The Architecture of Change

The Architecture of Change
Business Architecture and the meaning of Digital Transformation
This paper describes digital transformation and its illumination using a discipline known as business
architecture. In Part 1, we explore the term and point to a need for a generative abstraction in order to
understand the its meaning. Part 2, we explore the power of abstraction to render insight and mobilize
thought. Part 3 lays out the basic principles of business architecture and applies them to a business
planning its own digital transformation. Finally, we argue that, insofar as digital transformation has a
meaning, it is architectural in nature.
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Part 1: What is Digital Transformation?

Figure 1: Fish to Fowl, 'Class' Transformation

“Digital Transformation” has emerged as a catchphrase used to describe fundamental changes to
organizations and institutions caused and enabled by modern digital information technology. Various
consultancies and scholars have surveyed and cataloged these changes, but there is no model of how
transformation occurs or, indeed, what is being transformed. If Uber is a taxi company, and if all taxi
companies share a similar structure in order to be a taxi company, what makes Uber so different?
Before we propose an answer to this question, it is worth investigating how the phrase “digital
transformation” is being used and what is intended by it. Even if the meaning remains vague and
ambiguous (and it will), it is worth understanding how the conversation has gone so far. If nothing else,
we can thereby avoid merely adding yet another opinion to the heap. If we are successful, we can go
beyond mere description and offer some very practical advice concerning how digital transformation


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can be actively and intentionally effected. But let’s start with the data – the digital transformation
discourse as it has emerged thus far.

Figure 2: a collage of Digital Transformation Discourse
You say you want a transformation?
Consider the phrase “digital transformation” in isolation. In ordinary speech, it is an attributive
adjective – “digital” specifies the kind of transformation. But in recent years it has become a proper
noun,i
standing for phenomena occurring in commerce, science and culture related to the changes that
digital technology makes either possible or necessary.
For the web as a whole, Google shows the incidence of “digital transformation” as a search term
increasing 10-fold in just 2 years. Amazon lists 333 book titles for the string “digital transformation.” Of,
these about 2/3 have been published in the last 5 years. Forbes.com returns 632 results and Harvard
Business Review (HBR.ORG) 125. It has become, as is said in the vernacular, “a thing” – a meme in its
own right.


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Figure 3 Google Trends "Digital Transformation"
But does this phrase “digital transformation” mean anything definite? Does it have a definition? We
have to look to the salient literature (including online videos and presentations) as a starting place, since
that is where the term is being defined.
Wikipedia defines digital transformation as “the changes associated with the application of digital
technology in all aspects of human society.”ii
The World Economic Forum also takes a similarly broad
view of the phenomenon, defining it as “[r]apid advances in digital technology [that] are redefining
society.”iii
MIT Sloan Management Review, in collaboration with CapGemini consulting, focuses on
business and defines digital transformation as “the use of technology to radically improve performance
or reach of enterprises”.iv
IBM states succinctly that it involves “[c]reating new business models where
digital meets physical”.v

But these definitions are unsurprising and coincide with what we surmise digital transformation to be in
the first place; digital transformation is surely business transformation, caused or enabled by digital
technology. Given this, and the fact that digital transformation has been ongoing for at least 40 or 50
years now, one wonders: why the sudden attention to the phenomenon and, moreover, why now?
After all, the impact of information technology on humanity has been the subject of writings since at
least the 1940s and 50s.vi


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Contemporary digital transformation, according to IBM, is rooted in technology’s pervasiveness in
everyday life and in consumer empowerment:
As customers became increasingly empowered based on pervasive access to online
information, along with a multiplicity of choices and channels, their expectations ratcheted
skyward. As a result, customers have now become the primary force behind digital
transformation in all industries.vii

Figure 4 IBM evolution of digital transformation
In IBM’s analysis, digital transformation is a culmination of infrastructure and web strategy, resulting in
the transformation of business models themselves. The tool has, in this view, turned back on the tool-
user and transformed it (the business, the industry, the economy, the society… ).
The World Economic Forum has a different point of view. The transformative power of information
technologies lies in their combinatorial effects, which accelerate progress exponentially, and which are
today are reaching ‘critical mass’ worthy of trying to describe and systematize.


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Figure 5: World Economic Forum 2016
In this view, technology is having recursive, self-reinforcing effects, which are reaching a ‘critical mass’ in
the businesses and business environment they affect. Digital transformation is change-inducing-change
in which technology itself has turned back on the business model that uses it.
Finally (in this incomplete surveyviii
), CapGemini/MIT Sloan defines digital transformation as “the use of
technology to radically improve performance or reach of enterprises.” What is new and transformative,
according to CapGemini, is the fact that the impact of digital technology is being felt in large, traditional
companies whose business is manifestly not digital. The somewhat vague definition (doesn’t everybody
have a website?) is made more definite by describing it as three ‘pillars’ of nine elements; digital
transformation is the impact of digital technology on the business’s customer relationships, its internal


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processes or its business model.ix

Figure 6: A famous chart by CapGemini
What’s so transformational about all this?
Pervasiveness, rapidity, empowerment, combinatory effects … what each characterization of digital
transformation is pointing to is the secondary and tertiary effects that digital technology is having on the
environments in which it operates. It is not, for example, merely the fact that anyone anywhere on the
planet can now view a real time video of an event occurring in Minneapolis; it is that this fact of
planetary simultaneity has passed onto tacit assumptions that we make concerning awareness, action,
choice and even judgment. One sometimes thinks this is why we see time as somehow “speeding up”.
The assumptions affected by technology permeate our “average everydayness.” It is often those
products or inventions that “disappear” or become inconspicuous – the telephone, the paperclip or the
electric screwdriver – that have the greatest effect our shared fabric of meaning. It is because


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technology has such fundamental effects that digital transformation – as a thematic field of study – is a
credible and appropriate concept.
In the context of business, digital transformation means that the very suppositions on which business
models are founded are changing. That the largest taxi company need not own taxies; that the largest
movie house should own no theaters; that the world’s largest telecom provider owns no switches,
repeaters or transmission lines – these are profound changes to taken-for-granted business structures
that have been in existence for hundreds of years.

