A framework for_enterprise_architecture_effectiveness


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A framework for_enterprise_architecture_effectiveness

  1. 1. A Framework for Enterprise Architecture Effectiveness Takaaki Kamogawa,* Hitoshi Okada 1 SAP Japan Co.,Ltd, Tokyo Sankei Bldg., 1-7-2, bhtemachi, Chiyoda-ku, Tokyo, Japan 2 National Institute of Informatics, 2-1-2 Hitotsubashi, Chiyoda-ku, Tokyo, Japan I takaaki.kamogawa@sap.com, okada@nii.ac.jp Abstract- Since Japanese firms have recently been forced to this, there should be one business architecture whichinnovate their business models due to several factors, such as describes the business rules by which the business is putglobal operations, e-business, and Merger & Acquisition, they together, and includes the IT elements. Thus we call itare need to have flexible business information systems to adaptto their industry changes. HistoricaBy, the biggest ehaIIenge Enterprise Architecture. The reason why this is important isfacing to firms is “adaptation” t any environment. The o that the rate of change in business environment is causingflexibility of business information systems to create business organizations to have to synchronize these two activities tovalues has been discussed for a long time as one of critical reduce unnecessary delays and to do it cost-effectively. Fig.1.problems among Information Technology (IT) communities. shows this situation.One of potential solutions is Enterprise Architecture, which firststarted with e-Government. However, the effectiveness of level-uphnovatianEnterprise Architecture is stir1 highly uncertain and littleresearch evidence establishes the benefits of architecture orhelps firms asses their architecture. The purpose of this paperis to clarify problems when firms confront ebusiness systemimplementation from an Enterprise Architecture viewpoint, andto propose an analytical framework in terms of EnterpriseArchitecture effectiveness while discussing the relation withGovernance, and other relevant factors. Keywords: Enterprise Architecture; e-business;@-Government; Governance I. INTRODUCTION TimJEvolution Enterprise Architecture refers to how IT components fittogether to support business architecture. For instance, there is Fig.1. Positioning of Enterprise Architectureno way to change automobiles or airplanes without theproduct’s design sheets and descriptions. As seen in these In this research we will seek to address the Following majorindustries, the architecture for building them is mature. problems: 1. What critical success factors influence the application ofWhereas, when establishing business models; it isindispensable for firms to describe what they do, and how Enterprise Architecture.they will do it using IT. Although firms have applied 2. #at business values does Enterprise Architecture bring.Enterprise Architecture for nearly IO years, the Enterprise The purpose of this paper is to propose an analyticalArchitecture effectiveness is still highly uncertain and little framework in terms of Enterprise Architecture effectiveness.research evidence establishes the benefits of architecture or Section 2 discusses the related works i terms of Enterprise n Architecture Frameworks, and Enterprise Modeling to clarifyhelps firms assess their architecture. Although information system departments in Japanese current problems from e-business point’of view. Thereafter,companies have developed information systems for section 3 addresses a framework to assess Enterprise Architecture. Section 4 presents a framework to verifyapproximately 40 years in Japanese industries, they have beenfocusing on maintenance of the existing information system, Enterprise Architecture effectiveness by using business cases in Japan and the United States. In conclusion section 5ie. legacy systems which from management viewpoints arealready recognized to be hopelessly inadequate to satisfy concludes the paper and presents future directions with regardcument demand. In addition, even approximately 10 years to assessing Enterprise Architecture effectiveness.after implementing ERP (Enterprise Resource Planning) inmost Japanese top firms, the legacy systems still remain. 11. RELATED WORKSHowever, our interest is that we do not assert that the Certainly it is not a new concept for Japanese firms toremaining legacy systems are not good, but rather how firms implement Enterprise Architecture. There is considerablemanage IT resources to innovate current business models -doubt hodever, that not only business people including seniortoward e-business models more easily and flexibly. To realize executives,, Chief Executive Officer(CE0) and Chief - 740 -n-7803-8971-9/05/$20.00 02005 LEEE
