Implementation and Reuse of Digitized Platforms Helps Companies Remain Competitive and Gain and Advantage


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Transcript of a BriefingsDirect podcast in conjunction with The Open Group Conference in San Francisco on how enterprise architecture can lead to greater efficiency and agility.

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Implementation and Reuse of Digitized Platforms Helps Companies Remain Competitive and Gain and Advantage

  1. 1. Implementation and Reuse of Digitized Platforms HelpsCompanies Remain Competitive and Gain and AdvantageTranscript of a BriefingsDirect podcast in conjunction with The Open Group Conference in SanFrancisco on how enterprise architecture can lead to greater efficiency and agility.Listen to the podcast. Find it on iTunes/iPod. Sponsor: The Open Group Register for The Open Group Conference Jan. 30 - Feb. 3 in San Francisco.Dana Gardner: Hello, and welcome to a special BriefingsDirect Thought Leadership interview series coming to you in conjunction with The Open Group Conference this January in San Francisco. Im Dana Gardner, Principal Analyst at Interarbor Solutions and I will be your host throughout these discussions. The conference will focus on how IT and enterprise architecture support enterprise transformation. Speakers in conference events will also explore the latest in service oriented architecture (SOA), cloud computing, and security. [Disclosure: The Open Group is a sponsor of BriefingsDirect podcasts.]Today, were here with one of the main speakers at the conference, Jeanne Ross, Director andPrincipal Research Scientist at the MIT Center for Information Systems Research. Jeanne studieshow firms develop competitive advantage through the implementation and reuse of digitizedplatforms.She is also the co-author of three books: IT Governance: How Top Performers Manage ITDecision Rights for Superior Results, Enterprise Architecture As Strategy: Creating aFoundation for Business Execution, and IT Savvy: What Top Executives Must Know to Go fromPain to Gain.As a lead-in to her Open Group presentation on how adoption of enterprise architecture (EA)leads to greater efficiencies and better business agility, Jeanne and I will now explore howenterprise architects have helped lead the way to successful business transformations.To find out more, please join me now in welcoming Jeanne Ross, Director and PrincipalResearch Scientist at the MIT Center for Information Systems Research. Welcome back toBriefingsDirect, Jeanne.Jeanne Ross: Thank you, Dana. Nice to be here.
  2. 2. Gardner: Your upcoming presentation will describe how enterprise architecture has contributedto success for such companies as Campbell Soup and Southwest Airlines, but before we go intothat, it has been typically difficult to concretely link things like IT productivity and generalbusiness success. I wonder, then, how you measure or determine that enterprise architects andtheir practices are intrinsic to successful business transformations? How do we link the two?Ross: That’s a great question. Today, there remains kind of a leap of faith in recognizing that companies that are well-architected will, in fact, perform better, partly because you can be well-architected and perform badly. Or if we look at companies that are very young and have no competitors, they can be very poorly architected and achieve quite remarkably in the marketplace. But what we can ascribe to architecture is that when companies have competition, then they can establish any kind of performance target they want, whether it’s faster revenue growth or better profitability, and then architect themselves so they can achieve their goals. Then, we can monitor that.We do have evidence in repeated case studies of companies that set goals, defined anarchitecture, started to build the capabilities associated with that architecture, and did indeedimprove their performance. We have wonderful case study results that should be veryreaffirming. I accept that they are not conclusive.Architectural maturityWe also have statistical support in some of the work weve done that shows that highperformers in our sample of 102 companies, in fact, had greater architecture maturity. They haddeployed a number of practices associated with good architecture.So we do have evidence. It’s just that if you really don’t want to believe it, you could poke holesin it. There still is a certain amount of faith attached to the link between performance andarchitecture.Gardner: I certainly get your point that repeatability would be a chief indicator, that if you intend to do something repeatedly, you can point to the ways in which you would carry that out. How about the intent from the perspective of wanting to transform in a certain way that you haven’t done before? Is there something that being an architect allows that’s different from the past? Is there something that’s new about this,rather than just trying to reengineer something?Ross: Yes, the thing were learning about enterprise architecture is that theres a cultural shift thattakes place in an organization, when it commits to doing business in a new way, and that culturalshift starts with abandoning a culture of heroes and accepting a culture of discipline.
