Business and Strategic Alignment in EA – Practical Guidelines Based on Industry Best Practices

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Business and Strategic Alignment in EA – Practical Guidelines Based on Industry Best Practices - Dave Guevara

As IASA members we are constantly reminded that architects are responsible for connecting business to IT. Business alignment is indicated in architecture frameworks like TOGAF or Zachman as an important step. However, the challenge comes in getting this done where EA is not top-down driven, short term deadlines always win over strategic efforts and standards like ITIL, COBIT and BPMN help but don’t really answer how There is a great deal of writing about EA, SOA, their benefits and how they need to be driven by business needs. The architect is still left with diverse guidance that provides little practical help on how exactly to conduct line-of-sight alignment between business strategy and system implementation. In this discussion, we will look at this issue from four perspectives:
1. Practical means of determining business value and impact, then creating alignment to your future state architectures.
2. Top-down view using an EA framework.
3. Bottoms up view in a future state architecture
4. Business functional model related to an application functional model
5. Practical suggestions that work now and can scale over time

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Business and Strategic Alignment in EA – Practical Guidelines Based on Industry Best Practices

  1. 1. The Business of Architecture Please have pen/pencil and paper ready BEFORE we start. Dave Guevara 303.694.9394 daveg@bt-review.com 1
  2. 2. What in IASA are we Talking About? Source: IASA Architect Training Program 2 Dave Guevara – June 5, 2008
  3. 3. Agenda Business Architecture Business Value & Business Impact Business Impact – Do an Example Business Alignment Guidelines & Examples What Can You Apply Tomorrow? Networking & Open Discussion 3 Dave Guevara – June 5, 2008
  4. 4. Business of Architecture Conclusions Begin with the end in mind, meaning know what success looks like Simply to the core, common capabilities and architectural components Know how your architectures and solutions will deliver Business Impact to create value Be clear on which architectural level & context you are working Communicate, Sell, Listen, Communicate 4 Dave Guevara – June 5, 2008
  5. 5. Business Architecture What is it? How do we architects define it? What does it do for us? 5
  6. 6. Business Architecture is Just as Confusing as SOA Lot’s being written Same words/phrases being used to mean different things Lack of clarity about where to start or end Technical/software architectures often assume business requirements and business architecture have been defined. Business stakeholders don’t know this type of abstraction in their tasks, workflow, and entities (orders, invoices, POs, etc.) 6 Dave Guevara – June 5, 2008
  7. 7. FEA Approach to Business Alignment Source: “FEA Practice Guidance, Value to Mission” Federal Enterprise Architecture Program Management Office, OMB 7 Dave Guevara – June 5, 2008
  8. 8. FEA Definition of Segments Segments are the vertical bars, Business & Core Mission Areas Segments are also the common Enterprise Services 8 Dave Guevara – June 5, 2008
  9. 9. TOGAF Architecture Development Method (ADM) TOGAF Guidelines Phase A: Architecture Vision Set the scope, constraints, and expectations for a TOGAF project; create Vision; define stakeholders; validate the business context and create the Statement of Architecture Work; obtain approvals Phases B, C, D: Develop architectures at three levels: 1. Business 2. Information Systems 3. Technology In each case develop the Baseline (“as is”) and Target (“to be”) TOGAF™ is a trademark of The Open Group Architecture and analyze gaps 9 Dave Guevara – June 5, 2008
  10. 10. TOGAF Business Scenarios Business Scenario describes: The business processes, applications or sets of applications that can be enabled by the architecture The business and technology environment The people and computing components (called “actors”) who execute the processes in the scenario The desired outcome of proper execution <of processes and applications> Think UML 2.0 10 Dave Guevara – June 5, 2008
