Enterprise Architecture and Strategic Investment Planning Latest news from (my website): Bizzdesign

Even when an Enterprise Architecture practice is present in an organization, it is most often understood to be either strictly preoccupied with the management of IT, or at most with the management of business and IT together, but on a horizontal level. The truth is, however, that mature EA is not only capable but also expected to deliver a vertical line of sights between strategy to execution. This, by definition, entails giving guidance on the direction of investments and the orientation of change programs/projects.  

So, despite it not being immediately obvious how Enterprise Architecture can help with Strategic Investment Planning, EA is nonetheless very much capable of performing this function. And it’s this precise topic that forms the focus of today’s post. Providing key insights into the intersect between EA and Strategic Investment Planning we have BiZZdesign’s Marc Lankhorst. In this video, Marc will address the Why of the matter as well as the How, specifically touching upon the ways in which Enterprise Architecture can improve the investment evaluation process. 

The post Enterprise Architecture and Strategic Investment Planning appeared first on Bizzdesign

Enterprise Architecture and the Project Management Office Latest news from (my website): Bizzdesign

Planning and executing change is a key capability for organizations in this day and age. However, in order to do this successfully, businesses – especially large ones – must overcome the heavy burden of complexity that generally adds up as the organization scales up its operations. Complexity often means that an enterprise has little visibility into the full range of consequences for any proposed change or investment.  

As such, decisions might not always lead to harmonious results. Or they might even be incompatible, which results in wasted time, resources and possibly a lost business opportunity. The fact of the matter is that to ensure coordinated change across the entire enterprise the Project Management Office (or equivalent entity) needs a clear, big-picture view of the way proposed change impacts the business and IT landscapes. Only by tying in all the domains of the enterprise – strategy, business capabilities, IT infrastructure, processes etc. – can you guarantee a fast and minimal–risk implementation. And this is exactly where Enterprise Architecture’s value proposition lies.   

Addressing the topic today is our very own Marc Lankhorst. In the following video, Marc addresses what lies at the intersect between EA and the Project Management Office, and explains how Enterprise Architecture can help program managers, project planners etc. to ensure coordinated change across the business.  

The post Enterprise Architecture and the Project Management Office appeared first on Bizzdesign

How Do Enterprise Architects Get Invited to the Decision Table? Latest news from (my website): Bizzdesign

Enterprise Architecture Means Business

Perhaps it’s in the name – enterprise architecture. Maybe that’s what prevents business stakeholders from engaging in a more meaningful way with the EA team. Architecture summons images of systems design, technology infrastructure, software development – IT, in other words, and that spells techie guys in the basement. “Definitely not what we’re interested in”, the verdict probably goes. It’s quite possible that’s at least part of the problem.

Whatever the cause may be, the fact of the matter is leadership in most large organizations does not have a strong relationship with the EA function. They may have found it underwhelming in terms of results in the past, or indeed too IT-oriented. And this is a real issue. In a world of increased competition on the back of evolving technology and changing regulation, organizations stand to benefit greatly from an architectural approach to change. As such, it should be well-ingrained into decision makers’ minds that enterprise architecture is first and foremost a key business change enabler whose primary function is to advise the management team.

Whether we’re talking about strategy advancement, cybersecurity, improved processes or compliance, EA brings intelligent insight and practical advice to the conversation, which is why it needs to have a seat at the table. The clear line of sight it promises to deliver between high-level business goals on one hand and low-level operational activities on the other is invaluable during complex transformation scenarios. It’s this transparency as well as the ability to home in on all aspects and stages of a business change initiative that ensures effective strategy implementation. So the question is how can enterprise architects get themselves invited to the table? By the way, I also touch on this in a recent Bizzdesign Podcast I did, you may want to give it a listen.

Ways to Become More Relevant

I believe it is the duty of enterprise architects everywhere to bring value to their organization by improving some area over which they hold responsibility. Sometimes this means pushing things to the next level of maturity. Or sometimes it can even mean starting with something as simple as placing EA on people’s radar (more on this latter one here).

Don’t just play defense, go on the offense

Good things come to those who act, in this case. A job well done begets more work, which means it is possible to actually create your own demand. Currently, there is an unbelievable need for great information/advice at a leadership level, so go out there and advertise yourself to an audience that needs solutions. Show others what you can do for them; do it; and then tell them what you did for them.

Don’t wait for stakeholders to make the first step and come to you. As illustrated above, historically, EA hasn’t had the best track record at getting in touch with business leaders, which is probably why it’s not more developed as a field today. Clearly articulate to leadership that EA is not a minor consequence to having an IT department. Rather, EA is the Skunk Works within IT, with the ability to provide overwhelming value if properly leveraged by those at the top.

Put yourself in your audience’s shoes

Architects often speak in tech terms, since they usually come from a technical background. Unfortunately, this ends up alienating the C-suite. So it’s important to remember that business stakeholders have to deal with business problems. Being more mindful of this fact is sure to increase your rate of success when pitching ideas and initiatives. What does leadership care about? Well, among the key challenges that enterprises face at this point in time we can mention:

• Capital allocation
• Regulatory compliance
• Customer centricity
• Business agility
• Operational resilience (now more than ever)

So any project you have in mind, try and integrate it in a bigger story that centers around the core challenges that we mentioned above. For instance, the CFO is unlikely to resonate with you when you speak about application redundancy in some area or department. But, they will definitely care about cost savings if you can actually deliver a clear report that showcases how certain well-targeted changes will save the business X amount of dollars per year. That lets them know you understand what their priorities are and also serves up benefits on a platter, without them having to get too involved or coordinate things. So make it easy for them and you’ll be making it easy for yourself.

Actively monitor opportunities

This means keep an eye on market trends – be it technological developments, new industry best practices, or even social trends. For example, being agile, or doing agile is a big topic of conversation and rightfully so. Now, deciding that you want to be more agile as an organization and actually achieving that are two completely different things. And is certainly much more than ‘doing Scrum’.

But when you hear leadership is planning on embarking on the agile path, why not get ahead of this transition and put yourself and the EA department forward as a key enabler of this initiative. Deliver a presentation on doing agile correctly – best practices, pitfalls, project scope, potential impact. Then, once you’ve proven you have something relevant to add, start getting those deliverables out and ensure your opinion will be consulted again in the future.

Ending Thoughts

The bottom line is that there is genuinely a huge demand for high-quality information at the C-suite/leadership level. With so many change drivers influencing the marketplace these days, companies have increasingly less room for error, which places the onus on executives to deliver stellar results all the while avoiding an increasing number of pitfalls. In other words, high-ranking stakeholders covet business intelligence artifacts that can help them make better decisions.

All you need to do is summon the courage to let them know the range of help you can provide, preferably in business terms, and you are bound to have their attention. Once you deliver successfully on a project, you will undoubtedly be consulted for many other projects, with a general view to actually establish the EA function as a permanent business enabler and program/strategy adviser.

Thanks for making it to the end. If you are interested in listening to Bizzdesign podcast episode that I attended recently you can find it here. Or, if you’d like to get in touch, don’t hesitate to email us.

The post How Do Enterprise Architects Get Invited to the Decision Table? appeared first on Bizzdesign

Driving Organizational Change: The Heart of the Matter Latest news from (my website): Bizzdesign

I was recently invited onto the Bizzdesign Enterprise Architecture Podcast to discuss the journey of organizational change at the Royal Bank of Scotland, an initiative in which I’ve played an active role – and still do, in fact. I think it was a good talk and I encourage you to give it a listen if you can spare a few minutes.

We didn’t touch on technical aspects at the time and I don’t plan on doing it now either. Actually quite the opposite of that. If there is one fascinating aspect that came out of the experience, it’s realizing just how important people and the approach being used are during these large-scale change programs.

A people-centric view of organizational change

How you put together a working group and also how you build rapport with stakeholders makes a huge difference in the final outcome. So I’d like to just share a few thoughts on the topic of organizational change as seen through the lens of the human element. Not technology; not process; and not methodology. But rather people, and how good people (aka capable, motivated professionals) working as a team can turn around even a huge organization. Now, granted, there are various factors at play if you’re trying to deliver large-scale business transformation but, in this instance, I would like to focus on what I feel is the most important part of the change equation.

1. A person is all it takes

So how do people tilt the balance? At the start of a transformation scenario, a driven stakeholder can start the avalanche of change all by themselves if they are in a high enough position. If leadership is passive and the company is on auto-pilot, nothing is done to address future challenges and the business resembles a rudderless ship. However, an executive that is bought into the future of the company and takes an active interest in creating a path towards lasting success can kickstart a change initiative where previously there had been no interest or desire for such a thing. In other words – no will to change, no change.

For instance, here at RBS we’ve undergone a significant transformation over the past few years, which is still ongoing and in the process of maturing. As one of the big four banking groups in the UK, our organization deals with an intricate landscape of regulation; it maintains a huge IT estate to support its global business; and generally speaking it deals with a level of organizational complexity that is hard to overestimate. Now, when the organization decided to turn things around it wasn’t so much the timing of external factors (we’d had our share of IT downtime incidents in the past, so there was a case to be made for organizational change long before it actually happened). It was a matter of will finally coalescing and providing the impetus to kickstart this entire process.