  3. 3. Nobody wants to get rid of the heroes in their company. Heroes are people who see a problemand solve it. But we do want to get past heroes suboptimizing. What companies traditionally didbefore they started thinking about what architecture would mean, is they relied on individuals todo what seemed best and that clearly can suboptimize in an environment that increasingly isglobal and requires things like a single face to the customer.What were trying to do is adopt a culture of discipline, where there are certain things that peoplethroughout an enterprise understand are the way things need to be done, so that we actually canoperate as an enterprise, not as individuals all trying to do the best thing based on our ownexperience.The fundamental difference of being an architected firm is that there is some underlyingdiscipline. Ill caution you that what tends to happen is great architects really embrace thediscipline. They love the discipline. They understand the discipline, and there is a reluctance toaccept that that’s not the only thing we need in our organization. There are times when ad hocbehaviors enable us to be much more innovative and much more responsive and they are exactlywhat we need to be doing.So there is a cultural shift that is critical to understanding what it is to be architected. That’s thedifference between a successful firm that’s successful because it hasn’t gotten into a world ofreally tough competition or restrictions on spending and things like that and an organization thatis trying to compete in a global economy.Gardner: It’s interesting to me that were focusing not so much on the individual, the enterprisearchitect, but more the office of the enterprise architect.Ross: Right. Would you like me to speak to an architect instead? Would that help?Cultural phenomenonGardner: No, the point is that the champion that youre saying is important is not just anindividual. It’s that putting into place a repeatable office of the enterprise architect that is acultural phenomenon rather than a charismatic one.Ross: Yes.Gardner: What then is the role of the architect, if this isn’t just about a champion, but reallyabout change that’s repeatable and that’s culturally inculcated? What, then, is the role and whatshould they do?Ross: The architect plays a really critical role in representing the need for this discipline, forsome standards in the organization, and for understanding the importance of shared definitionsfor data. The architect should be able to create a very constructive tension in the organization,
  4. 4. and that’s the tension between individuality, innovativeness, local responsiveness, and the needfor enterprise thinking, standardization, and discipline.Normally, in most companies, the architect’s role will be the enforcer of discipline,standardization and enterprise thinking. The tension will be created by all kinds of people whoare saying, "Wait, Im different. I need this. My customer insists on that." When the tension isworking effectively, you get just enough architecture.One thing weve learned over the years, as weve studied architecture, is that’s actually what wewant. We don’t want to be a tightly architected organization, because tomorrow were going towake up and the world is going to change, and we have to be ready for that. We want to bearchitected enough to be efficient, to be able to reuse those things we need to reuse, to be agile,but we don’t want to start embracing architecture for architecture’s sake or discipline fordiscipline’s sake.We really just need architecture to pull out unnecessary cost and to enable desirable reusability.And the architect is typically going to be the person representing that enterprise view and helpingeveryone understand the benefits of understanding that enterprise view, so that everybody whocan easily or more easily see the local view is constantly working with architects to balance thosetwo requirements. Register for The Open Group Conference Jan. 30 - Feb. 3 in San Francisco.Gardner: Let’s take a contextual view here. It’s 2012 already and theres a lot happening in ITwith disruption in the form of cloud computing trends, an emphasis on mobile computing, bigdata, and the ability to harness analytics in new and interesting ways, all sort of churningtogether. Were also still faced with a difficult environment, when it comes to the economy. Is thisa particularly good time, from your vantage point, to undertake enterprise architecture, or is thisperhaps not the best time?Ross: It’s a great time for most companies. There will be exceptions that Ill talk about in aminute. One thing we learned early on in the research is that companies who were best atadopting architecture