  2. 2. Operation Officer(COO), but also for Chief Information levels due to the Clinger-Cohen Act 6 which requires USAOfficers(CIO), and system people understand the difference Federal Agency Chief Information Officers to develop,between Enterprise Architecture approach and traditional maintain, and facilitate integrated systems architecture. In thestandardization approaches by using modeling framework, or European Union the community is supporting andtechniques which are $milar to Architecture Frameworks we participating in several initiatives and projects, however, theywill discuss later. Moreover, it is often challenging enough for are not responsible for the result of projects [6].With regard tothem to recognize their own existing business system Enterprise Architecture framework.points of view, Zachmanarchitecture due to more increasing complexity of current Framework was originated in 1987 171. Mainly for businessbusiness information systems, heterogeneous business use, TOGAF, The Open Group Architecture Framework, wasinformation system environments, and lack of integrated produced by commercial standard consortium, The OpenEnterprise Architecture models. Group in 1995. When we discuss Enterprise Architecture, it is Is the Enterprise Modeling Framework a new discipline as essential to address some frameworks for e-Government, inone of techniques for developing Enterprise Architecture? We which its services are co-produced with the customers, i.e.have discussed how we should establish enterprise modeling citizens, since it is said that Enterprise Architecturefor over 10 years both from the viewpoint of business domain implementation in government has spread in Japanese firms.and from the viewpoint of business information system In 1999, FEFA, The Federal Enterprise Architecturedomain. Enterprise Modeling technology was first shown in Framework was produced by the CIO Council. In summaryan international conference in 1992[1]. The IFIP and WAC2 we present the main frameworks h a p Schekkeman describedWorking Conferences were to address problems regarding in his book [6] in Table 1. Due to Japanese industryenterprise integration [2]. From the process oriented background (METI) Ministry of Economy, Trade andpresentation aspects, several enterprise modeling Industry had surveyed Enterprise Architecture Frameworksmethodologies have been proposed for a decade: CIMOSA3, noted above which US government was trying to use. METIIEM4, and PERA. Process oriented presentation has many planed to promote an Enterprise Architectural initiative toadvantages relative to other solutions based on comparative Japanese industries in 2002, which was originally based onstudy among the three models mentioned above [3]. As seen the E F A model. Even though several Enterprise Architecturein the mid 1990s, virtual corporation was discussed [4], the Frameworks have been introduced all over the world and weconcern with the Enterprise Modeling for e-business or only focused on the research regarding the well-knowe-commerce has been growing recently. In particular for frameworks on this section, there are very few researche-business communities, an e-business reference process reports and thesis which give scientific support how to assessmodel has been proposed by MIT [5]. It can provide a the effectiveness of Enterprise Architecture.standard model for start-ups, which will conduct e-business Enterprise Architecture as noted above is playing a criticalentirely in the virtual world. Enterpriserepresentation, which role in innovating a firms business model toward e-businessis standard for designing and creating new enterprise, is model. In general, business model means a realized businessessential for virtual enterprise through using Internet design to create business value based on business vision andtechnologies. On the other hand, from the data oriented strategy to deal with related concerned parties. On the otherpresentation aspect, which is beneficid for IS communities, hand, e-business means business conducted by utilizingthe Entity Relationship Diagram (ER) q d the Data Flow methods brought by IT, mainly the Internet. When weDiagram (DFD) have been very useful to describe corporate consider Enterprise Architecture, we should focus on businessdata structure for business information system domains for domain as a high priority. In almost all e-business concerns,decades. In Japanese industries some firms have been trying we have to deal not only with intra-organizational businesst o m e these data and process modeling from points of view architecture but also inter-organizational business vchitecture. ,regarding business infomation system domains rather than Thus we should seek to identify the scope to discyss businesspoints of view regarding business domain, but other firms architecture including the relation between firms like banking,have not. As we stated above, although Enterprise Modeling vendors, suppliers, and customers. Based upon this meaning,is very close to Enterprise Architecture, it is clear that the we consider business models beyond f m s , in other wordsmodeling itself will not bring the effectiveness of Enterprise extended enterprise.Architecture. From the potential benefits of e-business conducted by On the other hand, the Enterprise Architectural initiative in extended enterprise, we address requirements of Enterprisethe United States is emerging as a significant Architecture effectiveness for organizationswhich result from Ibusiness-technology trend in the government sector. This cost and time savings to bring competitive advantage and totrend is visible at the federal, state, and local government support organizational change. At first e-business lowers the: cots of inventories, product customizations, communications, I International Federation for Information Processing and telecommunications. In addition to that, e-business 2 International Federation of Automatic Control lowers the costs of processing, distributing, storing, and 3 Open System Architecture for CIM 4 Integrated enterprise modeling 5 Purdue Enterprise Reference Architecture the Information Technology Management Reform Act also known as the Clinger-Cohen Act of 1996 - 741 -