But the spark doesn’t necessarily have to come from the top. Ideally you want it to, as that would make everything smoother and quicker, but it’s not an essential prerequisite. A determined enterprise architect or portfolio manager can just as well be the one to cascade disruption within the company. For instance, they may leverage personal connections to make decision makers/budget holders aware of the value of leveraging architectural insights to enhance strategic decision making. Or, if they lack the personal ties, they could simply pursue these key stakeholders so relentlessly that in the end they’d have no choice but to sit down together, which would provide the opportunity to drive into their psyche the benefits waiting to be unlocked.

So the journey begins with someone saying, ‘Let’s do better’. Then it continues mostly thanks to the initiator’s determination, who is generally required to defend the idea and coax people into

considering it. At this critical first stage, change really does reside entirely with the individual so the higher the quality of the individual, the better returns in the long run.

2. Team up with other believers

Once there is some traction and the project has at least a modicum of executive sponsorship, it’s important to put together the right team for the job. Naturally, it is possible that you have all the pieces already in place, but usually this sort of endeavor requires some fresh input. Here it’s worth noting that rounding up a team isn’t only a matter of sourcing the right sounding CVs. In fact, I’ll argue invisible traits are perhaps even more crucial. Namely, a like-mindedness when it comes to effecting change, which means they too would be determined to be a part of something great and would pursue this ideal resolutely; and solid personal chemistry to encourage efficient collaboration among team members.

These characteristics mean that everyone who’s participating in the transformation project is a good spokesperson for the initiative and can onboard other folks in their own turn with every interaction they have. At this stage, opportunities for showcasing what’s being preached are precious and should therefore be snatched up. If the team identifies a stakeholder or project that can benefit from the transformation team’s input, no time should be wasted in ensuring they get that help. That’s because no win is too small. Having good evangelists who can then also back up the theory with useful work deliverables will ensure the program enjoys a constant stream of victories. These will then be the fuel that keeps the ball rolling. After all, a change program isn’t much good if it doesn’t actually bring about changes.

3. Leverage the social web

At a mature stage in the life of the transformation program things look different. You have a team of people that have the inclination, skills and knowledge to execute on their mandate; you have deployed a tool to design and implement coordinated change; and you’ve registered enough victories that your work is now generally regarded as a net contributor to the organization’s direction. Well, even at this stage where processes and tools might seem like the likeliest candidates for enabling further improvements, I’d argue people still hold the highest potential for effecting positive change.

First, they hold the key to engraining those gains into the DNA of the organization, ensuring it survives and thrives long into the future (therefore, a net plus for the business). What does this mean? Well, if they’re diligent about their job, they will create processes that embed the newly-founded practice into the daily operations of the enterprise. So, for example, they might mandate that every new technology project that is put forward must clear the EA team’s checklist etc.

Then they will also formulate an agenda that sets out a long-term mandate for the team within the reality of the organization. This digs deep roots into the culture and operations of the company, ensuring it gets to leverage the great insights being delivered by the transformation team. Again, as a quick example, the team spearheading change might look at what’s been achieved so far and say, ‘Now that we’ve breathed new life into our business architecture practice, how about we now move on to taking proper ownership of our IT estate and optimize our technology portfolio?’. And so on, always keeping an eye on the future and planning on the next challenge to overcome.

Additionally – and importantly – they will establish a clear replacement strategy that ensures the practice and the vision upon which it was founded are independent of any one stakeholder. That way, when the Head of Innovation, or the Director of Enterprise Architecture, or whoever it may be that was a driving force leaves, business goes on as usual without missing a beat. And lastly, they’ll nurture

the vision, make sure it grows within everyone. Ultimately, processes will only get you so far. And they’ll always be in need of a retouch once enough time has passed. A highly-motivated stakeholder with a genuine desire to deliver amazing work, though… well, that’ll safeguard the change program forever.

Summary

Driving organizational change in an organization is the product of several elements coming together harmoniously. Yet by far the most important catalyst for transformation are people. Good people – whether we’re talking about a subject matter expert, a senior executive with their eyes on the prize, or simply someone determined to make a positive contribution in their area of practice – are worth their weight in gold. Definitely a much better success predictor for an initiative than any other variable, at any rate.

As such, I believe that all organizations, if they’re serious about implementing change, should start by carefully assessing whether their change agents are genuinely a good fit for the job at hand. And then, once they have put together their team, they should give them every means to succeed, and commit fearlessly to an agreed upon vision. The bottom line is that with a core of capable, driven people any obstacle can be overcome – irrespective of what stage of your transformation program you’re in.

Good people will make it happen. They’ll bring in the platform that’s needed to deliver change; they will rethink faulty processes; they’ll ask more of themselves and their team; and they won’t take no for an answer if that’s impeding progress. Good people will find a way. And that’s the heart of the matter when it comes to delivering organizational change.

The post Driving Organizational Change: The Heart of the Matter appeared first on Bizzdesign

5 Questions CEOs Should Ask Themselves in 2020 – Part 2 Latest news from (my website): Bizzdesign

Welcome back to our ‘5 Questions CEOs Should Ask Themselves in 2020’ series. Last time we discussed what the decade ahead will likely mean for the marketplace and went over the first two questions that leaders need to address in order to ensure they are competitive in the years ahead. Today we’ll talk about the remaining three questions (you can find Part 1 here).

5 Questions for the CEO (numbers 3 to 5)

3. How do we maximize the benefits that the IT function creates?

Maximizing the benefits created by IT is essentially the other side of the issue highlighted in the first question, which we discussed in Part 1. This time around, however, the question eyes the management and optimization aspect of the business’ technology practice and landscape. In order to build a future in which technology plays the role of a core business resource, on whose possibilities entire business models are built, it is necessary to set up the control mechanisms that will govern its activity. Therefore, you need to know how technology decisions are being made around the company. Is there a framework, or solid processes for this? Good oversight will keep waste at a minimum and get the most bang for your buck in terms of technology investments. Also, who are the people that are responsible for operationalizing this IT management? These are questions that need to be clearly answered for progress to be made.

The other side of this coin is that you also need to make sure that your governance is agile, meaning able to decide ‘on the spot’, and doesn’t inhibit innovation. Speed is increasingly more important than getting it exactly right or minimizing cost, certainly in markets where the ‘winner-takes-all’ effect mentioned previously benefits first movers. Moreover, especially in software-driven enterprises, it is comparatively easy to pivot and change the course if it turns out your decision wasn’t the greatest.

The CEO must find out how (if at all) the organization keeps track of the value being produced by IT investment and ensure oversight and accountability. So appoint/hire technology leaders wherever needed, get acquainted with their plan for the future and make everyone else in the management team buy into this technology-first approach. Set digital KPIs, follow up on the results achieved and shut down projects that aren’t providing value for the customer – even IT functions that are assigned significant resources can fail if the right management isn’t there to maintain the right course.

The digital agenda should be discussed at every high-level meeting and evolved according to the newest trends in the marketplace, developments within the organization and feedback from customers. This will ensure that IT works with and for the organization – at the forefront of things, not in the back as an afterthought. This is how you turn IT from a cost center into a profit center.

4. What part do customers play in writing our story?

Customer-centricity and the relationship between an organization and its customers is already a vital aspect of commercial success. Expect things to only get more competitive as we move forward. Two main factors will drive this. One, the lowering barrier to entry means an increasing number of people armed only with ‘the idea’ will be able to carve out a slice of the market for themselves. In the UK, less than ten years ago, Metro Bank became the first new high street bank to launch in over 150 years! Their recent problems notwithstanding, this was a significant achievement. Of a more recent wave of innovators, Monzo has their eyes set on becoming the first mainstream bank without a single physical location. What’s more, the PSD2 regulation will require banks to open up customer data (with the customer’s permission) to external financial service providers. Similar regulation in other sectors could break down monopolies on customer data and open up the world for new customer-centric service providers. Such disrupting events will continue happening at an increasing rate. And two, technology and legislation will elevate experiences, heighten expectations and eliminate barriers from migrating to a competitor. This trend is already visible. Here are a couple examples. The first is the wording of the GDPR’s Article 20 concerning data portability, which states “the data subject shall have the right to receive the personal data concerning him or her in a structured, commonly used and machine-readable format and have the right to transmit those data to another controller without hindrance”. Yes, this sets the vision for a future in which your customer can move to your competitor on a whim.

So ask yourself if your organization is geared towards delivering value to the customer or not. Improve your processes, redirect resources towards more customer-centric projects and products, elevate your customer journey, have developers get in touch with end-users and make sure that you listen to them. As we move forward, it’s likely that mass customer exodus/arrival phenomena will become more frequent and acute.

5. What is our approach to cybersecurity?

The last of the questions that CEOs need to ask themselves is to do with cybersecurity and the importance of fostering a secure IT function. The first key point to consider here is tightening regulation around data privacy and personally identifiable information. In fact, there’s a good chance that the next decade will mark the beginning of genuine self-sovereign identity (with the help of blockchain technology), with data being treated as the commodity that it is. As such, expect further legislative developments on the regulatory front and possibly the slow dismantling of the data-surveillance capitalism that has proliferated in the past twenty years.

