Organizations have numerous, disparate ways of leveraging IT to automate or otherwise support the variety of business processes that constitute the operation of the business, typically focused on achieving business outcomes through continual optimization. But when the organization seeks to be innovative, the story gets tricky when they treat innovation itself as a set of business processes. Innovation requires disruption, thus requiring a different management approach from traditional BPM-friendly "better-faster-cheaper" management techniques that drive optimization but limit innovation and resilience. As a result, we're faced with the dilemma: invest heavily in custom integration to govern all our processes, thus sacrificing the agility drivers of innovation and resilience, or govern many of the processes manually in a piecemeal fashion, risking holes in our compliance. The answer: cross-process governance that leverages dynamic constraint satisfaction. Implement technology that is able to interpret and apply diverse metadata across the organization, including policies, rules, and other governance-related information, maintaining compliance "on the edges," while disruptive innovation takes place as needed across the organization.

1. Copyright © 2014, Intellyx, LLC
1
Cross-Process
Governance
How to Balance Agility &
Compliance
Jason Bloomberg
President
jason@intellyx.com
@theebizwizard

2. About Jason Bloomberg
• President of Intellyx
• Advise companies on their digital
transformation initiatives & help vendors
communicate their agility stories
• Write for Forbes, Wired, & DevX on
Digital Transformation
• Buy my latest book,
The Agile Architecture Revolution
Copyright 2 © 2014, Intellyx, LLC

3. How do You Manage?
• Each Line of Business/Division has its own
goals & business outcomes
• LoB Management drives
toward optimizing those
outcomes
• Maximize shareholder
value/profit/revenue
• Better-Faster-Cheaper,
then repeat
Copyright 3 © 2014, Intellyx, LLC
Photo Credit: Kenny Loule https://www.flickr.com/photos/kwl/

4. The Problem with Better-
Faster-Cheaper
• BFC pushes technology and the organization to
its breaking point
• Less able to deal with disruption, leading to
failure when the unexpected happens
• Failure can occur anywhere
• Resilience eventually becomes top priority
Copyright 4 © 2014, Intellyx, LLC
Photo Credit: Frits Ahlefeldt-Laurvig https://www.flickr.com/photos/hikingartist/

5. Optimization vs.
Innovation
Innovation
Disrupt status quo
to allow human
creativity to
flourish
Optimization
Establish
feedback loops
that maximize
business
outcome
Copyright 5 © 2014, Intellyx, LLC

6. Innovativeness
• The ability to introduce change into the business
environment in order to achieve a strategic
advantage
– New products or services
– Expand market share
– Enter new markets
Copyright 6 © 2014, Intellyx, LLC
Photo Credit: Kay Kim https://www.flickr.com/photos/kaykim/3883340152/sizes/o/

7. Business Agility
• Responsiveness
– Tactical value
• Resilience
– Risk mitigation
• Innovativeness
– Strategic value
Copyright 7 © 2014, Intellyx, LLC
Photo Credit: Masonite Burn https://www.flickr.com/photos/masonite-burn/6273626739/sizes/l
Ability to respond to change in the
business environment and leverage
change for competitive advantage

8. Innovation Requires
Disruption
• External Disruption
– Competitive pressures/new
entrants
– Globalization
– Regulation
• Internal Disruption
– Digital Transformation
efforts
– Innovation initiatives
Copyright 8 © 2014, Intellyx, LLC
Photo Credit: Charles Wagner https://www.flickr.com/photos/chazwags/

9. Disruption Introduces
Risk
• Optimization without
disruption stifles
innovation
• Disruption without
optimization is an
innovation crap shoot
• Optimize what you
can & disrupt what
you must
Copyright 9 © 2014, Intellyx, LLC
Photo Credit: epSos .de https://www.flickr.com/photos/epsos/
Mitigate risk with resilience

10. Resilience
• The ability to respond
quickly and efficiently to
negative change in the
business environment
– Managing risk
– Bouncing back from
adverse events
– Disaster recovery
• Tactical business driver
Copyright 10 © 2014, Intellyx, LLC
Photo Credit: Joe https://www.flickr.com/photos/bitshaker/167480266/sizes/o/
The opposite of brittleness

11. Process for Innovation?
Disrupt Innovate
Innovation is not a typical
business process!
Copyright 11 © 2014, Intellyx, LLC

12. Recipe for Agility
Copyright 12 © 2014, Intellyx, LLC

13. Better Way to Manage
• Build cross-organizational teams
• Understand when to
optimize and when to
innovate
• Embrace disruption
• Encourage resilience
• Give people the tools
they need and
get out of their way
Copyright 13 © 2014, Intellyx, LLC
Photo Credit: Philip Leara https://www.flickr.com/photos/philleara/

14. Bimodal IT: The Wrong
Way
• Digital Team
– Self-organizing
– Fast-moving
– May follow
Agile at least
in spirit
– Little
governance
• Traditional IT
– Hierarchical
– Slow-moving
– Waterfall-centric
– Formal,
bureaucratic
governance
Copyright 14 © 2014, Intellyx, LLC
Photo Credit: Keith Williamson https://www.flickr.com/photos/elwillo/
Ungoverned Shadow IT is Result

15. Rethinking Bimodal IT
• Business-driven transformation of traditional IT
– Iterative
– Opportunistic legacy modernization
– Cross-cutting reorganization to DevOps culture
– Increased collaboration with digital teams
– Move toward
continuous
development &
integration
Copyright 15 © 2014, Intellyx, LLC
Photo Credit: Andrew Magill https://www.flickr.com/photos/amagill/
Increased automation of governance

