Anatomy of Agile Enterprise

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In their seminal work on systems in biology, Maturana and Varela make a useful distinction between the organization and structure of a system. The organization of the system defines its identity in terms of inter-component relationships. It specifies a category, which can be realized through specific structures. A system may change its structure without loss of identity, as long as its organization is maintained.

Let’s take an example: a motorcycle. It is a system with an organization and with a structure. The organization of the motorcycle is about the functional relationships between its parts: how the engine powers the wheels, how the handle-bars steer the front wheel and so on. The structure of the motorcycle is those parts: the specific engine, transmission, wheels. The structure can be changed without changing the essential nature of the motorcycle. If the front wheel is changed, the motorcycle is still a motorcycle. However, when the systemic organization is changed, the very essence of the motorcycle may change, too. When the transmission is removed, for instance, the motorcycle is rendered useless, as the engine does not power the wheels anymore.

At the most abstract level, an enterprise can be seen as a system. As such, it cannot be defined in terms of its actions as a whole or by enumerating its constituent elements.An enterprise is essentially defined by its business processes encompassing both systemic organization and structure: the relationships between process participants as well as the specific realizations of the participants. A business function, for instance, plays different roles in different business processes and aligns its internal operations accordingly. The implementation of a separate business functionality can be changed, e.g. by automating a manual task, without affecting the nature of the business process as a whole.An enterprise operates at different levels, each with different objectives, data needs, and methods. These levels can be classified by the decision-making horizon as follows:Strategic decision-making affects activities in the distant future. These decisions are usually made in the face of external influences – technical advances, market shifts, environmental factors, or competition. They have a high impact on the organization and require significant effort over a long period of time. Strategic enterprise decisions are made by the top management.Tactical decisions involve actions intended to occur in the future – business process re-engineering, incorporating new suppliers, installing new software or equipment. The decisions are often interlinked to strategic plans and based on operational data. Tactical decisions are far-reaching and their implementation requires substantial time and effort. They are generally made by the middle management that translates the strategic intent to the concrete reality of business.Operational decision-making is related to concerns of the immediate future – resource allocation, priorities, and expenditures. Operational decisions have a direct impact on the conduct of business and typically do not require laborious implementation. The decisions are made in response to tactical plans or based on operational data and are mostly made by front-line business managers.Real-time decisions pertain to current activities. They are made within the operations themselves, in line with the operational plans, by automation or people conducting the work.

In his seminal book “Requisite Organization”, Elliott Jaques defends hierarchy as a natural and efficient form of social organization. Organizational dysfunctions can be traced to poor structure that prevents employees from working at their full potential. A properly structured Requisite Organization, in contrast, can release energy and creativity and improve morale. According to his Stratified Systems Theory, the hierarchy reflects the complexity of problem solving. The greater the complexity (level of work) in a role, the higher in the organization should the person in the role be. A simple measure of the level of work is the time span of discretion in a role—the longest task for which one is held accountable. The longer the time span of discretion, the higher the level of work. As simple and straightforward as this may sound, decades of research support the notion. It also bears intuitive relevance—the task delegated by a manager cannot span a longer time period than the task the manager himself is responsible for. Jaques maintains that the role complexity increases in specific steps at time spans of 1 day, 3 months, 1 year, 2 years, 5 years, 10 years, 20 years and 50 years. These breakpoints stratify varying kinds of work into natural layers, or “strata”, in the hierarchy. A role falling into any given stratum should report to a role in the next stratum up. When roles are placed requisitely, an organization is likely to function effectively. When they are too close or too far, dysfunction is inevitable. Problems also arise when a person is in a role at a level higher or lower than his or her current capability or when there are too many or too few layers. Jaques maintains that there are four methods by means of which people process information: Declarative Processing: disjunctive, declarative reasoning, in which the reasons are separate and no connection is made with any of the other reasons. Cumulative Processing: conjunctive reasoning, in which independent ideas are conjoined to make sense as a whole. Serial Processing: sequential reasoning, in which each reason sets the conditions that lead to the next reason. Parallel Processing: concurrent reasoning, in which a number of possibilities, each arrived at by means of serial processing, is examined. This quartet of mental processes is recursive in that it gets repeated at a more complex level in each higher order of information. There are five orders of information complexity: Pre-Verbal (PV): This is the most concrete order of information expressed in pre-verbal infancy in the form of gestures and physical contact with objects. Concrete-Verbal (CV): This refers to thinking and language as it is found in children. Thoughts and words are immediately tied to physical pointing out of the things thought about and referred to—or to a thing that, although not physically present, has recently been seen somewhere and is assumed still to be there. Symbolic-Verbal (SV): This is the form of thought and language used by most adults. Thoughts and words no longer have to refer to specific tangible entities. They are used as true symbols and can be construed and worked with as though they themselves were the things. Conceptual-Abstract (CA): This is the form of thought and language required for successful work at senior corporate levels. Thoughts and words seem abstract in the sense that they refer to other thoughts and words rather than to things; that is to say, conceptual abstract thoughts and words pull ideas together; but they must be able to be related to tangible things at more than one remove. Universals (U): This form of thought and language is ordinarily thought of in terms of genius—creating new types of society, new systems of ethics and morality, new values and cultures, sweeping new theories.

