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What's in a Business Architecture

Introduction

What is in a Business ArchitectureThis article will outline the steps organizations must take to establish a business architecture to ensure that their bold statements of strategic direction are realized through the mechanism of business processes and business capabilities.

In my view, the prime role of Business Architecture is to assure that the various developed capabilities are optimized and aligned with one another and together they deliver traceable business process performance back to the stated strategic goals and objectives of the “Organization-in-Focus” (OIF). The need is to ensure that capability investment decisions for change and ongoing management of business process operations are always in synch.

Today, everything an enterprise does is interconnected and the rippling effect of a change in one domain or department can spill over to many others with severe unintended consequences. We still see plans developed by functional managers that largely disregard their peers’ needs and are blind to the ultimate value proposition to customers. Functional managers request services and need capabilities from enabling parts of the organization such as Information Services and Human Resource departments based on their functional needs making it difficult to paint a connected picture from an enterprise capability perspective.

There is a better way than taking an inside-out approach that ignores enterprise strategic intent and customer value creation. Customers and consumers do not care at all about our insides. If we take a customer centric approach, then we will consider ‘ends’ before ‘means’. Fortunately we are now seeing organizations take aligned strategy, business process and capability management more seriously.

Architecture Methodology Implications

PRG pyramid

With so many pressures and options facing managers an integrative approach seems necessary. Modern methods recognize the need to work at many levels in many domains but also to be connected among them. The BPTrends Associates Pyramid conceived by Paul Harmon in Figure 1 shows an Enterprise level that deals with overall strategic alignment and management of the intellectual assets with governance, prioritization and resource allocation for business transformation. The Burlton Hexagon shown in Figure 2 shows that processes are the mechanisms that are measurable and deliver performance through the definition of the process KPIs in support of the stakeholder relationship and corporate objectives. It also shows that policies and rules, software technologies, facilities, all aspects of human capital, human motivation and organization design are needed to create a business oriented architecture. At all levels of the pyramid, alignment among the hexagonal capability components must be established and maintained.

Clearly the management of the information asset is also critical since information is created, consumed and updated by business processes.

burlton hexagon gross

It is important to note that, when it comes to the perspective of managing enterprise assets, the work of the architects has a context that is traceable to the intended direction of the OIF. Consequently, the effort conducted at this point is NOT to be confused with actually developing corporate strategy but instead it is to understand what has been done and be sure that the interpretation of it is a commonly understood and accepted one. Lack of agreement is a warning flag that cannot be ignored since processes have purposes and the analysis of performance and capability gaps must be assessed against a common set of accepted criteria. If some members of the senior management team see the OIF as being all about customer relationships and others believe that cost reduction and operations should be the emphasis then the remainder of the enterprise level BPM work will thrash and stall. No architecture will save it.

I will describe the activities and deliverables that the enterprise level activities encompass.

  1. Understand Enterprise Context and Strategy
  2. Model Enterprise Processes
  3. Develop Performance Measures
  4. Align Process Capabilities
  5. Prioritize Process and Capability Changes

Understand Enterprise Context

The purpose of the Understand Enterprise Context activity is to understand and validate:

  • The planning horizon for the strategic statements
  • The scope of the enterprise “Organization in Focus” (OIF)
  • External and internal business drivers
  • The strategic intent of the OIF
  • Organizational principles
  • Known OIF strategies
  • The Business Model
  • Existing OIF scorecards
  • The strategic criteria for future decision-making in all following process work

Some potential techniques for this are:

  • Business Motivation Model (BMM) to articulate Mission, Vision, Goals and Objectives as well as other driving motivations.
  • The STEEPL business environmental analysis
    • Social
    • Technological
    • Political
    • Economic
    • Environmental
    • Legal
  • Business Scenario Analysis
  • Value Proposition Determination
  • Strategy Maps
  • Balanced Scorecard
  • Business Landscape Analysis

Determine Stakeholder Relationships

The purpose of the Determine Stakeholder Relationship activity is to understand or determine:

  • Customer segmentation
  • Other external stakeholder types and sub types
  • Today’s and tomorrow’s products, services and information given to and received from each stakeholder type (interactions)
  • The health of the current interactions between stakeholders and the OIF
  • The needs and expectations (our goals) of the relationships
  • The performance indicators and objectives (goals with KPIs and targets) of the relationship
  • The high level supporting capabilities required to be successful

