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Strategic EA: The Bridge Between Business and IT Strategy

Anne Lapkin

Gartner Webinar

5 November 2008

Multiple Strategic Initiatives: A Recipe for Brownian Motion

Enterprise InformationManagement

Business IntelligenceCompetency Center

SOA CompetencyCenter

Business Process Improvement

PortfolioManagement

Program Management

EA

ITILLEAN

Key Issues

1. What is the business context, and how do I build the business context for my enterprise?

2. How do you leverage the business context for strategic initiatives in the enterprise?

3. How do you engage with business leaders to drive EA as strategy?

A Coherent Context for Strategic Initiatives Adds Value All Across the Enterprise

Run the Business

Grow the Business

Transform the Business

• Identify common goals and objectives across multiple strategic programs

• Identify synergies and opportunities for collaboration and sharing

• Understand discontinuities between business areas

• Exploit interdependencies between business areas

• Translate business vision and strategy into effective enterprise change

• Ensure coherence across multidimensional change programs

A Shared Business Context Helps Strategic Initiatives Work Together

Shared Business Context

Shared Goalsand Objectives

CommonConstraints

SynchronizedRoad Maps

CoherentExecution

Source: scottdesignworks.com

Business Context Defined

• The business context describes — through requirements, principles and models:- The strategic intent of the enterprise and its implications- The effect of external trends on the enterprise- The high-level constraints that will guide decision making to

ensure consistency with the strategic intent of the enterprise- The functional components of the enterprise, their

relationships with one another and with the enterprise ecosystem

• The business context informs the subsequent architecture work and ensures alignment of the strategic initiatives and governance mechanisms with the business strategy

BizGoals

Biz Strategy Creation

Adjust Operating

Model

Develop Annual

Operating Plan

ExecutionBusiness Planning

3-5 Year Operational

PlanStrategicIntents

The Linchpin!Implications?

Assumptions?

Integrate Planning Within the Envelope of Shared Implications and Assumptions

All functional entities impacted by strategic intent must share and compare implications, assumptions and

proposals using a consistent methodology.

What's In the Business Context?

1. A common requirements vision — a process for documenting and capturing:- The business strategies of the enterprise- The effect of environmental factors on the strategies of the

enterprise: 1) market pressures; 2) regulatory pressures; and 3) technology pressures

- The implications of the business strategy and environmental factors on: 1) the processes the business performs; 2) the people who perform the processes and how they are organized; 3) the information the business uses; and 4) the technologies that the business employs

2. A set of principles- Constraining architectural, implementation and governance

decisions to best support the business strategy

3. A functional model of the business

Creating the Business Context Is an Iterative Process

Documentstrategiesand trends

Documentimplications

Deriverequirements

Deriveprinciples

Create theanchor model

Validate ValidateValidateValidate

Business Context

PPM

BPCC

ITIL

BICC

EA

SOACC

It's Not Enough to Acknowledge External Trends — Acknowledge Their Impact Too

Trend Impact ImplicationThe market wants an integrated view of accounts

Banking and financial services customers are demanding more visibility across their accounts, with greater ease of use

We need a single view of the customer across all internal systems and customer-facing services

Compliance regulations are becoming more stringent

Regulatory compliance has forced us to increase the expenditure on and effectiveness of internal controls, resulting in increased cost

We must reduce compliance costs as a percentage of revenue, while leveraging the internal audit and controls to identify process efficiencies and customer experience improvement opportunities

Derive Your RequirementsBusiness change requirements —How must the business change?• Process• Organization• Finances• Culture

Institute personal bankers and account management process for high-net-worth customers

Business information requirements —what new types of information will be required ?

Customer profitability by individual customer and channel

Information technology requirements —what new technology capabilities must be provided?

Enterprise data warehouse and analytics

Business solution requirements — what programs will support our strategic objectives?

Customer analytics: retention and segmentation to evaluate the profitability of customers, market segments and product lines

Create Your Principles

Implications:• All lines of business must have a single, consistent

data source for customer information• We must have information and processes for

assessing customer profitability

Principle: Customer information is accessible across all lines of business, regardless of the product relationship to the customer.

Justification: Our strategy requires us to develop deeper, more-profitable relationships with customers by offering a one-stop resource for all of their financial services —personal as well as business.

Create an Anchor Model of the Enterprise

Strategic Plans

Strategic requirements

Processhierarchy

Process improvement

objectives

Processperformance

metrics

BPI initiativebusiness

case

OrganizationalBehaviors

Change management

Communications

Performance management

Competency centers

Programmanagement

Project management

Methods & Templates

Six Sigma, Lean, Kaizen,

Rummler-Brache and

more

SCOR, RosettaNet

Agile IT

Simulation/optimizationalgorithms

ABC

Balancedscorecard

Tools & Technologies

BPA

Visio

Paper/Post-Its

KM or process asset

repository

BPMS

ESB

….

