Performance Driven Architecture V2 August 2010


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Performance Driven Architecture V2 August 2010

  1. 1. Booz & Company This document is confidential and is intended solely for the use and information of the client to whom it is addressed. Performance-Driven Architecture A strategy-led approach to focus and align an organisation’s architecture capabilities to create business value Canberra, August 2010 Perspective
  2. 2. 1 Performance Driven Architecture - v2 August 2010.ppt Overview Strategy by Design Booz & Company Approach Our Experience
  3. 3. Booz & Company 2 Performance Driven Architecture - v2 August 2010.ppt This document outlines a strategy-led approach to focus and align an organisation’s architecture capabilities to create business value Document Overview For years, many companies have experienced a problematic tension between their IT departments and business units - one approach to close the distance is the discipline called ‘architecture’ which can be described as the logical framework and design that establishes the links between strategy and organisational structures, business processes, information and underlying technologies Background Strategy by Design Our Global Study Linking Maturity & Value Performance- driven Architecture Whilst organisations have been heavily investing in architecture over several years and many consider it core to their strategic advantage, senior business & IT executives still question the value it actually delivers. Many also question the role of an architecture capability within an organisation in terms of its accountability across the enterprise, domain and solution levels To this end, Booz & Co. recently completed a global study by surveying executives across a mix of financial services and government organisations to determine how much value architecture can contribute to the business and to understand the key challenges and best practices adopted by mature organisations The results of the study are revealing - the amount of value realised through architecture was clearly linked to the organisation’s architecture maturity level, however, many organisations struggle to manage their performance. This was particularly evident in terms of measuring and communicating to the business, the effectiveness of their architecting capabilities and the impact of their design decisions To address these challenges, Booz & Co. have developed a comprehensive framework aimed at enabling a strategy-led approach to focus and align an organisation’s architecture capabilities and demonstrably create business value including revenue generation, customer intimacy, reduced costs, increased agility, reduced risks and lower complexity Note: These are the highlights of a recent Booz & Company viewpoint, released in June 2009; For more information, see
  4. 4. 3 Performance Driven Architecture - v2 August 2010.ppt Overview Strategy by Design Booz & Company Approach Our Experience
  5. 5. Booz & Company 4 Performance Driven Architecture - v2 August 2010.ppt 4 Organisations have been investing in architecture to address key challenges in the current economic environment Optimisation of operations & infrastructure 1 Customer intimacy & speed to market 2 Changes to business models 3 Increased focus on risk & compliance 4 Core systems replacement 5 Challenges & Themes (1) Description Cost pressures and across-the-board budget cuts forcing organisations to do ‘more-with-less’ including leverage and re-use of existing assets Optimisation of operations and infrastructure including standardisation, consolidation and integrated portfolio planning between business & IT Achievement of integrated customer services & products across multiple delivery channels with a strong focus on meeting customer’s preferences Increased agility / speed to market with customer service and new products Changes to industry structures and consolidation of market following mergers and acquisitions Evolution and readjustment to develop new business models and emergence of new value chains Increased focus on corporate governance and enterprise risk management New regulatory and legislative requirements will increase role of compliance and interactions with key regulatory bodies Many organisation’s driving major transformation programs to upgrade or replace their core business platforms New platforms will drive changes in business processes, systems and structures including the broader IT operating model required to support them (1) Sourced from Senior Business Executives & CIO interviews with over 60 Financial Services & Government organisations in Australia, US, Middle East. UK & GSA
  6. 6. Booz & Company 5 Performance Driven Architecture - v2 August 2010.ppt However, architecture remains a fuzzy concept in modern corporate strategic planning - no common industry definition exists The process of translating business vision and strategy into effective enterprise change by creating, communicating and improving the key principles and models that describe the enterprise’s future state and enable its evolution Source: MIT Sloan Information Systems Research Centre, Wikipedia, The Open Group, Gartner, ANSI/IEEE A complete collection of artifacts to describe the logical organization of business strategies, metrics, business capabilities, business processes, information resources, business systems, and networking infrastructure within the enterprise. The structure of a business, or the documents and diagrams that describe that structure; the business methods that seek to understand and document that structure; a business team that uses EA methods to produce architectural descriptions of the structure of an enterprise The organising logic for business processes and IT infrastructure reflecting the integration and standardization requirements of the firm’s operating model Definitions of Architecture Architecture is the fundamental organisation of a system embodied in its components, their relationships to each other and to the environment, and the principles guiding its design and evolution
