Chapter 1

Drivers of enterprise architecture

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

1. Most companies cannot keep up with changing markets

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

 Numerous factors may explain why firms have so much difficulty to
remain competitive in their markets:
•  One constancy, change.
•  Increasing customer demand and expectations for quality.
•  Globalisation.
•  Growing raw material and energy process forcing companies to deliver new levels of
scalability, quality, cost efficiency and performance.
•  Rapidly reducing lifecyles/time to market.
•  Increasing consolidation trend through mergers and acquisitions as costs of developing
new products in house are growing.

Source : Ross et al. (2006)

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

1. Most companies cannot keep up with changing markets

2. The necessity to integrate the supply chain

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

 Numerous factors justify the need to integrate the supply chain:

•  Volatile demand, fierce competition and customers who are harder to please, have
recently forced manufacturing firms to transform the way they approach and do business
with their partners.
•  Commercial strategic focus is shifting from the competitive advantage of firms to
competitive advantages of entire supply chains
•  Supply chain success does rest on member firms’ capabilities to integrate their
respective competencies in order to provide a personalized offer to customers [demand
driven supply chain].

Supply chain integration rest on the assimilation of IT by the members of the

network in order to optimize their internal processes as well as the
interorganizational processses supporting electronic transactions and collaboration
between the partners.

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

1. Most companies cannot keep up with changing markets

2. The necessity to integrate the supply chain

3. The different priorities of business and IT

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

 Top ten business priorities in order: Top ten technologies priorities in order:
1.  Business process improvement 1.  Business intelligence applications
2.  Controlling enterprise-wide operating 2.  Enterprise applications: ERP …
costs
3.  Legacy application modernization
3.  Attract, retain and grow customer
4.  Networking, voice and data communications
relationships
5.  Servers and storage technologies virtualization
4.  Improve effectiveness of enterprise
workforce 6.  Improving security technologies
5.  Revenue growth 7.  Service-Oriented Architecture (SOA)
6.  Improving competitiveness using 8.  Technical infrastructure management
intelligence in products and services
9.  Document management
7.  Deploy new business capabilities to meet
10.  Collaboration technologies
strategic goals
8.  Enter new markets
9.  New products or new services
10.  Faster innovation

Source : Gartner (2007)

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

1. Most companies cannot keep up with changing markets

2. The necessity to integrate the supply chain

3. The different priorities of business and IT

4. The historic ineffectiveness of IT architecture efforts in large
organizations

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

 Comments from senior executives like the following are indicators:
•  Different parts of our company give different answers to the same customer questions
•  Meeting a new regulatory or reporting requirement is a major effort for us, requiring a concerted
push from the top and significant infrastructure investment
•  Our business lacks agility—every new strategic initiative is like starting from scratch
•  IT is consistently a bottleneck
•  There are different business processes completing the same activity across the company, each with
a different system
•  Information needed to make key product and customer decisions is not available
•  A significant part of people’s jobs is to take data from one set of systems, manipulate it, and enter it
into other systems
•  Senior management dreads discussing IT agenda items.
•  We don’t know whether our company gets good value from IT.

Source : Ross et al. (2006)

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

1. Most companies cannot keep up with changing markets

2. The necessity to integrate the supply chain

3. The different priorities of business and IT

4. The historic ineffectiveness of IT architecture efforts in large
organizations
5. Firms do not use the right strategy to align their business objectives
and IT capabilities

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

 Most companies put in business processes and IT systems using a fairly straightforward
logic:
1.  Management defines a strategic direction
2.  The IT unit, ideally in conjunction with business management, designs a set of IT-enabled solutions
to support the initiative
3.  The IT unit delivers the applications, data, and technology infrastructure to implement the solutions

The process starts over each time management defines another strategic initiative.
This process also goes wrong in at least three ways:
1.  The strategy isn’t always clear enough to act upon. General statements about the
importance of “leveraging synergies” or “getting close to the customer” are difficult to
implement. So the company builds IT solutions rather than IT capabilities
2.  Even if the strategy is clear enough to act upon, the company implements it in a piecemeal,
sequential process. Each strategic initiative results in a separate IT solution, each
implemented on a different technology.
3.  Because IT is always reacting to the latest strategic initiative, IT is always a bottleneck. IT
never becomes an asset shaping future strategic opportunities.

Source : Ross et al. (2006)

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

The result:

Source : Ross et al. (2006)

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya
 1. Most companies cannot keep up with changing markets

2. The necessity to integrate the supply chain

3. The different priorities of business and IT

4. The historic ineffectiveness of IT architecture efforts in large
organizations
5. Firms do not use the right strategy to align their business objectives
and IT capabilities
6. Drive for quality frameworks and new regulatory compliance

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

•  High adoption rate of quality frameworks (e.g., Six Sigma, CMM)

•  New regulatory compliance (e.g., SOX, Basel II, HIPAA)
•  Also, enterprise architecture is becoming a regulatory requirement in certain
industries (e.g., Clinger-Cohen Act en 1996 mandate l’utilisation de l’AE pour
les agences fédérales).

Source : Grigoriu (2007)

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

 Gartner (2007). Creating Enterprise Leverage, a survey of IT.

Grigoriu, A. (2007). An Enterprise Architecture Development Framework: The Business

Case, Best Practices and Strategic Planning for Building Your Enterprise
Architecture, Trafford Publishing.

Ross, J.W., Weill, P. et Robertson, D.C. (2006). Architecture as Strategy: Creating a

Foundation for Business Execution, HBS Press.

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya

Chapter 1

Drivers of enterprise architecture

MTI-422 - Arquitectura Empresarial Professor Pierre Hadaya