enterprise architecture enterprise architecture and and business architecture business architecture

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Enterprise Architecture Enterprise Architecture and and

Business ArchitectureBusiness Architecture

Dr. Ir. J.A.P. Hoogervorst

27 mei 2009

Hoogervorst Enterprise Governance and Enterprise Engineering

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Contents (1)Contents (1)

1. IntroductionIntroducing our core concepts

2. Enterprise essentialsSome core concepts

3. Conditions for successfully implementing strategic choicesThe case for design focus

4. System thinking and the importance of architecturePrelude to the enterprise as a system

5. Architecture, architecturing and designingThe complementary nature of architecturing and designing

6. Enterprise architecture and business architectureBusiness architecture as the functional architecture of the enterprise

7. Closing Thoughts

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A Central Problem of Modern A Central Problem of Modern ScienceScience

Introducing our core concepts


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A world of ProblemsA world of Problems

Problems of unorganized complexityVery large number of interdependencies

Problems of organized complexityMany interdependencies

Problems of organized simplicityFew interdependencies

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Organized ComplexityOrganized Complexity

EnterpriseGovernance

&Enterprise

Engineering

Order Design

Enterprises as organizedcomplexities


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Two Main ThemesTwo Main Themes

Enterprise Governance: the organizational competencefor continuously exercising guiding

authority over enterprise strategy and architecture development, and the subsequent design,

implementation and operation of the enterprise

Enterprise engineering: a discipline – domain of knowledge, concepts, theory and associated

methodology – for analyzing, designing, and creating enterprises

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TheThe Notion of DesignNotion of Design

Enterprise design:“courses of action aimed at changing existing [enterprise] conditions into preferred ones1

1. H. Simon, The Sciences of the Artificial(1969)

Chaotic developments:• Incidental• Subject to change• Unpredictable

Intentional developments:• Goal oriented• Purposeful• Overall order

DesignGovernance


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Enterprise EngineeringEnterprise Engineering

Form

Content

Intention

Data Systems Engineering

Information Systems Engineering

Enterprise Engineering

Organizational Sciences

Data

Information,Communication

Collaboration,Cooperation

Enterprise Ontology Enterprise Architecture

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The Organized Complexity Problem The Organized Complexity Problem

“A basic problem posed to modern science is a general

theory of organization” (p. 34)

“The only meaningful way to study organization, is to study it as a system” (p. 9)

(1969)

Or in our terminology: the only meaningful way to

analyze, design, and deploy an enterprise is to that from

a system perspective.


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Broad AttentionBroad Attention

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Enterprise EssentialsEnterprise Essentials

Some core concepts


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What is an Enterprise?What is an Enterprise?

• “A consciously coordinated social entity with a relatively identifiable boundary, that functions on a relatively continuous basis to achieve a common goal or a set of goals”1

• Organizations are social units (or human groupings) deliberately constructed and reconstructed to seek specific goals”2

1. Social entities

2. Goal directed

3. Designedas deliberatelystructured and coordinated activity systems

4. Linked to the external environment

Enterprises are3:

1. Robbins, S.P., Organizational Theory(1990)2. Etzioni, A., In: Lammers, C.J., Organisaties vergelijkenderwijs(1987)3. Daft, R.L., Organization Theory and Design(2001)

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Fundamental Issue (1)Fundamental Issue (1)

• Functionalization1: arranging specific tasks or task structures

• Coordination1: realizing coherence in task execution

• Rational finalization1: ensuring that the totality of interaction patterns is directed towards the ultimate enterprise goal(s)

Differentiation2

Integration2

The fundamental issue:Functionalization, differentiation Unity, coherence, integration

1. Lammers, C.J., Organisaties vergelijkenderwijs(1987)2. Lawrence, P., Lorsch, J., Organization and Environment (1967)


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Fundamental Issue (2)Fundamental Issue (2)

Formalization

• Quality of service• Reliability• Availability

Innovation

• Renewal• Adaptation

• Machine-like• Predictable

• Chaotic• Nomadic• Unpredictable

Opposing

Characteristics

• Becoming• Change

• Being• Conservation

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Organizational ChallengeOrganizational Challenge

