Business Architecture-driven Digital Transformation Maturity
With Toys R Us joining the ranks of businesses that fail to adapt to digital competition it would seem obvious that lacking a clear digital strategy today is a negligent death wish.
However despite this obvious threat, not all organizations are catching on. HBR reports in 2017 that:
“the average investment in emerging technologies (as a percent of total technology spending) grew just 1% over the 10-year period. In our most recent survey, executives say they look to digital initiatives primarily to increase revenue and reduce costs. These are worthy goals, of course, but it also means there’s less priority being placed on innovating and implementing the latest technologies into their products.”
Even more alarmingly when identifying IT’s Future Value Proposition McKinsey reveals that:
“Just 12 percent of all respondents say their IT organizations are very effective at leading digital transformations across their business, and only 8 percent say IT is very effective at the design of e-commerce and online experience.”
This would suggest that we’re likely to see more big name casualties and the opportunity for aggressive digital disruption is still ripe.
Many management experts propose a systematic way of responding to this threat is through quantifying and improving overall digital capability maturity.
This polled the digital maturity of a number of organizations and charted them across this journey, highlighting the key activities of the mature leaders such as Walmart. The key insight is that they don’t treat it as yet another isolated IT system adoption but as a holistic transformation of how their organization works, impacting multiple dimensions of culture, talent and skills, across short and long term strategic perspectives.
They define that a digital strategy is the single most important driver, and emphasize that this doesn’t mean just a a focus on a particular technology, such as mobile or migrating to the cloud, but instead they envision how the organization can and should do business differently as digital technologies change the market. Specifically:
“For digitally maturing organizations, technology typically is not simply an add-on to existing processes and practices. Instead, it prompts these companies to rethink how they do business.”
Business Architecture: Aligning Strategy and IT
Digital Business Architecture refers to the use of Business Architecture for purposes of planning Digital Transformation, and the expertise offers the fundamental mechanism for improving IT organization maturity, most notably formally establishing an explicit link between IT and business strategy.
A first key question to ask is how this relates to Enterprise Architecture. Most organizations already have well established EA teams, but often these are mainly technical in nature, focused on aspects like software architecture guidelines; the business alignment to executive strategy is still missing.
This presentation Aligning Business Architecture to TOGAF takes on this question, exploring the specific connect with TOGAF and making a number of key mappings, in particular how BA designs like Capability Maps can be transposed on to EA designs such as a SOA (Service Oriented Architecture).
McKinsey describes a framework of Nine Elements of Digital Transformation that lists a number of key enabling Strategies and Capabilities that BA provides the methodology for planning how to overlay and integrate into existing corporate structures, and in Three Steps to Success, they repeat the central point about the essential dynamic of this interface that maps these to IT systems design:
“To make a digital transformation happen, you need complete alignment—from the board through the executive team through the whole organization. Without that “air cover” from the board and from shareholders who understand the change that you’re taking the organization through, it is very, very hard to do it successfully.”
CIO.com also writes in the Evolution of the Business Architect that they key function of the Business Architect is to act as ‘translator’, and that while traditionally they’ve sat within the EA team, this function is more successful when they become an active part of the line of business teams.
Best practices: Credit Suisse – Digital Transformation Roadmap
How to achieve this connection is defined in the Business Architecture presentation from Credit Suisse, which shares how they have encoded the Business IT Alignment into their IT management governmance.
Design Reviews Using the Business Capability Model, from the OMG Innovation Summit, details their overall Enterprise Architecture framework, their ‘eBCM’, with one critical feature being described on Slide 7:
Credit Suisse demonstrate a specific middle tier of activities that connects the higher level board strategy planning, with a lower one of IT implementation, the primary mechanic that can then begin to answer more specific questions about how IT generates $ Value for Money.
Daniel Lambert explores this same cascading of strategy to execution in his Linkedin blog, expanding it to a level of detail that includes how the specifics of these strategies can be articulated through writing up user stories, the base unit of business requirements that IT teams are familiar with.
Business Architecture and Process Transformation
As McKinsey writes in The Digitization of Business Processes, the building block of new digital business models is the automation of previously manual workflows, and BA can translate strategy and user requirements into the list of required Capabilities, that can then define what new Cloud services are needed to implement them.
These organizational maturity improvements can first be applied within the IT organization. A key benefit of shifting to the Cloud is not just better computing capabilities but also a significant improvement in the agility of the organization overall, where for example ‘DevOps’ and ‘Continuous Deployment’ practices can be adopted to enable a faster cycle of requirements analysis being implemented into working software. Business Architecture helps quantify and provide a frame of reference for planning these improvements.
A more mature IT organization will underpin and enable a more mature digital organization overall, protecting the enterprise from commercial threat and positioning them to instead by the bringer of disruption to their industry.