Enterprise Architecture
                       as foundation for
                      Electronic Business

              ...
relates it to the environment of the organisation. In section 2 the Enterprise
Architecture model is described. In section...
The four layers are embedded in a layer that describes the culture of the organisation.
The culture can be considered to b...
Models                 Constraints               Decisions
 Mission/strategy        Strategic business       Trading laws,...
Decisions




                                      Transformation




                         Existing                  ...
replaced by electronic means. When visiting the organisation’s web-site, the customer
does not only get information about ...
E-BUSINESS




                                      E-COMMERCE




                                     E-ADVERTISING



...
investigate the possibilities against the characteristics of their business, the mail order
business.
In 1997 management d...
also the mission and the strategy had to be redefined in the light of the new
technology.

                               ...
MO (partial)

          S1                     A1                           A2                   S5
        Customer      ...
At the moment MO is busy with the implementation of the new enterprise
architecture. A new web-site has been built, the ex...
Zachman, J.A. 1996. Enterprise Architecture: The Issue of the Century. http://www.zifa.com
      (retrieved 3-9-1999)




...
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Enterprise Architecture as foundation for Electronic Business.doc

  1. 1. Enterprise Architecture as foundation for Electronic Business Victor E. van Reijswoud Devote Institute of Technology Devote n.v. P.O. Box 73 3980 CB Bunnik, The Netherlands vreijswoud@devote.nl Abstract Many organisations feel the pressure to adopt technological innovations in order to keep or to develop a competitive advantage. In many cases however, they fail to align the new technology with the business objectives. With the hype of E-services, this is especially the case. In this paper the Enterprise Architecture Model is presented as a means to get an integral view on an organisation by focusing on the mission/strategy, processes, information and ICT infrastructure, organisational structure and culture. The Enterprise Architecture Model is illustrated by means of an example of a mail order company that considers the implementation of E-services. 1 Introduction The emergence of the Internet has opened up new business channels and new business possibilities. At this moment, Electronic Services (E-Commerce, E-Business or E advertising) seems to have the most potential to take full advantage of the possibilities of this medium. Maira and Taylor (1999) do not only predict impressive savings that can be achieved by using e-business, they also predict a major impact on the way in which companies structure their business-to-business and business-to-consumer relationships, and the underlying set of business processes structures. By adopting E- services, companies may develop totally new core competencies, process and support structures. In order to be able to maximise the potential of the Internet, the building of a web site alone no longer sufficient, a reconsideration and alignment of all the aspects of the business is needed. The recognition of the potential benefits of E-services, the uncertainty on how to achieve these benefits and the necessary organisational restructuring that is required to achieve these benefits is for many organisations an important reason to postpone E- services projects. The management of the organisation often does not have the overview that is needed to decide to start or to continue a project. An architectural description that includes business and IT aspects and that is able to expand on the consequences of change and innovation, proves to be a powerful managerial instrument. This paper proposes the Enterprise Architecture model. The model provides an overview of the architecture of an organisation, it allows to describe alternatives and
  2. 2. relates it to the environment of the organisation. In section 2 the Enterprise Architecture model is described. In section 3, an understanding of E-services is provided. In section 4 the two sections are combined and illustrated by means of a case study of a mail order company using the Enterprise Architecture model when considering the introduction of E-services in their organisation. Finally, in section 5 some conclusions are drawn. 2 A framework for Enterprise Architecture Organisations are complex structures. The Enterprise Architecture model provides a way to reduce the complexity and to analyse distinct aspects of the organisation as well as the mutual relationships between these aspects. The Enterprise Architecture model that is proposed here is in use by the Dutch company Devote to discuss with their customers innovation in general, and the potentials and the consequences of E- business in particular. The Enterprise Architecture model is founded in the communication based business paradigm as proposed by Medina-Mora et al. (1992) and Dietz (1996). The basis of the model is formed by idea that the activities in an organisation can be divided into business activities, informational activities and material/documental activities. The business core of the organisation is formed by people that use interaction as the means to establish business commitments. For a further discussion of the underlying communication principle, the reader is referred to (Reijswoud, et al., 1999; Dietz, 1996; Reijswoud, 1996; Winograd & Flores, 1986). Informational activities support the business processes and material/documental activities realise the business activities. The Enterprise Architecture model provides an extension on the basic communication based business paradigm as proposed by Medina-Mora and Dietz. The model is composed of four interrelated aspect layers and a background providing layer. The top layer describes the reason