  7. 7. Booz & Company 6 Performance Driven Architecture - v2 August 2010.ppt We see architecture as a key strategy to bridge the business-IT divide and address the key challenges facing organisation’s today Source: Booz & Company Results (for business and customer) Business Vision and Strategies (*) Note: Example business processes. Not exhaustive. (Enterprise) Business Processes * Strategy planning Sales and marketing Customer services Product processing Account management Payment processing Financial management Portfolio management Regulatory reporting Structure Roles and responsibilities Skills / competencies Performance management Organisation Information Technology Data architecture and management Business information Customer data Application services Product platforms Integration layers Infrastructure Extended Enterprise Associations Third party service providers External systems Alignment Standards Integration Key Components of Architecture Services Requirements Our Architecture Definition Provides an end-to-end holistic view of the capabilities within an organisation at the enterprise, domain and solution levels and supports the decision-making process needed to continuously improve and transform the business Serves as a guiding reference and a communication bridge connecting business operations with IT The blueprint and the road map for the development and management of two views: the existing enterprise, and the enterprise of the future as it is envisioned to achieve its business goals
  8. 8. Booz & Company 7 Performance Driven Architecture - v2 August 2010.ppt Organisations typically focus their architecture efforts across 3 distinct levels: Enterprise, Domain and Solution Source: Booz & Company IC Architecture operates across breadth of organisation (i.e. multiple lines of business) and is aligned to the corporate strategy and outcomes Capability Scope Description Architecture relevant to specific business unit(s) or operating models within an organisation Also referred to as segment architecture and is aligned to business strategy & outcomes Architecture supports detailed design and technology implementation relevant to support specific projects or capability outcomes Enterprise Domain Solution Continuum Level Architecture Capability Continuum Low High Level of Detail
  9. 9. Booz & Company 8 Performance Driven Architecture - v2 August 2010.ppt Our recent global study re-enforces the benefits of architecture through the compelling link of architecture maturity and value Architecture Maturity & Value Over 60% surveyed mature organisation’s realise all 4 sources of value through architecture Organisations that report little or no value through their architecture capabilities are all within the ‘Emerging’ maturity level Agility is the most challenging source of value through architecture and is ultimately the product of realised reduced complexity & innovation to enhance the speed to market for new products & services Link between Architecture Maturity & Value Results of Booz & Company Global Study
  10. 10. Booz & Company 9 Performance Driven Architecture - v2 August 2010.ppt The drive business value, organisations should focus on three key value drivers across both architecting and architecture disciplines To drive business value, organisations should focus on maturing three key value drivers1: 1). Strategic Alignment, 2). Competency & 3). Performance Value Drivers Architecture Architecture refers to the actual products, artifacts & decisions created by the architecting capability within the organisation Architecting Architecting refers to the effectiveness and role of the architecture function within an organisation operating at the enterprise, domain and solution levels Maturity Elements Strategic Alignment Process Competency Performance Organisation
  11. 11. Booz & Company 10 Performance Driven Architecture - v2 August 2010.ppt Our research highlights many organisations face challenges in maximising the performance of their architecture capabilities Operationalised architecture function Organisation’s have significant investment in architecture (people, process and tools) but outputs are often limited to the definition of theoretical end states and are contained within an “Ivory Tower” Fully operationalise the architecture function by maintaining role in strategic planning whilst also informing day-to-day operations and technology investment decisions within the business and projects Measured outcomes Emphasis on the architecture function being a necessary evil and input to either co-design, governance and/or compliance processes Formalise accountability through the definition of metrics and targets. Measure value attributed through architecture and communicate the realisation of the target state over time Integration across domains Conflicting strategies and tension between the enterprise and business driven “solutions”. Architectural integrity often loses and increased complexity is the outcome Integrate function across domains - enterprise, domain and solution architecture functions integrated at a design, governance and organisational level. Architecture function taking the lead in pragramatic trade-offs between specific business demands and enterprise alignment Challenge Optimal End State