Figure 7: Source IBM
Yet, even after transformation, we do recognize these altered entities as entities of a particular sort –a
taxi company, a telephony provider, a movie purveyor. Their essential nature remains the same. What
is therefore transformed and what persists through transformation?
To answer questions like these, what is needed is a generative abstraction –a model using general
concepts which can be used to describe any business of a given kind, yet which is sufficiently rich and
specific to tell us what we can or must do to assimilate technological change. With such a model, we
have a possibility of repeatedly, deliberately and creatively setting about on a digital transformation.
We can, so to speak, put our finger on what changes and what endures in our business. Without one,
we can at best imitate what others have done. Without it, digital transformation is blind – an
exhortation without substance, repeatability or insight.


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Part 2: The power of abstraction

Figure 8: Subway Abstract. Copyright 1972 Massimo Vignelli
What about a business is transformed when its essential nature nevertheless stays the same? In the
case of Uber, for example, what allows us to recognize it as a taxi company, despite the radical
reshaping of an entire industry? What is transformed and what persists? This is not mere philosophical
theorizing concerning “quiddity” or “essence” – it is of greatest pragmatic significance for business in
the 21st
Century. The fortunes of entire industries hinge on the answer, as does technology assessment
and policymaking.
My intent is to not only describe the phenomenon of digital transformation at a structural level, but to
arrive at a prescription for purposefully setting about making it happen. I am looking to enact digital
transformation rather than merely observe it. I am seeking, if not a recipe, then a method for deliberate
digital transformation.
The power of abstraction
You have perhaps heard that “software is eating the world” and that an economy of “disruption” is
upturning business models everywhere. But for the clothing retailer, the consumer goods manufacturer


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or distributor, the insurance company or the financial institution seeking a strategic response to
technological change, these incantations and catch-phrases are of little use and do little to provide
positive instruction or criticism.
Nor will it help to collect instances and adduce from them a common digital transformation ‘signature.’
The businesses and industries involved, their dynamics and imperatives, are simply too diverse to arrive
at a technique or an instrument by induction. What would it mean “to uber” the retail clothing industry,
for example? To end-run Macy’s or Nordstrom’s by matching the consumer with the clothing
manufacturer in China or Bangladesh? The consumer looks to these retailers precisely because they
perform the services of selection and distribution on her behalf. The simple-minded transplantation of
exemplars from the taxi business will only accidently provide us the principles we are seeking.
To set about transforming a business in a principled and deliberate way, we need to understand what
“the business” is, apart from its particular people, offices, automations, and tangible and intangible
assets. We need to dissociate from particulars, so that we can speak of taxi companies per se,
broadcasters per se, movie houses per se -- without regard to any particular business. To do so is to
abstract from specific instances and to identify those features shared by whole classes of businesses.
Abstraction is fundamental to the innovation necessary for digital transformation:
In the innovator’s tool box, abstraction is one of the most powerful tools. For the creative mind,
it offers a way to step away from the mundane to find fresh ways to conceptualize… The power
to abstract is fundamental to innovation. When ideas are scarce, a fresh viewpoint makes all the
difference. Abstraction is also a hierarchical process, and that perfectly fits the needs of the
innovator facing complex problems requiring system solutions.
– Charles Owenx


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Figure 9: Abstracting a house, from Owen
In moving from the particular to the general, we can focus on those features of a thing that are essential
to its function, which might be implemented in new ways, or that might share common potential
solutions with other things. In figure 2 (perhaps a trite example), we see that a plant might serve better
than a wall for dividing space, given some criteria of desirability. If we contract with a company for
utility maintenance, we might inquire whether they provide cooling systems work in addition to heating.
Abstraction enables the creative re-assembly of concepts and their subsequent realization in specific,
particular things: “[r]eleased from the mental restrictions of conventional names and imagery, the
innovator can speculate freely upon what a house might be with a new approach to surfaces, storages
and the rest of the necessities of home living.”xi


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The business as system
Abstraction is not merely a method for innovative thinking, it can also provide the ability to model a
business as a system. A system is a collection of components that relate to one another according to
principles that govern their behavior and interaction. I would go so far as to claim that it is only when
rendered as a system that a business can be rigorously described, analyzed, assessed, measured and
understood.
A systematic view of business requires not only that we abstract away from particulars and identify
those features that hold true of all instances (e.g., in the above diagram, lamps, windows and skylights
are “lighting”), but that our abstractions endure over time – that they have enough permanence for us
to say that they are the self-same entities exhibiting the self-same properties at time T0 as they do at
time Tn. An order processing department that today receives orders and tomorrow refers them on is
not “the same” department, and we are therefore unable to make any stable generalizations about it.
In the end, treating the business as a system enables human beings to share a common picture of the
business – it makes any discussion about the business possible by virtue of the fact that we use the same
words to describe the same things.xii
It allows us to say what the business does, how it does it, who does
it, why they do it and when it gets done. It allows us to say what about the business is working and how
well. Conversely, it allows us to say what is failing and why.
Most importantly for the discussion of digital transformation, viewing the business as a system enables
us to envision and model alternate configurations for implementing strategy and for delivering value by
using technology. The abstract and enduring components of the business system become variables that
can be modified, replaced and augmented by means of mobile communications, data analytics and even
artificial intelligence. By conceptualize the business as a system, the ‘art of innovation’ is aided by a fair
degree of analytical rationality; transformation can be explored in a systematic way using a common
language. It is for this reason that analysts say that “digital transformation isn’t really about
technology.”xiii
Digital transformation is business transformation, caused or enabled by information
technology.