The Requisite Control Structure observes the requisite strata of Requisite Organization in a repeating pattern. In the smallest business of one stratum, there is a one-level control structure, Model, that encompasses all decision-making horizons of the business. A two-strata business has a two-level control structure, Control-Model, in which the real-time decisions are delegated to the lower level, while the higher level addresses the longer decision-making horizons. The third stratum brings about coordination to the control structure; in Coordination-Control-Model, strategic and tactical decisions pertain to the coordination level, while operational and real-time decisions are made at the control and model levels, respectively. In a four-strata business, the real-time, operational, tactical, and strategic horizons translate to strata I–IV, respectively.

A layered architecture framework is useful in representing different aspects of different models as long as overall consistency is preserved through the framework’s metamodel. In this model, an architectural framework of five levels is proposed. These layers from top down are: Business Strategy Layer, Organization / Business Process Layer, Integration Layer, Software/Data Layer and IT Infrastructure Layer.

Business strategy layer answers to “what” and “why” questions about the business models that the enterprise currently operates and aspires to operate in the future. The layer comprises of organizational goals and success factors, products/services, targeted market segments, core competencies and strategic projects.

Organization/business process layer answers “how” the selected strategic business models are run depending on the organization structure and on the enterprise assets available. The layer comprises of organizational units, business locations, business roles, business functions, business processes including inputs/outputs (internal and external business services including service levels), metrics (performance indicators) and service flows, business information objects and aggregate information flows. Less tangible elements such as culture, learning, human resources and competencies can also be identified. Although these aspects cannot be readily represented in the EMR metamodel, pertinent principles can be used prescriptively to guide enterprise development efforts

Integration layer mediates between business and IT architectures. Merely modeling the business processes and business services, however, is not enough to enable agility. It is necessary to identify the applications and technology that underlie the processes and to understand their interdependencies. Traditionally, large-scale enterprise information systems support business processes and other organizational activities. In SOA, the technical artifacts are bundled to implement the specified context-independent business services. These services can be used as implementations of business functions within business processes. Business services play a key role in enterprise architecture and are documented at the integration layer. Flexible integration requires following coherent and consistent information architecture principles that guide exploring, presenting and exploiting information.In this model, information architecture is not seen as a separate architecture domain but rather split in the organization/business process layer in terms of logical information structures and in the software/data layer in terms of implementation of data repositories. These two models meet at the integration layer and provide a sound basis for the interface design of business services.