  11. 11. Remember? Begin with the end in mind, meaning know what success looks like Simply to the core, common capabilities and architectural components Know which Business Impact(s) your architectures and solutions must affect Be clear on which architectural level & context you are working Communicate, Sell, Listen, Communicate 11 Dave Guevara – June 5, 2008
  12. 12. Economic Resource Economic Agent inside participation Economic Event stock-flow Economic Agent outside participation Give duality Take outside Economic Agent participation Economic Event stock-flow Economic Agent inside participation Economic Resource REA model of cookie sale from entrepreneur’s (ELMO) perspective Resource-Event-Agent (REA) Model developed by William E McCatthy, Michigan State University Example of TOGAF Common Business Model 12 Dave Guevara – June 5, 2008
  13. 13. Top-Down with Bottoms-Up Approach in ITPM and EPM Strategies Initiatives IT Portfolio Management ITPM Business Value Governance (ITPM) Value Risk Management Roadmaps Management Investments Architecture Blueprints Projects Phases/Stages WBS Schedules PMO Work Breakdown Structure Resources Requirements Enterprise Execution Project Management Tasks Budgets Timekeeping Management (EPM) 13 Dave Guevara – June 5, 2008
  14. 14. Top-Down with Bottoms-Up Approach in EA and SOA Strategies Initiatives Business Enterprise Business Value Governance Architecture Architecture Risk Management Roadmaps (EA) Value Management Investments FSA Blueprints Comm Plans Business Models Business Business Business Services Logic Processes Technical, Info Activity / Technical Composition & Software Event Mgt Governance Service Architectures Lifecycle & Budgets Repositories Oriented Environ Mgt Solution Messaging Metadata Security Architecture Management (SOA) Infrastructure Services Architecture 14 Dave Guevara – June 5, 2008
  15. 15. Recall the Great Enterprise Service Bus (ESB) Talk by Kevin Geminiuc & Jason Barrios 15
  16. 16. Converging to the integrated ESB Business Custom Code Message Processes adapters, RPC Queues (e..g EbXML, Stove Pipe (Corba, DCOM) (MQSeries) MOM?) systems Stand-alone apps Business Message EAI Adapters Web Services Processes Queues (WebMethod (SOAP, SOA, (e..g WS-BPEL, (JMS, s), JCA - Restful) BizTalk, Human MSQMQ) connectors workflow) EAI, MOM, SOA ESB ESB (Message routing, Component event- driven arch, Standards (SCA, policy WSDL), management) B2B Adapters Wiring Messaging Composite Protocols Applications App Adapters (http, queues, (JBI - JSR208, (SAP, Document ftp, xmp) SCA-Oasis, workflow, ETL) SDO - Oasis) 16 Dave Guevara – June 5, 2008
  17. 17. Component view Identity BAM ETL Management Core Process Components Orchestrator ESB UDDI Policy (BPEL/ Engine Registery Manager External BizTalk) Partners Routing Engine SOA Tier Rule Engine Data FTP ... Portal Adapter Adapter Applications Deployed Composite App Swift CICS Human (SCA, JBI) Adapter Adapter ... Workflow Reliable Messaging (JMS, MSMQ, ..) 17 Dave Guevara – June 5, 2008
  18. 18. Case Study 1: Healthcare Eligibility Processing Background: How to create business process templates for reuse for healthcare processing with agile and decoupled services processing complex rules based on “life events” 1. External user healthcare paper application entered into system 2. Listener to changes on beneficiary demographic change events 3. Message routed to appropriate BPEL orchestration process (New application or existing person/family) 4. Human task to evaluate data quality (random sampling) 5. Eligibility Rule Engine calculation 6. Invoke web service to generate appropriate document Result: Interface decoupled from data-change events routing by application type swap in “state” level orchestration processes & rules scalable (load tested to 20K applications per hour) 18 Dave Guevara – June 5, 2008