Additionally, as increasingly more and more value will be transferred onto the digital self, cybercrime and attempts to illegally break into systems will also rise in lockstep, enticed by the bigger payoff. The really hard job in this case will be not to secure digital operations but rather to do so while maintaining the delicate balance between security and innovation. And finally, one last thing to consider is security by design and by default. Is this happening presently in your business? Why/why not, and what steps can you take to address this problem – both internally and in your relationship with vendors?

Conclusion

The 2020’s will see several currently experimental/niche technologies go mainstream. This will likely have profound but as of yet unknown effects on the marketplace, and a significant number of companies will fall behind for good. In order to ensure their organizations become or remain competitive in the decade ahead, CEOs must get to grips with a few key concepts – technology and its role in their company; customer-centricity; and organizational agility.

We believe the difference between successful and unsuccessful companies in the years ahead will be made by leaders’ willingness to come to terms with the important topics mentioned above, as well as their ability to strategize around and execute on them.

The post 5 Questions CEOs Should Ask Themselves in 2020 – Part 2 appeared first on Bizzdesign

Define digital transformation KPIs with Enterprise Architecture Latest news from (my website): Bizzdesign

Introduction: Digital Transformation KPIs set the stage

Digital transformation has become a standard practice for organizations aiming to stay competitive in a rapidly evolving landscape. With advancing technology, demanding consumers, and low barriers to entry, businesses understand that the status quo is no longer sustainable. However, the importance of defining clear digital KPIs is often overlooked. This oversight results in initiatives that lack direction and resemble knee-jerk reactions rather than well-thought-out strategies.

Digital KPIs act as a guiding framework, aligning all efforts toward a common goal. They provide a structured “game plan” that ensures projects, investments, and strategic decisions are focused on achieving the desired outcomes. While balancing conflicting KPIs can be challenging, the clarity they bring significantly enhances progress. In practice, this alignment means every decision—whether related to technology, people, or strategy—directly contributes to the success of the transformation effort.

How do you set relevant Digital Transformation KPIs?

Imagine an organization that approaches its transformation journey with deliberate intent, prioritizing meaningful outcomes over quick fixes. Such an organization understands the importance of establishing digital KPIs but recognizes the complexity of doing so, particularly for traditional enterprises embarking on their first large-scale digital transformation. So, how should they proceed?

One common approach is to emulate what other organizations have done. While this can offer a starting point, its success hinges on how similar the “model company” is to the “apprentice company.” If their organizational variables align closely, a lift-and-shift strategy might work. However, if the two organizations differ significantly, this approach often falls short. Simply copying a competitor’s playbook without tailoring it to your unique context can lead to wasted efforts. Competitors’ successes are often the result of careful planning and customization, not just replicable steps. Relying on a fear-of-missing-out strategy rarely delivers transformational results.

This is where option two becomes critical: looking inward. Every organization is unique, shaped by its internal dynamics, external environment, and distinctive characteristics. Successful digital transformation requires identifying digital KPIs that align with the organization’s specific needs and goals. This involves deep introspection—examining the company’s structure, culture, and strategic objectives to create a bespoke transformation program. Unlike the one-size-fits-all approach, this method demands significant effort and perseverance but is far more likely to produce meaningful, sustainable change.

In essence, tailoring digital KPIs to reflect the organization’s DNA ensures that every action taken—whether strategic or tactical—is purpose-built to drive the desired outcomes. It’s not the easy route, but it’s the one that delivers long-term success.

Enterprise architecture guides the selection of Digital Transformation KPIs

This is where Enterprise Architecture comes in. Let’s have a look at how it supports organizations that want to leverage digital KPIs to increase their digital transformation’s probability of success.

    1. Define a goal

The first step, if you’re taking the digital KPIs route, is to settle on a clear digital goal, e.g. fully digitizing the customer experience for transitioning from one financial product (an entry-level debit card) to another (a premium card that offers certain benefits). This ensures you won’t waste any time and resources chasing the wrong rabbit. EA plays a major role at this point because it provides a comprehensive view of the company’s business and IT landscapes. Therefore, the team spearheading the transformation efforts can access reliable information on how the business layer with its capabilities, processes etc. interacts with – and is indeed supported by – the application and technology layers. Here is another example in the visual below, this time illustrating an Increase Digital Banking revenues by 100% by targeting millennials goal, which is further decomposed into digital KPIs.

Also, here is another visual created in Bizzdesign Horizzon below that illustrates how this aligns with another goal to Reduce IT Operating Expenditure by 20% to Reinvest in Digital.

Taking a step further into this direction, it wouldn’t be a stretch to imagine this being connected at the top to the strategy and business model side of things. If the initiative is truly transformative, it must be strategic as well. On the more operational side, EA could shed some light into the processes that are currently in place, highlighting where the most acute problems are, or where most value-add lies – important things to know as you set out to ‘remodel’ the organization.

Of course, the more granular the preoccupation the less it would come into play at this stage, and the farther outside the scope of architecture it would straggle. But, depending on the specifics of the scenario, these may be relevant even at an early stage. In any case, it’s safe to say that at this point enterprise architecture will help you turn a somewhat poorly defined grievance into a clear objective.

    2. Identify relevant metrics

Once you have settled on a digital goal, you suddenly have a better idea of what you should monitor – inadvertently, an initial metrics selection takes place. Now you can further refine this list and get it down to a more manageable size, with more relevant content. A good approach would be to try and include metrics that resonate with both internal stakeholders (from the business and IT side) and customers. So, for example, feature elements that would make the Chief Enterprise Architect (or Chief Operations Officer) happy – metrics around the rate of progress of digitization initiatives within different departments, the digitalization of the workplace, improved collaboration between employees, automating processes, etc. But be sure also to include ones that would please the CFO, such as metrics relating to an increase in the bottom line via digitalization – new revenue facilitated by new digital capabilities, a lower churn rate, a higher lifetime customer value etc. That accounts for people inside the company. Now think of your audience and how their interests might be represented here. You have a solid group of metrics to work with.

In this instance, too, enterprise architects prove valuable. As a liaison between management and operational roles, they can ensure the proposed metrics are connected to the business reality. Are executives providing business feedback incompatible with metrics used to measure IT infrastructure and applications? Maybe application owners are unresponsive to how application performance is impacting business performance. Whatever it may be, if there’s a group that can provide an integrated view on the inner workings of the enterprise and make opposing camps find common ground, that’s architects.

    3. Select the Digital Transformation KPIs

Establishing a strong framework of relevant metrics positions you well to define your digital key performance indicators (KPIs). This stage is critical for collaboration with management. Enterprise Architecture plays a key role here by enabling the creation of clear and actionable business cases for digitalization targets, which, in turn, guide the selection of meaningful KPIs.

To enhance the utility of your KPIs, you could align them with traditional metrics, such as those used in a Balanced Scorecard, or develop a tailored “Digital Scorecard” to provide management with actionable insights. Having well-defined objectives—specific subsets of your overarching goals—leads to a clearer understanding of the anticipated benefits when discussing desired outcomes. However, these objectives cannot be based on assumptions alone. They must be grounded in the realities of the IT infrastructure and the availability and constraints of business services and interfaces. This is another area where the visibility provided by architectural insights proves invaluable.

Ultimately, while there is considerable flexibility in defining KPIs, the most effective ones remain focused on business impact, are clear in their purpose, and are measurable. Following these principles ensures you develop a relevant and actionable digital KPIs.

ALSO READ: Master Enterprise Architecture Management with our wiki

4. Monitor, reassess, improve

This fourth bullet point is dedicated to ‘continuous improvement’. That’s because irrespective of how well you plan and prepare, there are certain aspects of any project that only become apparent with time. In this case, EA keeps track of the direction and progress of change, offering a reliable record of the initiative at various stages in time. Checking that against the KPIs or other unforeseen developments provides a background for analysis, and possible opportunities to course correct. You can even imagine spotting trends and making forecasts based on these measurements. That will let you proactively carry out changes before the immediate need arises. Experience might point towards the fact that a certain KPI is not as valuable as you believed, or in fact, you might identify a new KPI that makes a lot of sense but wasn’t spotted initially. To track and keep tabs on the progress of a digital transformation program effectively, you need to be willing to change these – the things you measure need to evolve as well! Enterprise architecture makes knowing what you are trying to achieve and what to track more evident and quickly.

Conclusion

To conclude, digital transformation KPIs are not only complex affairs but also very particular. As such, their success depends closely on how accurately they reflect the unique reality of the enterprise, and therefore how relevant the performance indicators selected to drive and measure progress are. Since this boils down to deep organization knowledge, enterprise architecture stands out as the go-to solution for defining and assessing the best possible digital KPIs.

In fact, during such vital programs, architects have the opportunity and responsibility to act as a first-tier advisory function to management. With their background in technology and business and leveraging the key insights they produce, enterprise architects can ensure management gets all the support they need to formulate a fact-based strategy forward.

