A Business Executive’s View of Business Architecture

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President, TSG, Inc.
William Ulrich is President of TSG, Inc. and a strategic planning consultant specializing in business / IT alignment. He has worked with numerous large corporations and government agencies in the area of business / IT alignment. Mr. Ulrich has written several books and published hundreds of articles. His latest book is Business Architecture: The Art and Practice of Business Transformation. Mr. Ulrich is a Former Editorial Director of BAInstitute.org and Co-founder of the Business Architecture Guild and an advisor to the Penn State Enterprise Architecture Advisory Group.

Business architecture is a game changing discipline that allows a business to establish a common vocabulary, shared vision, and level of transparency that facilitates initiatives ranging from mergers and acquisitions to deployment of new strategic business models. Even as business architecture success stories emerge, the message has been slow to penetrate the executive suite. This article discusses why business executives should strongly consider business architecture as a way of overcoming many of the complex obstacles inherent in today’s dynamic business environment. Consider how business architecture has helped a number of organizations already.

A pharmaceutical firm used business architecture to expedite a large-scale merger. An international airline followed suit. A finance and insurance company used business architecture to investigate and reverse customer losses. A government agency is using business architecture to establish a vision to enable customer self-service. An international finance company is using business architecture to align the enterprise to a new business model. A large financial institution is leveraging business architecture to streamline its complex, post-merger portfolio.

In each of these cases, business architecture was sponsored by business leadership. This was important because business architecture is owned by and most benefits the business. Effective business architecture teams are comprised of business professionals representing a cross-section of business units. This requires senior business sponsorship. Unfortunately, this message has been slow to reach business leaders accountable for the success of these initiatives. In order to build executive support for business architecture, the benefits must be applicable to real business scenarios. For example, consider that business architecture:

  • Delivers transparency and clarity to enable issue collaboration, issue analysis, and problem resolution.
  • Establishes a framework of concepts that allows the business to clearly communicate current state business challenges and articulate a business-centric vision for the future.
  • Provides transparency across business units, product lines, and outsourced teams to enable cross-functional planning and ensure that funded initiatives are not working at cross-purposes.
  • Aligns business processes across business units and product lines, delivering stakeholder focused benefits far beyond traditional “lean” or similar process streamlining exercises.
  • Offers management teams a holistic view of the business that extends into outsourced, customer, and other stakeholder domains.
  • Allows the business to take ownership and drive transformation strategies through business-centric roadmaps and funding models, recasting traditional technology-centric funding models in business terms.

Miscommunication is rampant across businesses, which means that a common business vocabulary is essential to delivering business value through business architecture. Definitions for terms such as customer, representative, profit, product, vendor, broker, and partner are assumed, but often misconstrued. Miscommunication is particularly common when discussions cross product lines and business units and this leads to major problems such as misstatement of expenses or angry customers. Poor communication stymies a variety of initiatives such as improving basic business capabilities, creating common customer views, aligning processes across business units, and delivering accurate financial and regulatory reporting.

Consider two cases highlighting how lack of a common vocabulary can stymie progress while a common business vocabulary can overcome these roadblocks. In first case, teams responsible for creating coherent views of business information struggled for years to create a common view of enterprise data. The teams lacked an agreed upon set of business definitions and numerous initiatives stalled. The business was neither engaged, nor could it see why this mattered. In the second case, a business architecture team created a capability map that identified what the business does in complete, concise ways. Capability definitions provided to the data architecture team allowed the team to craft a common data model that aligned fully to the business vocabulary. While teams in our first case continued to struggle with creating priority management initiatives, organizations in our second case created a common information model that expedited projects across business units, customer initiatives, product lines, complex processes, and technologies.

A lack of a common vocabulary has far reaching effects and is the basis for many failed projects. Misperception and miscommunication stems from and further compounds widespread redundancy and inconsistency, which in turn have led to customer losses, missed opportunities, lost revenues, and millions of dollars in failed initiatives. The same issues are rehashed at meeting after meeting due to a lack of transparency across business units. Business architecture addresses these issues by establishing a common language that teams can use to establish a common understanding of issues as the basis for crafting robust, long-term solutions with demonstrable business benefits. The four main aspects of business architecture include Capability, Information, Organization, and Value Stream. Each category represents a unique view of the business and is summarized as follows.

  • Business Capability: Capabilities provide a complete view of “what” a business does. Customer Management, for example, is a capability. Capabilities are organized into the business capability map, a hierarchical topology of what the business does. This map serves as a foundational view of the business that eliminates the inherent complexity involved in discussing “how” something is being done or who is doing it. Capabilities provide the basis for crafting business-driven transformation strategies, which often include improved or new automate solutions.
  • Information Assets: Business information assets clearly define the information required to ensure that each capability is robust, viable, and acceptable to the business from a strategic perspective. For example, the definition of the “Account Management” capability must correspond to the definition of the information asset “Account”. Information assets, along with capabilities, form the foundation for the business vocabulary and data architecture.
  • Organization: Organizational view creates a structural overview of the business. This includes traditional business units and subunits, but can be extended to include collaborative teams, outsourcers, and other external stakeholders. Organizational views can be enhanced by mapping business units to strategies, capabilities, and initiatives.
  • Value Streams: Value streams depict the activities involved in how a business delivers end-to-end stakeholder value. While the capability map is said to show the business “at rest”, value streams show the business “in motion”. Common value stream examples include Manage Customer Portfolio and Update Account. Value streams are used to align and consolidate business processes and deliver automated solutions with a high degree of stakeholder visibility. 

Business Architecture-Based Planning, Roadmap Creation and Budgeting

One of the most fundamental benefits of business architecture is that it enables a more business focused investment strategy for priority business initiatives, much of which involves IT spending. Most IT spending is typically aligned to a given set of software applications. This approach limits the business vision to a silo-oriented, technology-centric point of view and leaves critical capabilities not part of an IT solution today off the table, ignoring horizontal views of how to deliver stakeholder value. Positioning investments in terms of business capabilities and value streams allows the business to focus on business value and not on IT centricities.

Delivering a business-driven vision, strategy, roadmap, and related funding model through the use of capability and value stream provided business vocabulary means that all aspects of a given capability and / or value stream are considered when making major initiative investments. This is rarely the case today because this visibility is sorely lacking. For example, consider the bank that implemented a replacement system for a small portion of its risk rating environment with no understanding of how it would replace the two systems already enabling this capability. Millions of dollars were spent and now the bank has three redundant, fragmented applications enabling this capability. Little business value was achieved and the bank has three systems implementing this same capability in different ways. The bank has destabilized a portion of its business model – even though the project was considered a success.

With business architecture, ineffectiveness and inefficiencies that drive up costs and contribute to failed projects will fade as a common business vocabulary takes hold. There is no need to wait for results. Many of the organizations introduced at the beginning of this discussion began benefitting from business architecture in a short period of time. As the business architecture matures, the use of it will mature as well. It only took a short time after rolling out the first capability map from one business team to begin using it to align strategies, transformation planning, roadmaps, and budgetary funding. This can only be achieved, however, with senior business leadership and sponsorship.  

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