for existence of the organisation. This layer is added because the business process structure of an organisation cannot be understood without understanding the context and the goal of the organisation (Zachman, 1996; McDavid, 1999). The layer contains a behavioural description of the definition of the organisation as described by the mission and the strategy to reach this mission. This top layer provides a point of reference for the activities in the underlying level. The business architecture layer contains a description of business processes in the organisation. The business architecture provides an operationalisation of the mission and strategy layer. On the basis of the expected behaviour, as described in the mission and strategy layer, the construction of the business processes is laid out. On its turn, the business architecture provides the behavioural constraints for the information architecture. Founded in the business architecture, the information architecture extends the business processes with a necessary information infrastructure. In other words, it provides a detailed description of the information that is needed to execute the business processes. At the lowest level, the ICT infrastructure, which also includes software architectures, and the organisational structure are described. This level provides the tools with which the levels above are realised. This description may contain machines, applications and application structures, workflow procedures, but also people in organisational functions. 2
  3. 3. The four layers are embedded in a layer that describes the culture of the organisation. The culture can be considered to be the glue between the other layers of the Enterprise Architecture model. Whereas the other layers are founded in formal action oriented communication in the organisation, culture is created by informal precondition creating communication between the elements in the organisation. For more details on the distinction between different types of communication in organisations, see Reijswoud (1996). In figure 1 below the Enterprise Architecture Model is illustrated graphically. Mission and Strategy Business Architecture Information Architecture ICT and Organisational Architecture culture Figure 1: The Enterprise Architecture Model In line with the guidelines for postulating information architectures (Land et al, 1999), an architectural description of an organisation addresses three different aspects: models, constraints and decisions. Models describe the current state of affairs of the organisation. In other words, what is done when and how? The models describe the structure of the organisation at each level of the Enterprise model. A precondition for the models is that they facilitate manipulations to create an optimised situation. This presumes that the models have some kind of formalised basis. The architecture models also need to be as stable as possible, so that they can serve as a basis for multiple decisions. Constraints describe internal or external elements that restrict changes to the organisation. These constraints can be uncontrollable for the organisation like for example laws, economic principles, technical standards, or ethical and cultural norms, but the constraints may also be within the change potential of the organisation. The last constraints mostly originate from inside the organisation. The proposed architecture has to obey these internal and external constraints. The last aspect of an architectural description is formed by the decisions that organisations take about the direction of the organisation and therewith the architecture they chose. In an architectural description of Enterprise Architecture, the three aspects are combined with the different layers of the Enterprise model. This means that each of the layers is described according to these guidelines. Table 1 below describes the result of the cross-correlation of the enterprise layers and the architectural aspects. The cells contain examples, and the list is not exhaustive. 3
  4. 4. Models Constraints Decisions Mission/strategy Strategic business Trading laws, macro Improved competitive models, e.g. Balanced economy, core position, changed Scorecard, SWOT, competencies, supply needs and increased Value Chain chain characteristics resources Business Business process Resources, business Increased efficiency architecture models, e.g., Soft procedures, business and effectiveness of Systems rules, business objects commitments and Methodology, Petri- action in processes Nets, DEMO Information Information models, Availability and Increased availability architecture e.g. ER, ORM, integrity of internal of information, Yourdon, Information and external improved Engineering, IDEF information sources, management workflow procedures information ICT/organisation Technological/organis Technical standards Increased speed, architecture ational models, e.g. and technical reliability, security UML, Organisation possibilities. and availability of Charts, Task diagrams Organisational ICT, changed function requirements organisational configuration Culture Cultural models, e.g. Qualifications and Changed Socio-technique, personality of the organisational norms socio-mapping employees and values Table 1: Possible elements in an architectural description In the architectural description, the Constraints and the Decisions at each level can be formulated as principles or standards. Principles are textual statements that describe the constraints the organisation is currently facing, or decisions based on the beliefs about the future direction of the organisation. Standards are a more formalised description of the principles and therefore more suitable to guide, qualify, and often quantify the architectural direction. Standards restrict an architecture by providing measurable and testable performance criteria, metrics for business and IT practices, and specifications for IT products, protocols, and methods. In analogy to the division of standards and principles, one can use more or less formalised models in combination with texts to complete the architectural description of the current situation of the organisation. However, in order to restructure the elements in the organisation, formalised models are preferred. The architectural description forms the basis for the process of architecturing. In an architectural process the existing structures of an organisation are transformed into a desired architecture. The process of creating a new architecture for an organisation is guided by the decisions, and limited by the constraints that were described in the architectural description. 4