Software/data layer and IT infrastructure layer describe the enterprise technical architecture artifacts, like applications, software components, data stores and their underlying execution infrastructure including hardware, system software and network elements. They are typically managed and documented in detail within configuration management databases (CMDB) used by enterprise IT operations units, but transforming a large and complex enterprise requires a holistic view of the enterprise complied into an EMR, embracing the enterprise business architecture, the associated technology architecture, and their semantic dependencies. Empirical studies have found that aggregating detailed technical application information is helpful in supporting holistic application portfolio management by senior IT executives.

Agility is not about operational efficiency. It is about rapid reassembly of organizational assets to respond to environmental stimuli – about continual adaptation of the internal organization to the external environment. In an agile enterprise, as opposed to what could be called a ‘fragile enterprise’, the enterprise architecture allows quick changes to its processes.At the strategic level, agility is manifested as strategic management rather than strategic planning: the planning perspective is short and the plan is constantly revised based on the feedback.At the tactical level, the focus is on the optimization of horizontal end-to-end processes rather than vertical functions. This calls for communication and coordination instead of command and control. Business Process Management (BPM) includes concepts, methods, and techniques to support the design, administration, configuration, enactment, and analysis of business processes. At the operational level, the business-IT alignment is achieved through context-independent services. In Service-Oriented Architecture (SOA), the intricacies of the application and technology infrastructure are enveloped behind a well-defined, self-describing service interface that is context-independent and reusable in different contexts. Technical functions are mapped to business needs and applications are rationalized to elicit “source of truth” information models. The data in the underlying information systems are mapped to these canonical concepts using appropriate integration technologies (EAI, EII, ETL).At the real-time level, the underlying application landscape and IT infrastructure remains. In an agile enterprise, Enterprise Architecture (EA) provides a comprehensive view of all these assets and their interrelationships and enables various kinds of cost calculations and impact analyses that facilitate planning for change.

Architecture modernization – from fragile to agile – starts with an identification of logical business system domains (BSDs). These domains are based on business functions, technical infrastructure, applications, or a combination of these.Next, integration spaghetti is replaced with lasagna: idiosyncratic point-to-point integrations are routed through Enterprise Application Integration (EAI) tools within the BSDs and the resulting EAI realms are connected with gateways between the BSDs.Gradually, business functionality is derived from the underlying technical functions and exposed as context-independent SOA services. These services are then orchestrated in functional business processes that are executed in a Business Process Management System (BPMS). Finally, the overall process is choreographed over the functional processes to bring about the end-to-end behavior.

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Anatomy of Agile Enterprise - Presentation Transcript

