In today’s digital era, it is essential for businesses to stay competitive by modernising their legacy processes.
By updating outdated process flows, software systems and data models, businesses can strengthen their competitive edge in the marketplace, develop new business capabilities and focus on growth into new and developing areas rather than on continually maintaining rigid and inefficient business fundamentals.
For most organisations however, it is tricky to know where to begin. Staggeringly, 70% of digital transformations fail, deterring some companies from taking the leap of faith. While there are many possible factors that can contribute to this, a lack of end-to-end view on the four fundamental layers of enterprise architecture is often a major culprit. Understanding these fundamentals before building out bigger changes is therefore crucial to success.
Enterprise architecture is a core concept in every strong digital transformation, determining how an organisation can successfully accomplish its present and future business goals by leveraging IT solutions. The process of enterprise architecture entails the analysis, planning, design, and, ultimately, the implementation of business and technology strategy to an organisation’s IT landscape.
This process can be divided into four layers; business strategy, system architecture, operational architecture and data models.
The first fundamental layer is business strategy. Business strategy determines the three to five-year vision for the business and operations in order to apply this to the IT strategy. The goal of business-IT alignment is to integrate the IT roadmap with business goals in order to lower costs, increase agility, and boost return on investment. This vision should consider the impact of technology on business operations, customer experience, and revenue growth.
For example, a company may decide to enter new markets or expand existing product lines. Its IT strategy must align with the business strategy to ensure that the technology infrastructure supports these goals. Failure to consider the business strategy can result in IT decisions to focus on areas misaligned with or even detrimental to the company’s goals and hinders its ability to compete effectively. For instance, system and process changes required to reduce time-to-market for setting up localised e-commerce channels in new markets might not be taken, effectively limiting the possibilities of international expansion.
However, there is no one-size fits all measure that can be applied as a blanket approach. The integration of a business-IT strategy must be tailored to support specific situations building on the insights gained with organisations of diverse sizes and at very different digital maturity stages. For instance, small, family-owned start-ups that want to become established e-commerce players can have very different needs from multinational corporations undergoing complex digital transformations. Business objectives are radically distinct in these cases, yet developing a modern, scalable, and fit-for-purpose enterprise architecture is always key to achieving them.
The next layer is system architecture, which is essentially the design of the IT system landscape, its interactions and how it supports business operations, the flexible evolution of the company, and the go-to-market strategy.
An effective system architecture should be in line with the business strategy, and it should also be scalable, adaptable, and secure. In other words, it should be able to accommodate changes in the business environment and relevant technologies as they emerge. Failure to design an effective system architecture can lead to inefficient processes, data silos, lack of business capabilities and security vulnerabilities that can impact the company’s ability to operate and compete.
Using proven enterprise architecture blueprints can be an efficient way to identify and easily visualise gaps and opportunities in a company`s system architecture. This analysis starts with a high-level view on the business architecture, encompassing areas like commerce, customer management or digital content management. The subsequent solution architecture view evaluates the functional building blocks in place to realise the business architecture. Finally, on systems level, the choice of own and third-party solutions is evaluated. Together with a structured project framework, this allows digital transformation to be executed successfully, and is essential for highlighting and building transparency documentation with the right level of detail for all involved stakeholders from C-level to operational teams.
At each stage of evolution, organisations require distinct capabilities. A company can concentrate on its core operational strengths and product offering as a start-up, but bigger companies tend to have more broad-spectrum operational needs. Businesses don’t need a lot of established processes or software systems at first as, when a company is young, agility and flexibility are vitally important. If there is help from all team members in all areas and productivity is not an internal problem, they are often already operationally well aligned. However, larger or more established companies are often complex in comparison.
This leads into the third fundamental layer of enterprise architecture, operational architecture. This layer focuses on how the system architecture performs alongside the core business processes. This view should be taken from early on in a company’s growth journey so that the architecture can evolve alongside business needs. For more established businesses, the operational architecture must be audited in the digital transformation process to ensure a seamless transition from existing processes towards a target state. The operational architecture defines the workflows and processes that drive the business, and it should be designed to support the business strategy. It should also consider factors such as compliance, risk management, and quality assurance. Failure to design an effective operational architecture can lead to inefficiencies, long time to market for new process elements, and poor customer experiences.
The final layer, data models, examines the design of the data models that a company’s systems use and whether they are flexible enough to scale and accommodate future use-cases. An effective data model should support the business strategy, system architecture, and operational architecture. It should also consider internal and external engagement, business and sales goals, and compliance requirements. Strong data models are an essential part of an enterprise architecture strategy as failure to create a robust data model can lead to inconsistencies, poor reporting, and difficulty in integrating new business requirements.
While it is advisable for businesses to have a clear perspective on their architecture at any stage, there are often clear signs when processes, systems and data models may need review. For instance, architecture review is likely needed when customer experience quality, operational productivity and cost-effectiveness are in decline, when execution of business processes require involvement of IT, and when businesses are working with legacy software maintenance and high levels of technical debt.
Overall, any successful digital transformation requires a focus on the four fundamental layers of enterprise architecture. The business strategy, system architecture, operational architecture, and data models must all be aligned to support the company’s goals and ensure efficient operations, flexible evolution, and an effective go-to-market strategy. It is by addressing these layers, that companies can enhance their customer’s experience, increase profitability, and strengthen the value of their product and service offerings.
About the Author
Tobias Moeglich is Director Enterprise Architecture at OMMAX. OMMAX supports organisations maximising the value of their enterprise architecture by providing expert guidance, best practices, and proven methodologies to develop and implement an effective enterprise architecture framework.
Featured image: ©Smart Future