  5. 5. Decisions Transformation Existing New structures architecture Constraints Figure 2: The architecturing process The result of the process of architecturing is a new architecture description of the organisation. This new enterprise architecture forms the foundation for the realisation of possible new strategic elements, business processes, information/ICT or organisational infrastructure, but also for the culture that binds the organisation together. The new architecture can be expressed in new models, but it can also be expressed in textual description formulated as principles and standards. In the next section we will expand on E-services as one of the application areas of the Enterprise Architecture model. In section 4 the Enterprise Architecture model will be illustrated by means of an example. 3 Electronic Services The idea of electronic services is as old the telegraph, but over the years we have observed important changes of the magnitude of the possibilities. In a retrospective research Yates (1993) shows that Swift and Armour were able to extend their market for meat dramatically by using new freezing technology in combination with the, by that time, new communication medium, the telegraph. Their market for meat transformed from a local market to a national market. This classic example shows that means of communication can have the potential to extend the market share or companies. In essence, the introduction of the Internet is not different from the telegraph, but it allows organisations to move from national markets to global markets. When we analyse E-service initiatives, we can identify three different objectives: E- advertising, E-commerce and E-business. The most low-key application of E-services can be labelled as electronic advertising. A web-site is used to position the organisation with electronic means. The web-site is used as a replacement for the traditional corporate brochures of an organisation. Web-sites of this type are mainly passive and they provide very little added value over the traditional paper brochures. In the second stage, we observe that E-services are used to support the current business processes of an organisation. Mostly it is observed that web-sites are used to support the sales process. When engaged in E-commerce, the traditional channel is 5
  6. 6. replaced by electronic means. When visiting the organisation’s web-site, the customer does not only get information about the organisation as with E-advertising, but the customers can also communicate with the organisation and engage in business transactions via the web-site. In the case of E-business, the web-site is used to create business that was not existed in the organisation before the web-site was instantiated. In other words, electronic means are used to alter the business objectives of the organisation and can create a new position in the value chain. The three applications of E-services are displayed in figure 2 below. In this figure we also observe that the applications are overlapping. This means that an organisation cannot engage in E- business when they have not included E-commerce and E-advertising. The figure also shows that the potential business benefits are expected to increase with the choice of the different E-services. E-Business Altering business objectives by using internet based IT solutions ORGANISATIONAL IMPACT E-Commerce Aligning business objectives by using internet based IT solutions E-Advertising Positioning business objectives by using internet based IT solutions INCREASING BUSINESS BENEFITS Figure 2: E-services in perspective The Enterprise Architecture model provides a good framework to further position the three types of E-services. In E-advertising, the service is located in the lower layer of the Enterprise Architecture model because the information architecture, the business architecture and the mission/strategy are not affected. E-commerce relates to the information infrastructure and the business process structure, but the business is not altered. This is only done when the organisation engages into E-business. Figure 3 illustrates the three types of E-services within the Enterprise model. It is important to realise that also in this model the three types of E-services overlap. 6
  7. 7. E-BUSINESS E-COMMERCE E-ADVERTISING Figure 3: E-services in relation to the Enterprise Architecture model In the next section we will apply the Enterprise Architecture Model to an example of a mail order company that is considering the possibilities of E-services. 4 An example of an enterprise architecture for E- services In this section we will present the enterprise architecture of a mail order company that has the intention to transform its business into an electronic business. The extend to which the management of the company wants to adopt E-services is unclear, because they lack a good overview of the consequences of this innovation. The example is based on a project that has been performed by Devote/Insite. A technical description of the project can be found in (Amerongen, 1999). Since the mail order company serves as an illustration for the application of the Enterprise Architecture model, we will omit company specific and mission critical details. The mail order company MO is the largest mail order company in the Netherlands with a turnover of about 350 million Euro in 1998. The company has an assortment of about 17.000 articles that can be ordered by the customers by sending in a standardised