  3. 3. retrieving paper-based information. It also further reduces Ai first, we will focus on what influential factors accelerate telecommunication costs since it is supported by the Internet Enterprise Architecture application based on these technology itself, which provides services cheaper than vdue assumptions. During this analysis, the following perspectives added networks like Electronic Data Exchange (EDI). Besides, will also be addressed: e-business is able to reduce inventories and also allow product -Enterprise Architecture Development Power (EADP).customization costs and indirect sales costs to decrease -Enterprise Architecture Cognition (EAC).through online business. Secondly, e-business facilitates -Enterprise Architecture with Governance (EAWG).organization responsiveness to changing business models by EADP shows that the roles and skills of those involvedsupporting business process engineering efforts. Finally, when applying Enterprise Architecture are a key successe-business results in a competitive advantage by contributing factor. EAC means that it is critical for senior executives to benot only to cost efficiency but also to customer focus and aware of the benefits of Enterprise Architecture. This includesproduct differentiation. Since e-business has become the not only the CIO and IT managers but also the CEO, COO,standard in our society and business world, firms have to and line of business managers.innovate their business models adapting to external EAWG presents that Governance means control processes,environments like laws, competitors, and supplier relationship rules, standards, roles and organization structure, which aremore quickly and flexibly i order to evolve their models n needed to drive the Enterprise Architectural initiative. Even ifmore quickly than before. When we do that, it is essential to f m s have established Enterprise Architecture, they wouldrecognize not only business structure but also business not have maintained it without a Governance mechanism for ainformation system structure. Our current interest for our long time. In the internet era, firms have to anticipate whereresearch is how Enterprise Architecture affects business and how they will alter the cohesion and boundaries of thevdues, and what results occur when applying Enterprise enterprises. It is necessary that Enterprise ArchitectureArchitecture. Kamogawa and Okada raised problems when reflects the latest developments and supports collaborationwe innovate enterprise model to adapt to e-business once and communication in which all stakeholders are involved.firms introduce Enterprise Architecture regarding this From Enterprise Architectural initiative points of view,argument [SI. Governance should take into consideration that it consists of In the next section, based on our interest and related work IT principle, IT architecture, TT investment managementwe discussed to this point, we will discuss a framework to framework, and prioritization.assess Enterprise Architecture. Secondly, we will focus on what business values are brought by Enterprise Architectural initiative. From the business information system point of view, we can only assume from the related works noted above in Section 2 that the benefits of Enterprise kchitecture are as follows: T ” - - WhanmllaLET-rIW, nrdfhmFEWioD4 1) Improve visibility €or business processes and information system. 2) Exclude the engineer’s own skills and techniques when developing business information system. I I DEVELOP A FRAMEWORK TO ASSESS i. ENTERPRISE ARCITECTURE 3) Accelerate productivity for developing business 4) information system. As we discussed in an earlier section, firms do not have to From the business point of view, we can also assume fromdevelop Enterprise Architecture by themselves from the the survey [lo] that the following business benefits should bebeginning. Instead, firms can refer to the Enterprise brought as an analytical dimensions:Architecture Frameworks. However, the framework itself 1) Business Process Excellence, lowcannot impact on anything directly though it will guide cost-consciousness, efficient and productivearchitecture development. Based on the outcome of the business operations.survey regarding Enterprise Architecture trend 2004[9], the 2) Customer Oriented, Extraordinary customerfollowing assumptions can be made: service, responsiveness, and relationship, based on 1) Methodologies and tools for Enterprise Architecture deep customer information (familiarity) and will be effective for developing and maintaining knowledge (research). Enterprise Architecture. 3) Innovation, First to market with innovative 2) The more Governance that is established and products and services, usually dependent on rapid penetrated into the T community, including the IT T R&D commercialization processes. Department, the more beneficial Enterprise 4) Strategic A&pbi&y, the ability to respond Architecture will be to Enterprise Architecture rapidly to competitor initiatives and new market development and maintenance. penetration opportunities. 3) If the top management of a f m improves cognition Thirdly, we will focus on how both the influential factors with regard to Enterprise Architecture, the effect and and the strategic business values should be related to present benefits of Enterprise Architecture will be higher. - 742 -