and implementing it effectively had cost pressures. What happens whenyou have cost pressures is that youre forced to make tough decisions.If you have all the money in the world, youre not forced to make tough decisions. Architecture isall about making tough decisions, understanding your tradeoffs, and recognizing that youregoing to get some things that you want and you are going to sacrifice others.If you dont see that, if you just say, "Were going to solve that by spending more money," itbecomes nearly impossible to become architected. This is why investment banks are invariablyvery badly architected, and most people in investment banks are very aware of that. It’s just veryhard to do anything other than say, "If that’s important to us, let’s spend more money and let’s
  5. 5. get it." One thing you cant get by spending more money is discipline, and architecture is verytightly related to discipline.Tough decisionsIn a tough economy, when competition is increasingly global and marketplaces are shifting, thisability to make tough decisions is going to be essential. Opportunities to save costs are going tobe really valued, and architecture invariably helps companies save money. The ability to reuse,and thus rapidly seize the next related business opportunity, is also going to be highly valued.The thing you have to be careful of is that if you see your markets disappearing, if your productis outdated, or your whole industry is being redefined, as we have seen in things like media, youhave to be ready to innovate. Architecture can restrict your innovative gene, by saying, "Wait,wait, wait. We want to slow down. We want to do things on our platform." That can be verydangerous, if you are really facing disruptive technology or market changes.So you always have to have that eye out there that says, "When is what we built that’s stableactually constraining us too much? When is it preventing important innovation?" For a lot ofarchitects, that’s going to be tough, because you start to love the architecture, the standards, andthe discipline. You love what youve created, but if it isn’t right for the market youre facing, youhave to be ready to let it go and go seize the next opportunity.Gardner: Perhaps this environment is the best of all worlds, because we have that discipline onthe costs which forces hard decisions, as you say. We also have a lot of these innovative IT trendsthat would almost force you to look at doing things differently. Im thinking again of cloud,mobile, the big data issues, and even social-media types of effects. So is that the case from yourperspective?Ross: Absolutely. We should all look at it that way and say, "What a wonderful world we livein." One of the companies that I find quite remarkable in their ability to, on the one hand,embrace discipline and architecture, and on the other hand, constantly innovate, is USAA. Imsure Ill talk about them a little bit at the conference.This is a company that just totally understands the importance of discipline around customerservice. Theyre off the charts in their customer satisfaction.Theyre a financial services institution. Most financial services institutions just drool overUSAA’s customer satisfaction ratings, but theyve done this by combining this idea of disciplinearound the customer. We have a single customer file. We have an enterprise view of thatcustomer. We constantly standardize those practices and processes that will ensure that weunderstand the customer and we deliver the products and services they need. They haveenormous discipline around these things.Simultaneously, they have people working constantly around innovation. They were the firstcompany to see the need for this deposit with your iPhone. Take a picture of your check and it’s
  6. 6. automatically deposited into your account. They were nearly a year ahead of the next companythat came up with that service.The way they see it is that for any new technology that comes out, our customer will want to useit. Weve got to be there the day after the technology comes out. They obviously havent beenable to achieve that, but that’s their goal. If they can make deals with R&D companies that arecoming up with new technologies, theyre going to make them, so that they can be ready withtheir product when the thing actually becomes commercial.So its certainly possible for a company to be both innovative and responsive to what’s going onin the technology world and disciplined and cost effective around customer service, order-to-cash, and those other underlying critical requirements in your organization. But its not easy, andthats why USAA is quite remarkable. Theyve pulled it off and they are a lesson for many