  12. 12. 11 Performance Driven Architecture - v2 August 2010.ppt Overview Strategy by Design Booz & Company Approach Our Experience
  13. 13. Booz & Company 12 Performance Driven Architecture - v2 August 2010.ppt To address these challenges, the Booz & Co. Performance Driven Architecture Framework can be used to manage performance… Business Value Booz & Company Performance Driven Architecture Framework … and developing integrated core capabilities spanning people, process, governance & technology Unlock and deliver business value… … by applying an operational lifecycle … Discipline Capability Continuum Level LifecycleBusiness Value
  14. 14. Booz & Company 13 Performance Driven Architecture - v2 August 2010.ppt … by providing the capabilities necessary to align architectural efforts within an organisation and unlock business value Overview Delivers a robust and transparent framework to effectively manage the performance of architecture at all levels: Enterprise, Domain and Solution Aligns to the typical operational lifecycle of capability development within an organisation and provides an integrated view of core capabilities required to manage performance spanning people, process, governance & technology Formalises the accountability of the architecture capability and provides the basis reduce risk and increase business value associated with architectural decisions and strategy Booz & Co. Performance Driven Architecture Framework Business Value
  15. 15. Booz & Company 14 Performance Driven Architecture - v2 August 2010.ppt The framework outlines a capability toolkit and sample outputs to assist architecture practitioners across the performance lifecycle Performance Driven Architecture Capability Toolkit ObjectivesOurApproach Example Outputs BenefitsDelivered Post project reviews Annual architecture maturity assessment Scenario-based reviews and before-and-after impact assessments of key design decisions Monthly or Quarterly Architecture Heartbeat Report (underpinned by a balanced scorecard performance management framework) Data collection processes & tools Proxy data based on industry-specific benchmarks and best practices Balanced Scorecard Framework Business Benefits Realisation Plan Architecture Performance & Value Metrics / KPIs Corporate & Business Strategy Value Chain Strategy Map Implement a capability that will drive continuous improvement of architecture by providing the mechanisms to manage change and track the results delivered Implement a performance management framework that provides clear visibility & transparency of the performance / value delivered through architecture Ensure mechanisms are used to capture / collect metric data in an effective efficient manner providing the information necessary to facilitate performance management Determine how the realisation of business objectives and value within the organisation will be measured in both qualitative and quantitative terms Identify strategic business objectives across the organisation including those within individual business units Embed the concept of continuous improvement across the architecture continuum by develop revised measures and stretch targets each year Establish a governance model to communicate performance across the continuum using agreed communication methods tailored to stakeholders needs Develop a data collection approach within projects, operations & forums to measure performance across the lifecycle and architecture continuum Highlight data quality & availability constraints Define and align measures across the enterprise, domain and solution levels Utilise lead and lag measures that address architecting and architecture disciplines Map alignment between the business units and the corporate strategy Identify key value drivers Highlight any trade-offs and prioritise business objectives Enables remedial actions and key decisions to be taken on a timely basis Measures value delivered from changes made Enables understanding of architecture impact on business outcomes Fosters accountability and senior leadership to achieve outcomes Reinforces cultural changes required to manage / improve performance across the architecture function Measures effectiveness of decisions made Enables early identification of root causes and potential flow- on effects which may impact performance and objectives Highlights constraints and availability of data to manage performance Alignment across architecture levels linked to business objectives Accountability and transparency of performance - agnostic of organisation structures and business unit constructs Ensures a “top-down” and enterprise approach to performance Fosters alignment across the C-suite on the priorities of the business as opposed to managing performance within individual business units or functional silos 1. Align Business Objectives 3. Capture Data2. Define Measures 4. Communication & Reporting 5. Continuous Improvement Business Value