The post Define digital transformation KPIs with Enterprise Architecture appeared first on Bizzdesign

An overview of the Levels of Abstraction in Enterprise Architecture Latest news from (my website): Bizzdesign

Introduction

Organizations today are facing a rapidly increasing pace of change. They adopt agile methods that impact the entire enterprise to drive faster transformation. Naturally, change must be communicated, but documenting every detail is impractical, as the information could become outdated in just a week or even a day. Enterprise architecture is a discipline that outlines an organization’s structure across various levels of abstraction, including strategy, business, information, application, and technology. ArchiMate is the global standard for visually describing and analyzing an enterprise holistically. It addresses these layers at varying levels of granularity, incorporating different levels of abstraction.

ALSO READ: Get expert insights on Enterprise Architecture Strategy

Defining these levels can be challenging but is crucial for the depth of analysis and the effort required to maintain up-to-date information. This blog provides an overview of the various levels of abstraction in enterprise architecture, with examples to illustrate what can be done at each level.

Introducing the overview

The ArchiMate Core Framework offers the ability to model the active structure (e.g. applications), behavior (e.g. processes) and passive structure aspects (e.g. data objects) of an enterprise architecture. In enterprises, a lot of diagrams circulate that partially describe a domain from a certain point of view: capability maps, business processes, information flows, application landscapes, technology architectures etc. These diagrams consist of the aspects mentioned above and they often vary in their level of abstraction. You might see generalizations, types of IT solutions abstracting from single deployments, or detailed process variants to show differences between regions. In consequence, you can add three “sub-aspects” to each aspect: Solution-agnostic, Solution-specific and Deployment-specific. By doing this you can create an Overview of the Levels of Abstractions in Enterprise Architecture.

First of all, the picture shows that you can model all these levels of abstraction with ArchiMate, but it does not tell you that you should model all these levels! For example, modeling every deployed instance of a technology service is definitely out of scope of enterprise architecture. But let’s start from the top of the picture.

Describe what the business does

Looking at the behavior column, we can model (at least) three levels of abstraction as shown in the picture.

• Front Office Process: Having a rectangle in a diagram stating “Front Office Process” takes a very high level of abstraction to describe specific parts of behavior in your enterprise and probably some department can be named that is fulfilling these types of processes. These boxes, or these elements can be used to describe high-level patterns or classifications within your enterprise. For instance, specific requirements may apply to all Front Office Processes because they have direct contact with customers.
• Sales Process: The “Sales Process” could be a subtype of “Front Office Process” and it is less abstract. It can be related to other process types to describe a pattern or standard. For example, all international branches of your enterprise have to perform the same approval of contracts in their sales processes, which may differ in other aspects based on local regulations and market conditions.
• Sales US/UK: It is possible that your sales processes vary between the US and the UK, for example because you need to deal with sales tax in a different way. There may even be multiple versions of the US sales process because taxable goods and services differ between states and some states don’t even have a sales tax. So you have different process versions implemented in different regions that are of the same type “Sales Process”. Process managers will immediately recognize this difference of process variants.

Describe what the applications and technology do

In the application layer we reflect the same circumstances by showing that we have front office application services that can support the front office processes (very abstract, but useful for high-level patterns) and that we have an application service to “Create Sales Order”. Modeling a Sales Department in the business layer (see the active column) that performs the Sales Process already describes a solution to what we want to get done. In the application layer, we might want to distinguish between application services of different solutions, which leads to one additional level of abstraction for applications.

• Create Sales Order SAP SD: This service describes a type of solution-specific application behavior, unlike the “Create Sales Order ” application service. When not naming the solution, it would have been solution-agnostic.
• Create Sales Order SAP SD (P01/2): These service descriptions are solution-specific and additionally reflect instances deployed or implemented in the enterprise. If you want to capture different KPIs for these instance-level services, e.g. business value or performance, you can use this low level of abstraction.
• Enterprise Resource Planning: We can use application functions to describe a type or bundle of functionalities at a very high level of abstraction. It might serve to create an application framework according to which you can organize your application solutions or design your application architecture in a solution-agnostic way. Of course, you can add something like a “Financial Planning Function” to describe more details (lower level of granularity).

The behavior aspect of the technology layer follows the same logic as the behavior aspect of the application layer. You can model high-level types of technology and (solution-specific) types of services to describe architecture patterns or project-specific designs, you can describe deployed or implemented services of technology solutions, and you can describe types or bundles of technology or infrastructure functionality to setup a technology reference framework.

Additional notes

The other two aspects (active, passive structure) follow the same logic, so we intentionally don´t describe their elements in detail in this blog, except for a few. In the active structure aspect of the application layer, it is worth mentioning that you can also use an application component to model an Enterprise Resource Planning (ERP) application. This is an option when you want to start with a generic name for the new application, relate it to other existing solutions, and add the name of the solution when it is selected. This is a practical example how an architecture model evolves over time.

In the active structure aspect of the technology layer we intentionally left out the deployed or implemented elements of system software, because that would correspond to specific licenses running on the server nodes. That is too far removed from enterprise architecture modeling and too deep into the implementation details. When designing enterprise architectures, usually only types of servers and system software (e.g. Windows 10) are modelled, not each deployed instance or license. Server instances are usually managed in CMDBs and the used system software provides a fruitful input for enterprise architecture repositories.

The passive structure aspect can describe the information architecture in your enterprise. There are different approaches to describe information architecture using concepts like the conceptual/ logical/ physical levels reflected in ArchiMate in the business object, data object, and artifact concepts. This

can be incorporated in the approach shown above. But you need to keep a possible federated approach into account here, too.

Conclusion and Recommendations

In this blog we have demonstrated that you can use ArchiMate at different levels of abstraction. It is also possible to add more granularity as you can create a hierarchical drill-down for each element. In the big-picture overview, we labeled the right levels with “Design” and “Design & Document”. This gives a rule of thumb for which purpose the levels of abstraction are usually used.

The elements indicated with “Design” can be used to model types of building blocks in an enterprise. At the same time, there might also be different variants of processes or systems (not explicitly modeled as own elements). Modeling architecture at this level will allow you to create an architecture repository for design purposes. You can create different architecture views by reusing the same building blocks to describe views of other options, variants, or reference architectures. By reusing the same elements, you ensure consistent naming and reuse of additional documentation and assessments (e.g., “current standard technology stack”), and by using ArchiMate, you use a common language for the development of your enterprise. These advantages help to standardize communication in transformation projects and make it, therefore, faster and more efficient.

The elements indicated with “Design & Document” can be used to capture the actual deployment level of an enterprise. This usually includes process variants or IT instances, for example. It allows you to do to enterprise portfolio management, trace faults in your IT infrastructure, assess the business impact of a server failure, and more. It is certain that for a large enterprise, this level of abstraction cannot be modeled and maintained by a small centralized EA team. You need to involve additional roles in the organization, and preferably automate harvesting such information with techniques like process mining and crawlers that listen to your network traffic, service bus communication, et cetera. Applying this level of abstraction to projects, you can manually model all variants or examples and capture the rest via mass imports to complete the repository information. The visual modeling (of examples) reflects the design flavor and the completion of changes to all elements reflects the documentation flavor.

Key message: This overview provides an instrument to classify levels of abstraction of enterprise architecture descriptions and gives hints for which tasks which level of abstraction is useful. Analyze and decide which level you need to describe for your purpose. Everything is possible and there is a way to connect all dots with Bizzdesign Horizzon. Contact us for more information. 

About the authors:

Marc Lankhorst

Managing Consultant & Chief Technology Evangelist at Bizzdesign

Marc contributes to Bizzdesign’s vision, market development, consulting, and coaching on digital business design and enterprise architecture. He also spreads the word on the Open Group’s ArchiMate® standard for enterprise architecture modeling, of which he has been managing the development. His expertise and interests range from enterprise and IT architecture to business process management.

Bernd Ihnen

Managing Consultant at Bizzdesign

Bernd has held various roles during career, including consultant, trainer, and global solutions manager. His expertise includes Business Architecture, Enterprise Architecture, Portfolio Management, and Business Intelligence, where he has guided customers in maximizing value from Bizzdesign Horizzon predominantly in finance and manufacturing sectors in DACH and EMEA region.

The post An overview of the Levels of Abstraction in Enterprise Architecture appeared first on Bizzdesign

3 Things Everybody Ought to Know About the Benefits of Decision Management Latest news from (my website): Bizzdesign

Be honest, do you consider yourself a great decision maker? I believe, with a few exceptions, that many people are not able to make optimal decisions. Why you might ask? Well, the answer is quite simple: people don’t have the time to collect and analyze all the available data and information from information systems in your organization, suppliers, customers and other external sources.

In addition, people’s capacity to process and store certain amounts of information is very limited. Just try to remember what you had for dinner two weeks ago…? But don’t worry – help is on the way, because in this blog I will list three important benefits of Decision Management that everyone should know in order to improve business outcomes.

Before beginning, I’d like to point out that a colleague of mine, Ton Baas recently wrote a blog explaining the 5 most common pitfalls of informed decision making. He demonstrated three different types of decisions; strategic, tactical and operational. In this blog post, I will focus on the operational type, since these kind of decisions are made very often, and in a repetitive way. If you would like to read more about the strategic benefits I can recommend the What is decision management? blog by Suleiman Shehu. Without further ado, here are the three things everybody ought to know about the benefits of decision management.