Anatomy of Agile Enterprise
www.requisiteremedy.com
Systemic Organization and Structure
There is so much talk about the system. And so little understanding.
That’s all a motorcycle is, a system of concepts worked out in steel.
− Robert Pirsig, Zen and the Art of Motorcycle Maintenance
There is so much talk about the system. And so little understanding. That’s all a motorcycle is, a system of concepts worked out in steel. − Robert Pirsig, Zen and the Art of Motorcycle
Requisite Control Structure
Strategic
Contract
Organization
for
Tactical
Coordination
of
Operational
Control
Structure
over
Resources
Real-Time
Strategic Level: Contract
Contract:
An agreement between two or more parties for the doing or not doing of something specified.
− Webster’s Encyclopedic Unabridged Dictionary of the English Language
Tactical Level: Coordination
Coordination:
The act of organizing something; a process of communication from one source to two or more coterminous receivers which makes the receivers act in concert.
− Krippendorf (1986): ”A Dictionary of Cybernetics” (unpublished)
Operational Level: Control
Control:
A constraining effect on a variable, a directing influence on the behavior of a system, or the setting of the parameters of a system. Any one-way communication, which by its definition conditions a receiver's behavior in some respects, involves control of a receiver by a sender.
− Krippendorf (1986): ”A Dictionary of Cybernetics” (unpublished)
Real-Time: Model
Model:
A system that stands for or represents another typically more comprehensive system.
− Principia Cybernetica Web
Time
Span
50 Y
20 Y
Conceptual Abstract
10 Y
5 Y
2 Y
1 Y
Symbolic Verbal
3 M
1 D
Jaques: Stratified Systems Theory
Strategic
tactical
operational
real-time
IV
Strategic, tactical
operational
real-time
III
Strategic, tactical,
operational
real-time
II
Strategic, tactical,
operational, real-time
I
Control-Model
Coordination-
Control-Model
Contract-
Coordination-
Control-Model
Model
Requisite Control Structure observes the requisite strata of RO
RequisiteStratum
Role
Complexity
Control
Mechanism
Mental
Process
8.
50 years
Contract
Parallel
20 years
Serial
7.
Coordination
Conceptual Abstract
Cumulative
6.
10 years
Control
5.
5 years
Declarative
Model
2 years
4.
Contract
Parallel
1 year
3.
Serial
Coordination
Symbolic Verbal
2.
3 months
Control
Cumulative
1 day
Model
1.
Declarative
Requisite Organization and RCS
Strategic Management
2 years
Strategy
Strategic
Level
Re-Engineering
1 year
Tactical Level
Organization
Processes
Planning
3 months
Operational Level
Information
Systems
Business
Services
Operations
1 day
Real-Time Level
Software
Hardware
Data
Decision-Making Horizons and Pertinent Enterprise Artefacts
Business
Strategy
Layer
Strategic
Organization/
Business Process
Layer
Tactical
Integration
Layer
Operational
Software/Data
Layer
Real-Time
IT Infrastructure
Layer
Enterprise Architecture Layers
Business Strategy Layer
Organizational goals and success factors, products/services, targeted market segments, core competencies and strategic projects
Business
Strategy Layer
Organization/Business
Process Layer
Integration Layer
Software/Data Layer
IT Infrastructure Layer
Organization / Business Process Layer
Business
Strategy Layer
Organizational units, business locations, business roles, business functions, business processes, metrics and business information objects
Organization/Business
Process Layer
Integration Layer
Software/Data Layer
IT Infrastructure Layer
Integration Layer
Business
Strategy Layer
Organization/Business
Process Layer
Business services and Enterprise Information Systems
Integration Layer
Software/Data Layer
IT Infrastructure Layer
Software/Data Layer and IT Infrastructure Layer
Business
Strategy Layer
Organization/Business
Process Layer
Integration Layer
Applications, software components, data stores and their underlying execution infrastructure including hardware, system software and network elements
Software/Data Layer
IT Infrastructure Layer
Architectural Dimensions as Verticals Rather Than Layers
Strategic
Tactical
Operational
Real-Time
Technology
Business
Information
Information
Systems
Strategic Planning
Strategic Management
Function-Oriented
Process-Oriented
BPM
Idiosyncratic Integration
EAI, SOA
Technology Mess
Asset Repository
Fragile vs. Agile Enterprise
Strategic
Level
Tactical Level
Operational Level
Real-Time Level
SOA Benefits at Different Levels
- Partner Integration
- Outsourcing
Strategy
Business Processes
- Rapid development of new capabilities
- Agile business processes
Information Systems
- Reuse
- Interoperability
Infrastructure
- Technology virtualization
- Better transformability
ArchitectureModernization
CapabilityDevelopment
0
1
2
3
4
5
Co-Evolution of Maturity and Agility
EA of Enterprise Scope
EA = BA + EWITA
Business Process
Management
EA = EWITA
EA = ITA
Business Process
Orchestration
Evolution of enterprise agility
Business Process
Automation
No EA View
Business Process
Modeling
No Process
Modeling
Service-OrientedArchitecture (SOA)
Basic SOA
Enterprise ApplicationIntegration (EAI)
Point-to-Point
Integration
”Islands of Automation”
Level 1:
Initial
Level 2:
Managed
Level 3:
Defined
Level 4:
Quantitatively
Managed
Level 5:
Optimizing
Evolution of enterprise maturity