Welcome to the new blog of TSG, INC. We have begun a journey on the road to business / IT architecture transformation. Along the way we will meet head-on the obstacles that lie in the way. It’s an open road, so buckle your seatbelts, put on your helmets, or grab your walking shoes and join us.
If you work in a large corporation or government entity, you have probably noticed that coordination and collaboration across points of customer engagement, strategy execution, product delivery, program deployment, and other areas are lacking in a variety of ways. Consider the evidence from a review of 25 years of project research; successful projects are achieved less than 30% of the time, a number that has improved only slightly over the decades in spite of technology advancements and growing overhead costs. What is the disconnect? The reality is that organizations lack a shared view of what they do, how they engage customers and partners, and how they execute strategies. Enter the “cognitive enterprise”. The cognitive enterprise describes a business that learns, adapts, and scales on an evolutionary basis by combining an ecosystem-wide business perspective, or shared mental model, with cognitive computing technologies. If you want to learn, more check out the article at https://tinyurl.com/cognitive-enterprise.
Business professionals consider it a mystery that IT can spend 10’s or 100’s of millions of dollars annually with little business value to show for it. Leave aside the fact that Standish Group tells us that almost half of those IT investments are wasted, and further consider that the other half is often spent on technology upgrades and platform migrations. Since IT investments ultimately come from the business, the onus is on the business to drive the reversal of these practices by clearly articulating business objectives and quantifying IT investment priorities based on those objectives.
Business objectives are often vague, lacking business focus and measureable outcomes. As a result, misdirected business funding is often driven by technology trends such as cloud computing, digital transformation, and a revolving list of shiny objects. While these and related targets are worthy of being incorporated into business strategies, technology should not be the main or sole driver of IT investments. Reversing this trend requires clearly stated, measurable, and attainable business objectives.
For example, a company may want to lower loan defaults to a fixed percentage, expedite partner onboarding, rationalize customer product offerings, or streamline customer issue resolution across business units. These and numerous other business objectives often remain unarticulated or unresolved while technology-driven investments dominate IT budgets. Business planning teams should, therefore, be singularly focused on framing business objectives that IT can clearly interpret and leverage to scope and align IT investments and related programs.
While well-articulated business objectives are a critical aspect of focusing and balancing IT investments across technology and business-driven targets, every substantive program and project must additionally be prioritized based on quantitative business and IT impact analysis. The steps to quantifying, prioritizing, and justifying business and IT investment priorities include:
Quantitative analysis targeting business-driven IT investment prioritization is based on two sets of metrics. Business / IT architecture alignment metrics establish a direct link between business objectives and gaps in IT architecture’s ability to deliver business value. In addition, IT architecture degradation, or traditional technical debt, metrics provide insights into weaknesses in application, data, and technical architectures. Collectively, these metrics provide a basis for prioritizing business-driven IT investments.
Business / IT architecture alignment metrics provide business and IT a clear perspective on the overall effectiveness and usage context of the business domains and IT assets targeted by candidate business objectives. Consider that these metrics offer insights into how well certain capabilities are performing in context of business units, partners, products, and end-to-end stakeholder value delivery. These metrics additionally provide insights into the scope of business and IT impacts, costs, and return on investment.
For example, reducing loan defaults requires rapid assessment of the state of agreements, customers, partners, payments, financial accounts, and related business objects across one or more value streams. When framed through the lens of business architecture and subsequently mapped to data, application, and technical architectures, planning and investment teams gain transparency into current state business and IT architecture strengths and weaknesses, scope of need and impact, and what it will take to address the loan default challenge from a holistic perspective. This analytical approach additionally enables program management teams to quickly ascertain where certain programs may overlap or be in conflict, allowing those teams to streamline investments across multiple programs.
Business executives can no longer sit idly by while critical business challenges remain unattended or unarticulated, even as IT continues to invest a growing percentage of scarce budget dollars in technology-driven investments. Business performance and business / IT alignment metrics, applied to well-articulated business objectives, establish a missing element in IT budget models and ensure that businesses large and small maximize IT investments to deliver business value year in and year out.