form specifying the article, the quantity, and of course the customer details. In the last years customers can also order by telephone. The mail order company delivers all items from stock. With 17.000 items, the company has a large number of suppliers, which makes stock keeping and ordering from the suppliers a laborious process. This process has become more critical because the company has tight delivery times for their customers. MO promises their customers that the order will be delivered the next day when the order is made by telephone or within 4 days when the paper form is used. This requires that the items need to be in stock. In 1995 the company built their first web-site to start experimenting with the possibilities of the Internet. The first web-site only displayed some of their corporate brochures electronically. The web-site did not have added value for the visiting customers of the mail order company, and they stayed away. In spite of this, the company realised the potential of the Internet for their business, and they decided to 7
  8. 8. investigate the possibilities against the characteristics of their business, the mail order business. In 1997 management decides to extend their services on the Internet. They decide that the Internet needs to be a full blown channel for the services of MO. In order to make a balanced decision on the further development of electronic business, the company realises that it needs to consider all the aspects of the organisation. The mere extension of the web-site is not enough to get the full potential of e-business. An integral analysis of the organisation’s structure with the Enterprise Architecture model is needed to investigate the possibilities and to find a new direction for the E-services. The Enterprise Architecture of the mail order company MO In order to determine the possibilities of E-services for MO, an analysis of the organisation was carried out. The organisation was analysed at the five layers of the Enterprise Architecture model. For each layer the current situation was described by using different kinds of models. The focus of the different models is listed in table 2 below. In the analysis both formal models and informal models (textual descriptions) were used. In this paper we will not go into detail on all the modelling techniques and the resulting models. Parallel to the determination of the current situation of the MO, the constraints the company is facing were analysed. The constraints were mainly described as principles. In the case of MO, the main constraints originated from an existing technical infrastructure. At the moment the company was analysed, MO was using a mainframe to store information about their products, their customers and the orders (customer orders and suppliers orders). Although the infrastructure was very rigid, the management deceided that this technical infrastructure needed to be kept intact. A second important constraint was formed by the existing business process design. The processes in the company were designed to have two channels by which items from stock could be ordered. The supplier ordering was designed in a traditional manner. Traditional forms of ordering (paper/fax) were used to replenish the stock of MO. Few of their suppliers were using electronic means. The last important constraint originated from the organisational culture. Although the marketing department had experimented with the Internet, little of this knowledge was distributed to workers in the organisation. The focus of the people in the organisation was on paper. In the table 2 the main results of the analysis are summarised. The analysis of the current situation of MO and the constraints they were facing formed the starting point for the formulation of decisions about future directions. It was clear that the organisation wanted to extend on the current E-advertising based E- service. The Internet needed to create a new ordering channel for MO. They believed that this was the only way to increase their turnover in the globalising market. An important decision the management of MO had to make was whether they wanted to use electronic support for their existing business processes (E-commerce) or to look for possibilities to alter their business processes and to initiate new processes (E- business). On the basis of the Enterprise Architecture model the management got a clearer picture of the magnitude of the change for both alternatives. Based on this analysis MO decided to extend their E-services from E-advertising to E-business. This implied that not only the construction of the web-site needed to be reconsidered, but 8
  9. 9. also the mission and the strategy had to be redefined in the light of the new technology. Models Constraints Decisions Mission/strategy Models describing Global markets Increase in overturn the core enable customers to by introducing a new competencies, buy their products direct sales channel customers and anywhere (1999: 13M Euro; suppliers 2003: 100M Euro) Business architecture Business models Business processes Optimised business describing the are based on two process lead time business processes existing channels Maximise and their mutual Business processes outsourcing of relationships are grouped around business processes the stock Maximum support of supply chain Information Information model Availability of Information needs to architecture describing the supplier delivery be kept in one central information, their information location. Changes structure and their have to be made location quickly ICT/organisation Infrastructure Connectivity with Using current architecture Models describing internet standards technical the technical Security in infrastructure (Oracle infrastructure and transactions DB, mainframe) models describing Rigidity of design of Direct coupling with the organisational current database mainframe, Real roles time ordering, Real time content management Culture Models of Strong focus on Awareness of knowledge traditional possibilities of the distribution in the communication