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Business architecture as system architecture
Insofar as business can be described as a system, it is amenable to a system architecture. A system
architecture is a conceptual model that defines the structure, behavior, and more views of a system.xiv

The system architecture that describes the structure and behavior of a business is business architecture.
Business architecture, according to the Business Architecture Guild, is “a blueprint of the enterprise that
provides a common understanding of the organization and is used to align strategic objectives and
tactical demands.”xv

In the last and final part of this paper, we will use business architecture to model digital transformation,
arguing that it is through business architecture that we can understand what digital transformation
means, and that by using business architecture, strategy and business models, we can set about
intentionally to effectuate a digital transformation in even the most staid and prosaic of businesses – in
this case, an ordinary dry cleaning business fighting to stay in business.


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Part 3: An architectural interpretation of digital transformation

Figure 10: Wave of the Future. Image from "Wave of the Future" poster by Brad Pomeroy and Judy Kirpich (1982)
The story so far
Because transformation is by definition a fundamental change in the nature of a thing,xvi
the method for
purposeful change must look beyond the particular and accidental features of a business. Building a
website or a mobile app to take orders online rather than by phone is not necessarily transformational
and does not necessarily impact either the business model or the position of the business vis-ā-vis the
competition. Such changes can be very superficial and even counterproductive, as many a CMO or CEO
can attest.
Transformational change requires that we abstract from particulars and identify those features of a
business that are essential to its function and that are stable over time. By identifying the enduring
components of a business in a rigorous and systematic way, we free the imagination to envision
alternate configurations that might better satisfy the goals we are after. Far from constraining
creativity, an exacting and structured process enables the imagination by providing definiteness to our
abstractions. Finally, I’ve said that that the tool we need for business transformation is a system


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architecture that that describes the structure and behavior of a business qua business –a business
architecture.
Business architecture as essential structure
I argue that the concepts of business architecturexvii
offer the just the generative abstractions we are
seeking. They are among the most well-developed and universal of business abstractions, useful and
comprehensible across all businesses. Business architecture provides common terms for addressing the
what, who, how and why of all businesses, so that we can agree (or disagree) on our descriptions of
particulars. It provides for an essentially complete model of all the elements comprising the business,
and is capable of aligning with other low-level, domain-specific or viewpoint-specific models of the
business related to IT, Marketing, Product Development, Strategy, Process, and so on.
Business architecture enables us to build a model of a particular business (or of a type of business),
which in turn allows us to ask questions and pose hypotheticals about what the business consists in and
how it operates. Just as a building architecture establishes a basic vocabulary and set of principles for
describing surfaces, structures, materials, functional units, aesthetic patterns and the like, so too does
business architecture use certain fundamental concepts to describe the way a business is constructed.
The core elements of business architecture are value, capability, information and organization. These
are stable, enduring business structures that persist over long periods of time, both during the lifetime
of a specific business and over the course of history for businesses of that sort (existing for perhaps
hundreds of years). These elements are fundamental to a business and attach directly to strategy, and it
is to strategy where we must look first for truly transformational change.


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Figure 11: core business architecture elements
To avoid becoming pedantic, I refer the reader to the Business Architecture Guild’s free introductory
chapter of BIZBOK,xviii
or to its video overviewxix
for a full description of the basic concepts. For those
nevertheless wanting a short primer, here is a footnote.xx

Let’s forge ahead employing business architecture concepts ‘on the fly’ in an example that follows. I’ll
hope to convey some of the meaning of the terms for these concepts by using them in an imaginary but
concrete context.
Act locally, think globally, hold the starch
The substrate for our story of digital transformation is a business familiar to anyone who has ever worn
dress attire: the neighborhood dry cleaner – it accepts shirts, dresses and suits for cleaning and
pressing, gives you a pink ticket and makes your clothes available for pickup a couple of days later,
clean, pressed and on hangers or folded.
Why use such a humble, prosaic small business example for illustration? Business architectures have
been developed for banks and large financial institutions, aircraft manufacturers, drug companies,
insurance companies, utility companies, airlines and even the U.S. Patent Office. Dramatic case studies
•data and a context
used or produced by a
capability for decision-
making, or as a product
•a network of business
units and collaborative
groups that have
capabilities
•What the business
does; its abilities and
capacities for
achieving outcomes
•What a stakeholder
obtains from the
business; the reasons
the business exists
Value Capability
InformationOrganization


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of digital transformation have been documented for paints manufacturers, apparel manufacturers,
international mortgage companies, media companies and airport operations specialists.
But if business architecture is sufficiently universal, and digital transformation sufficiently pervasive,
each should apply in equal measure to all strata of business activity. Small business retailers are no less
affected by truly profound changes than large multinationals, and the fundamental structure of their
operations is simpler and more amenable to illustration than that of large and complex organizations.
Solving the strategic challenges of a local dry cleaner will be clearer, simpler and perhaps even more
rewarding and entertaining than grappling with a large and complex big business.
I will first develop a baseline business architecture for the dry cleaner, using my own casual
acquaintance with the way dry cleaning operates, supplemented by a modicum of web research. In a
real world setting, the business architecture would be driven to far greater levels of detail, undergirded
by detailed interview and review by subject matter experts far more qualified than I. To detail a real
architecture, I would examine documents, interview stakeholders and engage in deep discussions about
what a dry cleaner does with those who actually perform the work.
Next I’ll posit a strategy for the business, which will lay out some basic objectives and provide a target
state against which its initiative can be measured and evaluated. I then engage in an act of imaginative
abstraction involving both the rigorous structure supplied by business architecture and the free play of
fantastic potential that modern digital technology represents. Finally, I will speculate on what a to-be
architecture might be, which is necessary to facilitate transformative change to the business model.xxi