The ability to create conditions for delivering (predictable) quality of service, as well as create conditions that enable (unpredictable) patterns of

renewal, innovation and adaptation to emerge

“Having the capacity to changebefore the case for change becomes desperately obvious”1

1. Hamel, G., Välikangas, L. (2003). The Quest for Resilience.

The capacity for change must be designed-in

Conditions for Successfully Conditions for Successfully Implementing Strategic ChoicesImplementing Strategic Choices

The case for the design focus

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Strategic SuccessesStrategic Successes

“Various studies indicate that 70 percent to 90

percent of organizations failed to realize success from their strategies”1

1. Harvard Business School Press 2004

What is the percentage of success?


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Many Failures...Many Failures...

Total Quality Management

Six Sigma

Business Process ManagementBusiness Process Reengineering

Learning Organization

Customer Relationship Management

Supply Chain Management

Enterprise Resource Planning

Activity Based Costing

Mergers and Acquisitions

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Technology ImplementationsTechnology Implementations• The majority (50%-70%) of

technology implementations fail1

• 75% of all attempts to introduce automation to the workplace have failed1

• Technology introduction requires (major) changes outside the technology domain, which the technology introduction does not “automatically” bring about2

• Looking at technology alone is insufficientfor making technology “work” 2

1. Rechtin, E. (2000). Systems Architecting of Organizations.2. Scott Morton, M.S. (1991). The Corporation of the 1990s.


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IT ResultsIT Results

Reference level

0Relative IT investment level

Relative enterprise performance

• There is no correlation between investment in IT and profitability, or other key measures of business success1

• According to the Standish Group: more than 50% of IT projects did not meet requirements, and around 25% are cancelled1

1. Pisello, T., Strassmann, P. (2003). IT Value Chain Management - Maximizing the ROI from IT Investments.

2. Strassmann, P., (1990). The business value of computers.

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About Strategy and ImplementationAbout Strategy and Implementation

High

Low

Low High

Strategic capabilities

Deployment capabilities

‘waste’

‘lost case’ ‘ineffective’

‘competent’Coherent and consistent• Strategic initiatives• Deployment of initiatives

Design and implementation

Governance competence


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Unity and integrationUnity and integration

Many failed change programs prove the importance of consistency and coherence

1. R. Fritz, Corporate Tides(1996)2. A. Pettigrew, In: R. Galliers, W. Baets, Information Technology and Organizational Transformation (1998)3. P. Lawrence, J. Lorsch, Organization and Environment(1967)4. T. Powel, Organizational Alignment as Competitive Advantage(1992)5. D. Nadler, M. Tuschman, Competing by Design (1997)6. J. Hoogervorst, Quality and Customer Oriented Behavior: Towards a Coherent Approach for Improvement (1998)

Ability to change

Unity and integration

Enterprise performance

• Structural conflict1

• Segmentation and incoherence2

• Internal structural fit3

• Organizational alignment4

• Congruence5

• Coherence6

Labels:

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Unity and integration…Unity and integration…

Governance and design


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A Framework for IntegrationA Framework for Integration

Strategy Systems

Skills Style

Structure

Staff

Sharedvalues

• Unclear whether attention areas are comprehensive (necessary and sufficient

• Unclear how coherence and consistency between the attention areas is achieved

• Underlying theory and methodology behind the framework remains vague

McKinsey 7S Framework, In: Perters, T.J., Wateman, R.H., In Search of Excellence(1982)

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Our Premise (1)Our Premise (1)

A condition for the successful realization of (strategic) enterprise objectives is that the

enterprise has been (re)designedin an integrated, coherentand consistentmanner.

This condition does not imply that integration, coherence and consistency necessarily leads to success (although this condition appears to be more

important than the quality of the strategy itself1), but that success indicates that integration, coherence and consistency have been established, and that

absence of these conditions imply failure

1. Collis and Montgomery, In: Kaplan, R.S., Norton, D.P. (2001). The Strategy-Focused Organization.


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Our Premise (2)Our Premise (2)

Increasing the success rate of strategic (IT) initiatives will generally not result from

structural governance measures (e.g. more stringent financial decision making)

The key to increased success of implementing strategic choices lies

in the area of Enterprise Design

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Integrated Design RequiredIntegrated Design Required

• Business design• Organizational design• Informational design• Technology design

A design methodology is required that aids in integrated, mutually consistent

Business, Organizational, Informational and Technology design

System Thinking and the Importance System Thinking and the Importance of Architectureof Architecture

Prelude to the viewing enterprise as a system

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What is a System?What is a System?