  19. 19. Case Study 1: Eligibility Info Flow User Demographic - Data-Entry Domain Objects Staff Demographic Updates, Aspects- Application Attribute XML Inspector -Doc System Web App Content Composite s Router Application Healthcare Application paperwork <Invoke> <invoke> New Existing State healthcare Application insured applicant data recipient New Application Process <BPEL> New Application Process <BPEL> Process Rule Invoke Process Invoke Human Application Task Engine Call Letter Process Application ... Letter Process DB Task Rule adapter Adapter Adapter Add to Task Queue Item Completed -Pass/Fail QA Task Eligibility Screen Specialist Eligibility Data Eligibility Denial Letter Process Approval Letter Process <Rule Engine> result <BPEL> <BPEL> HealthCare Invoke Invoke Eligibility ... Letter Service ... Letter Service Approval Letter <Web Service> GenerateLetter Denial Letter 19 Dave Guevara – June 5, 2008
  20. 20. SOA Service Layers Business Process Layer orchestration service layer Services Interface Layer business service layer application service layer ERP CRM Applications Layer SCM Custom Source: “Service-Oriented Architecture, Concepts, Technology and Design” 20 Dave Guevara – June 5, 2008
  21. 21. Be Aware of the Level Your Working At & Your Context Strategies Initiatives Enterprise Business Business Value Governance Architecture Architecture Risk Management Roadmaps (EA) Value Investments FSA Blueprints Management Comm Plans Business Models Business Business Business Services Logic Processes Technical Activity Mgt Composition ITApplications Technology, Design and Management Governance Lifecycle & Service Solution Budgets Repositories Oriented Environ Mgt Management SOA, MS Capabilities Modeling Messaging Metadata Security Architecture (SOA) Infrastructure Services Architecture 21 Dave Guevara – June 5, 2008
  22. 22. SOA Example in Future State Architecture (FSA) Framework Architecture Viewpoints Perspectives Business Information Technical Solution Business Context Conceptual SOA Logical Example Implementation 22 Dave Guevara – June 5, 2008
  23. 23. Future State Architecture (FSA, ‘To Be’) Framework Architecture Viewpoints Perspectives Business Information Technical Solution • IT Goals & Objectives • Architecture Principles Business • Business Solution Requirements • Gap Analysis Context • Business Value Model • ROI/Value/Economic Analysis • Conceptual Info • Apps Mapping to • Integrated View • Business Process Business Value & Patterns & Models • Role-Based Skills Model Process Models Conceptual • Biz Info Entities Matrix • Conceptual (workflow docs, structured • Services Model Process Patterns data, taxonomy, content, • Life Cycle Mgt master data…) • Define Domains Architectures • Logical Business • Logical Info Process • Services Arch • Solutions Patterns Process Pattern • Application Arch (flow) Pattern • Interface Patterns Logical • Business Process • Logical data models • Security Arch dependencies on • Infrastructure Arch • Testing, O&M, • Systems of record • Presentation Layer Distribute Patterns applications • Use case • ETL process logic • Implementation • Physical diagrams descriptions e.g. • Data hygiene and Architecture of all domains & UML 2.0 quality logic Patterns Implementation • Source/target maps, layers • SOX process flows • Security • Life Cycle Mgt • Physical data constructs Patterns • BPM/BPEL models models & stores Note: This is not intended as a complete list of all models and artifacts. 23 Dave Guevara – June 5, 2008
  24. 24. Enterprise Architecture Management (EAM) Framework Influences Portfolio Business Supported Stakeholder Management Alignment Influences EA Team By Analysis Ranking of Process Business Alternatives Strategy Business Stakeholder EA Team Alignment Analysis ITPM Tools Charter & Defines Business Plans Performance Strategy Metrics Defines Supports In DefinesSupports Identifies Best Assists in Defining Alternatives & Participates Implemented By EA Future State Communication Governance Oversight Board Measurement Shares Guides Architecture Plan Strategy Charter Program Supports Success Future State Communication Governance ESC Board Metrics Architecture Plan Strategy Charter Deliverables Identifies ARB Charter Strategic Supports Goals & Gaps Defines Viable Constrains Alternatives Defines Defines Costs, Benefits & Risks Future States Aligns Defines Financial Attractiveness ROI Analysis With IT Strategy Defines Phasing Migration Plan LEGEND: Current State Budgetary Compliance Architecture Strategic Migration Financial / Risk Deliverable Roadmap Plan Attractiveness Group Current State NPV / TCO Defines Initial Architecture Assessment Baseline Coversheet Within Group Defines Viable Alternatives © 2008 Dave Guevara IASA Members are authorized to reuse, copy and modify. Such use much include a note “© 2008 Dave Guevara reproduced with permission” 24 Dave Guevara – June 5, 2008