Sauber. Like Uber only Cleaner
Sauberxxii
is a full service dry cleaner, located on the main highway near the commercial center of the
city, but on the opposite side of town from a growing residential area. It operates a retail store for
customers to drop-off, pick-up and pay for their clothing.
In an adjacent property, Sauber operates a
laundry that allows it to save costs of outsourcing and provide fast turn-around for clean laundry.
Sauber exists to serve its stakeholders: its customers, owners, investors and employees. It provides
value to these stakeholders through a set of connected activities that produce the item value to the
stakeholder, called value streams. Sauber’s most important stakeholder is the Customer, who receives


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freshly laundered clothes packaged for immediate use. The core value stream that provides this value is
called simply “Customer Laundry” and it is comprised of stages that encapsulate the activities that must
be completed to deliver the customer value. The value stream for Sauber is probably very similar to
other dry cleaners’ and looks simply like this:

Figure 12: Customer Laundry Value Stream
Each of the stages Customer Intake, Clothes Clean and Customer Fulfillment produces value for
its own stakeholder (which may be an employee), and each has it its own entry and exit criteria.
Intake, for example, is initiated by the customer stakeholder and the value delivered to the
employee stakeholder is wash-able laundry, properly identified and tagged. Tagging the laundry
enables it to transition to the “Clothes Clean” stage.
Each stage requires certain abilities or capacities in order to complete successfully. In the case of
Customer Intake, the business must be able to greet the customer, record her or his name and describe
the clothing for dry cleaning, provide a quote and a ready date, bundle the clothes for cleaning and tag
the clothing with a number and record that number of a receipt for customer pickup. Each of these
business aptitudes is a capability; “a particular ability or capacity that a business may possess or
exchange to achieve a specific purpose or outcome”.xxiii In short, capabilities are what the business
does. The capabilities necessary to support each value stage might look like this:
Customer Intake Clothes Clean Customer Fulfillment
Custome
r
Custome
r
Washable
Laundry
Washed
Laundry
Clothes
returned
clean


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Figure 13: Value Stages and supporting Capabilities
Each capability can be decomposed into more specific constitutive capabilities; Clothes Tagging, for
example, might consist of Tag Printing, Tag Sequence Management, Tag Attachment, Tag Numbering,
Tag Matching and the like (not shown). The level of granularity is dictated by what is necessary to fully
articulate what the business does and to fully identify the business objectsxxiv
that are required for the
analysis.
Capabilities act on business objects, which may be tangible (Clothes) or intangible (an Agreement). The
action of capabilities produces a result – an “outcome” – that can be used by other capabilities; for
example, Agreement Creation produces an executed Agreement, which becomes a specification for
capabilities supporting the “Clean” value stage (“6 shirts – easy on the starch – complete by Thursday
the 10th”).
To the degree that the outcome of a capability has a name, it can form part of the essential structure of
an information map – another essential business architecture modeling principle. An information map is
comprised of concepts like “shirt” or “jacket” or “pants,” which may be organized hierarchically (“dress
shirt” and “causal shirt” are “shirts”) and whose relationship to other concepts can be specified (“casual
shirts are not ironed”). These rudimentary business concepts, which are undoubtedly part of the pricing
structure, form a vocabulary that can be later be used to found and validate a database logical schema
and drive requirements for data processing (we’ll get to IT / automation alignment and requirements
below).
• Customer
Greeting
• Agreement
Creation
• Clothes
Handling
• Clothes
Tagging
• Receipt
• Clothes Pre-
treatment
• Clothes
Washing
• Clothes QC
• Clothes Iron
• Clothes
Packaging
• Clothes
• Customer Greeting
• Customer Payment
Processing
• Agreement
extinguishment


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Figure 14: information mapping
We might continue to elaborate the basic architecture of Sauber (or any dry cleaner) by continuing our
exploration into information, and from there to organization (which is not the same as an org chart),
stakeholder, product, initiative and policy. Each of these domains brings its own domain concepts (for
example, “Product” and “Product Line” from product mapping), and each of these domain concepts
maps back to value, capability, information or organization. Changes in any of the domains can affect
the structure of other domains (e.g., changes to the capability map may affect the organization map). In
this way, a complete “blueprint” of the business can be developed, shared and used for a variety of
purposes, from investment analyses, to mergers and acquisitions to new product requirements,
outsourcing, supply chain, joint venture, compliance and a host of other scenarios.
Location, location, location
More immediately, however, we are concerned with how the owners of Sauber might employ
technology to address a very fundamental problem in their business. Because of its location, Sauber is
at a competitive disadvantage to other dry cleaners in the city, most of whom are located much closer
to customers’ homes. More importantly, Sauber is losing business as customers move further away
from its downtown location. Sauber is increasingly inconvenient even to the ‘white collar’ office
workers whose commutes no longer go past Sauber’s retail storefront. Retail expansion opportunities
into these residential areas is limited, expensive and will be far from Sauber’s laundry, negating the
competitive economic advantage that Sauber gains from having its own cleaning capabilities.
Sauber outlines a simple strategy (see Figure 6): it wants to grow the customer base without growing its
retail geographical footprint, and to retain and get more repeat business by keeping more customers
longer and by increasing transaction frequency and regularity. Each of these objectives is decomposable
into sub-objectives, which can become ever-more specific.
men shirt
dress shirt casual shirt
ironed
pre-treated
is
relationship between conceptssubsumption
relationship


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Figure 15: Simple Strategy Map for Sauber
When the business superimposes these strategy objectives on its existing value and capability map,
some interesting insights begin to emerge (see Figure 7). The “Growth” objective (left) is anchored
squarely in the Customer Intake value stream stage – to gain market share and enter new markets
without geographic expansion means that the capabilities comprising the Intake stage will need to be
examined for innovation possibilities. The sub-objective of minimizing dependence on geography will
happen in this stage, using these capabilities, if at all.
Meanwhile, the “Repeat Business” objective is, by definition, delivered after the Return stage (after the
Customer Laundry value stream completes). Objectives like increased loyalty and incidence will require
that we examine what can be done to affect them in either existing value stages, or in an as yet non-
existent post-Return stage (the “?” in figure 7).
Grow Customer
Base
Grab Market Share
without Geographic
Expansion
minimize
geographic
importance
avoid location costs
Create New
Markets without
Geographic
Expansion
serve new locations
serve new customer
types
Gain More Repeat
Business
Increase Loyalty
keep more
customers for a
longer period
Increase Incidence
encourage more
frequent and
regular cleanings