othercompanies.Gardner: And as you pointed out, being able to repeat this is really essential. So that gets backto that discipline. But youve mentioned that youve got ongoing research, and youve mentioneda company, USAA that youre working with and youre familiar with. I suppose this gives us achance then to step back and take a look at what the MIT Center for Information SystemsResearch is and does and your role there.Value from ITRoss: The Center for Information Systems Research is part of the Sloan School of Management.We were formed in 1974 to study how companies get value from information technology.In 1974, we were studying mainframes and IT directors. There was no such thing as a CIO yet,but we have certainly gone through the stages of the increasing importance of IT inorganizations. We went through the end-user computing. We went through enterprise resourceplanning (ERP) and e-business. Weve followed, and hopefully led, thinking around how IT addsvalue in organizations.You mentioned this is a good time to be introducing architecture. This is a good time to be at theCenter for Information Systems Research, because IT is so central now to business success, andmany companies that didnt start as digital companies are really struggling to understand what itmeans to transform for the digital economy, and thats exactly what we study.Gardner: Youve mentioned one company, USAA. Let’s take a look at a number of companies. Iknow youre going to be mentioning several during your presentation. Are there any salientlessons that are common among them? Are they all different and therefore you cant draw suchcommon denominators, or are there a couple that jump out?Ross: Well, our established research on this, and this is the work that appeared in the EnterpriseArchitecture as Strategy book. We find that the things we learned as we prepared that book are
  7. 7. still very true. Companies indeed go through stages, and theyre very predictable -- weve not yetseen an exception to this -- and theyre hard.Stage one is the stage of, dont worry about the discipline, just have fun, learn how to use IT,apply it to any strategic need where it makes sense, and go out there and do your thing, buteventually all of that will lead to a fairly messy legacy environment.We saw, when we studied these stages, that as companies understood these stages, they wouldavoid stage one, but it turns out that, if you are a fast growing innovative company, you cantavoid that stage. You actually dont know how youre going to make money. You have to respondto the marketplace. You have to do whatever it takes. Then, as you get really good at things, youstart to establish yourself in what is often now a new industry.Youve created an industry. Thats how you succeeded. But because youre making money, youregoing to attract competitors. When you get to the stage that you actually have competitors, thenyou look at what you created and you say, "Oh no, we really have to clean up some of thislegacy." That’s really what stage two is about. Its the underlying technology.Now, were learning how to not make quite as big a mess, but there is still this stage of, "Okay,lets refrain from kind of the crazy innovation and be more disciplined about what we put in andhow we reuse" and all that kind of thing.In the third stage, we get much more emphasis on building platforms that wire in those coreprocesses that enable us to do high-volume transactions. These are things around order-to-cash,human resources (HR), or finance. There will be some of that in the earlier stages, but we reallyworry about scale in this third stage, scaling up so that we can manage large volume transactions.We think this third stage is going to look different in a world of software as a service (SaaS) andcloud, because in the past, third stage often meant you put in Oracle, SAP, or something like that.Nowadays, its much more about piecing together some cloud services. It does look different. Itgoes in faster, but its still pretty tricky. If youre not architected well, you can really create amess in stage three.Working smarterStage four is really about working smarter on this platform, learning how to innovate off theplatform. And companies are struggling to get there, because once you get in this platform, ittakes a while to really make it solid and learn how to use it well. Weve been studying that forsome time, and companies get there.This is the story of Campbell Soups and the Southwest Airlines. Theyre trying to use theplatforms theyve created, even though the process of putting them in takes a very long time. Soyoure still putting them in, while you are trying to learn to get good at using them. Its achallenging world out there.
