Born at a time when the CIO did not have a CXO title and reported into the CFO organization, Enterprise Architecture over several decades, has evolved from being a cost of doing business to enabling the business to now being the business.
What is the next evolutionary step for Enterprise Architecture? The advent of the great restructuring has ushered in new business models, shifting focus from linear value addition to a multi-exponential platform economy.
By embracing a patchwork of heterogeneous, innovative business and ecosystem partners, Enterprise Architects and enterprises can quickly aggregate the network effect of business capabilities in the cloud.
No discussion on the evolution of enterprise architecture will be complete without an appreciation of the evolution of the business models that it supports.
The evolution of business models
Since the dawn of the industrial age, the world has seen multiple waves of evolving business models. The introduction of new technologies and advances in existing technologies combined with ever-changing consumer preferences and trends have been the catalysts in every new iteration.
Each wave had its share of vanquishers and the vanquished: winners and losers. Innovators were the disruptors, unceremoniously unseating the incumbents and reigning supreme… until a new innovator arrived to take their place.
However, just as it is today, innovation and customer demand by themselves did not guarantee success. It took an eclectic mix of product and process innovation, packaging, timing, risk appetite, combined with oodles of sheer luck to successfully disrupt and scale.
The Industrial Revolution started in the 1790’s across Europe and the United States, with the transition to machine tools. It took the brilliance of Henry Ford to successfully implement standardization of both product and process design to usher in a new assembly-line based mass-production era of manufacturing.
“Any customer can have a car painted any colour that he wants so long as it is black.”, exemplifies the level of standardization that The Ford Motor Company instituted. These and other similar measures (chassis, number of models) allowed him to bring down the price of the Ford-T from $900 in 1910 (approximately $22,500 today) to $395 in 192 (approximately $4,800 today)!
General Electric (GE) applied these principles to mass-produce electric lights, generators, and motors while Proctor & Gamble flooded the market with industrially produced soaps.
The sign of business success was the size of the production facilities. Standardization and mass-production reduced the number of choices, but the customers did not mind as the products were abundantly available and affordable.
Combining mass production with advanced logistics in procurement and distribution further improved availability and affordability while simultaneously delivering improved quality.
Retail giant Walmart and Toyota are classic examples of volume-players that operated at razor-thin margins but raked in superlative profits due to the sheer volumes.
Businesses succeeded by passing on the cost benefits of a globally outsourced, standardized production facilities to the customers. Cheaper and better quality? What’s not to like about that?
The Internet and affordable, ubiquitous computing options (the PC, smartphones) resulted in the birth of several new business models, leveraging the easy flow of information. Several new business-to-consumer and business-to-business organizations were born that were hitherto impossible to conceive or implement.
Paperless books (Amazon), disk-free music (Real, MP3s), phoneless voice communication (Skype), tapeless home movies (Netflix), automatically updated encyclopedias (Wikipedia), stamp-less, free, and instantly delivered mail (Hotmail, Gmail), and a freely searchable catalog of information that was not housed in a dusty university library (Google) and many more.
“Your network is your net worth”, best characterizes the successful companies of this phase. The free flow of information was key to bringing further efficiencies in manufacturing, procurement, distribution, and support processes. “Innovate or perish” was the clear writing on the wall that was missed by several brick-and-mortar retailers, music labels, telecommunication utilities, and many more.
The iPhone not only reinvented Alexander Graham Bell’s greatest invention but dropped a powerful computer in every pocket. Communication, media, commerce, entertainment, travel, politics… indeed all of society has since been irreversibly altered. The seller’s market that was de facto since the dawn of the industrial age has almost instantaneously transformed into a strong buyer’s market.
A dissatisfied customer once used to vent into a secured 1-800 corporate call center number. Today the same customer tweets about his/her experience, the modern-day equivalent of shouting from the rooftops. In this viral-news-cycle era, a solitary customer social media post can strongly influence the fortunes of well-established organizations. Instagram influencers and YouTubers are the sports stars and Hollywood celebrities today swaying public opinion and raking in millions.