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Figure 16: Insight into Strategically Important Capabilities
We are beginning to know where to look in the architecture for changes to capabilities necessary to
accomplish the strategic objectives, but we still lack the detailed insight necessary for transformational
change.
An atlas of the innovation landscape
Recall our earlier quote from Charles Owen:
For the creative mind, [abstraction] offers a way to step away from the mundane to find
fresh ways to conceptualize… The power to abstract is fundamental to innovation. When
ideas are scarce, a fresh viewpoint makes all the difference. xxv

How would we go about ‘stepping away’ from our mundane dry cleaning business and reimagining a
basic business model that is nearly 200 years old?xxvi
Now that we have an abstract ‘blueprint’ of
Geography
Independence
Post-Return /
Pre-intake
value?
?
• Agreement
Creation
• Clothes Handling
• Clothes Tagging
• Receipt Issuance
• Clothes Pre-
treatment
• Clothes Washing
• Clothes QC
• Clothes Iron
• Clothes Packaging
Processing
• Agreement
extinguishment


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Sauber’s business (and indeed, of all dry cleaners), how do we solve for its strategic goals leveraging new
and emerging digital technology? How do we take the imaginative leap that allows us to re-
conceptualize Sauber’s business as a mid-21st
Century dry cleaner?
Business architecture is of direct and instrumental use here xxvii

• First, “value streams have a direct and defined relationship to automations of business processes,
case management, user interfaces, and similar business design concepts.”xxviii
The entire set of
activities involved in the delivery of value to stakeholders may be affected by technology. Value
streams provide a framework for envisioning how the business can establish innovative solutions for
managing stakeholder interaction and automation to enable a customer’s laundry job to visibly
transition across and among value streams. Value stream analysis becomes a way of assessing how
technology might be used to, for example, unite a variety of customer touchpoints – digital and
non-digital – in a way that transforms customer experience from a series of disconnected
encounters to a progressively informed conversation concerning the customer’s needs and history
as it relates to a given value item. Business architecture, aligned with a customer experience
analysis, shows how the customer story and the business story interlock. There is much work afoot
concerning mapping value streams to the customer journey, which will help us better understand
how to align business and customer views.xxix

• Second, technology instantiates capabilities.xxx
Digital transformation is about the extension,
enhancement, replacement or creation of capabilities that are involved in the delivery of value. The
capability map becomes a focal point assessing application functionality, use cases and services
orchestration. Capabilities can be mapped directly to current state application architecture, which
allows a business to determine where a given capability is automated, if it is automated consistently,
and what type of strategy should be employed to address these and related challenges. Where no
apparent mapping is found, either no automation exists or the business architect must consider the
possibility that shadow systems exist that provide automation.xxxi

• Third, insofar as digital transformation is primarily concerned with digital technology, it directly
affects capabilities that use information. The information map, therefore, allows us to identify
opportunities for formalizing, codifying and automating heretofore informal or even tacit business
knowledge. Information maps directly to data architecture. Robust, cross-business-unit definitions


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are important, and information mapping is the foundation of business semantics and basic
relationship concepts that equip data architects with concise, agreed-upon building blocks for the
data architecture.
• Finally, the organization map can help us to understand the implications of technological change for
the business units and partnerships that constitute the ‘human’ part of the enterprise. Business
units deliver capabilities, and changes to either affect the other.

• Figure 17: Strategy to Deployment. Source Business Architecture Guild, 2016
The business architecture becomes a sort of atlas for transformation and innovation, mapping out
the territory where insight and imagination can explore the art of the possible. I refer to this as
“imaginative abstraction” and it is without a doubt, the most exciting and enjoyable activity one can
engage in in business, because it is an act of discovery:
The true method of discovery is like the flight of an aeroplane. It starts from the ground of
particular observation; it makes a flight in the thin air of imaginative generalization; and it
again lands for renewed observation rendered acute by rational interpretation.xxxii

Imagination is essential to the process of discovery involved in digital transformation. Yet, untethered
imagination wastes itself and can, at best, produce utility and even beauty in an accidental and random
way. Business architecture serves a constraint that is necessary for creative imagination and productive
innovation. It is because a business is fettered by a real world that true creativity in solving problems is


Page: 25
necessary. The digital transformation practitioner must be knowledgeable of what is possible and
feasible technologically, but must also be cognizant of what is required by the business to meet its
objectives. Because business architecture also supports performance management methods, such as
the Balanced Scorecard, xxxiii
an organization’s behaviors, results, and success can be measured,
reported, and achieved as digital transformation is initiated – providing the kind of discipline necessary
to see a transformation initiative through from ideality to reality.
Meanwhile, back at the dry cleaners
To grow its intake funnel, Sauber realizes that the Intake value stage need not be location-bound to a
retail store at all. In the past, fielding all of the calls that might be made and sending out a vehicle for
timely way for clothing pick-up would not have been feasible. The volume of calls would have been too
great for a single clerk, resulting in the need for an operator whose time would instead be slack. Drivers
carrying money was deemed risky and open to theft. Opportunities for error were great and pick-up
routes and times would have been wasteful and inefficient. The Customer Intake value stage was of
necessity a location-bound set of activities that required a customer to travel to the retail location.
But today, most, if not all, of Sauber’s customers have a mobile phone. They can signal the need for a
pickup, and transmit their order details without ever leaving home and without involving a human
operator in a serial, customer-by-customer telephone conversation. The capabilities involved –
Customer Greeting, Agreement Creation, Clothes Handling, Clothes Tagging and Receipt Issuance can all
be conducted digitally in a communication between a mobile app and a server, without the need for a
retail presence. The mobile presence greets the customer by name, allows him or her to specify a
pickup order, date and time, see a projected delivery time and add it to their calendar, pre-pay for the
order. A truck with sufficient storage and a free, weather-proof dry cleaning box enables Sauber to
conduct Intake at the customer’s home.
Moreover, in re-evaluating the capabilities involved in Customer Intake, we have a clue to transforming
the ‘other end’ of the value stream involved in Customer Fulfillment. The same mobile app can alert
customers to the availability of clean laundry (via various notification media) and enable the customer to
set a delivery date and time. Furthermore, because customer location and time information can be
immediately entered into a constantly updating routing algorithm, Sauber’s driver can receive point-by-
point GPS directions, optimized against order priority, drop-off orders and time of day. Routing