Some potential techniques for this are:

  • Business Context model of stakeholder interactions and exchange health showing all current and future exchanges
  • Stakeholder Relationship performance gap of capabilities needed
  • Stakeholder Needs, Expectations KPIs and Targets Analysis
  • Critical Success Factors (CSFs) determination

Model Enterprise Processes

The purpose of the Model Enterprise Processes activity is to determine:

  • All value chains, value streams, business processes and sub processes of value to the enterprise stakeholders
  • The relevance of any published industry process frameworks to the OIF
  • The Core Processes of value to the customers of the organization
  • The Guiding and Enabling Processes supporting the Core
  • High Level Process Map and Attributes
  • The KPIs of the architected processes

Some potential techniques for this are:

  • Business Process Manifesto
  • Stakeholder Lifecycle Analysis
  • Business Resource Lifecycle Analysis
  • State Change Analysis
  • Industry and Process Reference Framework Analysis

Define Performance Measures

The purpose of the Define Performance Measures activity is to:

  • Identify the key performance indicators (KPIs) to be used for each business process
  • Associate the process architecture KPIs with the strategic objectives and stakeholder measures
  • Determine traceability of measures across the start to end of the value streams and end to end business processes
  • Identify where measurement data can be captured

Some potential techniques for this are:

  • Effectiveness, Efficiency, Quality, Adaptability Measures
  • Top Down KPI traceability
  • Horizontal KPI Traceability
  • Balanced Scorecard

Align Process Capabilities

The purpose of the Define Performance Measures activity is to:

  • Determine Enterprise Information Fit / Gap
  • Determine Knowledge Fit / Gap
  • Identify Organizational Structure Fit / Gap
  • Identify Policy and Business Rules Fit / Gap
  • Identify Enabling Technology Fit / Gap
  • Determine Human Competency and Culture Fit / Gap
  • Establish Physical Facility Fit / Gap

There are a myriad of methods and approaches that can be applied to this work of developing capability but without the foundational strategic, process and measurement methodological work described earlier all of these will be misaligned and change will not be delivered holistically.

Change Prioritization

The purpose of this methodology activity is to:

  • Determine which processes are critical to the achievement of Strategic Business Objectives and Stakeholder Value Creation (Highest Gain)
  • Identify the biggest gaps in performance between current state performance and ideal state target performance (Highest Pain)
  • Find the potentially best choice to invest in improving value according to the strategic criteria created earlier
  • Begin the ranking of processes and related capabilities for feasibility assessment, business case analysis and renewal

Some potential techniques for this are:

  • The Process – Capability / Strategic Intent Impact Matrix
  • The Process – Capability Performance Gap Matrix
  • The Pain and Gain Grid (heatmap)
  • The Nine Block Triage Grid (heatmap)
  • Reconciliation with Current Portfolio
  • Feasibility Analysis and Business Case

Conclusion

The work described in this article is the foundation for managing a modern business enterprise; one that is customer-focused, strategically-aligned and process-centric. This fundamental shift in work towards linked performance management and capability change management must become a relentless pursuit for change agents. It will happen sooner or later to all organizations that survive. What I have attempted to describe here is a simple and common sense approach to remain true to the ideals of managing by process for stakeholder outcomes not by function for internal reward.

Author

Roger BurltonRoger T Burlton, P. Eng., CMC, is the President of Process Renewal Group and co-founder of BPTrends Associates, the services arm of the BPM knowledge portal BPTrends.com. He is the author of the thought leading book ‘Business Process Management: Profiting from Process’. He is considered the industry leader in the introduction of realistic ways of implementing enterprise BPM programs as well as innovative approaches for organizational and process change. He is the author of the ‘Business Process Manifesto’ which is now available in fourteen languages. He is regarded as a realistic practitioner, who delivers pragmatic solutions for his clients. He has helped over one hundred organizations implement BPM as a corporate strategy in many different industries, countries and cultures. An exceptional speaker, he has chaired over forty high profile conferences on Advanced Business Architecture and Process Management around the world. To date, he has conducted over seven hundred seminars and has presented to over sixty thousand professionals. His seminars have been translated for diverse audiences around the globe.

Tags: Business Architecture