I have worked with numerous large-scale corporations and government agencies over the years and the level of disconnect between IT program investments and business objectives seems to be escalating to an alarming level. IT is spending more and more money on programs that are seemingly disconnected from business strategies and underlying objectives. Most of these IT investments target underlying technical architectures and all too often ignore the data and application architectures that actually deliver value to the business and its customers.
Consider an example where a large systems integrator was engaged in IT architecture transformation work in excess of $250 million annually. This budget figure did not represent the entire IT budget but it did represent the vast amount of program-specific investments in application systems and underlying data. At the same time, the business was facing cross-business unit transformation demands that would definitely impact these same application and data architectures, yet these business transformation objectives were not being addressed by annual IT investments. Most concerning was the fact that key business stakeholders had no idea as to what value existing IT investments would deliver or why business demands were being ignored.
This example represents a significant disconnect between IT investments and business strategy. My experience has shown that this degree of disconnect is not an exception but more the norm at businesses large and small. When the gap between IT spending and business value delivery is large, it derails a business’ ability to deliver customer value, ensure regulatory compliance, stave off competition, and deploy new or updated business models. Opportunity costs skyrocket, while business agility sinks.
When it comes to business / IT disconnectedness, the root cause issue is often overlooked. First let’s state the obvious; IT is never shy about filling a vacuum. Regardless of the investment monies granted an IT organization, IT will find a way to spend that money. If IT is unclear as to the scope and business impacts associated with a given strategy, it will make a best effort to deliver a solution and fill the remaining vacuum with platform and language migrations it views as essential infrastructure investments. Inadequate understanding of business objectives and related impacts, coupled with the inability to define the scope of those impacts, is at the heart of misdirected IT spending and failed attempts to deliver business value.
The root cause of this escalating challenge can be tied to the fact that most businesses lack a clearly articulated perspective as to what they do, the vocabulary they use, and how they frame stakeholder value delivery. Businesses tell IT to fix a system or deliver other results with little indication of business impacts. All too often, the same requests come in from multiple business units, with conflicting or overlapping demands, using a variation of business vocabulary. Collectively these disparate requests are tossed over the wall to IT to decipher, setting up IT to fail regardless of the degree of IT maturity. Costs escalate and programs and projects miss the mark, again and again.
This lack of business perspective and overall scope is not an IT problem; it is a business problem that is passed on to IT to solve when IT is in no position to do so. So how can businesses address the challenge of misdirected IT investments? Businesses must deliver business objectives to IT along with clearly framed impact analysis on customer value delivery, business units, stakeholders, and business capabilities. With this clearly framed impact analysis in hand, IT can quickly associate capability and related business architecture impacts on current state application and data architectures and concurrently frame target state solutions.
If you are a business executive frustrated with IT’s inability to cost effectively deliver business value, perhaps you need to look at your own organization before laying the blame entirely on IT. If you are an IT executive tired of getting hammered by the business for spending too much and missing the mark on program after program, it is time to request or even mandate that all business objectives and related investments be framed in terms of a clearly articulated business architecture impact analysis.
Either way, it is time for IT to demand clarity from the business and for the business to step up to the responsibility of providing this clarity. Until that point in time, IT and the business can expect to keep getting the same results.
Organizations are seeking to craft and deploy a common business vision focused on a variety of strategic pursuits driven by customer demands and other forces. This shift towards executing a cohesive business vision is evidenced in publicly shared vision statements. For example, the “One Ford” plan refers to one team, one plan, and one goal. Ford is not the only company with this unified vision, and rightly so. This business trend is long overdue. Yet a countertrend is emerging that would lead you to believe that IT organizations are heading down a path of isolationism.
Countless organizations face hurdles in moving towards an integrated business ecosystem perspective. Business unit silos commonly found across organizations large and small inhibit collaboration towards achieving a shared vision, proliferate redundancies and inefficiencies, and lead customers to perceive of a business as a disjointed set of broken pieces working at cross-purposes. See my recent blog post on crisis, risk, and compliance management for more on the impacts of business unit silos.