16. Connecting IT
Governance to GRC
• Governance, Risk
Management, & Compliance
– Broad-based business
context
– Traditional GRC tools “hard-wired”
to applications
– Inflexible
– Separate architectural
context from IT governance
• Business agility requires
automation of GRC
Copyright 16 © 2014, Intellyx, LLC
Photo Credit: Michael Coghlan https://www.flickr.com/photos/mikecogh/

17. Governance as Agility
Enabler
• Simple rules & policies lead to
complex emergent behavior
– Which ones lead to agility?
• Levels of governance
– Low-level rules & policies
– Departmental
– Organizational
• Governance has negative connotation
– Reputation for limiting productivity
– Governance, Risk, & Compliance tools integrated in
traditional manner
Copyright 17 © 2014, Intellyx, LLC
Photo Credit: Mike Lewinski https://www.flickr.com/photos/ikewinski/9430887561/sizes/l

18. Separating Software
Behavior into Policy Layer
• “Policy” defined as rule or set of rules
• “Aspects” in aspect-oriented programming
• Generally, “constraints” on behavior of system
• Can apply narrowly or broadly
• Technical context, business context, or both
Copyright 18 © 2014, Intellyx, LLC
Photo Credit: Glen Scarborough https://www.flickr.com/photos/photographerglen/

19. Layers of Abstraction
META Dealing with Change (metaprocesses, metapolicies, etc. )
DYNAMIC Abstract Models (dynamic schemas, dynamic APIs, etc.)
ABSTRACTED
(LOGICAL)
Abstracted Technology (schemas, software interfaces,
Copyright 19 © 2014, Intellyx, LLC
etc.)
PHYSICAL Technology (software, middleware, databases, etc.)

20. Supporting Policy Change
• Create dynamic policy models
• Represent policies as metadata
• Establish metapolicies for policy change
• Implement technology that supports policy
creation, mediation, and enforcement
Copyright 20 © 2014, Intellyx, LLC
Photo Credit: jason Rogers https://www.flickr.com/photos/restlessglobetrotter/

21. Metapolicies &
Governance
• Meta
– How variable must policies be?
– What are your policies for doing
governance?
• Dynamic
– How to represent policies
abstractly?
– Realize dynamic policy
representations by governance
infrastructure
• Abstract
– Metadata representations of
individual policies
Copyright 21 © 2014, Intellyx, LLC
Photo Credit:Mike Mozart https://www.flickr.com/photos/jeepersmedia/

22. Automating Compliance
• Policies that apply to human
behavior
– Provide tools that make it easy
to comply
• Policies that apply to
technology behavior
– Fully automated compliance
• Shift human behavior to
automated behavior when
appropriate
– Especially when compliance is
improved
Copyright 22 © 2014, Intellyx, LLC
Photo Credit: Robin Zebrowski https://www.flickr.com/photos/firepile/

23. Shifting Role of
Governance
• Old Way
– Paperwork-heavy
– Morale-killing policies & procedures
– Bureaucratic & slow
– “Scar tissue” that impedes
innovation
• New Way
– Highly automated
– Focus on “edge cases” where
governance is essential
– Depends on dynamic constraint satisfaction
Copyright 23 © 2014, Intellyx, LLC
Photo Credit: Pascal https://www.flickr.com/photos/pasukaru76/

24. Introducing Dynamic
Constraint Satisfaction
• Constraint satisfaction
– Process of finding a solution to a set
of constraints that impose conditions
that variables must satisfy
• Dynamic constraint satisfaction
– Set of constraints evolves
• Conditions are policies & rules
• Every person & system within an
organization is expected to comply
with multiple layers of policies and
rules
• Policies and rules are always subject
to change
Copyright 24 © 2014, Intellyx, LLC
Photo Credit: Pink Sherbet Photography https://www.flickr.com/photos/pinksherbet/

25. Dynamic Constraint and
Emergence
• Dynamic constraint satisfaction
ensures all rules comply with
– Applicable regulations
– Policies
– Other rules across the entire
organization
• Automating the solution of
such problems in real time
leads to emergent behaviors
– Unpredictable behaviors taken
together lead to higher order of
behavior of organization as a
whole
Copyright 25 © 2014, Intellyx, LLC
Photo Credit: Sid Mosdell https://www.flickr.com/photos/sidm/

26. Dynamic Constraint
Satisfaction
• Enforce the full breadth of
business & technical
policies
• Run time environment
must solve for the
combination of all
applicable policies
– Dynamically at run time
– Across the entire
application environment
Copyright 26 © 2014, Intellyx, LLC
Photo Credit: Robson# https://www.flickr.com/photos/_robson_/

27. Governance & Agility?
• Do we get business agility?
• Agility doesn’t mean chaos
– If everybody in an
organization did whatever
they wanted to without any
rules or policies
– Rules & policies
inconsistently
communicated or applied
• Secret to business agility is to empower people
to innovate within constraints of organizational
policy
Copyright 27 © 2014, Intellyx, LLC
Photo Credit: Pascal https://www.flickr.com/photos/pasukaru76/

28. Closing the Loop on
Governance
• Rules & policies may lead to undesirable behavior
• Measure effects in context of operating business
– Customer behavior, financial
metrics, etc.
• Big Data analysis of policy
efficacy
– Feedback for continual
improvement
• Avoid confirmation bias
– Favoring evidence that
supports hypotheses
Copyright 28 © 2014, Intellyx, LLC
Photo Credit: Dave Gough https://www.flickr.com/photos/spacepleb/

29. Cross-Process
Governance
• Governance as layers of policies & rules
• Need to calculate effective policy
• Cross-process, cross-organization, in & out of Cloud
• In real time
Cross-Process
Governance
Process “A” Division “B” Team “C”
Copyright 29 © 2014, Intellyx, LLC

30. Thank You!
Jason Bloomberg
President, Intellyx
jason@intellyx.com
@theebizwizard
Send email NOW to bbc14@intellyx.com to
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