1. Develop or redefine decision models
Define your business rules and model them in a way that they become visible and logical for your stakeholders. This way, you can learn how your business rules are embedded in business processes and gain insight into the factors and rules that are used. Making a decision model will reduce the complexity of numerous business rules and make them more manageable. This way, you’ll improve your knowledge of your business processes and you’ll be able to optimize and streamline corresponding actions. Most of the time, business rules change while the process remains the same, for example with taxes. The business rules around taxation change very often, whether it is your income or legislation, but the process of paying taxes remains the same. Modeling your business rules will enable you to change these rules without having to make any changes in your process.

2. Automate decisions
Once you have modeled your business rules, you’ll see that many operational decisions can be reused and automated for multiple decisions. Take, for example, the processing of e-payments by an automated clearing house. The ACH has a set of rules for processing one e-payment and in turn these same rules can be reused for millions of other e-payments. Therefore the decisions need to be fully structured (or at least semi-structured) so that the decision model can help support the analytics and decision management tools. Given that operational decisions are numerous and need to be made on a minute-by-minute basis and within a timely manner, automating these decisions will improve quality and reduce the workload of the people who used to make them.

3. Make it “real-time”
Once you are able to automate operational decisions you could make use of real-time business intelligence. Note that real-time intelligence only makes sense for decisions that require immediate action once new and fresh data has been collected. Some examples that might benefit are: e-payments, fraud detection, call center optimization, algorithm trading and dynamic pricing. In some cases suboptimal, but quick decisions may be more valuable than accurate and prolonged ones. However, in order to make this work you will need to model your business rules into a fully automated process. As a result you will be able to make decisions more effectively, quickly and proactively.

“There are more things in heaven and earth than are dreamt of in your philosophy…”
I just couldn’t resist quoting a line from Shakespeare’s Hamlet (Act I, scene V), although there is some disagreement about the meaning of this sentence. I believe it means something along the lines of: education and rationale can’t explain everything we observe in this world, for example the ghost of Hamlets father. Putting this into the context of decision management: for some, it can be difficult to make sense of the complexity of the business rules surrounding your business processes. However, with the right set of tools and methods you can create necessary insights and develop knowledge about your decision making process and business rules. This way, you are one step closer to realizing the business benefits effective decision management can deliver.

The post 3 Things Everybody Ought to Know About the Benefits of Decision Management appeared first on Bizzdesign

The Digital Twin Organization: Can Enterprise Architecture Help? Latest news from (my website): Bizzdesign

One of the more interesting developments in the tech space taking place right now is the emergence of digital twin technology. For those of you asking What is a digital twin? right now, allow us to elaborate.

What is a Digital Twin?

A digital twin, as per Gartner, is “a digital representation of a real-world entity or system”. More exactly, digital twin technology provides the ability to create a virtual representation that accurately simulates (hence twin) both the physical components as well as the dynamics and behavior of how an Internet of Things device performs and functions throughout the entire duration of its lifecycle. This is achieved by collecting and interpreting vast datasets from deployed sensors in order to realize the desired sameness between the real-world element and its duplicate.

Digital twin technology has been in use in the aerospace industry for some time now. However, it’s only recently became a major development thanks to the advent of the Internet of Things and Industry 4.0. The main benefits in a traditional (read equipment/hardware-oriented) deployment include:

• Gaining insights into operational inefficiencies
• Prolonging the lifespan of equipment through better stewardship, i.e., preventive maintenance, ongoing parameter optimization
• Minimizing downtime
• Using the operational data to inform research and development, resulting in superior future designs and implementations

Almost anything you can think of can have a digital twin – an office building, a water filtration system, footwear, your cat etc. So, the question that naturally arises is – why not the enterprise?

Realizing the Digital Twin of the Organization with Enterprise Architecture & the Bizzdesign Suite

The Digital Twin of the Organization is a concept created by Gartner. Quite simply, it is predicated on using a digital representation of an organization (its business model, strategies etc.) to better plan and execute a business transformation initiative. The whole idea behind the digital twin concept, and the reason why it is so useful, is that it offers a virtual model that can be analyzed and tweaked more easily than the real thing. The new insights and efficiencies you uncover this way can in turn be used to improve the organization.

Model is the key word here. Models are massless, frictionless, virtually free, reusable, and – importantly – they are also the lifeblood of enterprise architecture. Thus, EA is by default positioned to play a key part in taking the Digital Twin of the Organization from concept to reality. We have been arguing the importance of a model-based approach to business change for quite some time on this blog, now it seems the future is starting to catch up. Let us have a more detailed look at how exactly EA helps, and offer some examples based on the Bizzdesign suite. In a recent blog post, we already outlined the power of this combination of structure and data to realize “BI 2.0”. The Digital Twin of the Organization builds on that.

Digital Representation 

Having a virtual representation of the organization is the first requisite for a DTO initiative. You need to see your enterprise landscape if you are going to optimize it. This first requirement is fully answered by Enterprise Studio, our collaborative business design platform. Enterprise Studio offers powerful, integrated modeling across multiple disciplines (EA, Business Process Management, Business Model & Strategy and others), as well as all the capabilities needed for seamlessly planning and executing meaningful organizational change.

Thanks to its intuitive modeling interface, users can build an accurate representation of the enterprise across all relevant levels – Strategy, Business, Applications, Infrastructure. What’s more, it supports Capability-based planning, which enforces a business outcome-oriented mindset and helps to focus the company’s resources on delivering actual business value. It is even possible to go beyond the confines of the organization and model the wider ecosystem in which it functions – for instance, things like suppliers, regulatory constraints, as well as customers and their behavior.

Using advanced customer journey maps in Enterprise Studio you can help unlock the value in your products and services by highlighting areas where customer interaction can be optimized to increase customer satisfaction. All these features and more are available in an easily-navigable environment that lets you move across models and drill down on desired artifacts with ease. This facilitates modeling and ensures a steady level of progress during complex projects such as a Digital Twin Organization implementation.

Strategy to Operations Alignment 

Of course, having the digital representation of the enterprise is only the first step. Making an organization more effective and efficient is about finding opportunities for improvement and carrying them out without disrupting the business.

This is where having a clear model framework to integrate and make sense of operational data comes in really handy. Enterprise Studio features support for an extensive range of standards and frameworks, including ArchiMate, TOGAF, BPMN, NIST 800-53, Open FAIR and many others. Access to high-quality guidance, support and best practice examples means you do not have to reinvent the wheel and can instead focus on your objectives without petty distractions along the way.

Another one of Enterprise Studio’s stand-out features is its powerful analysis engine. Cutting through complexity in pursue of internal coherence and agility requires strong analytical tools with which to uncover opportunities for optimization (be it for business process improvement, or application rationalization etc.). The platform offers users access to a vast selection of analyses. These are an important component of the ‘tweaking’ aspect of the Digital Twin of the Organization, since they help with getting new, valuable insights.

Without going into too much detail, the platform supports impact analysis, dependency analysis, process analysis, lifecycle analysis, as well as financial analysis to name but a few. Enterprise architects or other affiliated roles can also execute SWOT, PESTEL, and Porter’s 5 Forces analyses, and a range of other ones, scorecard-related or otherwise.

Integrate, Consolidate and Operationalize Data 

Finally, since having a reliable image of the organization means access to (near) real-time data, to ensure the ‘twin’ quality of the model(s), the Bizzdesign platform integrates some state-of-the-art technology to enable you the highest agility, flexibility and productivity on the market. Horizzon is our cutting-edge collaboration and publication portal, a key component of any DTO initiative.

Horizzon can be seen through two lenses. On one hand, it is a fantastic tool for disseminating information across the enterprise and socializing content to all the relevant stakeholder groups in the right format. Its data analysis along with its dashboarding and reporting capabilities are powered by Kibana technology (part of the Elastic Stack), making it a crucial tool for operationalizing data, i.e., getting people to engage with and act upon it. Since enterprise architects do not run the business by themselves, their work needs to be easily understood by management and other business-side stakeholders. Horizzon makes socializing architectural content very straightforward thanks to the visually rich outputs that instantly communicate findings to audiences. As such, it increases the likelihood and speed of making informed, constructive decisions, which has a long-term positive effect on the business.

On the other hand, HoriZZon’s high connectivity and integration capabilities, already mentioned in our earlier blog post, allow it to act like a hub. Its Kafka component allows extremely fast data streaming, which makes it a desirable platform for consolidating data from third party tools (for instance, Business Intelligence tools, CMDBs, IT Service Management tools, process mining etc.). Having a portal that features a live image of the organization and presenting insights in the form of signature-ready deliverables brings to life the idea behind Gartner’s Digital Twin of the Organization. It places decision makers in front of a reliable representation of the enterprise and lets them immediately influence the real-life direction of the company and/or the way things are done. Whether it be updating the business model due to new regulation, removing inefficiencies from business processes, or cutting investment from areas that do not support the end business goals, decision makers can carry out real change to the business they run by using this digital model the same way engineers would change the parameters of a water pump in a traditional, industrial digital twin setting.

