Enterprise Business

Architecture

A Practical Approach to
TOGAF®

Senaka Ariyasinghe
Senior Enterprise Architect, Cisco Systems

Monday, October 24, 11.15 - 11.45

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 Agenda
 Business Architecture definitions
 Business Architecture Views
 Business Architecture analysis frameworks and models
 Business Architecture examples (using a budget airline as
an example)

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What Is Business Architecture?
 Business Architecture Definitions
“Business Architecture articulates the structure of an enterprise in terms of
its capabilities, governance structure, business processes, and business
information. The business capability is "what" the organization does, the
business processes are "how" the organization executes its capabilities. In
articulating the governance and information, the business architecture
considers all external actors to an enterprise (including its customers,
suppliers, and regulators), to ensure that flow in and out of the enterprise are
captured” – The Open Group

"A blueprint of the enterprise that provides a common understanding of the

organisation and is used to align strategic objectives and tactical demands.”
- The Object Management Group (OMG)
 Common themes: Understanding of an organisation from strategy, structure
and business process perspectives
 Business architecture helps translate an organisation’s business
strategy and objectives into actionable processes

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Defining target Business Architecture – using TOGAF v9 ADM

Source: TOGAF™ Version 9 - A Pocket Guide 4

Questions Addressed By Business Architecture
 What are the goals and objectives of the business?
 What strategies are needed to achieve business goals?
 What is the optimum business model to support strategy?
 What is the organisation structure needed to support the
business model?
 What business processes are in place to execute the
strategy?
 What are the organisational capabilities?
Enterprise
Architecture

Business IT
Strategy Strategy
• Business
• Application
• Data
• Technology
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 Business Architecture Views
 Some architectural views that can be used to represent an
organisation from a “business architecture” sense
Organisation
Strategies
Business
Context Organisation
Structure
Business Goals
Business & Objectives
Model
Business
Functions
Value Chain
Business
Processes

As-is To-be
Internal & External Triggers Organisation
Organisation
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Organisational
Goals & Objectives

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Organisational goals & objectives
 Organisational Goals
Help define an organisation, giving it direction and purpose
Help motivate staff by communicating an organisation’s aspirations
Help identify an organisations long term direction
 Objectives
Objectives give meaning to Goals
SMART: Specific Measurable Achievable Realistic and Time-Bound
Each Goal can have one or more objectives supporting it

Example: Goals and Objectives for a budget airline

Goals Objectives
Be the #1 low cost carrier Earn an annual rate of
in the regions we serve return on investment over Financial
the next 5 years of 15% Objective

Increase market share by

30% over the next 3 years Marketing
Objective

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Organisational Strategy

Introduction to Strategy and Analysis Frameworks

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Organisational strategy
Michael Porter’s generic strategies for competitive advantage
 Cost leadership strategy
Achieves lowest purchasing, production and distribution costs - so that it
can price goods lower than the competition
Produce a high volume of standardised good – achieve scale economies

 Differentiation strategy
Aims to be the service leader, the quality leader, the style leader, the
technology leader and so on
Allows the firm to sell the product at a premium

 Focus (or Niche) strategy

A business focuses on one or more narrow market segments (niches) rather
than going after a large market
The business gets to know the segment’s needs so well and pursues either
a cost leadership strategy or a differentiation strategy to fulfill the needs of
the target segment

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 Organisational strategy analysis

(e.g. market segment)

Narrow Market
Scope
Focus Strategy
(e.g. industry wide)
Broad Market

Cost Leadership Differentiation

Scope

Strategy Strategy

Low Cost Uniqueness

Competency Competency

 To be effective, an organisation must decide on a strategy to pursue – either a

cost leadership , differentiation or focus strategy
 Based on the selected strategy, it must organise itself to execute the strategy
(e.g. have the right business model, right organistaion structure, streamlines
processes etc)
 Companies that do not follow a clear strategy – “middle-of-the-roaders” – do the
worst

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Organisation strategy example – for a Budget
Airline

Cost leadership strategies to keep operational costs low,

and thereby offering everyday low fares
 Single-class configuration (e.g. economy-class only)
 Standardised fleet (e.g. manufacture/model of aircraft)
 Meals/entertainment optional – chargeable service
 Operating out of secondary airports
 Internet-only sales

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Business Models

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Business Models
 A business model describes:
The organisation’s operations, including all of its components, functions and
processes
Value the oganisation offers to its customers , cost & revenue structures,
partner networks, customers segments, customer relationships, distribution
channels, key activities & resources
 A company’s strategy of combining the four factors of production
Land, labor, capital and entrepreneurship will determine the
uniqueness of its business model
 Superiority of the business model over its competition
A source of sustainable competitive advantage

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Some Generic Business Models

