Business Architecture Trends & Methods

Andrew Guitarte, PMP, PMI-ACP, CBAP, CIP, DBA

Building Business Capability Conference

Las Vegas, NV

November 14, 2013

Session abstract

Business Architecture is a key component of the Enterprise Analysis Knowledge Area. Business analysts & Enterprise business architects need to equip themselves with the tools, techniques, and methods of building and analyzing business capability maps, business domain models, and business process models to excel in the field of business architecture. This session explores the latest trends, value propositions, and methodologies in business architecture, both from the practitioner and business manager points of view.

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Session agenda

1. Trends in business architecture a) Why (& what is) business architecture? b) Business analysis & business architecture convergence

2. Sample business architecture methods & tools 3. Q&A

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Business architecture definition & value proposition are in a state of flux “The Structure of Scientific Revolutions”

by Kuhn “Once a paradigm shift has taken place, the

textbooks are rewritten.” Early influencers OMG definition & streams of work Third-party consulting firms’ view Forrester, Cutter, Gartner, others

Formal non-profit associations & coalitions Subject-matter experts Academe, consultants, industry practitioners,

government experts, others Early beginnings of a “body of knowledge”,

social-networking style Software tool vendors

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Why (& what is) business architecture?

OMG BASIG A blueprint of the enterprise that provides a

common understanding of the organization and is used to align strategic objectives and tactical demands

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Source: OMG BASIG, Balanced Scorecard Model (Draft), 2010

•From Wikipedia (2013) Business Architecture is a disciplined approach to realize business models and to serve as a business foundation of the enterprise to enhance accountability and improve decision-making. Business Architecture's value proposition, unlike other disciplines is to increase functional effectiveness by mapping and modeling the business to the organization's business vision and strategic goals. •Mapping identifies gaps between the current and target business capabilities (underlying services, processes, people, and tools). •Modeling discovers business requirements in the area of interest including stakeholders, business entities and their relationships, and business integration points. Source: OMG, Business Motivation

Model, 2008

Early references link business architecture to strategic planning & process excellence Pollak, Scott D. Methodology and Options for Establishing

a Data Sales & Services Business. URISA 1992 Annual Conference Proceedings. Ed. James Brandes. Washington, D. C.: Urban and Regional Information Systems Association, 1992. 4: 57-69.

Abstract: Developing the capability to successfully sell information to the private sector requires an approach altogether different from developing a successful government agency. This session will explore the methodology that must be employed to assure that a profitable line of business can be built. Starting from the initial steps of defining a market and establishing products & users through the more advanced steps of potential delivery models and developing a business plan, all phases of the development cycle will be examined. …

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The key phases of Strategic Business Architecture are Core Business Validation (which lines of business are we in?), Business Strategy and Positioning (which strategies should we employ to ensure our lines of business are marketed …

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Early references link business architecture… (continued) Palermo, R. C. and Gregory H. Watson. (1993).

A World of quality: the timeless passport. ASQC Quality Press. Description: This fascinating account of Xerox's now-

legendary quality crusade--from its uncertain beginnings to its Malcolm Baldridge National Quality Award-winning campaign to the company's current and future plans for advancing quality--provides both inspiration and strategic advice within a scintillating success history.

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Early adopters

•Pollak, 1992 •Palermo & Watson, 1993 •McDavid, 1999

Bridging the gap

•Forrester, 2002-present •Homann, 2006 •Object Management Group, 2008-present

•Business Architecture Society et. al., 2008-present

•Business Architecture Institute, 2008-present

Mainstream adoption

•Academe •Media •Corporations

Laggards

•Government •Micro & small businesses

Business architecture practice poised to exit “early adoption” stage

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Source: Moore, G. (1991). Crossing the Chasm. Harper.