Conclusion

Of course, working to realize the digital twin of your organization is a complex endeavor that requires a powerful platform behind it and a fairly high level of EA maturity. Nonetheless, considering the advantages it stands to deliver, enterprise architects would be well advised to do their due diligence and explore this concept for all that it could bring to their organizations. Done correctly, it can generate meaningful returns, and contribute to the creation of a competitive advantage.

The BiZZdesign suite is a leading EA platform that offers market-leading modeling, analytics, and data integration capabilities. To see how it can help you realize the digital business of tomorrow, please get in touch today!

The post The Digital Twin Organization: Can Enterprise Architecture Help? appeared first on Bizzdesign

Prepare your Organization for Change: 6 Key Capabilities Latest news from (my website): Bizzdesign

Few companies have a systematic and reliable way of translating their business strategy into action across all relevant parts of the organization. Research on digital transformations by MIT Sloan [1] distinguishes between the ‘what’ (what does an organization want to achieve) and the ‘how’ (how can an organization realize change) and shows that organizations that focus on the ‘how’ turn out to be much better at executing transformations. They don’t waste too much time thinking about what the future may look like; they make sure they are prepared when the need for change arises. We like to call these organizations ‘adaptive’.

Transforming an organization into an adaptive enterprise is not easy. It requires you to enable, execute and accelerate change on all levels of the organization, and stay in control at the same time. How do you do this?

We do not believe in a step-by-step method for business transformation and change, since ‘one size fits all’ approaches seldom work. Instead, truly adaptive enterprises in our experience focus on six key capabilities, shown in the figure below. If you want to be adaptive, you need to:

1. Simplify: Complexity is the enemy of change. It causes uncertainty and undesirable side-effects.
2. Innovate: You need to keep trying new things. Create space to learn and evolve.
3. Collaborate: Adapting to changing circumstances is a joint effort. Work together towards shared goals.
4. Accelerate: Your environment is changing faster than ever and you must keep up. Change the way you change.
5. Decide: Decisions need to be made ot all levels of the organization. You can’t always wait for the ‘higher-ups’, but at the same time you have to stay aligned along the same goals.
6. Control: Compliance and risk management cannot be neglected. Transparency is key.

6 Key Capabilities

In today’s digital age, everyone aims to use IT effectively to digitize their daily operations. Why not use the power of software to enable and grow your change capabilities as well?

To help, our latest ebook goes more into depth on these 6 capabilities and gives you guidance on how to become a truly adaptive enterprise and to thrive in this era of change.

Software on its own does not make your organization more adaptive, but it is an essential instrument in handling large amounts of information, making well-informed decisions, and executing change more effectively. Collaborative business design software provides a single source of truth on the current state and future plans of the organization and is a key enabler for adaptive enterprises.

We recently published the eBook ‘The Adaptive Enterprise’ in which we explain our vision on these challenges of change and control in complex enterprises, and describe the capabilities mentioned above in more detail. Click the link to download the eBook.

[1] “Digital Transformation: a roadmap for billion-dollar organizations”, MIT Sloan, 2011

ALSO CHECK: In case you missed it: Combining ArchiMate® 3.0 with Other Standards & Techniques – Summary

The post Prepare your Organization for Change: 6 Key Capabilities appeared first on Bizzdesign

Behavioral Economics & Enterprise Architecture (2): Improve Decision Making Latest news from (my website): Bizzdesign

The promise of enterprise architecture is that it helps improve decision making. Typically, the role of the enterprise architect is to advise and enable other stakeholders to make better decisions. Therefore, Enterprise Architecture – more than anything else – is a social discipline, in that it demands social skills and interaction in order for practitioners to successfully engage with stakeholders and change their behavior.

Not surprisingly, enterprise architects are more effective in steering decisions when they consider that they are dealing with Humans. And Humans, as we’ve explained in our previous blog, can be irrational, naïve and impulsive. By taking these biases into consideration and making choices as easy as possible for decision makers, architects can dramatically increase the likelihood of getting their point across and ultimately help deliver better business outcomes for the organization. Here, we present some principles to get you started.

Econs & Humans

In their best-selling book Nudge (2008), Nobel prize-winner Richard Thaler and Cass Sunstein introduce the concept of ‘choice architecture’, and present two types of actors: Homo Economicus and Homo Sapiens, or “Econs” and “Humans”. Traditional economic theory is based on choices made by Econs, who are perfectly rational and think like Albert Einstein, have the memory of IBM’s Summit supercomputer, and the willpower of Mahatma Gandhi. Humans, on the other hand, can forget their mother’s birthday, snack when they know they shouldn’t, and drink too much at parties. This is where Behavioral Economics branches off from traditional economics, explicitly acknowledging and accounting for the existence of human biases and their influence on everyday life and the economy.

Humans do not adhere to the rational world of traditional economics. But by understanding these human biases, we can steer (or “nudge”) choices effectively in the real world – an important ability for enterprise architects. It is not just about the decision that needs to be made, it’s about how the decision is presented to the decision-maker. In other words, enterprise architects must design the choices they present with care. They are choice architects.

Choice architecture

Earlier in this blog series, we described two systems in decision making.

• System 1 for fast, automatic, frequent, emotional, stereotypic, and subconscious irrational decisions.
• System 2 for slow, effortful, infrequent, logical, conscious rational decisions. In engineering your choice architectures, you want to make sure the human System 1 does not produce a negative or sub-optimal decision.

To achieve this, we should structure the design to make the options as obvious as possible and the choice as easy as possible, based on how we know the Human Type 1 decision-making system works, using the following principles (Thaler et al., 2008):

1. Create better defaults
   Humans will choose whatever option requires the least effort, even if that is not the best option for them! This “path of least resistance” is called the default: it is the outcome if the chooser does nothing. Defaults are unavoidable. For any node of a choice architecture system, there must be an associated rule that determines what happens when the decision maker does nothing. There is huge power in defaults, just think about that auto-renewed subscription you still want to cancel…
   In terms of Enterprise Architecture, suppose you want to keep your infrastructure landscape up to date. When the operating system of a server is no longer supported by the vendor and the default option is to do nothing, the entire landscape – and everything that runs on it – will be out of date soon! Now imagine implementing a simple principle that all infrastructure will be updated as soon as a newer version is on the market. ‘Doing nothing’ will now result in an up-to-date landscape.
2. Expect error
   Humans, unlike Econs, make mistakes. A well-designed system expects its users to make mistakes and is as forgiving as possible. Foolproof, idiot proof, monkey proof – you get the idea.
3. Give feedback
   Well-designed systems tell people when they are doing well and when they are making mistakes. In the product design world, this is usually ‘hard-coded’ in the product (e.g. error messages in software). In Enterprise Architecture, the architect is the designated provider of the feedback to the designated decision makers. Social skills will help with timing and framing the feedback to be as effective as possible.
4. Improve the ability to ‘mapMapping Capability Contributions
   ‘Mapping’ is the relation between an option and the (expected) results of choosing that option. A good choice architecture helps decision makers to improve their ability to map and hence to select options that will make them better off. This can be done by making the information about the options more comprehensible, e.g. transforming complex information into units that translate more readily into actual use. For instance, you could show the impact of a set of new technologies on a capability using a spider chart, as illustrated below:
5. Structure complex choices – Drive Simplicity!  
   As the number and complexity of alternatives in a decision scenario grows, people are more likely to use simplifying strategies. When a choice is complex, choice architects have a much higher chance of steering decision makers towards the right choice. Structuring alternatives is an effective way of making choices easier (think about the categories and subcategories on your Netflix account).  By understanding the decision patterns of entire groups of decision-makers, a choice can be structured more effectively for a specific stakeholder. This is known as collaborative filtering, e.g. “Customers who bought this item also bought…”
6. Focus on incentives
   Choice architects should think about the right incentives for the right people, which is particularly important in the sometimes highly political enterprise environment. One way to do so, is to ask the following questions about a particular choice architecture:
   – Who uses?
   – Who chooses?
   – Who pays?
   – Who profits?

Structuring and steering choices

Salience of options and results can of course be manipulated, and good choice architects can take steps to direct people’s attention to incentives. Consider the rationalization of an application landscape. Applying the right filters to your decision-support visualizations helps focus attention on the ‘biggest bang for the buck.’ For example, see the BiZZdesign Horizzon visualization below.

E2E TIME analysis

We see a TIME analysis performed on an application landscape comprising over 100 applications. Since a bubble chart of 100+ applications is not easy to read – let alone make decisions on – we applied a filter to only show applications that are more expensive than $300,000. Without the clutter of the smaller applications, we can easily see which expensive applications are candidates for elimination (bottom left corner) and in which applications we should invest (top right corner). Structuring different options adequately makes every decision easier!