Page: 26
algorithms and the orchestration of order creation activities with order fulfillment activities will allow
the driver to combine pickup and delivery runs. This re-imagining at an architectural level is depicted in
Figure 9 below.
To increase customer loyalty and order incidence, a new value stream stage may need to be added,
which has the purpose of “feeding” the capabilities of other stages with correlations between customer
satisfaction and business performance. A new capability instance – perhaps “Evaluate” – must show up
in each of the existing value stages to provide metrics on performance of each of their capabilities. New
organizational business units may be required in order to provide these new capabilities.
If we examine the business architectural implications of all this, we see that once-simple capabilities –
Customer Greeting, Agreement Creation, Clothes Tagging and Receipt Issuance – have now become
complex and multi-faceted and will be realized as automated machine activities. In the past, the
“signal” of the customer’s desire for dry cleaning was that they showed up at a location. Now, the
customer will initiate the value stream from an app and the Clothes Handling capabilities of the Intake
stage will, so to speak, show up at the customer location. In this way, old capabilities are instantiated in
a very new form. The capabilities that are affected by the existence of technology in the new strategy
are identified by blue gears in Figure 9. The ‘internal’ structure of these capabilities, together with the IT
and organization systems that own them, are subject to substantial renovation.


Page: 27

Figure 18: transformation options
In some cases, a strategy might call for the construction of entirely new value streams or value stream
stages. For instance, a new value stream stage, “Register Prospect,” may be required to optionally allow
the customer to store basic account information (e.g., credit card) and even transmit their pickup
location automatically. They don’t do this today, in the physical retail environment.
The information map, derived from the capability map, can serve as requirements for IT development
initiatives, both with regard to the apps that need to be developed and the data model that these apps
will be working on. Indeed, the information map forms a sort of business-led IT development initiative,
which traces the entire relational schema design back to the business-developed information map:
3
• Agreement Creation
• Clothes Tagging
• Receipt Issuance
• Pick-up Routing
• Pick-up
• Clothes Pre-treatment
• Clothes Washing
• Clothes QC
• Clothes Iron
• Clothes Packaging
Processing
• Agreement
extinguishment
• Return Routing
• Return
Clean ReturnIntake
Customer
Name
Customer
Contract
Tag Number
Receipt
Tag Number
Availability
Notice
Availability
Notice
Tag Number
Customer
Contract
InformationConcepts Sauber
Retail
Laundry
Maintenance
AdministrationValueMapOrganizationMap
Register? Evaluate?
CapabilityMap
Payment
invoice &
Memo
Technology
Capability
Candidates =
= new
capability
Services Orchestration
Data Schema
Designs =


Page: 28
The information map is an abstract model of data. A relational schema can be extracted
from an information map by the following procedure:
1. Select a Class that has a business identity (i.e., it corresponds to a Business Entity [i.e.,
business object])
2. Identify the attributes of that Class that serve to identify Individuals in the Class – these will
become the natural keys
3. Identify all Roles the selected Class participates in that have 1-1 relationships with the Class
and whose target Individuals are lifetime dependent on the existence of Individuals in the
selected Class – these will be the columns of the Class.
4. Identify all other Roles and implement them as foreign key or association tables
relationship.
Similar techniques can be used to extract XML schema and RDF schema models from the
information map.xxxiv

Thus, by mapping the key information concepts implicit in the interaction between capabilities (see
Figure 9 at bottom), we have a nascent relational schema, subject to development by a skilled DBA but
led by the business strategy. This is an important feature of business architecture – it is a description of
the business by the business, and one which “normalizes” all descriptions, even those employed by IT.
The organization map – the final domain belonging to the business architecture core – is to a degree a
consequence rather than driver of digital transformation. Insofar as a capability is realized by a business
unit, the business units that own these newly-instantiated capabilities must evaluate changes in their
composition and interaction. The organization map allows us to perform this kind of analysis. The
rough organization map superimposed on the value stream above indicates that much of the retail
business unit is dramatically affected by the proposed technology transformation. Only two business
units have any direct involvement in the customer value stream, and only Retail is customer-facing. The
alignment of business units to capabilities is simple and straightforward: Retail has all of the capabilities
necessary for Intake and Return, and Laundry handles all of the capabilities necessary to accomplish the
Clean value stage. To the degree that Sauber wishes to hold onto its retail location, staffing may be
largely unaffected, but this will ultimately be determined by the success of its digitally renovated form.
The simple organization suits the simple business model currently used by Sauber.
Of course, all of the modifications to capability instances, information concepts and organization maps
can be traced back to the strategy map objectives. This trace-ability is key, for it allows initiatives to be
mapped to transformations required in capabilities, information and organization, and measured for


