Traditionally, the focus of Enterprise Architecture (EA) has always been a combination of both business and technology architectures. In the near future, this focus will gradually shift to business design or as many of us term it business transformation. This shift entails providing existing architectural as well as new advisory services to the enterprise. EAs will not only limit their advisory services to traditional enterprise architecture domains (business, information, application, technology) but rather will engage further in driving change along strategy, market, product / services and capabilities. Below are some of the key trends we are witnessing right now:
- Disruptive forces like social media and mobility have major impact on enterprises
- Unlike before, changes to business operating models is more frequent now
- The shelf-life of business architecture models and artifacts is shrinking fast
- Understanding capabilities is central to managing impact of disruptions
- Unlike before, enterprise architects will increasingly focus on business design
- A new architecture role focusing on business design is slowly emerging
Disruptive forces like social, mobility, big data, cloud, gamification etc. typically have the following characteristics: they bring along innovation, they open up new markets, and finally expose new value networks. These combined characteristics of disruptive forces eventually displace earlier offerings and technology from the existing market place. Typically, we should view disruption as a force that rips through an existing market by creating a new market altogether. Apparently, most disruptive forces tend to be “digital” or “technical” in nature mainly because they accelerate disruption by providing new and faster access channels that empower consumers and improve market penetration.
In the early days, we used to believe “differentiation” alone creates a competitive advantage for enterprises. While competitive advantage may have been good enough in those early days, it is no longer adequate for enterprise that wish to dominate a market place by creating uncontested markets and making competition irrelevant. Unfortunately, differentiation on its own does not cause “disruption”. In essence, you would need a combination of both differentiation and low cost to emerge as a dominating force. In fact, to be successful, you would need to sustain the state of dominance.
If you explore most existing EA practices, you will notice the focus has been blueprinting enterprise at people, process and technology layers. Unfortunately, disruption does not only occur in this layer. Typically, disruption occurs at a much higher or contextual layer where we define business operating models or as most of us term it target operating model (TOM). Very few EAs have attempted to include in their scope business motivation (strategy) and business value (value chains and networks) layers. The absence of these layers in their blueprint means few EAs contribute towards business design or transformation.
The actual business design or transformation happens at the business operating model layer. At this layer, the emphasis is much broader: designing innovative products, offering quality services, attracting customers, gaining market share, eliminating competition, reducing operational cost, adopting right-sourcing, improving scalability, increasing profitability, guaranteeing revenues etc. In here, you leverage a top-down approach to better design an enterprise that achieves a balance between product innovation, customer intimacy, and operational excellence during its lifetime. Apparently, this requires frequent redesign to ensure sustainability and this means EAs may have an active role in this space.
So how will “disruptive forces” affect EA? Initially, the traditional EA models that purely focus on “business architecture” and “technology architecture” will gradually be phased out by one that focuses on “business design”. The previous mandate of EA was to improve projects, programs, portfolios, and capabilities. Business design is much broader than this as its mandate is to improve products, services, markets, performance, and profitability. Among others, its scope involves knowledge of surrounding environment, understanding of business capabilities, analysis of disruptions forces, knowledge of competition, appreciation of markets dynamics, creating innovative products and services, designing and recommending sustainable business patterns, defining and leading transformation roadmaps, identifying and mitigating business risks, and managing enterprise change.
Moving into the “business design” role means EAs have to learn new and leverage existing skills around four business models namely strategy, market, and product / service, and capability models. Ultimately, EAs need to use these skills to contribute towards business design or transformation. Below, I attempt to highlight some of these skills:
a) Strategy Model: EAs have to build new skills around understanding business strategy, business context, business patterns, asset lifecycle, business motivation, business innovation, and business environment etc. At this level, EAs may innovate business models to produce artifacts like business motivation models.
b) Market Model: EAs have to build new skills around understanding market trends, industries dynamics, customer segments, channel strategy, commercialization, go-to-market, customer experience, and product / service branding etc. At this level, EAs may analyze customer experience and journey maps to produce artifacts like brand architecture.
c) Product / Service Model: EAs have to build new skills around understanding customer relationships, value propositions, product / service offerings, product / service innovation, supply chain, speed-to-market, customer experience, customer cultures etc. At this level, EAs may study value maps to produce artifacts like product design models and roadmaps
d) Capability Model: EAs have to use existing skills around leveraging capabilities, value chains, processes, business services, functions, data, applications, and technology. At this level, EAs may analyze value chains to produce artifacts like capability models.
How do you envision the impact of disruptive forces on EA? Do you see other emerging trends? Until next time, I pen off here..