Set clear, measureable, attainable business objectives Frame objectives through capability, value stream, information and stakeholder perspectives Value Stream Enables Frames Service Orchestration Orchestrates Frame IT architecture impacts through business architecture lens Highlight current state IT architecture constraints to the delivery of business objectives Aligns object term & definition Capability Automated by Service Uses / modifies Align IT transformation plans with corresponding business transformation plans Information Business Provides business view Data IT View
19 Leveraging Capabilities to Define SOA, Microservice & Cloud s Target State Concepts: Microservices: - Organized around capabilities* - Capabilities and (micro) services share common principles, both being object based - Capability decomposition enables microservice definition and refinement Current to Future State IT Leveraging Capabilities to Define Legacy Impacts, Future State Services Cloud deployment - Capability usage across business unit and value streams provide key input to cloud strategy context - Generally, supporting and non-core capabilities are more cloud suitable - In all cases, capability framed services provides greater business agility and cloud options, now or later *Microservices, http://martinfowler.com/articles/microservices.html
20 Business-Driven, IT Alignment & Transformation Requires a Robust Knowledgebase Business / IT Knowledgebase Business Unit Engaged in Initiative Initiative Business Unit Initiative Impacts Value Stream Initiative Impacts Capability Business Unit Has a Capability Value Stream Capability Value Stream Contains Value Stream Stage Value Stream Stage Capability Enables Value Stream Stage Value Stream Stage Relies on Application Capability Automated By Application Application Incorporates Service Service Application Application Accesses / Modifies Data Service Requires / Modifies Data Information Capability Requires / Modifies Information Capability Automated By Service Data Business Unit Uses Application Data is Derived From Information Clearly defined relationships among business and IT architecture domains within business architecture knowledgebase are essential to business-driven, IT architecture alignment and transformation
21 Businesses Should Seek Continuous, Non-Disruptive, Business-Driven, Business / IT Alignment Business / IT Continuous Alignment Model Business Alignment & Transformation Today, most businesses undergo disruptive, large-scale, very expensive IT transformations These transformations are characterized by many individual business unit investments in siloed IT systems This pattern of disruption will continue until businesses shift to a business-driven IT transformation and investment approach Businesses should seek to achieve continuous, non-disruptive transformative alignment, driven by business objectives from a holistic perspective IT
22 Shifting to a Business-Driven, IT Transformation Perspective Shift from a business unit-specific, application architecture-driven approach to framing IT investments from a capability and stakeholder value perspective Where IT programs and investments are not traceable to business objectives, reestablish the link to strategy as viewed through capability, value stream and stakeholder lens Frame initiatives from a business perspective and not simply based on the application systems involved in the effort Highlight overlap of initiatives based on capability and value related impacts Consider the direct business value of every IT dollar spent
Business-Driven, IT Transformation Thank You! 23 William Ulrich President, TSG, Inc. Partner, Business Associates President, Business Guild Fellow, Cutter Consortium Co-chair, OMG -Driven Modernization Task Force