Page: 29
budget, timeliness and effectiveness. The data requirements can be derived from the information map
and application functional requirements from the capability map. In this way, the business can chart a
transformational course for itself.
Conclusion:
Business Architecture as the Meaning of Digital Transformation
We began this article by asking: what does “digital transformation” mean and how might we set about
deliberately to digitally transform a business? So far as the first part of the question is concerned, there
seemed to be as many definitions as there were authors. For the most part, the term “digital
transformation” was ostensible; it was used to point to what the author thought was an instance of the
phenomenon.
These ostensive approaches might be helpful in conveying real world examples and case studies, but
they do little to help to actually plan a transformation. Sauber would be hard-pressed to re-imagine its
business based on what banks, airlines and shipping companies have done using information
technology. The various white papers, research findings and marketing glossies are merely indicative,
rather than providing procedural and systemic knowledge.
Now, with business architecture as a way of understanding transformation, we are at last in a position to
answer the questions we posed at the outset. To begin with, we can offer an intensional definition of
digital transformation (i.e., one that states its necessary and sufficient conditions) as follows:
Digital transformation is a modification to business capabilities enabled by digital technology that
empowers the business to achieve strategic objectives by means of changes its business model.
This squares with MIT/Deloitte dictum that “strategy, not technology, drives digital transformation”,xxxv

insofar as it is not technology per se that is transformative, but the impact of technology on the
fundamental structure of the business, understood as a collection of value streams enabled by
capabilities. Digital transformation is a species of business transformation.
We have also described a transformation methodology. It requires an as-is architectural analysis of
some depth, relevant to the value streams at issue in the company’s strategic objectives. It then
employs the art of imaginative abstraction, constrained by knowledge of what is technologically possible


Page: 30
and feasible and by the objectives that are required by strategy. Finally, it re-maps capability instances
in a digital-technological form and lays the foundation for IT initiatives necessary to carry them out.
The notion is similar to the sketch (from BIZBOK) in Figure 8, which posits a parallel business and IT
transformation process. What is different in the case of digital transformation is that the as-is IT
architecture may not even exist (as was the case with Sauber), but may have to be invented as a
consequence of the business model change necessary to fulfill strategic objectives.

Figure 19: Business / IT Transformation - TSG, Inc.
Of course, none of this is to suggest that I can offer a “cookbook” for digital transformation. There is no
algorithm for disruption, any more than there is a marketing plan for assuring a viral video. Nor am I
suggesting that Uber, AirBNB and other archetypes of transformation somehow employed a disciplined
value stream and capability analysis to arrive where they did. My ambition was simple after all: to point
up the need for some kind of shared conceptual framework – an architecture – if we are going to even
begin to speak meaningfully and deliberately about digital transformation. I hope I have had some
success in this.
###


Page: 31

i
We will us title case only when referring to it as a title – as in “the Digital Transformation literature”.
ii
https://en.wikipedia.org/wiki/Digital_transformation
iii
World Economic Forum in Cooperation with Accenture, Digital Transformation
of Industries, 2016
iv
MIT Sloan / Capgemini Consulting. 2011.
v
IBM Institute for Business Value, Digital transformation, 2011
vi
I’m thinking here of Claude Shannon, Herbert Weiner and the like – the early AI theorists. The author
was legal analyst at the now defunct Office of Technology Assessment – an agency of the US Congress
charged with documenting digital transformation (among other technological impacts on policy) for
House and Senate Committees concerned with technology-related legislation.
vii
IBM Institute for Business Value
viii
For a systematic review of the digital transformation literature, see: Association of Information
Systems, The Shape of Digital Transformation: A Systematic Literature Review,
http://aisel.aisnet.org/cgi/viewcontent.cgi?article=1027&context=mcis2015, 2015.
ix
“Executives are digitally transforming three key areas of their enterprises: customer experience,
operational processes and business models (see Figure 3). Within each of the three pillars, different
elements are changing. These nine elements form a set of building blocks for digital transformation.
Currently, no company in our sample has fully transformed all nine elements. Rather, executives are
selecting among these building blocks to move forward in the manner that they believe is right for their
organizations. The tenth element– digital capabilities – is an essential enabler for transformations in all
areas.” These same themes – customer experience, internal business process and business model
transformation – are echoed in the WEF and IBM papers on the subject as well.
x
"The Power of Abstraction" 2009, The Business Process Management Institute.
https://www.id.iit.edu/artifacts/the-power-of-abstraction/
xi
Ibid.
xii
Hayakawa, S. I. (2016-06-14). Language in Action: A Guide to Accurate Thinking, Readng and Writing
(Kindle Locations 1849-1850). Barvas Books.
xiii
Kane et al., Research Report Strategy, Not Technology, Drives Digital Transformation, MIT Sloan
Management Review, Summer 2015.
xiv
https://en.wikipedia.org/wiki/Systems_architecture
xv
Business Architecture Guild, A Guide to the Business Architecture Body of Knowledge, version 5.0,
2016.
xvi
The Business Dictionary defines transformation as “transformation implies a basic change of character
and little or no resemblance with the past configuration or structure.”
(http://www.businessdictionary.com/definition/transformation.html). More generally, many
dictionaries define it as “a complete change in the appearance or character of something or someone”
(see, e.g., http://dictionary.cambridge.org/us/dictionary/english/transformation or
http://www.dictionary.com/browse/transformation ).
xvii
As practiced by the Business Architecture Guild See http://businessarchitectureguild.org
xviii
See:
http://c.ymcdn.com/sites/www.businessarchitectureguild.org/resource/resmgr/BIZBOK5_1publicdocum
ent/Introductionv5.1.pdf
xix
See: https://vimeo.com/157787273