In the face of business trends toward one team, one plan, and one goal, a countertrend has emerged within the IT community. Industry publications ranging from CIO Magazine to Forbes are suggesting that IT manage itself as an independent business. This degree of independence is more pronounced in some publications, such as Garter’s “The Six Pillars of Running IT as a Business”, than in others. While running IT as a business may simply imply aligning to the same business ecosystem as the business as a whole, a subset of the IT industry has taken it to mean that IT should be run as a “stand-alone” business.
What happens when IT is viewed as a stand-alone business? Industry literature suggests running IT like an outside service provider, decoupling IT from the business as a whole, and isolating IT from the business ecosystem it shares with other business units. Consider one perspective. Gartner cites in its Six Pillars publication that under a scenario of running IT like a business, IT becomes service obsessed, demand-driven, internal customer centric, and process-based.
Following this train of thought involves creating complex service exchange structures with the rest of the business, which in turn leads IT to think that it is succeeding because it is meeting certain service level commitments linked to “internal services”. This allows IT to claim success even as revenues drop and costs escalate for the business as a whole. If every business unit behaved in similar fashion, it would create a spider web of services, drawing more and more energy towards service exchange tracking and creating a “blame game” environment across multiple business units, all the while deflecting attention away from optimizing end-to-end customer value delivery.
When IT becomes “internal customer centric”, it loses track of the end customer. This inward looking viewpoint further isolates IT from understanding and contributing to external customer value delivery critical to a business’ bottom line. Business architecture disciplines offer shared end-to-end value delivery perspectives that leverage business capabilities that span the business ecosystem. However, if IT creates its own value streams for delivering value to “internal customers”, it decouples IT from the overall business ecosystem, impeding coordinated value delivery to revenue generating customers as a whole.
Two other points of concern arise from the Six Pillars discussion. First, demand-driven IT organizations can find convenient excuses for disengaging themselves from strategy formulation and delivery, essentially turning IT into a disinterested third party. IT as a disinterested third party is not conducive to achieving a one team, one plan, and one goal vision. The last point is minor but important; IT is already process-obsessed. Measuring success by rigid adherence to processes allows IT to claim it is delivering value when this inward facing perspective could be detrimental to the business and its customers on the whole.
IT isolationism is a dangerous countertrend that runs counter to business trends to unify around a shared business vision. In addition, this countertrend blinds IT to revenue generating customer impacts and demands and creates internal service exchange complexities that impede customer value delivery while driving up costs. IT already carries enough baggage without doubling down on problematic segregation perspectives that are now recognized as a relic of the past.
What action can an organization take to enable IT and other business units to move forward in cohesive fashion towards a common vision? Businesses use business architecture to create a unified business perspective that serves to break down the silos that stymie collaboration towards common goals. Value stream, capability, information, and related business architecture perspectives view the business holistically, which enables coordinated strategy, initiative, and solution formulation that aligns to a single, overarching vision. Going forward, businesses should articulate a view of their business that is silo agnostic and consider this holistic perspective as a basis for achieving one team, one plan, and one goal.
Every business must deal with crisis, risk, and compliance challenges. Teams chartered with addressing these challenges are often split across business units and regions, which fragments crisis, risk, and compliance management efforts. Business unit silos and related complexities obscure ecosystem transparency, which in turn constrain an organization’s ability to identify risks, assure compliance, and prevent and disarm crises. Business architecture delivers business ecosystem transparency as a basis for improving a business’s ability to collectively address crisis, risk, and compliance related challenges.
Crisis, risk, and compliance management are highly intertwined disciplines. Consider that organizations identify weaknesses, threats, and related impacts as a basis for mitigating risks and future crises. They seek to achieve compliance to avoid legislative, audit, and oversight violations and related disruptions that stem from these violations. All three disciplines rely on a high degree of business transparency as a basis for prevention and remediation, with a focus on nullifying customer, partner, public, employee and general business impacts.
Business ecosystems, which reflects the breadth and depth of business dependencies that extend beyond the walls of the legal entity, must be highly transparent to key stakeholders to enable risk identification and avoidance, regulatory and related policy compliance, and rapid cause and effect analysis during a crisis. Business architecture delivers this level of transparency.