A set of different elements so connected or related as to perform a unique function not performable by the

elements alone1

1. Maier, M.W., Rechtin, E. (2002). The Art of Systems Architecting.

A set of elements standing in interrelation among themselves and with the

environment2

2. Von Bertalanffy, L. (1969). General System Theory.


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Functional and Constructional Functional and Constructional PerspectivePerspective

Functional, teleologicalperspective:• Closed, “black-box” view1

• Management, control oriented• Design knowledge not required

Constructional, ontologicalperspective:• Open, “white-box view1

• Design, change oriented• Design knowledge essential

1. Dietz, J.L.G., Enterprise Ontology (2006)

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Key System Thinking AspectsKey System Thinking Aspects

• Holistic, not reductionistic• Focus on relationships between the system

elements• Teleological (purpose) and ontological

(essence) perspectives, translated into the functionaland constructionalperspectives


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The System as an ArtifactThe System as an Artifact

• A system is a purposeful, intentionalarrangement of elements

• The process of system creation is thus inherently not accidental

• The inevitable question is thus how the system is to be realized

• The nature of this question implies normativeguidance

Normative guidance is in our view the essence of architecture

Logical consequences:

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Views on ArchitectureViews on Architecture

• A top-down descriptionof the structure of the system, its components and their interrelationships

• A family of guidelines(rules, concepts, principles, patterns, standards) for design

• A formal descriptionof a system that supports reasoning about the structural properties of the system

• A system’s reference model• The fundamental organization of a systemembodied by its

components, their relationships to each other and the environment, and the principles guiding its designand evolution (IEEE 1471)


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Architecture: Two ViewsArchitecture: Two Views

• Descriptiveview: architecture describes how a design actually is in terms of its functional, operational or material manifestation (consequence)

• Prescriptiveview: architecture guides how a design must beaccomplished: normative limitation of design freedom (antecedent)

The descriptive view is cogently rejected

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Our View on ArchitectureOur View on Architecture

• Conceptually, the essence of architecture is to provide normativeguidance for design

• Architecture is therefore essentially a prescriptiveconcept that pronounces how things must become, rather than a descriptiveconcept that reveals how things are

We will use the prescriptive view and consider architecture practically as a consistent and coherent set of principles and

standards that guide how a system is to be designed.1. Hoogervorst, J.A.P., Enterprise Governance & Enterprise Engineering (2009)2. Hoogervorst, J.A.P., Dietz, J.L.G., Kernbegrippen omtrent enterprise architectuur en architectureren(Tiem 2005)

Architecture, Architecturing and Architecture, Architecturing and DesigningDesigning

The complementary nature of architecturing and designing

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Architecturing and DesigningArchitecturing and Designing

Architecture

Design

Architecturing

Designing

Implementing

System

System Engineering

• Functional model• Constructional models


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Two Complementary ProcessesTwo Complementary Processes

Architecture

Systems

Architecturing

Specific systemSystem class

Design

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References for ArchitecturingReferences for Architecturing

System: car

• Personalized transport• Status

• Reliability• Safety• Economy• Maintainability

Construction:• Motor• Chassis/Casco• Interior• Brakes• Wheels• Lamps

operationalize

addressed in

Architecture

System goals

Areas of concern Design domains

indicate addressed in

need needaddresses applies to

oper.support

Function:• Lighting• Warning• Heating• Steering


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Architecture ExamplesArchitecture Examples

Architecture:• Two separate brake systems must be used• Both brake systems must operate on rear wheels

indicate addressed in

operationalize

addressed in


oper.support

Area of concern:• Safety

Design domains:• Wheels• Brakes

Car system goals:• Personalized transport• Status

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Architecture ExamplesArchitecture Examples