The Business Context Informs BPI Initiatives

A BPI Framework for Success

Workforce Issues

Process skills

Roles and responsibilities

defined

Performance plan and incentivealignment

Training

Governance & Standards

Processchange

management

Process ownership

Compliance

Reporting

Notationstandards

SOAstandards

Analyticskills

Statistical and process skills

Business needs

Data management and integration

Tools andapplications

Businessskills

Business needs

Organization and processes

IT skills

The Business Context Informs Competency Centers

Business needs

Organization and processes

Tools andapplications

Integration and management

Source applications

Develop user

skills

Control funding

Define visionManage

programs

Organize methodology

leadership

Build technology blueprint

Establish standards

CC

The Business Context Provides Goals, Objectives and Performance Criteria for Managing the Portfolio

Increasing RiskIn

crea

sing

Val

ue

J

F

CM

GA

Increasing Risk

Incr

easi

ng V

alue

As-Is Portfolio

J

F

CM

GA

Target Portfolio

Size of circle = Project cost Color = Project health In troubleOn target At risk

H

My Enterprise Doesn't HAVE a Business Strategy

Stop Whining!At the end of the day, the important part of the business strategy is the four to six things that the enterprise wants to do differently in order to be more successful:

• Target high-growth markets

• Attract high-value customers with comprehensive online services

• Deepen the customer relationship

• Grow through mergers and acquisitions

A strategy articulates a vision or objective, and bounds the options for attaining it.

The Gartner Business Value Model — Making Implications and Assumptions Explicit

SupportSupportServicesServices

SupplySupplyManagementManagement

Aggregates(desired business outcomes)

Primes (leading performance indicators)BusinessAspect

DemandDemandManagementManagement

CustomerResponsiveness

SalesEffectiveness

MarketResponsiveness

Product DevelopmentEffectiveness

SupplierEffectiveness

OperationalEfficiencyHuman

ResourcesResponsiveness

InformationTechnology

ResponsivenessFinance and Regulatory

Responsiveness

On-TimeDelivery

ServiceAccuracy

AgreementEffectiveness

Target Market Index

Product PortfolioIndex

Sales OpportunityIndex

Sales PriceIndex

CustomerRetention Index

Market CoverageIndex

Market ShareIndex

Configure-abilityIndex

Channel Profitability Index

Opportunity/ThreatIndex

Cost of SalesIndex

Sales CycleIndex

ForecastAccuracy

Sales CloseIndex

New ProductsIndex

Feature FunctionIndex

Time-to-MarketIndex

R&D SuccessIndex

ServicePerformance

Order FillRate

MaterialQuality

Customer CarePerformance

TransformationRatio

Supplier On-TimeDelivery

Supplier ServicePerformance

Supplier OrderFill Rate

Supplier CarePerformance

Supplier MaterialQuality

Supplier ServiceAccuracy

Supplier Trans-formation Ratio

Supplier AgreementEffectiveness

Cash to CashCycle Time

ConversionCost

AssetUtilization

SigmaValue

Recruitment Effectiveness Index

HR AdvisoryIndex

BenefitsAdministration Index

HR TotalCost Index

Skills InventoryIndex

EmployeeTraining Index

SystemsPerformanceNew Projects

Index

IT SupportPerformance

IT TotalCost Index

PartnershipRatio

Service-LevelEffectiveness

ComplianceIndex

AccuracyIndex

AdvisoryIndex

Cost of ServiceIndex

What Is Our Strategy?

How Will It Impact Us? How Will We Execute?

Where Governance and Portfolio Management Fit

Go to Slide Master to add client's name, project #

Compliance Management

Project Management

Design, build, run

Enterprise GovernanceEnterprise GovernanceEnterprise Governance

Principles, models, standards, guidelines

Assessments Business metrics, pre-/postmortems

Strategic ResponseBusiness Strategy and

Intent Functions 1 … n

Future-State Requirements

Core Change Assumptions

Current-State Assessment

Gap Analysis

Alternative Analysis

Proposed Initiatives

Portfolio Management

Road Map

Business Value Model

Management Imperatives

CIOs and enterprise architects should:In the short term (when you get back to your desk)- Assess the clarity of your business context — make immediate

plans for remediation if necessary- Assess the drivers of your strategic initiatives and governance

programs for coherence

In the medium term (within six months)- Complete the articulation of your business context

• Requirements, principles AND models

- Define how enterprise programs should use the business context

In the long term (one year)- Assess program performance against your strategic objectives- Remix and repeat as necessary

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