Communities of practice

Pure-play organizations emerge to create business architecture “vortex”

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Standards-setting bodies

Third-party vendors

Influencers

BPM/SOA BEI

The Open Group TOGAF

OMG MDA

BPMN BASIG

ISO

PMI AOGEA

IIBA BizArchCommunity

BAA

Business Architecture

Society

BAI BPMI BrainstormCentral

Progress Pega

Mega

Metastorm IBM

Troux

Sparx

Gartner

Forrester Cutter IIR Various

authors

Media Academe

Influencers led followed by communities of practice and standards-setting bodies; vendors followed

Conflicting ideas provide opportunity to define the future of business architecture profession

Business Architecture

Guild

What is business analysis? (IIBA, 2010) Set of tasks and techniques used to work as a liaison among

stakeholders in order to understand the structure, policies, and operations of an organization, and to recommend solutions that enable the organization to achieve its goals

…defining the capabilities an organization requires to provide products and services

…play a central role in aligning the needs of business units with the capabilities delivered by information technology

Business analysis competency model aligns with business architecture

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Source: IIBA. (2010). Business Analysis Competency Model Version 2.0

Majority of projects fail because of incomplete or changing requirements

Standish Group (2010) 24% cancelled before

complete 54% cost more than original

estimates Only 32% of projects

completed on time and on budget Only about 20% of the

features and functions specified ever get used

Bull Survey (1998) Bad communication between

relevant parties, 57%

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Top five reasons projects fail (OASIG, 1995) 1. Lack of User Inputs,

12.8% 2. Incomplete

Requirements & Specifications, 12.3%

3. Changing Requirements & Specifications, 11.8%

4. Lack of Executive Support, 7.5% 5. Technology Incompetence, 7.0%

Strategic thinking & planning are key inputs to enterprise analysis Balanced scorecard (Kaplan &

Norton, 1996) System for tracking implementation

of strategy A focus on financial measures

creates short-term and conflicting goals

Look at organizational performance based on 4 perspectives Financial Customer Internal Process Learning and Growth

Relationship to portfolio management, risk management, enterprise architecture, organization change management

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Source, IIBA, BABOK V2.0

BABOK V3 puts business architecture front and center

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Business process modeling drives business architecture adoption in key industries

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Source: Forrester Research, 2010

Enterprise architecture frameworks attempt to embody business architecture

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Zachman Framework

TOGAF 9

Shift of focus towards business outcomes drives role convergence “sweet spot”

Enterprise architecture Strategy

Business analysis Product management

Business architecture

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(Functional / Technological)

Silo

Enterprise

Organization structure

Sweet spot

*Merriam-Webster (2010): The network of professionally skilled managers (as scientists, engineers, and administrators) that tends to control the economy both within and beyond individual corporate groups; first appeared in “The New Industrial State” (Galbraith, 1967)

Business process management

Technostructure* Share-holders Organization control Goal: Survival Goal: Maximize profits

Case 1: Going to the “cloud” involves changing the organization structure

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Source: Onisick, J. (2010). The Organizational Challenge. Define the Cloud. Retrieved from Wordpress: http://www.definethecloud.net/?p=122

Problem: “You cannot and will not break out of technological silos without first breaking organizational silos.”

Solution: 1. Place Network and

Storage teams under common management

2. Cross-train your MVPs 3. Promote ingenuity 4. Analyze budget process

"It still boggles my mind … [that] the subprime mortgage market could grow from practically nothing to close $1.5 trillion in the space of a few years … without anybody doing something about it…“ -Paul Volcker, Former Fed Chairman as quoted in American Banker, 10/27/2010

Case 2: Foreclosure (& mortgage) crisis exerts external influence on bank operations

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"We should have been asking how servicers were able to achieve such efficiencies without sacrificing quality.“ -Sheila Bair, FDIC Chair as quoted in American Banker, 10/27/2010

Bank Assets Bank of America

$2.3T

J P Morgan Chase

$2.0T

Citigroup $1.9T Data from SNL Financial/Associated Press, 8/31/2010

"If rules are being broken, we don't need to wait for an expert in Washington to wake up. If we set it up right from the beginning, the agency can collect and analyze data faster and get on top of problems as they occur, not years later." -Elizabeth Warren, new CFPB Chief as quoted in The Fiscal Times, 10/29/2010

What is a business capability map?

Capability (Homann, 2006) A particular ability or capacity that a business may possess

or exchange to achieve a specific purpose or outcome. Describes what the business does (outcomes and service

levels) that creates value for customers; for example, pay employee or ship product. Abstracts and encapsulates the people, process/procedures,

technology, and information into the essential building blocks needed to facilitate performance improvement and redesign analysis Business capability map Clear structural outline of the business capabilities and their

connections (for example, structured network)

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Example 1: SOA view of business capability establishes service levels

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Capabilities are "black boxes," with inputs and outputs defined with explicit service level expectation

Source: Homann, U. (2006). A Business-Oriented Foundation for Service Orientation. MSDN Library.