Area of concern Design domain Architecture

Safety

Function (warning) Warning signals must be presented visually and audibly

Function (lighting) Headlights must extinguish after engine switch-off

Construction (brakes) Dual brake systems must operate on the rear brakes

Construction (casco/doors) Closing signals must only be triggered by all locks closed condition


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ArchitecturingArchitecturing

• Normative (principle-based)

• Formal (method-based)

• Participative (stakeholder-based)

• Heuristic (experience, insight-based)1

1. Maier, M.W., Rechtin, E. (2002). The Art of Systems Architecting.

Architecturing can be defined as the process for defining architecture

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Architecture FrameworkArchitecture Framework

In short notation1:

1. Dietz, J.L.G et al., Extensible Architecture Framework (2004).2. Hoogervorst. J.A.P., Enterprise Governance & Enterprise Engineering (2009)

<S,D,A>• Areas of concern• Design domains• System type

An architecture framework is a conceptual structure pertinent to a system type, consisting of areas of concern and

a necessary and sufficient partition of the system type in design domains related to a chosen perception

Enterprise Architecture and Enterprise Architecture and Enterprise Design DomainsEnterprise Design Domains

The system view on enterprises

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What is Enterprise Architecture?What is Enterprise Architecture?


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EA: A Popular ThemeEA: A Popular Theme

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CautionCautionEnterprise Architecture is still

relatively immature from both a research and practice perspective,

and there is not a widespread consensus on the terminology. The terms “Enterprise Architect” and

“Enterprise Architecture” are interpreted and defined in many

different ways and there is no single universally accepted definition yet1

1. Global Enterprise Architecture Organization (www.geao.org), accessed December 12, 2005


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Architecture: Broad AttentionArchitecture: Broad Attention

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The Enterprise Basic PerspectivesThe Enterprise Basic Perspectives

Teleological perspective:• Purpose(s)• Function(s)• Black-box

Ontological perspective:• Design• Construction• White-box

Management

Architect/Engineer


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Bridging the GapBridging the Gap

• Management• Performance

• Design• ChangeIncommensurable

domains

Black-boxFunctionalPerspective

White-boxConstructional

Perspective

EnterpriseArchitecture

Can bereasoned from

Requirement:Handling of multiple product labels through various interaction channels

Architecture:•Products and services must be suitable for selling under multiple labels

•Presentation logic may not contain label-specific functionality

•Portlets must be multi-channel compatible

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Architecture: Two AspectsArchitecture: Two Aspects

The environment:

•Passengers

•Airports

•Service personnel;

•Flight crew

•Air traffic control

Function architecture:

•Critical system switches must have different shape

•Flight warning signals must be both visual and audible

•Flight information must be presented according to the ‘basic T’ standard

Construction architecture:

•Four separate flight guidance systems must be used

•Wiring of the different flight guidance systems must use different cable conduits

•Flaps must be made of composite material

•AC voltage is 115V/400Hz

•Baggage storage space must be based on standard LD4 containers


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Enterprise ArchitectureEnterprise Architecture

The environment:

•Customers

•Business partners

•Suppliers

•Competitors

•Market

Function architecture:

•Separate payment and service points

•Electronic payment through cards and mobile phone

•Sales outlets only through franchising

•Per basic product a maximum of three product variations may be offered

Construction architecture:

•Process control must be separated from process execution

•Quality control must take place at the point of production

•Product and sales information must be available at all outlets

•Network access must be based on authentication and role-based authorization

Function: the businessConstruction: the operation

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Key Enterprise Design DomainsKey Enterprise Design Domains

• Business: regards the primary purposeful and gainful enterprise activities (e.g. the delivering of products or services)

• Organization: regards the manner by which the purposeful and gainful enterprise activities are actually arranged

• Information: regards the intelligence (cognitive aspects) pertinent to business and organizational activities

• Technology: the specific use of knowledge, methods, and human and physical resources through which the enterprise is implemented.