  25. 25. Business Value & Business Impact Value is more than just ROI Impact is evident by how it affects people, money, economics & risk 25
  26. 26. Where is the Struggle? Business Case at Program and Project Level (ROI) Selecting Which Projects to Fund & the Sequence Requirements Discovery (driven by value or capability) Architectural Design Aligned to Business Impact Change Adoption Planning & Implementation Adapting When Things Change Not Using a Repeatable, Effective Process Losing the Voice of the Customer 26 Dave Guevara – June 5, 2008
  27. 27. ROI May Not Be What You Think? ROI analysis methods range from the simple/qualitative analysis to more rigorous/quantitative. Practical ROI or More Value Analysis is rigorous Applied Information Economics about NPV/IRR Val IT Business Impact.Complexity of Total Economic Impact Analysis Methods Business Value Index x pl e Use Cash Flow l e to Co m Benefits Analysis mp Schedules for Va lu e :S i We Want large, complex Simple projects with More Type of Analysis More qualitative quantitative Business Impact. Source: “Measuring the Business Value of IT”, Craig Symons, Forrester © Sept 2006 27 Dave Guevara – June 5, 2008
  28. 28. Only 5 Ways to Impact Business Value Increase Revenues Reduce Costs Improve Efficiencies Governance Compliance – Risk Mitigation Change/Create Core Capabilities Culture & soft values has to produce or contribute to one of these 5 28 Dave Guevara – June 5, 2008
  29. 29. Business Value within IT Assume you have a business driven IT group that delivers great business value What have you done in IT to increase productivity, reduce costs, eliminate redundancy, create needed new capabilities and terminated unnecessary capabilities, sustained those that need to be in O&M, created BI that improves decision making IT Efficiencies Throughout Asset Lifecycles Concept & Analysis Design & Development Testing Deployment Operations & Maintenance Termination (End of Life - EOL) 29 Dave Guevara – June 5, 2008
  30. 30. Intel’s IT Business Value Matrix _ Business Value + + Improved IT Improved Creates Efficiency Business LOB/User With No Resistance Business Value Value AND Penalty IT Efficiency IT Efficiency Improved Business Value Necessary but Failure at No/Limited Low Value IT Efficiency Penalty Requires Failure Failure Incremental IT Budget _ Source: “Managing Information Technology for Business Value” 30 Dave Guevara – June 5, 2008
  31. 31. Business Impact Let’s Do an Example 31
  32. 32. Business Impact Analysis Exercise in Small Groups IT Budget Growth this year is 3% IT Budget $10.0M last year Need $1.3M for new projects (innovation) IT Budget Categories (last year) Overhead (OH), includes EA = $1.5M SW/HW Maintenance = $1.5M O&M (excluding Maint) = $3.3M “Must Do” Infrastructure & Upgrade Projects = $0.7M Test & QA = $0.5M SW Dev = $1.5M New Projects = $1.0M Budgets this year reflect COL & Growth Plans Figure out: Cost reductions, where & how. 32 Dave Guevara – June 5, 2008
  33. 33. Business Alignment What is it? How do we architects define it? What does it do for us? 33
  34. 34. Why Business Alignment? “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.” Robert Murdoch Chairman and CEO News Corporation 34 Dave Guevara – June 5, 2008
  35. 35. So What to Do? Look at how what you DO and CREATE Affects Peoples’ Behaviors Environments Performance Feedback PERSONAL needs As evidenced in the Business Impact 35 Dave Guevara – June 5, 2008
  36. 36. What’s Business Really Care About? You as Whether Anybody Cares Is architects: determined by how you answer WIIFM making Their Job: Manage Easier Architect Faster Specify More Profitable Govern Safer Sustain Understandable Evolve Actionable Retire Adaptive Assets & Resources! Higher Quality 36 Dave Guevara – June 5, 2008
