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Page 1: Enterprise Architecture: A Strategic Agenda for CXOs · PDF fileEnterprise Architecture: A Strategic Agenda for CXOs. Progressive organizations must look beyond traditional approaches

Enterprise Architecture: A Strategic Agenda for CXOsProgressive organizations must look beyond traditional approaches and tightly align the enterprise architect role and function with corporate strategy, program management and strategy evaluation lifecycles.

Executive SummaryTechnology subjects often carry negative equity when “real” businesspeople are confronted with them. Let’s look at a brief dialogue between a CXO and an enterprise architect at a coffee vending machine in the office.

CXO: What are you working on?

Enterprise architect: I am working on enterprise architecture matters.

CXO: Oh, I didn’t know that we were planning to make changes to our building.

Many times, the significance of the EA’s work might not be obvious to top-level executives. The reason, in many cases: fundamental archi-tectural concepts were derived from a hardware philosophy. Today, architectural concepts have embraced software applications and data as well as business structures and processes. To counteract old-world thinking, this white paper presents a new twist on the enterprise architec-ture function, arguing for a reorientation to a business and strategy perspective.

This white paper presents a combination of real-life client situations and illustrative business situations to see how the EA function can play a strategic role in combination with other strategic corporate functions.

Enterprise Architecture: An Enlightened PerspectiveTo embrace this new view of the enterprise function (as illustrated in Figure 1), organizations need to take note of the following:

• The ever-changing business world: With the only constant being change, enterprises have to adapt, reorganize, gain experience and refine. Therefore, to strategically address these changes and seize emerging business oppor-tunities, it is important to have a running view of enterprise architecture including business and IT strategy, operating models, business processes, designs, people, applications, data and underlying infrastructure. The EA function can play a strategic role in providing a quick understanding of this underlying complexity and simplifying the decision-making process.

• The redoubled emphasis on moving quickly and effectively from strategy to execution: Lead time for action, reaction and adaptation is reducing from years to months, days or even minutes. With a solid knowledge base of all these interlinkages, the EA function can guide and support the implementation of any business change in an effective manner. In other words, the EA can provide the ability to quickly pinpoint which enterprise element needs to be

• Cognizant 20-20 Insights

cognizant 20-20 insights | june 2013

Page 2: Enterprise Architecture: A Strategic Agenda for CXOs · PDF fileEnterprise Architecture: A Strategic Agenda for CXOs. Progressive organizations must look beyond traditional approaches

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changed or updated to improve the enterprise performance mandated by corporate strategy.

• Disruptive Technologies: Emerging disruptive information technologies and systems are evolving as the key differentiators among orga-nizations. Therefore, the ability to perceive and fundamentally understand disruptive tech-nologies in business, financial and nontechni-cal terms can be a useful tool for CXOs to plan appropriate responses.

Figure 2 illustrates the evolution of key EA char-acteristics.

Given the changing nature of the EA function, what should CXOs be thinking about?

• How their strategic directives or thinking has been translated and interpreted by the management team at the conceptual level.

• How to produce a consistent, transparent and agreed-upon architecture vision to prioritize, plan, implement and control initiatives.

• How to further refine strategic decisions and challenge the derived concepts downstream in a timely manner.

• How to collectively evaluate known and estab-lished governance models, processes and frameworks.

cognizant 20-20 insights

Figure 1

Evolution of Architectural Concept vs. Leading Contemporary Business Issues

Strategic Business Issues

Data Center Concepts

EA Wave

Broadening EA Scope

IT Heavy Concepts

Management Philosophy

Changing Business World

Strategy to Execution Lead

Time

Disruptive Technologies

Figure 2

Recasting the EA Role

Architecture Characteristics

Past Practices Current Practices Future Practices

AlignmentApplication & Technology

Business & IT Strategy & Operations

Approach IT Focused EA Framework Oriented Mixture of Frameworks

Change DriversBusiness Change Driven

by TechnologyBusiness Demanding Technology Change

Strategy & Business Imperatives Guiding Technology Change

Reporting & Sponsorship CIO CIO & BU Heads CEO, COO, CFO, CIO

Page 3: Enterprise Architecture: A Strategic Agenda for CXOs · PDF fileEnterprise Architecture: A Strategic Agenda for CXOs. Progressive organizations must look beyond traditional approaches

Figure 3 illustrates how CXOs should frame their refined view of the EA function.

Approaching Enterprise Architecture Strategically Changes in the business environment force orga-nizations to continuously reposition themselves in the market. Repositioning is accompanied by the reorganization of internal structures, which are often complex and difficult to change. These shifts require the firm to improve its ability to plan and implement change. The EA function can bring enterprise-level concerns, viewpoints, challenges and quantitative assessment together and form a common enterprise-level understand-ing to prioritize strategic initiatives.