  8. 8. Gardner: So I shouldn’t reach the conclusion that the enterprise architecture kicks in, in stagethree and four. It should be something that would be there and useful throughout these stages.Ross: Thats correct. What happens is that in stage one you dont think a lot about architecture. Ifyou don’t think at all, you are going to regret it. But you just cant predict what are going to bethe critical capabilities in your organization. When you cant predict the critical capabilities inyour organization, it limits how much you can architect.You can bet on some things. There are some things around finance and HR that are prettypredictable even in stage one. But that early stage is where youre really defining yourself as acompany, and that can last for some years, as you grow. As long as youre under $500 million insales or at least, lets say, $200 million in sales, youve got some leverage there, because you canonly create so big of a mess.If you start growing beyond that, youre going to need more architecture. That’s when you reallyget into stage two and start seriously defining your standards and the processes that enable you toget them in and recognize when you need exceptions and when theyre out of date and that kindof thing.Gardner: So even as we have had this evolution in these stages that happen within theseenterprises, we have also had historical evolution in the definition, standardization, andcertification around the architects themselves. Where are we there? Is there a stage three or fourthat we are at with the architects?Ross: I think well be constantly tweaking the certification processes for architects. We getsmarter about what they need to know and what they need to be good at, but I don’t know that Iwould so much call it stages for the architect certification as just getting smarter and smarterabout what great architects will excel at. We have the basics in place. I havent been involved alot in certification programs, but I think there is a good sense of the basics that are required.Gardner: We certainly seem to be well into a professionalization phase and weve got a numberof different groups within The Open Group that are working on that across different disciplines.So Im curious. Is The Open Group a good forum for your message and your research, and if so,why?Ross: The Open Group is great for me, because there is so much serious thinking in The OpenGroup about what architecture is, how it adds value, and how we do it well. For me to touch basewith people in The Open Group is really valuable, and for me to touch base to share my researchand hear the push back, the debate, or the value add is perfect, because these are people who areliving it every day.Major themesGardner: Are there any other major themes that youll be discussing at the conference comingup that you might want to share with us? Did we cover them all? What did we leave out?
  9. 9. Ross: Well, were still doing the analysis on our latest survey. So Im not exactly sure what thekey findings will be that Ill be sharing. One thing we have observed in our cases that is more andmore important to architects is that the companies are struggling more than we realized withusing their platforms well.Im not sure that architects or people in IT always see this. You build something that’sphenomenally good and appropriate for the business and then you just assume, that if you givethem a little training, theyll use it well.That’s actually been a remarkable struggle for organizations. One of our research projects rightnow is called "Working Smarter on Your Digitized Platform." When we go out, we find therearent very many companies that have come anywhere close to leveraging their platforms the waythey might have imagined and certainly the way an architect would have imagined.Its harder than we thought. It requires persistent coaching. Its not about training, but persistentcoaching. It requires enormous clarity of what the organization is trying to do, and organizationschange fast. Clarity is a lot harder to achieve than we think it ought to be.The message for architects would be: here you are trying to get really good at being a greatarchitect. To add value to your organization, you actually have to understand one more thing:how effectively are people in your company adopting the capabilities and leveraging themeffectively? At some point, the value add of the architecture is diminished by the fact that peopledont get it. They don’t understand what they should be able to do.Were going to see architects spending a little more time understanding what their leadership iscapable of and what capabilities theyll be able to leverage in the organization, as opposed towhich on a rational basis seem like a really good idea.Weve been studying companies, and the easiest ones to study are ones like 7-Eleven Japan andProtection One, which is a security company. These are companies that have replicated models.You look at one branch or one store and you say, "How are you doing this?" Then you say,"Okay, here is the best one. How are we going to make sure that everybody uses our technologyand the information thats coming from it? How are we going to do that throughout thecompany?"That’s even harder than designing and implementing an architecture. Architects are going to haveto be well aware of that, because if companies are not driving value from what they have built,you may as well stop spending the money. That’s a tough thing for an architect to admit, becausethere’s so much you can do just on a rational basis to make the company look better. But if theyare not using it, its not worth anything.Gardner: That might explain some of the attention that’s been given to things like cloud andmobile, because there is a sense of an organic adoption going on, and if the workers, themanagers, the departments, specific functional groups like marketing, for example, are going toSaaS, cloud, mobile for "bring your own device," or consumerization of IT benefits, perhaps