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Enterprise Design DomainsEnterprise Design Domains

Complex, adaptive “socio-technical” system of human endeavor

Context Context

Information

Business

Organization Technology

Construction: how

Function: what

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Enterprise ArchitectureEnterprise ArchitectureFunction: the businessConstruction: operation

Business architecture is the function

architecture of an enterprise: a

coherent and consistent set of

principles and standards that guide

the manner of interaction between

the enterprise and its environment

Somewhat limited focus:

Business architecture is a coherent

and consistent set of principles and

standards that guide the way

products and services are offered and

delivered to customers

•Organization architecture

•Information architecture

•IT architecture

form the construction architecture of an

enterprise: a coherent and consistent set of

principles and standards the guide the

arrangement (its ‘being’) of the enterprise


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Enterprise Architecture DefinitionEnterprise Architecture Definition

Enterprise architecture is a coherent and consistent set of principles and standards that

guide the design of the enterprise as a whole

Hoogervorst, J.A.P., Enterprise Architecture: Enabling Integration, Agility and Change(IJCIS 2004)Hoogervorst, J.A.P., Enterprise Engineering en –Architectuur: een antwoord op falende strategie-implementaties(HMR 2004)Hoogervorst, J.A.P., Dietz, J.L.G., Kernbegrippen omtrent enterprise architectuur en architectureren(Tiem 2005)Hoogervorst, J.A.P., Enterprise Governance & Enterprise Engineering(Springer 2009)

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ArchitecturingArchitecturing

addressed in

• Flexibility• Time to market• Quality• Customer satisfaction• Employee satisfaction• Employee involvement• Safety• Costs• Compliance• Business ethics

• Strategic position• Strategic perspective

operationalize

• Enterprise mission• Strategy

• Business• Organization• Information• Technology

Architecture

System goals

Areas of concern Design domains

indicateindicate,

addressed in


operat.support


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Architecture ExamplesArchitecture ExamplesArea of concern Main design domain Architecture

Customer satisfaction

Business Products and services must be customizable

Organization Management must enable employee self-management

InformationComplete and up-to-date customer information must be available at all customer contact points

Organization Decision making must take place at the lowest possible level

Technology Technology must enhance customer productivity and comfort

Security

Information Supplier information must be available from one unified source

Technology (IT)Network access must be based on authentication and role-based authorization

Safety BusinessThe delivery of products and services must never compromise safety

Employee satisfaction Organization People employment must focus on employee self-efficacy

Flexibility OrganizationProcess flow control must be separated from execution logic

Decision making must take place at the lowest possible level

Compliance OrganizationProcurement and payment processes must have ‘non repudiation’ protection

Business ethics BusinessDevelopment and delivery of products and services must have minimally possible milieu impact

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Enterprise Architecture: Four Enterprise Architecture: Four Main Design DomainsMain Design Domains

Organizational Architecture

Importance of consistency withinand betweenarchitecture domains

Business Architecture

Technology Architecture

Information Architecture


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Information

Business

Organization Technology

Function: what

Construction: how• Process control must be separated from process execution

• Customer purchase/selection actions must always be confirmed

• Redundant data entry about the same aspect is not allowed

• Processes must have non-repudiation protection• Assessment and reward systems must evoke and support

customers and service oriented behavior and adherence to espoused norms and values

• Presentation and content of data must be separated• Access to systems and data must be based on authentication

and role-based authorization• Applications may not contain brand-specific logic• Applications must enable multi-channel access• TCP/IP must be the standard transport protocol

Unity and IntegrationUnity and Integration• Data may have only one authoritative source• Data about customer claim behavior must be actively

captured• Data from operational systems must update

informational systems real-time• Data content and presentation must be separated• Presentation logic may not contain brand-specific

functionality• Customer data must enable risk profiling• Semantics must be consistent enterprise-wide

• Products must enable delivery under different brands• Only low-risk products may be offered• Insurance transactions must be completely executed through

the Internet• Product customization may only be based on standard

modules• Customer purchase/selection actions must always be

confirmed• Products may only have one customer contact point• Customers must be informed about the status of their

request/order

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The Role of ArchitectureThe Role of Architecture

Architecture Object (System)

Design domains

Architecture(Principles and

standards)

<S,D,A> Architecture framework

• Flexibility• Compliance• Customer satisfaction…• Employee satisfaction• Costs

Address

Applies to

Key actions

Defines the enterprise strategy in an emerging manner


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Publication of Business Architecture PrinciplesPublication of Business Architecture PrinciplesPrinciple statementInsurance transactions must be completely executed through the Internet.