Next to making decisions easier, choice architects can also steer decisions when considering human bias in presenting the different options of a decision. A well-known example of human bias is loss aversion, or people’s tendency to prefer avoiding losses to getting equivalent gains: it is better to not lose $5 than to find $5. A well-known result of loss aversion is the sunk cost fallacy. After buying a non-refundable sporting event ticket, many people would feel obliged to go to the event despite not really wanting to, because doing otherwise would be wasting the ticket price. Or in a business context, “We’ve already spent so much on this SAP implementation, we just have to continue”. The recent SAP fiasco at Lidl (€500M down the drain) provides an excellent example. In bubble charts, these will be the really big bubbles on which all attention is focused. That may be another reason to filter your bubble charts in the right way.

The principles we discussed can help enterprise architects become effective choice architects and so play a big role in ensuring the organization meets its strategic goals. We believe that by accounting for human biases, they can significantly enhance management’s decision-making process and their overall performance. Therefore, we will dive into leveraging human biases in our next blog, with examples from Behavioral Economics literature. Stay tuned!

The post Behavioral Economics & Enterprise Architecture (2): Improve Decision Making appeared first on Bizzdesign

Communicating Architecture with Stakeholders Latest news from (my website): Bizzdesign

Previously, I have blogged about stakeholder management and showed you some useful techniques to support this important part of enterprise architecture. In this blog post, I want to address different ways to share architecture information with different types of stakeholders involved in changing your enterprise. 

Communication goals

When communicating about architecture, you need to consider the type of stakeholder you are addressing and the information he/she needs from your architecture. As originally described in Enterprise Architecture at Work and also mentioned in the ArchiMate® standard for architecture modeling, there are three main goals in communicating change: 

1. Designing: Supporting architects, process designers, software developers, and others with precise, unambiguous information on designs. Typically, this group uses various diagrams in languages like ArchiMate, BPMN, or UML. Their main focus is on functional and non-functional aspects of their designs. 
2. Deciding: Supporting managers with information they need to decide on priorities, investments, planning, and more. They commonly use tables, various charts, heatmaps for highlighting, and Gantt charts for scheduling. They also tend to emphasize financial and risk metrics to decide on change.  
3. Informing: Addressing other stakeholders, such as employees, customers, and business partners, to involve them in (proposed) changes. This does not require the precision of the previous two groups, but it requires a simple and intuitive understanding of the (sometimes personal) consequences of change. Examples of these include illustrations, cartoons, animations, and infographics. 

Communication styles

Next to these communication goals, you also need to take into account the way people prefer to consume information: 

• Visually oriented people like to communicate via images, e.g. diagrams, pictures, and animations. Stakeholders with a technical background often fall into this category.  
• Numerically oriented people favor numbers, tables, and charts. Of course, those in finance are often in this group.   
• Verbally oriented people best understand a situation via a textual description. The legal profession is an important example of this.  

Because architects are often visually oriented, we tend to show the fruit of our efforts by means of diagrams. But this is not always the best option; it mainly works for 1) designing and 2) visually oriented people. In management, we often find people with a legal background. They are ill-served by diagrams and other pictures, but instead require text, while those with a background in finance need numbers, tables, and charts. Speaking their “language” is an important part of effecting the change you want to see. 

Examples of stakeholder communication

The information contained in architecture models can be displayed in many forms – not just diagrams. In particular, the various dependencies between the elements of your architecture can be exploited to create cross-cutting insights that serve the needs of various stakeholder groups. Displaying this information in multiple ways may help different types of stakeholders gain the understanding they need to move forward. 

Below, you see the technology obsolescence risk of (part of) the business capabilities of an organization. The end-of-life dates of various technologies, as provided by Technopedia (which we can import in our platform), are aggregated across the entire architecture via, in this instance, applications and business processes supporting each capability. Such an analysis helps management address business continuity risks of old technology, and also decide where to invest in upgrades or replacements.

A heatmap like the one above works best for visually oriented people, who will immediately zoom in on the red capabilities at the top right. The same information can also be shown in a table, as demonstrated below. This may be more suitable for people who prefer text or tabular information.  

Below is another example: a planning diagram with additional tabular information on project conflicts. This is the type of information a manager needs to assess the impact of delaying a project, or the information a product owner requires when deciding whether or not to push a feature to the next sprint.  

At the top, we see that the delay in the first project on the timeline leads to a problem with the second project (the yellow warning sign), since that relies on the first. The table at the bottom shows (in red) that there is also an indirect potential conflict: both projects work on the same system, so if they overlap in time, they may step on each other’s toes.  

Next to the diagram and the table, the text you just read is, of course, a third description of this information. Any diagram or table should come with such an explanation. Such natural language text can even be automatically generated from models. But we can go beyond that: If you have attended the presentation given by our customer and innovation partner, Schaeffler AG, at the Gartner Enterprise Architecture Summit in London, you have seen a demonstration of our chatbot, which allows you to talk to your architecture models! 

Do you want to know more about the communication capabilities of Enterprise Studio and HoriZZon? Contact us for a demo! 

The post Communicating Architecture with Stakeholders appeared first on Bizzdesign

Behavioral Economics & Enterprise Architecture (1): The Case for Slower Decisions Latest news from (my website): Bizzdesign

Humans have evolved to make fast decisions. For example, when a stranger approaches you, you know almost instantaneously if they represent a threat, if they are angry, friendly or happy. The cognitive processing involved is mind-boggling if we actually stopped to think about it (which we don’t).

We subconsciously process a myriad of information, such as the person’s stance and their facial expression, and make a decision in a split second about whether this stranger represents a threat or opportunity. Or, in the language of evolution, we decide “Which one of us is lunch?” and “What am I going to do about it?”

The human decision-making process

The key point here is we subconsciously process this information: it is an instinctive process rather than a conscious evaluation. The cognitive psychologists Daniel Kahnemann and Amos Tversky would call this System 1 decision-making, where decisions involve characteristics such as fast, automatic, frequent, emotional, stereotypic and subconscious, as described in the seminal bestseller Thinking Fast and Slow (Kahnemann, 2011).

However, these types of decisions are subject to cognitive biases, such as over-optimism, loss aversion, the way a question is worded (“framing”), substitution of simpler questions, or more readily available answers to different yet similar questions.

For example, which one of the following tables is longer?

The one on the left, obviously.

That was your System 1 jumping in and deciding for you. Now let your System 2 brain – the one that deals with slow, effortful, infrequent, logical, conscious calculations – go and fetch a ruler and measure the lines. They are the same length.

This is a simple optical cognitive bias. We humans have many other cognitive biases around decision-making, which makes us prone to error, sometimes in life-threatening situations, like flying planes and diagnosing cancer. Most frequently, though, these errors occur in making business decisions based on the evidence (data) at hand.

Cognitive bias in Enterprise Architecture

The discipline that studies the effects of psychological factors on (economic) decisions, is called behavioral economics. Behavioral economics broke into mainstream thinking several years ago, and it’s becoming a hot topic in a variety of industries. With the Nobel Prize for Economic Sciences awarded to behavioral economist Richard Thaler this year, behavioral sciences gained another spike in interest.

We at BiZZdesign believe the lessons learned in behavioral economics can benefit the world of Enterprise Architecture as well.

When making strategic decisions at the enterprise level, it is incredibly important to be aware of these biases in order to avoid making suboptimal decisions, which can be very costly.  Making fact-based decisions, and understanding key decision criteria, is key to successful enterprise transformation.

This blog series aims to help organizational designers leverage human biases to steer decision-makers into making even better decisions. In the next two blog posts in this series, we will use examples from famous behavioral economists and apply them to the world of Enterprise Architecture. Finally, we will discuss the possibility and need of minimizing –or even ruling out – human biases.

Stay tuned!

The post Behavioral Economics & Enterprise Architecture (1): The Case for Slower Decisions appeared first on Bizzdesign

Three Key Techniques for Managing Your Stakeholders Latest news from (my website): Bizzdesign

Stakeholder management

Everyone remotely involved with enterprise architecture and similar disciplines knows the importance of knowing your stakeholders. Stakeholder management is a key technique in EA and many methods, including TOGAF, stress its importance. But there is more to management than keeping individual stakeholders happy. In this blog post, I want to introduce three techniques that not only help you ensure stakeholder satisfaction, but also make good use of stakeholders and their influence in achieving business goals. 

Augmented power grid

The first technique I want to discuss is the augmented power grid, which is slightly different than the classical power grid familiar to many architects. The version described by TOGAF’s Chapter 21 on stakeholder management plots the level of interest against the power of stakeholders, and then identifies how to address stakeholders in the following four quadrants (shown in picture below): 

• Low power, low interest: monitor 
• Low power, high interest: keep informed 
• High power, low interest: keep satisfied 
• High power, high interest: engage closely 

Based on this analysis, you can then define a communications strategy with specific engagement deliverables for different stakeholder groups. 

In Enterprise Studio, we support an augmented version of this power grid, pictured below. We have added two things to the standard power grid:  

• The attitude of the stakeholder with respect to the change goal at hand (shown with colors and smiley/frowny faces) 
• The influence that stakeholders can have on each other (shown with arrows) 

In the example below from an insurance company, we see that employees are not happy with the cost reduction goal and may exert a negative influence on the Board, which itself is currently indifferent. Intermediaries and customers are both positive about this cost reduction, though, as intermediaries influence their customers and their choice for certain products. This is a crucial relationship in the business model of this insurance company. 