internet organisation media Table 2: The most important point in the architectural description of MO As a result of the decision, a redefinition of the enterprise architecture at the mission/strategy layer was established. MO decided to move business function away from a stock keeping business handling the ordered material, to an information handling business, handling order information between customer and supplier. In the new business architecture, MO does not have a stock anymore, but uses the suppliers’ stock. The customers can orders items from the web-site, but in fact the information is redirected immediately to the supplier of the ordered item. The supplier also takes care of the actual delivery. The customer does not notice this change, but for MO this brings along an important reduction of costs. The change in the business architecture is displayed in the business model in figure 4 below. For more details on the modelling approach see Reijswoud, Dietz, 1999. 9
  10. 10. MO (partial) S1 A1 A2 S5 Customer Deliver Deliver T1 order item T2 stock item T5 Supplier T3 A4 T4 Deliver stock item Supplier (partial) Legend A1 Deliver order item System boundary A1 Deliver Actor T1 MO (partial) order item S1 T1 Transaction A2 Customer Pay order T3 Executor link Initiator link Informative conversation Transaction Meaning T1 Delivering order item The customer orders from MO and the order item is delivered by MO to customer T2 Delivering stock item The order item is delivered from stock T3 Paying order item After the delivery of the order item the customer has to pay MO T4 Checking stock Periodic checking of the stock of MO T5 Ordering supplies Ordering items from supplier if the stock levels are low Figure 4: The old and the new business architecture of MO In the new situation, the availability of supplier information has become more important. MO needs to have access to the stock levels of the suppliers so that they can assure the short delivery times. When the stock levels are too low, they need to inform the customer immediately that there will be a delay. For the ICT infrastructure architecture, the new situation needs to assure that the systems can be integrated with the systems of the suppliers. With a reduction of paper forms, the reliability of the systems becomes increasingly important. As a result of the changed situation where the stock of MO is deleted, the organisational structure also needs to be adjusted. More important however is the culture of the workers of the organisation. The workers need to realise the change of the function of the organisation, and have feel responsible for information and order information handling instead of material processes. 10
  11. 11. At the moment MO is busy with the implementation of the new enterprise architecture. A new web-site has been built, the existing technical infrastructure has been adjusted and internal restructuring is initiated. 5 Conclusions In this paper we have proposed and illustrated the Enterprise Architecture model. The model provides an overview of the most important aspects and their relationships in an organisation. The existing structure of the organisation, the constraints and the future directions are specified for the related elements of the organisation. The application of the Enterprise Architecture model to the example of the mail order company revealed some strengths but also some weaknesses. The most important advantage of using the Enterprise Architecture model is that it provides a rich framework that allows management to determine directions for the future innovation. The model enables an integral approach to organisational innovation where business issues, IT issues and cultural issues are considered in connection with each other. A weakness of the current status of the Enterprise Architecture Model is that is not prescriptive in the selection and the use of the models for the description of the current situation. Since some representational models are more suitable to be used in combination than others, this may lead to incompatibility of the models in the model cycle. Also, some models are more suitable for some purposes. These aspects may lead to the choice of inappropriate models. At the moment, in the field of architecture there is not one method that covers all the areas of the Enterprise Architecture Model. Future development of the Enterprise Architecture Model will focus on the development of a line of models, complementary to each other. 6 References Amerongen, W., 1999. COM in de webshop. Computable, 30 april, nr 17, p. 50. Dietz, J.L.G., 1996. Introductie tot DEMO. Samsom BedrijfsInformatie, Alphen a/d Rijn. Land, M Op ‘t., K. Middeljans, K. van der Poel, A. Slijkhuis, L. van der Valk, 1999. Informatie-architectuur: Naar een verantwoorde definitie. Management en Informatie, 99/3, pp. 60-65. Maira, N.M., M.R. Taylor, 1999. The Big Picture: An Overview of Electronic Commerce. Prism, First Quarter, 1999, pp. 5-15. McDavid, D.W., 1999. A Standard for Business Architecture Description. IBM Systems Journal, Vol. 38, No. 1. Medina-Mora, R., T. Winograd, R. Flores, F. Flores, 1992. The Action Workflow Approach to Workflow Management Technology. In: J. Turner, R. Kraut (eds.), Proceedings of the 4th Conference on Computer Supported Cooperative Work. ACM, New York. Reijswoud, V.E. van, 1996. The Structure of Business Communication: Theory, model and application. PhD dissertation Delft University of Technology. Reijswoud, V.E. van, J.L.G. Dietz, 1999. The DEMO Modelling Handbook, Vol. 1, Delft University of Technology, Delft. Reijswoud, V.E. van, J.B.F Mulder, J.L.G. Dietz, 1999. Communicative Action Based Business Process and Information Systems Modelling with DEMO. Information Systems Journal, Vol.9, pp. 117-138. Yates, J., 1993. Control Through Communication : The Rise of System in American Management. Johns Hopkins University Press. 11
  12. 12. Zachman, J.A. 1996. Enterprise Architecture: The Issue of the Century. http://www.zifa.com (retrieved 3-9-1999) 12

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