Example 2: Business capability architecture is “the tie that binds all”

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Customers Processes,

People, Tools

Business

Capability BCA

Principles 1. Non-overlapping 2. Complete 3. Rich 4. Business oriented 5. Industry-agnostic

Concepts 1. Business situation 2. Business purpose 3. Business outcome 4. Business behavior 5. Business resource 6. Business role

Drivers 1. Maintain

competitive edge 2. New products /

markets 3. Consolidation /

acquisition 4. Business

transformation

Goals 1. Enhance

accountabilities 2. Better decision-

making 3. Improve

operations

Source: Guitarte, A. (2008). Business Architecture Methods Value Proposition. Presented at OMG BAWG.

Hexagonal frustum

BCA effectively maps the inter-relationships among business components

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Business Capabilities

Products

Projects

Processes People

Tools

Strategy

BCA Goal: Enhance accountabilities.

Customers

Business Partners

enable

depend on

implement

perform

automate

use

measure

rationalize

deliver

justify

encapsulate

empower

defines

realize

informs support buy

satisfy

extend

include

BCA sample use cases address pain points related to change LOB Executive

Define a set of business capabilities to realize a strategic intent

Business Architect Identify target business capabilities to accomplish a product strategy

Product Manager Determine which business capabilities will be impacted by a change in product

configuration

Program / Project Manager Justify a project’s business case in relation to an organization’s strategic goal

Business Analyst Discover project requirements that meet business needs

Process Analyst Identify gaps in processes, people, and tools to enable a business capability

Resource Manager Measure performance by role in relation to the accomplishment of process success

metrics or service level agreements

Enterprise / Systems Architect Identify gaps and tools integration opportunities for shared services

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Example 3: Civil service capability review

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Source: Home Civil Service. (2009). Capability Reviews: Refreshing the model of capability. Retrieved from Civil Service: http://www.civilservice.gov.uk/Assets/Model%20report%20final_tcm6-8282.pdf

In summary

1. Business architecture definition & value proposition are in a state of flux

2. Pure-play organizations emerge to create business architecture “vortex”

3. Business architecture practice poised to exit “early adoption” stage

4. Shift of focus towards business outcomes drives role convergence “sweet spot”

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Appendix

Metastorm

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Metastorm ProVision®’s comprehensive EA support for Business Architecture, Information Architecture and Strategic Planning, allows organizations to holistically model, understand, analyze and plan their business…

Source: Metastorm. October 2010. http://www.metastorm.com/products/provision_ea.asp

Troux

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IBM

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What does it take to be a business architect?

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Visit my blog at BrainstormCentral.org on BA Methods

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References

Galbraith, J. (1967). The New Industrial State. Boston: Houghton Mifflin Company. Guitarte, A. (2008). Business Architecture Methods Value Proposition. Presented at OMG BAWG

meeting, Santa Clara, CA. Homann, U. (2006). A Business-Oriented Foundation for Service Orientation. MSDN Library. Kuhn, T. (1962). The Structure of Scientific Revolutions. Chicago: University of Chicago Press. McDavid, D. W. (1999). A standard for business architecture description. IBM Systems Journal,

38(1). Mintzberg, H. (1994). The Rise and Fall of Strategic Planning. New York: The Free Press. Morabito, J., Sack, I., & Bhate, A. (1999). Organization Modeling: Innovative Architectures for the

21st Century. New Jersey: Prentice Hall. Object Management Group. (2010). Mission & Overview. In Business Architecture Special Interest

Group. Retrieved from http://bawg.omg.org/ Palermo, R. C. & Watson, G. H. (1993). A World of quality: the timeless passport. ASQC Quality

Press. Pollak, S. (1992). Methodology and Options for Establishing a Data Sales & Services Business. URISA

1992 Annual Conference Proceedings. Ed. James Brandes. Washington, D. C.: Urban and Regional Information Systems Association, 4: 57-69.

Richardson, C. (2010). The Forrester Wave: Business Process Management Suites, Q3 2010. Retrieved from Forrester Research: http://www.forrester.com/rb/Research/wave%26trade%3B_business_process_management_suites%2C_q3_2010/q/id/53295/t/2

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