  16. 16. Booz & Company 15 Performance Driven Architecture - v2 August 2010.ppt Our approach draws on insight and expertise from other industries that specialise in non-IT architecture and design disciplines Cross-industry Best Practices in Architecture & Design Performance Management Lend Lease has developed a performance reporting framework to communicate its performance to shareholders and internal stakeholders. Leading construction firms also follow a industry-defined ‘Construction Design and Productivity Framework’ which outlines performance targets and benchmarks for architecture and design including re- work %, energy efficiency ratings, quality and safety Construction GE implemented a centralised ‘digital cockpit’ to feed its balanced scorecard to enable the aggregation and capture of performance data. This approach includes the digitisation of performance data from projects, operational and decision-support repositories to capture business value (i.e. NPV, savings, operational efficiencies) Manufacturing As part of its product leadership strategy, Intel defines specific design and innovation performance measures including product development time: from idea to market. These are cascaded through a balanced scorecard across the business with a core focus on information capital (design and manufacturing), internal processes and financials Semiconductors Lockheed Martin aligns its 10 functional business units to the corporate strategy through a Strategy Map and EIS. This approach ensures that business objectives are commonly understood and aligned horizontally (across similar design capabilities) and vertically across the organisation’s functions to ensure that ‘strategy is everyone’s business’ Aerospace Toyota follows 14 foundational management principles which underpin its “Lean Production”. A key principle for its design function includes ‘becoming a learning organisation through relentless reflection (Hansei) and continuous improvement (Kaizen)’. This includes identifying root causes in design systems and processes, scenario-based solution development, before-and-after comparisons of designs and the development of stretch improvement metrics to continually improve performance Automotive Performance Capability DescriptionIndustry Examples Align Business Objectives Align Business Objectives Define MeasuresDefine Measures Capture DataCapture Data Communication & Reporting Communication & Reporting Continuous Improvement Continuous Improvement
  17. 17. Booz & Company 16 Performance Driven Architecture - v2 August 2010.ppt We recommend a multi-phased approach to drive a typical ‘Performance-driven’ Architecture Project for an organisation Performance Driven Architecture Into Action: A Typical Project Approach Led by core team Embed changes as part of ongoing architecture operating model Led by core team and executed by sub-teams - leveraging tools and processes Led by senior architecture management team Led by senior architecture management with input from CIO / CTO Led by senior architecture management with input from sub- teams Led by CIO / CTOProcess Identify capability improvement opportunities Manage capabilities improvement by defining changes required to execute improvement recommendations Capture the benefits of changes made Understand current key alignment issues and define business objectives Understand and define key drivers of architecture value across the continuum Define core team to manage / execute Performance Driven Architecture process Implement communication & reporting capabilities to communicate performance of architecture Establish governance model to communicate performance of the architecture function Note key constraints Define agreed and understood metrics for measuring architecture performance with key stakeholders Develop the mechanisms to efficiently and accurately capture / collect data Establish sub teams to assist with performance management Establish appropriate change management capability that will manage execution of the identified improvements across the architecture continuum Capture baseline data from defined data sources Assess baseline results to identify key problem areas Extrapolating insights for each of the levels of architecture capability Assess overall architecture function maturity and drivers of value Outcomes Executive Teams Architecture Teams Together Rapid Capability Design and Setup: 4-6 weeks (Strategy Development) Baseline Data Gathering & Results Assessment Define Continuous Improvement Tools & Processes Define Communication & Reporting Framework Define Measures & Data Collection Approach Business Strategy Alignment Ongoing Capabilities Development Continuous Improvement: Ongoing (Strategy Execution) A B C D
  18. 18. 17 Performance Driven Architecture - v2 August 2010.ppt Overview Strategy by Design Booz & Company Approach Our Experience
  19. 19. Booz & Company 18 Performance Driven Architecture - v2 August 2010.ppt North America – Atlanta – Chicago – Cleveland – Dallas – Detroit – Florham Park – Houston – Los Angeles – McLean – Mexico City – New York City – Parsippany – San Francisco Booz & Company is a leading global management consulting firm, helping the world's top businesses and other institutions – Moscow – Munich – Oslo – Paris – Rome – Stockholm – Stuttgart – Vienna – Warsaw – Zurich South America – Buenos Aires – Rio de Janeiro – Santiago – São Paulo Australia, New Zealand, and Southeast Asia – Adelaide – Auckland – Bangkok – Brisbane – Canberra – Jakarta – Kuala Lumpur – Melbourne – Sydney Asia – Beijing – Hong Kong – Seoul – Shanghai – Taipei – Tokyo Europe – Amsterdam – Berlin – Copenhagen – Dublin – Düsseldorf – Frankfurt – Helsinki – London – Madrid – Milan Middle East – Abu Dhabi – Beirut – Cairo – Dubai – Riyadh 90 years of consulting experience (founded 1914) Solely owned by its 200 officers 3,300 firmwide staff US$ 1.3 billion annual sales 57 offices around the world 15 offices in growth region Asia Pacific, 4 in China Over 10,000 clients in 75 countries - 400 of the Fortune 500 companies Success based on client results - 85% of our assignments come from existing clients