By doing this, EAs can allow CXOs to focus investments and resources on those initiatives that generate significant business performance improvements.

The following things should be kept in mind while implementing EA concepts:

• Integrate the EA function with the corporate strategy cycle.

• Integrate the EA function with the project lifecycle.

• Integrate the EA function with the corporate strategy evaluation cycle.

Figure 4 highlights our thinking.

3cognizant 20-20 insights

Figure 3

CXO-Driven Target Enterprise Architecture Vision

Market Positioning

Market Servicing

Profit & Volume

Resource Utilization

People & Change

Revenue Growth

Strategy Translation

Interdependencies

CXOs

Agenda

Concerns

Challenges

Consistent Knowledge, Understanding, Reuse of Assets + Resources + Capabilities

EAOrchestration

Operations Perspective

Technology Perspective

Emerging Trends

Governance Perspective

Financial Perspective

Sales Perspective

Technology Integration Shared Architecture

Vision

Detailed Target EA

Figure 4

Enterprise Architecture’s Strategic Fingerprints

Cost Reduction Programs

Emerging Technologies

Compliance Requirements

Emerging Markets

New Products & Services

Operational Demands

Merger & Acquisition Initiatives

IT Change Programs

Competitive Advantage

Strategic Goals

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Integrating EA with the Corporate Strategy Cycle If EA is a stand-alone activity, then the organi-zation will struggle to realize the EA function’s defined objectives and principles. This implies that enterprise architecture management practices need to be carefully embedded in all of the strategy processes including formulation and planning, implementation and evaluation.

The first step of this integration is the analysis of the “as-is” enterprise architecture and weighing it against the organization’s internal strengths, weaknesses, external threats and opportunities. The enterprise architect needs to help the organi-zation in carrying out this analysis. This analysis can help CXOs better understand the strategic options, their potential implications and the transformation roadmap.

The second step of this integration is to analyze and design a best project portfolio to implement the transformation roadmap. The enterprise architect needs to help in structuring the project portfolio by promoting the projects that have the highest strategic contribution and synergy.

The third step of this integration is to include EA-related KPIs in the enterprise performance scorecard to understand the actual performance of current enterprise architecture vis-a-vis planned enterprise architecture.

Integrating EA with the Project Lifecycle By the end of the strategic cycle, we should have a high-level target EA vision, a roadmap of how to get there and a resulting project portfolio. This can be documented as a conceptual blueprint. However, a blueprint alone is not sufficient to ensure realization. The question is how we can ensure that end results match the strategy. A strategy is more likely to succeed if the cor-

Figure 5

EA Entry Points

Strategy Formulation

Strategy Implementation

Strategy Evaluation

Business Architecture

EA Governance

Architecture Vision

Quick Take

Business situation: Entering a new market might require redesigning CRM processes to closely interact with sales agents and customers.

• Key goal: Time-to-market.

• Ultimate need: Additional online sales platform.

• Constraint: Market strategy can be developed and rolled out in months but migration to new sales platform might take one to two years.

• Strategic approach:

> Focus on highlighting Interdependencies or overlaps with other strategic initiatives by translating strategic business initiatives to the IT domain.

> Illustrate how strategic options affect the different parts and resources of the orga-nization by using cross-domain knowledge.

> Evaluate strategic options by not only tak-ing opportunities into account, but also the organization’s capabilities, potential, limita-tions and unforeseen side effects.

» For example, given the existing skills, business processes and applications, en-tering a new market may be risky. Over-looking such implications may hinder successful strategy implementation, or require costly strategy modifications at a later stage.

Taking EA to the Next Level

4cognizant 20-20 insights

Page 5: Enterprise Architecture: A Strategic Agenda for CXOs · PDF fileEnterprise Architecture: A Strategic Agenda for CXOs. Progressive organizations must look beyond traditional approaches

Quick Take

Situation:

This experience concerns one of the largest investment banks in the world, which filed for the largest bankruptcy in history. In this situation, the entire enterprise architecture including operating model, processes, applications, data needs and infrastructure had to be transformed (in their totality) to deal with new business goals and business models. The entire enterprise archi-tecture had to be reorganized and rationalized to meet the fresh needs of the business. This resulted in significant cost savings and effective administration of the bank.

• Key business goal: To realize the bank’s assets and return them to their rightful owners and creditors in a properly managed and legally controlled way.

• Ultimate need: New enterprise architecture aligned with new business goals and strategy. Also, to decommission unwanted IT elements.