Page: 32

xx
The core elements or “domains” used by business architects in the analysis of a business are: value,
capability, information and organization. Each is described below in some detail.
• Value is a benefit derived by a stakeholder interacting with the business.xx
A
stakeholder, in turn is an internal or external individual or organization with a vested
interest in achieving value in interaction with the business.xx
A customer is clearly a
stakeholder, but so too is a partner, a supplier, an investor or a regulator. A business
exists to provide value to stakeholders and has no other reason to exist. Value is
provided by a business in a series of activities that can be represented as stages or steps
in a “value stream.” Thus, while a taxi customer is seeking satisfaction in the form of
safe, rapid and affordable transport to her destination, it occurs in “value stages”
involving hailing the cab, passenger pick-up, passenger transport, passenger drop-off
and passenger payment.
• A capability is what a business does to produce and provide value; it is an ability or
capacity that a business may possess or exchange to provide a particular outcome or
purpose.xx
Capabilities are expressed as compound nouns comprised of a business
object and one or more adjunct nouns that modifies it: Customer Communications,
Trade Surveillance, Account Reconciliation, Package Shipment, Insurance Claim
Management are examples of capabilities. Capabilities can be decomposed or analyzed
into constituent capabilities. Thus “Account Management” might be comprised of
“Account Acquisition,” “Account Information Management,” “Account Contact
Management,” “Account Matching,” “Account Extinguishment” and the like.
Capabilities may exist in many different business units and in many forms across a
company, but are defined only once for the entire business, and the business has only
one “capability map” that describes the entirety of its capacities necessary for delivering
value.
• Information is data and a context for its interpretation, and in business architecture is
comprised of concepts that represent both tangible and intangible business objects like
a “loan,” “automobile,” “customer,” “product,” “location,” “account,” “policy” and the
like. An information map shows these concepts in their interrelationship with one
another and with capabilities, which create, modify, use and destroy information.
Information representing a business object can be traced through its interactions with
capabilities along a value stream.
• Finally, an organization is social unit of people, systematically structured and managed
to meet a need or to pursue collective goals on a continuing basis.xx
An organization is
comprised of business units, which are formal or informal collections of people
organized around a specific purpose, and which constitute a business capability. The
standard business “org chart” is one way of mapping an organization along lines of
command and control, but this form of organization map is not the exclusive or even the
most effective way or representing an organization. It is often more effective, for
purposes of assembling a business architecture, to represent business units in relation
to the capabilities they possess – this will often bring in extra-enterprise business units
such as trading partners, suppliers, consultants and the like.
Business architecture is extended by strategy, initiative, stakeholder, product and other non-core
concepts, but each of these maps back to the above “core” elements, and so provides a richer
understanding of transformational change. Business architecture is also “aligned” with various other
enterprise and IT architectural practices, such as Lean Six Sigma, Case Management, Software
Development Life Cycle, TOGAF and the like. The actual elaboration of business architecture consumes
well over 600 pages and many dozens of related presentations, which tell the story of how the


Page: 33

architecture relates to strategy, business model creation and business process modeling, and how it can
be used to align to IT strategy and IT transformation initiatives, case management and other business
disciplines.
xxi
I use the phrase “business model” throughout this article, but never elaborate on its use or meaning.
I have in mind Osterwalder’s famous “business model canvas”
(https://en.wikipedia.org/wiki/Business_Model_Canvas), which has been influential in normalizing
descriptions of the elements that comprise a business model and exploring their dynamics. In fact, the
business architecture literature makes extensive reference to the business model canvas and the set of
relationships at work. An original version of this article got overly complex in trying to integrate
business model concepts into an already lengthy text. So, despite the fact that it is a core concept, I
merely allude to it without elaboration. I hope to make up for this in a future article.
xxii
German for “clean,” whereas Uber is German for “above” or “over.”
xxiii
1 Ulrich Homann, “A Business-Oriented Foundation for Service Orientation”, Feb. 2006,
http://msdn.microsoft.com/en-us/library/aa479368.aspx .
xxiv
Business objects are tangible or intangible entities (e.g., Agreement, Shipment, Palette …) that the
business uses or processes.
xxv
"The Power of Abstraction" 2009, The Business Process Management Institute.
https://www.id.iit.edu/artifacts/the-power-of-abstraction/
xxvi
https://en.wikipedia.org/wiki/Dry_cleaning
xxvii
Business Architecture Guild, A Guide to the Business Architecture Body of Knowledge® version 5.1. p.
415. Hereinafter “BIZBOK”. BIZBOK states:
• Business architecture has a direct, unambiguous relationship to IT architecture.
• Business capabilities have a direct and defined relationship to applications and deployable
business services.
• Value streams have a direct and defined relationship to automations of business processes, case
management, user interfaces, and similar business design concepts.
• Information concepts have a direct and defined relationship to data definitions within the data
architecture.
xxviii
Business Architecture Guild, A Guide to the Business Architecture Body of Knowledge® version 5.1,
Page 416. Hereinafter “BIZBOK”.
xxix
See: https://www.brighttalk.com/webcast/12231/219691/business-architecture-gateway-to-
business-transformation
xxx
Think of a capability like “Customer Complaint Receipt” – in the old days (when I was manning a
customer service phone), this meant a human being taking calls as they came in and trying to discern the
nature of the complaint and the appropriate hand-off. The capability was embodied in a human and
each human was an instance of the capability. For better or worse, advances in phone technology have
enabled diagnostics and even service to be automated, vastly decreasing the costs of this capability and
(because of scale) increasing customer satisfaction (one no longer stays on hold waiting for a human
being).
xxxi
BIZBOK, page 470
xxxii
A.N. Whitehead, Process and Reality: An Essay in Cosmology (1929). We prefer “abstraction” to
Whitehead’s “generalization,” but they are essential synonymous in this context.
xxxiii
The concept was initially introduced by Robert Kaplan and David Norton in a Harvard Business
Review article in 1992 and has since then been voted one of the most influential business ideas of the
past 75 years.
xxxiv
BIZBOK page 470.


Page: 34

xxxv
See the report of the same name, subtitled “FINDINGS FROM THE 2015 DIGITAL BUSINESS GLOBAL
EXECUTIVE STUDY AND RESEARCH PROJECT”, Published in Summer of 2015 by MIT Sloan and Deloitte
University Press.

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