Enterprise Architecture as foundation for Electronic Business.doc
as foundation for
Victor E. van Reijswoud
Devote Institute of Technology
P.O. Box 73
3980 CB Bunnik, The Netherlands
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.
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
This paper proposes the Enterprise Architecture model. The model provides an
overview of the architecture of an organisation, it allows to describe alternatives and
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
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.
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
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.
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
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
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
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
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
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.
Altering business objectives by using internet
based IT solutions
Aligning business objectives by
using internet based IT solutions
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.
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-
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
investigate the possibilities against the characteristics of their business, the mail order
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
also the mission and the strategy had to be redefined in the light of the new
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
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
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
Culture Models of Strong focus on Awareness of
knowledge traditional possibilities of the
distribution in the communication internet
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.
S1 A1 A2 S5
Customer Deliver Deliver
T1 order item T2 stock item T5 Supplier
order item System
T1 MO (partial) order item
S1 T1 Transaction
Customer Pay order
T3 Executor link
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.
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.
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.
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