• Challenge: To understand the existing applica-tion portfolio and design fit-for-purpose, light-weight and low-cost IT landscape.

• Constraints: To reuse current enterprise archi-tecture and get rid of outside dependencies on vendor products and support.

• Approach:

> An enterprise architecture function was cre-ated to formulate a bigger picture of the current enterprise architecture.

> This function was working alongside the COO office and was up to date with the busi-ness vision and strategy-related discussions.

> Inputs were taken from the EA function to formulate realistic business strategies to publish achievable targets and timelines to external stakeholders including regulators and legal institutions.

> Architecture vision, business, data, tech-nology and infrastructure architectures were guided by strategic inputs from the COO office.

• Benefits:

> Reduction in IT infrastructure by 30% to 40%.

> Rationalized data requirements and func-tionalities by 40% to 50%.

> Significant reduction in licensing, mainte-nance and support costs.

> A highly simplified, need-based and easy-to-maintain enterprise architecture.

Total Transformation at a Bank

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responding portfolio of projects is properly organized, controlled and monitored.

Benefits

• The project team has a clear understanding as to how a project fits into the overall strategy.

• The project team is more aware about how the project contributes toward the realization of target architecture.

• The EA team knows what architectural layers are affected by the project’s output.

• Better collaboration, as the project team, EA team and strategy team will be in sync with each other in proactive ways as opposed to reactive.

• It is easier to develop relevant architectural principles and standards if there is a close coupling among these three teams.

Integrating EA into Corporate Strategy EvaluationKey performance indicators or business score-cards help to assess and ascertain whether exe-cution is in line with the strategy.

The first step of this integration is to define appro-priate EA metrics that can demonstrate EA’s impact in business terms – e.g., financial, risk and compliance and business continuity purposes.

The second step is to create a sustainable and sufficient information base for preparing these metrics.

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Recapping the EA Function’s EvolutionReturning to where we started, when the CXO and enterprise architect meet again, he automatically introduces him to his visitor as follows:

CXO: This is Y, our enterprise architect. He will join our meeting to discuss the implications of our new product partnership program.

Figure 6

Project Closure

Strategy Formulation

Strategy Implementation

Strategy Evaluation

Business Architecture

EA Governance

Architecture Vision

Phase A

Phase B

Phase C

Phase D

Phase E

Phase F

Phase G

Phase H

Requirements Management

Enterprise Architecture Framework (TOGAF 9

Technology Standards

Project Management Lifecycle

Project Management Concepts Resource

Management

Representation in Strategy Cycle

Portfolio Initiation

Portfolio Planning

Project Initiation

Project Planning

Project Execution

Project Monitoring & Control

Preliminary Phase

Architecture Repository

Segment Architectures

Business Standards

Application Standards

Data Standards

Scope Management

Cost Management

Risk Management

Time Management

Communication Management

QualityManagement

Syncing EA with Project Lifecycles

Figure 7

• EA Compliance

• IT Cost Savings

• Business Value Creation

• Define EA Impact in Business Terms

Most Famous Category

Next Category

Next Category

Least Famous Category

High Level Evaluation Approach

Strategy Evaluation

Desired Strategic Goals

Current Trend of EA KPIs

• Technology Environment• Technology Activities

• Define EA’s Efficiency & Effectiveness at Achieving Business & IT Goals

• Focus on Enforcement of Architecture Principles & Guidelines

• Measure EA Adoption Across the Enterprise

Business Evaluation

Right KPIs

IT Evaluation

EA Evaluation

EA Evaluation

Measuring What Matters

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About CognizantCognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process out-sourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 162,700 employees as of March 31, 2013, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant.

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© Copyright 2013, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners.

References

• TOGAF 9®, an Open Group standard, is a proven enterprise architecture methodology and framework used by the world’s leading organizations published by the Open Group.

• ITIL, the International Service Management standard for IT service management, published by the APM group.

• A guide to project management published by the Project Management Institute: http://www.pmi.org/PMBOK-Guide-and-Standards/Standards-Library-of-PMI-Global-Standards-Projects.aspx.

About the AuthorManish Nehra is an Enterprise Architect with Cognizant Business Consulting within its Global Technology Office and is a member of its Enterprise Architecture Consulting Practice. His areas of expertise are business and IT strategy, enterprise architecture vision, business architecture and infor-mation systems architecture. He is a registered member of the Open Group. Manish has experience across the financial services, retail and manufacturing sectors. He holds an M.B.A. in finance and systems from IIT Kharagpur and a B.E. in mechanical engineering from NIT Jaipur. He can be reached at [email protected].


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