All this has resulted in a data-driven obsessive-compulsive consumer focus. Hyper-personalization and customization are de rigueur. Successful companies are agile, nimble, and sense and respond better than their competitors. Other strategies involve partnerships (Costco), unbundling of products, operations, and services (AT&T, Apple), platform/ecosystem development (Walmart, Amazon), open sourcing (Red Hat), freemium (Robinhood) pricing plans, and more.
What does the future hold for business models?
2022 and beyond:
Earlier business models rewarded the investor of the financial capital (Ford, GE, P&G) or the “middle-man” that provided the content sharing platform (Facebook, Twitter, YouTube). While the capital investors rake in the profits, the content creators themselves receive precious little.
The global pandemic taught corporations that remote work is not only possible, but profitable too. On the other hand, the long dreary months of Zoom, Teams, and WebEx meetings have exposed the short comings of a 2D communication medium.
The Great Restructuring will address the consumer demand for varied Digital experiences and a desire for a creator-owner or peer-to-peer financial reward system. This will lead to newer decentralized financial constructs, and immersive work and entertainment experiences. Advances in Data Science will continue to make predictive analytics more accessible, powerful, and viable, leading to a market segmentation of one.
What is Enterprise Architecture?
Enterprise Architecture is an approach to strategic business planning and decision making by using a framework of models for describing a business in terms of its environment, its operations, and its IT infrastructure. It is a concept that has evolved into a framework for analyzing and designing enterprise-wide IT solutions. A good enterprise architecture helps align business and technology investments to support organizational goals and allow business leaders to make more informed decisions.
A successful organization has an enterprise architecture practice that metamorphs in lockstep with the changes to the business models it supports and the goals that it serves to fulfill.
A brief history of Enterprise Architecture
In 1987, John A. Zachman, wrote “A Framework for Information Systems Architecture” in the “IBM Systems Journal”. This was the seminal paper that articulated the need for a logical construct to define and control the interfaces and integration of all the components of the system due to “increasing size and complexity of the implementations of information systems”.
Enterprise architecture has had a far shorter lifespan than industrial business models. Hence it is prudent to view it from the lens of increasing maturity levels rather than a timeline view.
Driven by the notion that IT was an expense, Enterprise Architecture was evaluated as a “Portfolio of Technology Assets”. The focus of the Enterprise Architect was cost containment – accomplished via complexity reduction and efficiency improvements. The architecture was bottom-up in nature, designed to deliver an enterprise-wide technology view by a team of technology architects.
As organizations matured, business leaders began to invest in building differentiating competencies. This gave rise to a top-down architectural view that delivered on a “Portfolio of Business Capabilities”. The now expanded Enterprise Architecture team of Business, Process and Data Architects, planned their budgets on delivering new capabilities while continuing to maintain the technology assets.
Rapid advances in consumer technologies gave rise to the notion of customer value delivery and the focus shifted to business agility demands. Experience, Organization, and Digital Architects joined the team to deliver customer journeys, value streams, digital experiences, work streams, and lifecycles resulting in a “Portfolio of Products”.
To thrive in the API economy, enterprise architecture plays a proactive leadership role, defining the very businesses they serve. From running the enterprise to changing the enterprise, technology architecture is the enterprise now. To deliver on the promise of a Digital Business, the architecture team expands to include business leaders and ecosystem partners. Enterprise architecture teams eschew the habit of building it all in-house and fashion themselves as business orchestrators eager to integrate with external partner products and services.
How does one Respond?
To operate as efficiently and effectively as consumer technology companies, enterprise architects need to adopt similar approaches as their peers. The fundamental thinking of enterprise architecture as a cost of doing business, or as an index of business capabilities, or a business enabler must be enhanced to reimagining Information Technology and Enterprise Architecture as the business.
Reimagine Your Business
Enterprise Architecture teams and business leaders need to re-imagine the businesses they are in as a fully Digital Business. Change the frame of reference, and visualize the industry segment as a platform, a marketplace, or an ecosystem.