  37. 37. Value Based Business Alignment thru Resources Planning Portfolios Business Value Voice of Customer Initiatives Projects Industry Standards, Best Practices Requirements Stages Business Value Activities Demand Milestones Roles Supply New/Expanded Resources Solutions 37 Dave Guevara – June 5, 2008
  38. 38. Business Value Milestone Connects Your Decision Space Capability Development Business Impact & Budgets (Opexp, Capex) Performance Goals & Cash Flow Future State Architecture Risk Assessment & Management Functions & Business Features Value Scope, Change, Milestone and Cost Control Resource Planning Opportunity Resource & Management Asset Allocation Time Sequencing 38 Dave Guevara – June 5, 2008
  39. 39. Business Alignment Guidelines & Examples (ask Dave for the handout) Refer to the handout titled “Practical Guidelines for Strategic and Business Alignment” 39
  40. 40. Pick Alignment that Fits Strategies Initiatives Business Enterprise Strategic Alignment Business Value Governance Architecture Architecture Is done Risk Management at Roadmaps (EA) Value Management Corporate, Enterprise or Division Investments FSA Blueprints Comm Plans Business Models Business Business Business Services Logic Processes Technical, Info Activity / Technical Composition & Software Event Mgt Business Alignment Governance Service Architectures Lifecycle & Budgets Repositories Oriented Environ Mgt Is within Architecture Solution Messaging Metadata Security ManagementBusiness Unit or Workgroup or Process (SOA) Infrastructure Services Architecture 40 Dave Guevara – June 5, 2008
  41. 41. Strategic Alignment Guidelines (handout) Inputs: Strategic Intent Strategic Goals IT Strategies, Goals and Objectives Strategic Model Questions Outputs Business Value Model Business Economic Metrics Architecture Principles 41 Dave Guevara – June 5, 2008
  42. 42. Strategic Alignment Guidelines (handout) Process Steps Determine strategic intent and goals Define Porter Value Chain Model Define Business Value Model Business Value Milestones Strategic Alignment Process Questions 42 Dave Guevara – June 5, 2008
  43. 43. Porter Value Chain Model Support Activities (what we do to support making money) Primary Activities (how we make money) Source: “Competitive Advantage”, Michael E. Porter Value Chain Activities 43 Dave Guevara – June 5, 2008
  44. 44. Example of Business Value Model for Manufacturer Suppliers Sub-Contractors Customers Example: Info Process Mapped C Supply Chain Channels Distribution Channels onto BVM PO Fulfillment Fulfillment 3rd Party P Procurement Inbound Logistics Manufacturing Inventory Management Regulators Product Development Research & Development Product Management Product Design Product Integration Product Test Corporate Functions Vendors Sales Marketing Production Development Customer Service Operations Management Advertising Support Services Agency MIS / IT Corporate Affairs Legal Accounting Finance HR PMO Business Partners 44 Dave Guevara – June 5, 2008
  45. 45. Business Value Milestone Capability Development Business Impact & Budgets (Opexp, Capex) Performance Goals & Cash Flow Risk Assessment & Management Functions & Business Features Value Scope, Change, Milestone and Cost Control Resource Planning Opportunity Resource & Management Asset Allocation Time Sequencing 45 Dave Guevara – June 5, 2008
  46. 46. Business of Architecture Conclusions Begin with the end in mind, meaning know what success looks like Simply to the core, common capabilities and architectural components Know how your architectures and solutions will deliver Business Impact to create value Be clear on which architectural level & context you are working Communicate, Sell, Listen, Communicate Recommendation: Get an EA tool PowerDesigner, Troux, System Architect 46 Dave Guevara – June 5, 2008
  47. 47. EA Tools & Repository Really Help Manage Complexity 47 Dave Guevara – June 5, 2008
  48. 48. The Business of Architecture Questions? Dave Guevara 303.694.9394 daveg@bt-review.com 48

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