 Knowing about these relationships is key in understanding company politics, as well. Moreover, it helps you influence stakeholders who are out of your direct reach by targeting others whom you can address directly. But be aware that this can be sensitive knowledge. 

Relating stakeholders to architecture models

Next to knowing who your stakeholders are, you also have to understand their concerns or drivers. You can then assess the current situation with respect to these drivers and, based on those assessments, define change goals and desired (and undesired) business outcomes. To realize these goals, you need to understand key business capabilities and which resources are needed. The implementation of these goals is then modeled as the core of your architecture. Change initiatives, in turn, can be related to these architecture elements.  

All of this can be expressed in the ArchiMate modeling language, as supported by Enterprise Studio: 

• The Motivation concepts serve to model the stakeholders, goals and outcomes 
• The Strategy concepts are used for your capabilities and resources 
• The core architecture is modeled in ArchiMate’s Business, Application and Technology layers 
• The change initiatives are modeled with Implementation and Migration concepts 

Together, this gives you full traceability from investments in projects and programs, via the capabilities you develop or improve, to the business outcomes you realize and the stakeholders you serve. This traceability is key in informed decision-making on investment priorities. Too often I see ‘decibel-driven’ project portfolio management, where the loudest voices get their projects approved, whereas less vocal stakeholders are left in the cold.  

Ecosystem models

Enterprises are part of increasingly complex webs of customers, suppliers, partners, regulators, shareholders and various other parties. All of these should be treated as stakeholders. To gain more insight into these webs, ecosystem models can be helpful. Rather than putting your own enterprise at the center and only looking at the relationships it has with others, an ecosystem model looks at the broader perspective and also encompasses relationships between other stakeholders.  

Knowledge about these relationships helps you, much like the augmented power grid. Moreover, you can take an economic perspective and model the value creation and distribution within such an ecosystem, looking at the value contribution of different parties and analyzing the effects of change to the parties involved within that ecosystem. 

The figure below shows a very simple, three-party ecosystem model for the well-known insurance company, ArchiSurance, with various flows of information, products and money. As you can see, it also shows the relationships between customers and intermediaries, something that is outside the boundaries of your own organization but crucial to understanding your value network. Previously, we already saw how intermediaries influence their customers, another relevant type of relation that we might also add to this figure. 

The three techniques shown here are, of course, fully supported by Enterprise Studio, and tie in to many other types of analysis and visualization. For example, zooming in on such an ecosystem model, you might want to create Business Outcome Journey Maps that provide more detail on the value creation, or Customer Journey Maps that help you understand and improve the customer experience. 

The underlying, integrated models provide you with a powerful instrument to address your stakeholders’ needs. Rather than basing management decisions on hope and gut feeling, these models provide solid ground for decision-making and help you address your stakeholders in a balanced, fact-based manner.  

Do you want to know more about these and other techniques? Don’t hesitate to contact us!  

The post Three Key Techniques for Managing Your Stakeholders appeared first on Bizzdesign

7 Applications of the Business Model Canvas Latest news from (my website): Bizzdesign

What is the Business Model Canvas?

The Business Model Canvas is a strategic management tool that provides an integrated and holistic view of an organization’s business model. It offers a single-page view of the organization’s business model and is a focal point for various strategic analyses, helping strategists map out the impact and interdependence of different strategic options.

The Business Model Canvas has proven to be a very useful tool to answer questions such as:

1. “We have the best idea in the world! At least… We think it’s pretty good… What’s next?”
2. “What do the fancy slides from the boardroom mean for us?”
3. “We need new ways to do business. What are our options?”
4. “We have a lot of projects but can’t do them all at the same time. What’s most important and what sequence makes sense?“
5. “Of course, we have all required architecture views and process models, but why are people not using them?”
6. “Focusing on doing things right is great, but don’t we need to think about doing the right things?”
7. “We find ourselves discussing the same things repeatedly. Is there a way to structure the discussion?”

Practical applications of the Business Model Canvas

The Business Model Canvas is useful in the following scenarios:

1. Start-up and service design

“We have the best idea in the world! At least… We think it’s pretty good… What’s next?”

A great product or service idea doesn’t bring you success instantly. Most ideas tend to come from the inside of companies, where you and your colleagues feel, see and experience that your team is very good at doing a certain job. The first thing to do, is to think of a value proposition and potential customers. Which problem are we solving? And whose problem is this? Are customers willing to pay, or do we need an alternative revenue model? The structure of the Business Model Canvas helps you add the other relevant elements necessary to turn your idea into an implementable business model. You have to check facts and figures, get in touch with potential customers and make a plan to create the necessary infrastructure. Consider yourself blessed working in a Greenfield environment! All options are open.

2. Strategy Impact Assessment

“What do the fancy slides from the boardroom really mean for us?”

In larger organizations, periodically new versions of the strategy are released. Sometimes because elements in the organization’s environment change, and often after changes in leadership. For the rest of the organization, it can be difficult to interpret strategy, since it is on a fairly high level of abstraction. There is a gap between strategy and the projects launched to implement this strategy. By assessing the strategic choices made, you can point out the places in your business model that are impacted by the strategy. Firstly, it helps you assess completeness, and fosters the discussion between those responsible for creating strategy and those responsible for executing it. This execution may lead to change in the way the enterprise does business and/or is structured. Insight into the impact of the strategy on the business model helps you to allocate resources to the right places in your business.

3. Innovation – In search of new directions

“We need new ways to do business. What are our options?”

The Business Model Canvas helps give insight into your current business model, but is at its best when applied for innovation. One effective approach is called the “epicentric-approach”, in which you use one block as a starting point and see what alternatives you can come up with. Any change will require changes in the other blocks. For example, in the case of customer-driven business model innovation, a new customer segment is targeted. This will lead to required changes in the value proposition, delivery channels, infrastructure, etc. Especially when well prepared and done with cross functional teams, the variation and creativity of the people in your organization will blow you away. After selecting the best ideas, people are invited to pitch their idea, as worked out in a Business Model Canvas. The audience will give tips to improve the ideas.

In later phases of the innovation process, scenario techniques can be used to get a better understanding of the benefits and risks related to the various alternative business model options.

4. Portfolio Assessment

“We have a lot of projects, but can’t do them all at the same time. What’s most important and what sequence makes sense?“

Use the canvas as a background for your projects. Where do they impact your business model? What about the blank spots? How do we deal with the overlap? The most important thing here, is to relate this to your work done in Strategy Impact Assessment. By using the Business Model Canvas as a model to connect strategy to your project portfolio, you provide insight into the strategic fit of your projects. When you are positioned in a larger organization, it makes sense to work your way down from business model, to enterprise architecture, to project portfolio.

A second step might be to have all project leaders create a canvas for their projects! This will take some time, but really gives direction to a project during its lifetime!

5. Communicating more detailed models in a business-relevant context

“Of course we have all required architecture views and process models, but why are people not using them?”

Some of this may have to do with the fact that the representation of a view doesn’t make sense to your audience (remember IEEE1471?). Or they just need a bit of guidance in order to feel comfortable in a world they’re less familiar with, starting from a context they do understand. Once your stakeholders get used to thinking in terms of Business Model Canvases (which happens really fast!), you can start using it as a basis for more detailed models that you are already creating. This helps architects and analysts get more traction with business management and marketing oriented people.

6. Starting point for lean and six sigma projects

“Focusing on doing things right is great, but don’t we need to think about doing the right things?”

There must be some really lean CD case factories out there. But who still buys CD’s these days? Lean journeys often take off to save costs by improving process performance. By applying the Business Model Canvas as a starting point, people better understand the context of their processes. The collaboration helps create a team experience on one of the first days of the assignment. In some practices, we have seen that it fosters making choices and instantly stopping some activities. A common understanding of the value proposition is a good reference point for assessing activities and discussing their added value.

7. Be smart… or at least pretend to be!

“We find ourselves discussing the same things over and over again. Is there something to structure the discussion?”

Many people are now using the canvas on a daily basis. Whether by sketching it on a piece of paper while chatting with a colleague or asking about the intended customer experience to get people out of the ever-enduring channel mix discussions. Search for completeness, write down your hypotheses, and work from the right side of the canvas (customers) via the center (value) to your own key activities. And feel free to ask the questions that need to be asked… even if that makes others uncomfortable.

ALSO READ: Business Analysis with the Business Model Canvas by guest blogger Remco Blom

Final thoughts

The Business Model Canvas offers an integrated and holistic view of an organization’s business model, helping strategists map out the impact and interdependence of different strategic options. Knowledge of Business Modeling techniques is very powerful and useful in many different situations. If you want a demo of a Business Model Canvas, please contact us.

About the author:

Marc Lankhorst

Managing Consultant & Chief Technology Evangelist at Bizzdesign

Marc contributes to Bizzdesign’s vision, market development, consulting, and coaching on digital business design and enterprise architecture. He also spreads the word on the Open Group’s ArchiMate® standard for enterprise architecture modeling, of which he has been managing the development. His expertise and interests range from enterprise and IT architecture to business process management.

The post 7 Applications of the Business Model Canvas appeared first on Bizzdesign