  10. 10. theres an opportunity to take advantage of that, learn from it, and then standardize it andimplement as a platform. Is that somewhere close to what you are seeing?Ross: Yes, absolutely.Getting startedGardner: Before we segue out, lets consider advice about getting started. When youre anorganization and youve decided that you do want to be a level three or four maturity, that youwant to transform and take advantage of unique opportunities for either technical disruption ormarket discipline, how do you go about getting more structure, more of an architecture?Ross: Thats idiosyncratic to some extent, because in your dream world, what happens is that theCEO announces, "This is what we are going to be five years from now. This is how we are goingto operate and I expect everyone to get on board." The vision is clear and the commitment isclear. Then the architects can just say, and most architects are totally capable of this, "Oh, wellthen, here are the capabilities we need to build. Let’s just go build them and then well livehappily ever after."The problem is that’s rarely the way you get to start. Invariably, the CEO is looking at the needfor some acquisitions, some new markets, and all kinds of pressures. The last thing youre gettingis some clarity around the vision of an operating model that would define your criticalarchitectural capabilities.What ends up happening instead is architects recognize key business leaders who understand theneed for, reused standardization, process discipline, whatever it is, and theyre very pragmaticabout it. They say, "What do you need here to develop an enterprise view of the customer, orwhat’s limiting your ability to move into the next market?"And they have to pragmatically develop what the organization can use, as opposed to definingthe organizational vision and then the big picture view of the enterprise architecture.So in practice, its a much more pragmatic process than what we would imagine when we, forexample, write books on how to do enterprise architecture. The best architects are listening veryhard to who is asking for what kind of capability. When they see real demand and real leadershiparound certain enterprise capabilities, they focus their attention on addressing those, in thecontext of what they realize will be a bigger picture over time.They can already see the unfolding bigger picture, but there’s no management commitment yet.So they stick to the capabilities that they are confident the organization will use. That’s the waythey get the momentum to build. That is more art than science and it really distinguishes the mostsuccessful architects.Gardner: Well be looking forward to learning more through your research and through theexamples that you provide.
  11. 11. Weve been talking with Jeanne Ross, the Director and Principal Research Scientist at the MITCenter for Information Systems Research. Jeanne and I have been exploring how enterprisearchitects have helped lead the way to successful business transformations as a lead-in to herupcoming Open Group presentation.This special BriefingsDirect discussion comes to you in conjunction with The Open Group’sConference, which is January 30 to February 3 in San Francisco. Youll hear more from Jeanneand many other global leaders on the ways that IT and enterprise architecture support enterprisetransformation.So thank you, Jeanne, for joining us in this fascinating discussion. I really had a good time.Ross: Thanks so much, Dana, I enjoyed it.Gardner: And I look forward to your presentation in San Francisco and I encourage our listenersand readers to attend the conference, if theyre able. There’s more information available on ourwebsite and through this content.This is Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderatorthroughout this Thought Leader Interview Series. Thanks again for listening, and come back nexttime.Listen to the podcast. Find it on iTunes/iPod. Sponsor: The Open GroupTranscript of a BriefingsDirect podcast in conjunction with The Open Group Conference in SanFrancisco on how enterprise architecture can lead to greater efficiency and agility. CopyrightInterarbor Solutions, LLC, 2005-2012. All rights reserved. Register for The Open Group Conference Jan. 30 - Feb. 3 in San Francisco.You may also be interested in: • Overlapping Criminal and State Threats Pose Growing Cyber Security Threat to Global Internet Commerce, Says Open Group Conference Speaker • Exploring Business-IT Alignment: A 20-Year Struggle Culminating in the Role and Impact of Business Architecture • Enterprise Architects Increasingly Leverage Advanced TOGAF 9 for Innovation, Market Response, and Governance Benefits • Open Group Cloud Panel Forecasts Cloud s Spurring Useful Transition Phase for Enterprise Architecture
  12. 12. • The Open Groups Cloud Work Group Advances Understanding of Cloud-Use Benefits for Enterprises• Exploring the Role and Impact of the Open Trusted Technology Forum to Ensure Secure IT Products in Global Supply Chains