  4. 4. a framework in Fig.2. From an e-business point of view, This pattern shows that the key to Enterprise Architecturebusiness processes engineering has to be a key issue with effectiveness is governance, and also its development power.connection to not only intra-organizational business Thus Enterprise Architecture effectiveness could bearchitecturebut also inter-organizationalbusiness architecture. accelerated if both factors influence Enterprise ArchitecturalHow it is developed and by whom are important factors. initiative,Governance methodology to develop and maintain Enterprise Pattem#2: Correlation bemeen governance and EAArchitecture, which is relevant with management processes, is cognition.also one of critical success factors. If the management This pattern shows that the key to Enterprise Architectureprocesses go well when Enterprise Architecture is applied, the effectiveness is governance, and its cognition. Thuscost and time frame of business operations will be more Enterprise Architecture effectiveness could be accelerated ifaffected. In addition to the guiding principles, prioritizing IT both govemance and cognition for Enterprise Architectureinvestment t get the competitive advantage, creating new o influence Enterprise Architectural initiative.services and products, and focusing on customer service are Pattern#3: Correlation between EA Cognition and EAkey issues. Finally, senior management must recognize Development Power.Enterprise Architecture initiative to be a strategic adaptability This pattern shows that the key to Enterprise Architectureoption to best competitors. effectivenessis its development power, and also its cognition. Thus Enterprise Architecture effectiveness could be accelerated if both development power and cognition for I Infiucntial factors Enterprise Architecture influence Enterprise Architectural initiative. IV. BUSINESS CASES We explore case studies regarding several firms Enterprise Architecture of which there are very few cases in Japan at this moment, and also show a bench mark in a Japanese case and American case respectively to verify the framework we presented in the previous section. (1)Japanesefir-mcases 10 Japanese fr cases are surveyed [ 1I], and as a result, im we see the significant success factors, namely, standardization, modeling, principles, and transition planning (from previousF i g 2 An analysis pattem far Enterprise Architecture effectiveness architecture to new architecture). Thus Japanese firms have a tendency to focus on standarhzation (See Table 2.). When the effectiveness of Enterprise Architecture isanalyzed using three influential factors noted in this section, TABLE JAPANESEFIRM CASES FOR AWLYING ENTERPRISE 2. ARCIilTEcTUTU3.three analysis patterns can be raised. (See Fig.3.) EA (7 Development I.*.f ,...-. .*a EA Effectivcmss , &V"E If we assume that EAWG and EAC work interactively and simultaneously with the standardization initiative, we can say that in the case of pattern #2, Enterprise Architecture Pattem#l effectiveness could be accelerated. Based on the JapaneseEA ICognition EA Effectiveness EA fm cases noted earlier, standardization is critically involved in Governance and Cognition factor than other factors (See Fig.4.). As a result, we can bring about the following EA Effectiveness relationship: .,.....* * , ,/ *./ Govemance + ,* . EA EAWG+EAC > EADP+EAC.Pattern% Pattern#3 Cognition EAWG+EAC > EADP+EAWG.1)EnraprbsArchiloctMFig.3. Analysis pittems for Enterprise Archilecture effectiveness Pattem#l: Correlation between govemnce andEnterprise Architeetun. (EA) development power. - 743 -
  5. 5. (3) A firm case i United States as a benchtnurk case n Cisco Systems, a high-tech company strongly stresses that the standardization can bring a lot of benefits from Cisco’s - EA I... +...-‘. Pattern# 1 ;w*v EA Effectiveness EA *&“crnance experiences as follows7 (Business Process Excellence and EAWG): -Training and education cost can be’reduced. -Development cycle time can be reduced. -TCO can be reduced. Cognition E Effectiveness A Devtlopmcnt -System integration time can be rquced. y .1 T Pattem#2 / Govemmce . /’ Pattem#3 ..-. EA Effecriveness ’ * EA Cisco’s architecture had been constructed like a “silos” situation which results in many redundant business rules, many adjustment work, and many architecture levels. Cisco changed this architecture to a new Enterprise Architecture based on web portal services for customers, employee, PI FatoT&c suppliers and partners. Cisco’s business process became Arrhileclwe almost completely automated and standardized (Business Fig.4. An analysis pattem for Enterprise Architecture effectiveness with standardizationinitiative Process Excellence and EADP). Cisco’ IT Governance focuses on searching for a “best value” return (Customer To discuss further in depth, we will investigate’ two Oriented, Innovation and EAWG), the outcome of business business cases as a benchmark to valid the effect of proposed returns in the short run, and strict standardization. In addition framework. to,that, the business information system and business levels have to be aligned strictly among every organization (2) A firm case in Japan as a benchmark case (Strategic adaptability and EAC). As a result, we can map Tokyo Mitsubishi Bank (TMB) is one of the major banks these patterns into the framework to show the result, which is in Japan. TMB started to implement Enterprise Architecture presented by arrows (See Fig.5.).’ in 2002. The purpose of this implementation was to keep integration between business strategy and system structure, and to realize system optimization [ 121. The point in case of TMB is that every knowledge asset, including intangible assets stored in a single database, was triggered by senior management awareness (Strategic adaptability and EAC). The purpose of this is that TMB considered this approach one of methods to realize total optimization from dependent personal skills. At first TMB developed a principle which defines ; hipk system development and maintenance, and EA policy which ; &.i describes the statements that presented the integrity between business strategy and system design policy to valid implementation for business requirements (Customer Oriented and EAWG). TMB also developed three level architecture models (Innovation and EADP). The level-1 describes six main system groups just for management. The level-:! describes 5 subsystems to be broken down from Fig.5. A proposed framework f r Enterprise Architecture effectiveness o level-] to show application logic and data and relation with other subsystems for business users. The level-3 describes a V, CONCLUSION detailed design for applications which are over 200 for system Thus we can see that EADP can bring business process people. In addition, TMB defined a technology standard excellence and innovation, and EAWG can also bring which specifies its own technology standard and technology business process excellence, customer orientation, and trends, and also specifies assessment criteria which shows the innovation. Moreover, EAC can bring strategic adaptability. criteria for selecting packages and products (Innovation and These results are validated based on the two cases noted above EAWG). Moreover TMB defined Enterprise Architecture and by applying cases to proposed analytical framework management process, which is conducted by several reviews described in section 3. As we can analyze that pattem#2 is the to keep the quality (Business Process Excellence and EAWG). most effective, Enterprise Architecture Governance and As a result, we can map these.pattems into the framework. cognition are the most influential factors to bring about values Fig.5 shows the result of this, which is presented by dotted (See Fig.5.). arrows. We may, therefore, through analysis of the relationship Data Sburce:ERPResearch foyum,2005.02.09 -744-
  6. 6. between proposed framework and business cases, propose an develop an Ekerprise Architecture effectiveness model foranalytical framework in conclusion of this paper. We stress firms to use in their business model innovation using thethat it is essential that assessing Enterprise Architecture Enterprise Architecture initiative.effectiveness based on this study‘s approach be key to thedevelopment and enhancement of business service systems REFERENCESfor e-business. Thus Enterprise Architecture effectiveness [ I1 C.Petrie.Jr.. “Enterprise Integration Modeling Technology,”inR c 1st o.concerning e-business depends upon the following International Conf., MIT Press, Boston, 1992.perspectives: [ZI P.Bemus and LNemes (ed.), “Modeling and Methodologies for Enterprise Integration, in Proc. of the IFIP TC5 Working Conference ” 1. Creating a Governance model is a central success factor on Models and Methodologies for Enterprise Integration, Chapman &since not only in-house enterprise but also inter-enterprises Hall, Queensland, Australia, November 1995.should maintain the integrity of their business processes with 131 Kosankqk.. “Process oriented Presentation of modeling methodologies,” Modeling and Methodologies for Enterpriseeach other. Integration, (ed.)P.Bemus and LNemes. pp.45-55, 1996. 2. Developing flexible architecture for business [4) J.A.Byme, The Virtual Corporation, International Business Week, Newinformation architecture is necessary since e-business York :McGraw-Hills Publication, 1993. [ 5 ] MIT eBusiness. (2005, March 10). Available: http://ebusiness.mit.edurequires high performance and ability to process high data [6] Jaap Schekkerman, How to survive i n the jungle of Enterprisevolumes. Enterprise Architect would be highly recommended Architecture Frameworks, Canada: TRAFFORD. 7,004,pp.67.for most firms heading toward e-business. [7J Zachman J.A, “A Framework for information Systems Architecture,” IBM System Journal. 26(3). 277-288, 1987. 3. Driving Enterprise Architecture cognition for senior [8] Takaaki Kamogawa, Hitoshi Okada, “Issues of e-businessmanagement level is a high priority. Taking into account the implementation from Enterprise Architecture viewpoint,” presented atperspectives noted above is essential since activities for the 2004 Intemational Symposium on Applications and the Intemet, EFE-CS and IPSJ, pp.47-53,January 2004.developing Enterprise Architecture are conducted thorough [9] l a p . Schekkerman. IFEAD. (2005, April20). Available:inter-enterprises as wet1 as in-house enterprise, and since it is http://enterpnse-architectureinfohard to communicate with the related parties, including [IO] Peter Weill, “CISR Research Briefings 2004 Volume lv March, Julycorporate executives like CEO, COO, and CIO. and October Issues,” Center for Information Systems Research, M T I SIoan School Management. Cambridge Massachuseetts,pp.37, January Although this study has been made on Enterprise 2005.Architecture effectiveness, there is little agreement as to how [ I 11 Naoki Togawa, ”EA Japanese cases,” NIKKEI Computer, ~01.614,critical success factors will affect applying Enterprise Nov.2004, pp.60-70. [ 121 Tomohiko Hoshino. EA TAIZEN,Tokyo:Nkkei BP, 2004,PP. 12%-13 I .Architecture more in depth. Our final objective for ourresearch is to assess Enterprise Architecture effectiveness based on quantitative analysis more in depth, and also to - 745 -