For example, well-articulated business architecture provides rapid insight into which customers are aligned to certain accounts and agreements, how customers are linked to other customers and third parties, associations among accounts and agreements, and related business unit impacts. Business architecture highlights where blind spots exist, pinpoints impacts on the business from an ecosystem-wide perspective, and provides insights into resolving risk, compliance and related factors. I discuss how to leverage business architecture for crisis management in my BrightTALK on this topic at https://www.brighttalk.com/webcast/12231/253795. Listen in and share your thoughts. Is your business using business architecture to further its risk, compliance, and crisis management efforts? Let us know.
Pandemic Business / IT Architecture Misalignment
Information technology (IT) is failing business. The inability to deliver new solutions and transform bankrupt architectures is causing a pandemic of business / IT architecture misalignment. Misalignment rears its head in countless ways on a daily basis. Examples include major delays in launching new products, limitations on regional or global expansion, customer defections, lack of transactional transparency, reporting errors, market share loss, declining revenues and regulatory violations. While these and related challenges are commonplace, they are far from acceptable and bode poorly for the long-term health of a business. You can choose to fix these issues or you can chose to ignore then. But to ignoring them, can have significant consequences.
To be clear, misalignment is not a one-sided issue. Existing IT architectures that automate businesses today are a reflection of fragmented, redundant and poorly aligned business architectures. So there is no “us versus them” position on this matter and any solution must employ equal degrees of business and IT innovation and investment. Perhaps because misalignment is a result of historic actions taken by the business and IT, it is often accepted as the norm. Either way, it is not acceptable. Consider just a few of the following challenges.
Systems are wired together using a complex spider web of hardcoded interfaces. Redundant, mismatched data is spread across numerous system and data silos. Aggregate views for basic information such as account, agreement, customer, employee and revenue do not add up. Making changes across segregated systems and data structures is rarely easy, typically costly, often risk prone or even borderline impossible. Businesses think this is the norm.
Over half of all business processes are not automated, which drives up costs and errors while driving down transparency and efficiency. Architectural gaps among systems are big enough to drive a truck through, requiring hundreds or thousands of manual steps. Architectural gaps result in a lack of transactional transparency that is both costly and detrimental to growth and expansion. Automated processes are not in much better shape, buried in poorly architected source code that is hard to decipher, which in turn stymies business agility. Businesses think this is the norm.
Data is routinely massaged manually, often by an army of analysts using a myriad of poorly audited, high-risk spreadsheets and related desktop solutions. Executive reports are the result of a small team of artisans who use a cascading set of desktop tricks and techniques to produce analytics that are used to make strategic, high cost and high risk decisions. Data buried in these desktop tools is hidden from view and are or at least should be an auditor’s nightmare. Businesses think is the norm.
Many systems are encased in architectural silos, protected by organizational fiefdoms. And while business functionality is replicated across these silos, the automation needed to enable cohesive, integrated business solutions remains lacking. In addition, systems are assumed to be immutable artifacts that will stand forever or evolve through some phantom transformation strategy. Solutions to these issues typically focus on software languages and platforms, but bad architecture is bad architecture regardless of language or platform. All the while, IT continues to wallpaper over crumbling infrastructures while promising the wonders of the Cloud, SOA and other panaceas. And yet, businesses think this is the norm.
If these issues are acceptable to you as a business or IT leader or practitioner, you should stop reading right now. If you think nothing can be done about system imposed constraints on the business, endless workarounds, escalating inefficiencies and poor information integrity, stop reading right now. If you think that the situation is hopeless and organizational fiefdoms are permanent roadblocks, stop reading right now.
On the other hand, if you think these issues are unacceptable and that strong leadership and innovative thinking can overcome these challenges, let’s explore various options and strategies together. No single approach, tool or technology will address business / IT misalignment. There are no shortcuts. Solutions are multidimensional in nature and require strong leadership and planning, robust business architecture to empower business as a change agent, well defined target state IT architectures and a variety of business / IT architecture transformation approaches.
The beginning of every journey requires a first step. And the first step in this case is to stop thinking of business / IT architecture misalignment as the norm and map out a strategy for moving forward. If you are ready to do this, welcome to the fight. You have taken your first step.
The Art and Practice of Business / IT Architecture Transformation 