 Auction business model

 Franchise business model
 Low-cost carrier business model
 Premium business model
 Subscription business model
 Long tail business model
 Freemium business model

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 Business Model Framework …applied to a Budget Airline
Partner Networks Offer Customer Customer Segments
Key Activities
Relationships

o Flight
Operation o Monthl
s y News
o Sales Letter
o Marketin
g o Budget
o Airport
Consciou
s s
o Hotels o Cheap
Key Resources Distribution Channels Travelers
o Car “no-
Rentals frills”
flights
o Low Cost
MRO
o Internet
capability
(maintenanc Sales
e, repair & o Telephon
operations) e Sales

Cost Structure Revenue Streams

o Low Cost o Flight Sales

Hubs o Meals
o Fuel- o Car Hire
efficient o Hotel Hire
Aircraft

Source: Business Model Generation, A. Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self published, 2010 16
Value Chain Analysis

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 Value Chain Analysis
Porter's Generic Value Chain

Company Infrastructure

Prof
Supporting Activities

Human Resource Management

it
Technology Development

M
Procurement

a rg
Inbound Outbound Marketing/ Service
Operations

in
Logistics logistics Sales

Primary Activities

 Porter’s Value Chain can be used as a tool for identifying ways to create more customer value
in an organisation
 Value Chain identifies 9 strategically relevant activities that create value and costs in a specific
business – consisting of 5 primary & 4 supporting activities
Source: Competitive Advantage - Creating and Sustaining Superior Performance, Michael Porter
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 Value Chain Analysis Example
Mapping activities performed by an organisation into Porter’s model
Warehousing Manufacturing Fulfillment Sale/Marketing Service

Sales
Inbound Production Planning Order
Scheduling Processing Pricing Repairs

Fulfillment Warranty
Warehouse Computer Aided
Management Manufacturing Marketing
Campaigns Customer
Invoicing Enquires
Inventory Process Control Advertising
Management Logistics

Procurement Purchasing
Tender Management
Supplier Management

Human Recruitment
Resources Staff Development Intranet Management
Training Payroll

IT IT Service Level
Infrastructure Services Service Desk
Management

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 Value Chain Analysis Example
Warehousing Manufacturing Fulfillment Sale/Marketing Service

Sales
Inbound Production Planning Order
Scheduling Processing Pricing Repairs

Fulfillment Warranty
Warehouse Computer Aided
Management Manufacturing Marketing
Campaigns Customer
Invoicing Service Centre
Inventory Process Control Advertising
Management Logistics

Cost per Call $10

Syd Lon Manila Beijing $ .5
 Value Chain analysis will help answer:
Where are the costs and value created within the organisation?
Which activities are vital/strategic to the company and where they should be done?
Make or buy decision – should an activity be outsourced?
Are there any labor arbitrage opportunities? Should certain activities be done only in low cost centres?
Reconfiguring the value chain – How can IT be used for reducing costs and business innovation?

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 Using Value Chain Analysis to Optimise Application Portfolio
Warehousing Manufacturing Fulfillment Sale/Marketing Service

Inbound Production Planning

Sales
Scheduling Computer Aided Order
App H App I
Manufacturing Processing Repairs
Warehouse Pricing
Process Control App L
Management Fulfillment
Inventory Warranty
Management App F Marketing App K
Campaigns Customer
App A App D Invoicing App J Service Centre
Advertising
App C App E Logistics App M
App B
App G

Custom built COTS Apps Outsourced App

(Commercial off the Current Application Portfolio
shelf)

Warehousing Manufacturing Fulfillment Sale/Marketing Service

Inbound Production Planning Sales

Scheduling Computer Aided Order
Manufacturing Processing CRM Application Repairs
Warehouse
Management Process Control Pricing
Fulfillment Warranty
Inventory App D App J
Management Invoicing Marketing
App K
Campaigns Customer
ERP Application Service Centre

Integration Broker (ESB)

Proposed Application Portfolio

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Business Context
Diagrams

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Business Context Diagrams (BCD)
 High level representation of the overall set of interactions of
an enterprise - both internal and external
 Unlike UML/sequence diagrams (which tends to be too
detailed, complex and technical), BCD provides high-level
(and “friendly”) abstraction of an organisation's processes
 In a BCD
Rectangles: representing “actors”
Directional arrows represent: “messages” flow between actor
interactions
 BCD can be used as the starting point to derive detailed
business process diagrams for an organistaion

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Business Context Diagrams
Customer
Profile
Check Credit

Update Profile
Preferences
Get CX
Credit Card

Profile
Credit
Approval
Authorisation
Shop Service
Selection

Customer Add to Cart Budget Airline Process Charge

Order Web Portal

Confirmation Ch Charge Confirmation
ec
Av k H
aia ot e
lbi l/C
Re lity ar
sp
on
rt Seat Availability
se
Ca r