RationaleThe electronic (digital) form of transactions allows easy integration of these processes with other enterprise processes (e.g. financial and accounting process). Process quality is increased, and the complexity of processes – hence costs – is reduced due to the significant reduction of manual interventions. Customer satisfaction will most likely increase. Further, the process are faster in execution, while they can be more easily adapted to business growth. The electronic nature of the processes enable greater security and adherence to rules and regulations.

ImplicationsCurrent non-electronic forms of invoicing and payment must be reduced gradually. This has consequences for some customers and the internal administrative staff. Specific implications are faced by customers without acceptable electronic means.

Key actionsInvestigate solutions for electronic transaction services.Consider the consequences for the current administrative staff.Investigate possible solutions (or exceptions) for those customers not having (or unlikely to have) adequate means to handle insurance transactions electronically. Define under which conditions exceptions to the principle must be grantedDefine the requirements for electronic transaction servicesDevelop electronic transaction services as part of the Enterprise Commodity Infrastructure and Services (cf. paragraph 7.4.3).

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Publication of Organization Architecture Publication of Organization Architecture PrinciplesPrinciples

Principle statementAssessment and reward systems must evoke and support desired customer and service oriented behavior and adherence to espoused norms and values.

RationaleAs a strategic focus, our organization places high value on customers and the service to them, and treasures the norms and values by which we conduct our business. Hence, we must ensure that our assessment and monetary reward systems induce coherent behavior that is consistent with these views.

ImplicationsCurrent departmentally focused assessment and reward systems will be discontinued.Behavior not consistent with customer and quality oriented focus will be actively discouraged.

Key actionInvestigate en reengineer pertinent assessment and reward systems.Define necessary employee and management training.Define the necessary information supply and associated systems for supporting desired employee behavior.


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Publication Information Architecture PrinciplesPublication Information Architecture Principles

Principle statementData from operational systems must update informational systems real-time.

RationaleInformation is a key enterprise ‘recourse’. Timely availability is key in order to control enterprise processes adequately and respond to otherwise unnoticed trends and developments. These might for example concern quality degradations, or (undesired) consumer behavior. Improved process performance, business intelligence, as well as security and compliance are the result of timely availability of information. Moreover, the ‘real-time‘ enterprise offers opportunities to enhance the customer and service orientation, since customer data is always current and can be used productively and proactively in all subsequent customer interactions.

ImplicationsData must be considered as a corporate asset. No restrictions on their utilization outside the domain where the data are generated should exist. Operational processes should not limit the extraction of informational data.

Key actionsStudy how different types of operational data must be extracted, transformed, and loaded (ETL) into unified informational databases.Define ETL, back-up, (re)store, replication, synchronization, archiving, and reporting services in the context of data warehousing.

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Publication IT Architecture PrinciplesPublication IT Architecture Principles

Principle statementAccess to systems and data must be based on authentication and role-based authorization.

RationaleFlexibility and speed, as well as customer and service orientation are crucial enterprise areas of concern. For that, easy and quick access to our services - any place and any time- is essential for customers, business partners, employees, and suppliers. At the same time, such access should be secure in order to avoid security risks.

ImplicationsCurrent access methods must be discontinued.Different user groups must comply with more stringent access arrangements.

Key actionsEstablish the essential enterprise roles.Investigate possible methods for authentication and areas (user groups) of utilization.Study migration of current instances not compliant with this principle to the compliant access method.Develop identity management and access services.Create overall security policies and awareness for the different user groups


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Conceptual OverviewConceptual Overview

Strategic choices

Areas of concern

Functional requirementsConstructional requirements

Unity and integration

Lead to

Addresses

Ensures

GuidesDesign process

EnterpriseArchitecture

Functional designConstructional design

Business rules

Creates

Develops

Enterprise functionand construction

Enterpriseoperation

Endorse

EndorseAddresses

Materializes

Indicate

Fundamental convictions

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Design: Two aspectsDesign: Two aspects

Architecture guides the internal arrangements (the construction)

Business rules guide the way of working (operation)


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Closing ThoughtClosing Thought

enterprise architecture enterprise architecture and and business architecture business architecture

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