- Banks are Digital businesses that provide financial platforms for investors and borrowers to team up.
- Retailers are Digital businesses that provide marketplaces for buyers and sellers to transact.
- Automobile manufacturers are Digital businesses that provide engineering services to solve transportation problems
- Universities are Digital businesses that provide educational platforms for everyone who wants to learn
- Libraries are Digital businesses that provide an ecosystem for authors to publish and readers to access content
- Florists are Digital businesses that provide marketplaces for growers and consumers to celebrate, sympathize, gift, or decorate.
- Airlines are Digital businesses that provide an ecosystem to foster collaboration between airports, vacation destinations, other airlines, and flyers.
Reframing the businesses as a Digital business from the ground up will help identify new opportunities, missing capabilities, technology gaps, and new business partners.
Rethink The Legacy
Legacy in this context applies to both processes and technology assets that are not just past their use-by date, but past their usefulness state as well.
What have your processes done for you lately? Assess if your operational procedures are adding value and not acting as bottlenecks. Often, especially in highly regulated industries, it is seen that time-consuming procedures have not changed even though the regulations that originally necessitated the measures have ceased to exist. Sometimes it is organizational inertia, sometimes it is a case of “this-is-the-way-it-has-always-been-done-here” … whatever the cause maybe, even if it is something as sacrosanct as ITIL processes – question if it is relevant – and if it is, can it be automated?
Organize a “spring-cleaning” of the application landscape – aggressively eliminate ancient or redundant technology. As with household clean-up activities, if the technology tool has not been used for more than six months, then you can live without it. (Yes, the analogy fails for annual reports). If there are only a handful of users for the tool, are there alternatives available? If the tool/application/license does not help with your future digital state, set an expiry date, and stick to it.
ReBuild API First
Over the past few years, applications have become more distributed and have seen increased adoption of mobile interfaces and microservices architectures. In response, organizations have progressively adopted an integration layer strategy. Essentially, an API wrapper around an existing application or system. Resist this temptation. Allocate resources to rearchitect and rebuild these applications with an API first strategy. API’s cannot be an afterthought any longer.
While you are rearchitecting, reassess your API choice as well. REST (representational state transfer) is all the rage today, but do not discount the applicability of earlier integration modes (SOAP APIs, MFT etc.,) or the newer options (WebSockets, GraphQL etc.,) available.
Identify the business needs for the information, the nature of the information, the frequency of change, the interested parties, and security while evaluating the appropriate integration mechanism/protocol.
|Data Type||Data Complexity||Data Changes||Communication||Examples||Consider Using|
|Transaction Data||Simple||Real-time / Near-Real-time||One-to-One||Payment processing during e-commerce checkout||REST|
|Process Status||Simple – Medium||Infrequent||One-to-One-to-One||Shipping status provided by shipper on merchant’s site||Embedded Web Components|
|Continuous Stream||Complex||Real-time||One-to-One / One-to-Many||Stock tickers||Kafka stream|
|Event/ Transaction Data||Medium – High||Real-time||Bi-directional, One-to-One||Chat, Games||WebSocket|
|Business Data||Any||Weekly||One-to-One||Analysis reports||Managed File Transfer|
|Business Data/Events||Any||Real-time||Many-to-Many||Complex interactions between multiple interested parties||Event hub|
|Business Data||Complex/ Unstructured||Any||One-to-One||Exploratory inquiries/search||GraphQL endpoint|
Historically, Enterprise Architecture has helped contain operating costs, improve operational efficiencies, increase organizational productivity, increased profit margins and more. Now, as part of the Great Restructuring, is well poised to help transform businesses into a Digital Business.
Thankfully, in the age of the API economy, enterprises no longer need to provide all the differentiating business capabilities by themselves. By recruiting a trusted network of innovative business and technology partners, enterprises will continue to flourish and be ready for changes and issue challenges.
When it comes to the business of architecting the enterprise, Enterprise Architecture is highly enterprising, … it says so in the name itself!