Introduction
In today’s ever-changing business environment, it is imperative for enterprises to adapt quickly to not only deal with the change, but in many cases, exploit it for competitive advantage. Change can manifest itself in the form of new technology, new entrants into enterprises’ market space, competitors adapting new processes, changes in customer preferences and demographics, new government regulations, and so on. The rate of change in recent years has been much higher than in the past.
To thrive in such a climate, the enterprise needs to be agile. To be agile means to be able to transform itself quickly to meet the market and customer needs. There are two prerequisites for effective business transformation: (a) an employee culture that values adaptability, innovation and speed, and, (b) the ability of the organization to transform itself in a methodical fashion leveraging its technology, people, process and knowledge assets. One can find a fairly large number of books and articles that discuss the organizational cultures and management practices that facilitate collaboration and innovation. One can find relatively fewer sources for the techniques of implementing transformation through leveraging business assets. In this article, we focus exclusively on the latter, proposing the use of a business transformation framework that leverages multiple disciplines for achieving operational effectiveness and agility.
A Business Transformation Framework
Much of the knowledge in an organization is captured in the minds of the employees, the information systems, and the processes that tie these together to produce business value. Since business processes are critical to producing value, it behooves enterprises to manage these processes effectively. The discipline of business process management (BPM) does just that. In recent years, software systems used to manage business processes have matured and it has become easier for companies to model, simulate, optimize and manage business processes. Such advances have helped managers better control business operations.
At the other end of the spectrum, enterprises that used to operate in functional silos are collaborating more than ever across functional boundaries. This collaboration is driven by the need to be organizationally effective across the enterprise, and the standardization of data and information exchange across functional area. The introduction of a new standard in the form of eXtended Markup Language (XML) has facilitated once disjoint applications to connect with one another in a much less expensive fashion, compared to the proprietary Electronic Data Interchange (EDI) technology. This has helped Information Technology (IT) groups create ‘composite applications’ by enabling applications to share data and invoke the services of each other, through a paradigm called Service Oriented Architecture (SOA).
The challenge
The challenge of course lies in being able to bring together both BPM and SOA in a seamless fashion so that the business needs defined through BPM, can be realized effectively on the IT side through a SOA implementation, resulting in organizational agility.
The discipline of Enterprise Architecture (EA) can help to bring these together. In simplest terms, EA is a model of the enterprise. If the EA closely reflects the enterprise, then one can tweak the model in various ways to observe its behavior in the ecosystem, before making changes to the actual business. Changing the model to observe the pros and cons is a lot less expensive than changing the business itself. EA typically consists of two major components: Business Architecture (BA), and Technology Architecture (TA). The BA reflects how the business operates and the TA reflects how the technology is leveraged to achieve the business objectives.
Unfortunately in most companies, even if EA initiatives, BPM initiatives, and SOA initiatives are ongoing, they are treated independently, instead of being unified to address common business objectives and align with the business strategy. The discipline of business transformation provides that glue for unification.
The confluence of EA, BPM and SOA
The confluence of enterprise architecture, business process management, and service-oriented architecture, provides an effective and systematic approach to business transformation. We already mentioned that effective business transformation would lead the enterprise into a leadership position and put it at a competitive advantage. Only if the EA, BPM and SOA components are orchestrated well and aligned with one another can the business transformation be effective and successful.
How do we bring these disciplines together and align the respective initiatives? First, we model the organization and how it conducts business. This includes modeling the organizational units, the customers, external partners, organizational structure, roles and responsibilities, business information including knowledge and data, the business requirements and capabilities, and finally the business processes that tie all these together. Effectively, this is the BA. Using the BA as a basis, we determine the cross-organizational processes that are critical to the enterprises’ value chain. Having done that, we then model the business processes and determine how to monitor, manage and control these processes. This calls for metrics and controls to be put in place to track business performance. For instance, a financial institution may be primarily interested in metrics revolving around the speed of service to a customer, while a retail business may be primarily interested in metrics surrounding their supply chain effectiveness.
As the BA is being developed on the business side, it will drive the development of the TA on the IT side. In practice, this will also force the business and IT to work closely on many fronts, which will help to bridge the infamous business-IT divide. Similarly, the control, management and governance requirements on the business processes on the business side will drive the requirements and implementation of services on the IT side. This top-down approach of the business driving IT to fulfill their objectives is a prerequisite for organizational effectiveness. Unfortunately in many organizations, IT drives the development of services in a bottom-up manner, resulting in a proliferation of useless services since they have not been specified from the business side.
Conclusions
To remain competitive, enterprises need to be agile in today’s fast changing business environment. The discipline of business transformation helps the enterprise achieve organizational agility. In this article, we suggest that business transformation is most effectively implemented by the convergence of enterprise architecture, business process management and service-oriented architecture. Enterprises should stop treating these as separate unrelated disciplines but rather bring them together in a cohesive fashion to align with business strategy.