Confirmation
g
p in r de
op eO
Sh
rc ha
s Car/Hotel
Pu
Scheduling Orde
r
Con
fi rma
Car Hire

Confirmation
Ordering tio n
Seat

Order
Scheduling

Hotel

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Organisational
Structures

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Organisational Structure Types
 Most common structural classifications are:
Functional structure
Divisional structure
Project structure
Matrix structure
 Combination of structures are evident somewhere within
the organisation, but one is usually most dominant
 Organistaion strategy generally influences the
organistaional structure

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Organizational Structure Examples

Functional Divisional

Project
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 Using Organisation Structure Theory to
Analyse and Describe an Organisation
Functional & geographic decomposition

Function

Sub Sub Sub

Function Function Function

Process/
Activity

Sales R&D Support

Task

 Helps understand “what” the enterprise functions are and “where” they are
performed within the organisation
 One of the main driver’s in designing technology for an organisation
 Enterprise view of the organisation at major functions/sub functions level(i.e. an
enterprise/business unit-level perspective) rather than at activity/task level (i.e. not
a staff-level perspective)
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 Enterprise/Business Unit perspective
Functional decomposition at major function/sub function level
Major Sub Description Technology
Function Function Impact
Sales Corporate Sales Large enterprise & public sector strategic sales Critical
Finance Billing The calculation, generation and collection of billing for
customers. Critical
Finance Payment Handle money transfers and related transactions
Settlement
High
Finance Financial Generate required financial reporting, including Balance
Statements Sheet, Income statement, etc.
Critical
Marketing Market Analysis Profile customer base and product development
using demographic and other statistical tools
High
Marketing Pricing Develop product pricing and maintain multiple pricing
lists for different customer segments
Customer Order Tracking Locate the status and details of any order placed in the Low
Service organisation
Customer Customer History Maintain customer interaction history - past and present Moderate
Service customer orders, personal data, including shipping
address, payment details
Moderate
Customer Order Modification Change order details before product has shipped e.g.,
Service billing information, product selection, etc

Moderate

FDD has many uses…e.g. helps identify technology impact at a functional level 29
 Additional views of an organisation
Function/Geographic decomposition
Major Sub Function Geography
Function Sydney Singapore Manila Colombo London New York
(HQ)

Finance Billing Yes Yes No No Yes Yes

Finance Payment Settlement Yes Yes No Yes Yes Yes

Finance Financial Yes Yes No No Yes Yes

Statements

Marketing Market Analysis Yes No No No Yes Yes

PE
Marketing Pricing Yes No No No Yes Yes
P PE
PE
Service P
Customer Service Order Tracking No No PYes VPN - Video
No No No
Service
PE VPN - IPTel PE
Customer Service Customer History No No Yes
P Yes NoP P No

Customer Service Order Modification No No Yes No No No

…and helps identify technology impact at a geographic level

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Business Processes

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 Typical Enterprise Business Processes
Process Core Business Typical Cross Process Core Business Typical Cross
Group Process Functional Group Process Functional Name
Name Strategic Insight-to-Strategy Strategic planning
Customer Order-to-Cash Order Visioning Concept-Product
Centric fulfillment Vision-to-eBusiness Enterprise
Prospect-to- Customer enterprise management
Customer engagement Concept-to- R&D, product and
Manufacturing- Operations Development service evolution
to-Distribution and logistics Development R&D, product and
Request-to- Customer Initiative-to-Results service evolution
Service service Relationship-to- Strategic
Partnership partnering and
outsourcing
Process Core Business Typical Cross
Group Process Functional
Name
Business Forecast-to-Plan Budgeting,
Enabling outlooks and
forecasting Process Core Business Typical Cross
Requisition-to- Procurement Group Process Functional Name
Payables /vendor
Human Recruitment-to- Human resource
management
Capital Retirement management
Resource Resource
availability-to- management Awareness-to- Quality and safety
Consumption Prevention management
Acquisition-to- Fixed-asset
Obsolescence management
Financial close-to- Finance and
Reporting accounting

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Business Processes Decomposition
Order-to-Cash (order fulfillment) process
 O2C is a multi step
process, crossing
multiple functional
boundaries
 Improving O2C is of
strategic importance
 Errors and delays in
processing each step
will increase costs and
affect customer
satisfaction
 Some O2C performance
improvement levers
include:
 Order accuracy
 Shipping accuracy
 On time delivery

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Summary
 Suggested methodology is just one approach
 Important thing is to identify the right set of views that can
help define the “business architecture” for an organisation
 Start with a small number and then expand
 Use available models and frameworks in the analysis and
definitions (e.g. Porter’s model)
 Follow the TOGAF ADM process in defining business
architecture

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 Thank you!

Any Questions?

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