Business and Strategic Alignment in EA – Practical Guidelines Based on Industry Best Practices

1

The Business of Architecture

Please have pen/pencil and paper ready BEFORE we start.

Dave Guevara303.694.9394

[email protected]

mailto:[email protected]

2 Dave Guevara – June 5, 2008

What in IASA are we Talking About?

Source: IASA Architect Training Program


Agenda

Business Architecture

Business Value & Business Impact

Business Impact – Do an Example

Business Alignment Guidelines & Examples

What Can You Apply Tomorrow?

Networking & Open Discussion


Business of Architecture Conclusions

Begin with the end in mind, meaning know what success looks likeSimply to the core, common capabilities and architectural componentsKnow how your architectures and solutions will deliver Business Impact to create valueBe clear on which architectural level & context you are workingCommunicate, Sell, Listen, Communicate

5


What is it?How do we architects define it?

What does it do for us?


Business Architecture is Just as Confusing as SOALot’s being writtenSame words/phrases being used to mean different thingsLack of clarity about where to start or endTechnical/software architectures often assume business requirements and business architecture have been defined.Business stakeholders don’t know this type of abstraction in their tasks, workflow, and entities(orders, invoices, POs, etc.)


FEA Approach toBusiness Alignment

Source: “FEA Practice Guidance, Value to Mission”Federal Enterprise Architecture Program Management Office, OMB


FEA Definition of Segments

Segments are the vertical bars,

Business & Core Mission Areas

Segments are also the common

Enterprise Services


TOGAF Architecture Development Method (ADM)

Phase A: Architecture VisionSet the scope, constraints, and expectations for a TOGAF project; create Vision; define stakeholders; validate the business context and create the Statement of Architecture Work; obtain approvals

Phases B, C, D: Develop architectures at three levels:

1. Business2. Information Systems3. Technology

In each case develop the Baseline (“as is”) and Target (“to be”) Architecture and analyze gapsTOGAF™ is a trademark of The Open Group

TOGAF Guidelines


TOGAF Business Scenarios

Business Scenario describes:The business processes, applications or sets of applications that can be enabled by the architectureThe business and technology environmentThe people and computing components (called “actors”) who execute the processes in the scenarioThe desired outcome of proper execution <of processes and applications>

Think UML 2.0


Remember?

Begin with the end in mind, meaning know what success looks likeSimply to the core, common capabilities and architectural componentsKnow which Business Impact(s) your architectures and solutions must affectBe clear on which architectural level & context you are workingCommunicate, Sell, Listen, Communicate


REA model of cookie sale fromentrepreneur’s (ELMO) perspective

Give Take

Economic Resource

inside participation

outside participation

outside participation

inside participation

stock-flow

stock-flow

Economic Event

Economic Agent

Economic Agent

Economic Agent

Economic Agent

Economic Resource

duality

Economic Event

Resource-Event-Agent (REA) Model developed by William E McCatthy, Michigan State University

Example of TOGAF Common Business Model


Top-Down with Bottoms-Up Approach in ITPM and EPM

Enterprise Project

Management (EPM)

IT Portfolio Management

(ITPM)

Strategies

Risk Management

WBSWork Breakdown Structure

Tasks

Resources

Business Value Governance

Initiatives

Timekeeping

Schedules

Projects Phases/Stages

Roadmaps

Architecture Blueprints

Investments

Budgets

RequirementsPMO

Execution Management

ITPM

Value Management


Strategies

Risk Management

Infrastructure

Lifecycle & Environ Mgt


Initiatives

Metadata

Composition

Business Services

Roadmaps

FSA BlueprintsInvestments

Budgets Repositories

Activity / Event Mgt

Business Logic

Business Processes

Messaging Security

Technical Governance

Services Architecture

Comm Plans Business Models

Top-Down with Bottoms-Up Approach in EA and SOA

Service Oriented

Architecture (SOA)

Enterprise Architecture

(EA)

Technical, Info & Software

Architectures

Solution Management


Value Management

15

Recall the GreatEnterprise Service Bus (ESB)

Talk by Kevin Geminiuc& Jason Barrios


Converging to the integrated ESBMessageQueues

(MQSeries)

RPC(Corba, DCOM)

BusinessProcesses

(e..g EbXML,MOM?)

Stand-alone apps

BusinessProcesses

(e..g WS-BPEL,BizTalk, Human

workflow)

ESB(Message routing,event- driven arch,

policymanagement)

WiringMessagingProtocols

(http, queues,ftp, xmp)

Custom Codeadapters,

Stove Pipesystems

CompositeApplications

(JBI - JSR208,SCA-Oasis,

SDO - Oasis)

MessageQueues(JMS,

MSQMQ)

Web Services(SOAP, SOA,

Restful)

EAI Adapters(WebMethod

s), JCA -connectors

ComponentStandards (SCA,

WSDL), B2B Adapters

App Adapters(SAP, Documentworkflow, ETL)

EAI, MOM,SOA

ESB


Component view

Reliable Messaging (JMS, MSMQ, ..)

Rule Engine

RoutingEngine

SOATier

CoreComponentsProcess

Orchestrator(BPEL/

BizTalk)

ESBEngine

DeployedComposite App

(SCA, JBI)

IdentityManagement BAM

UDDIRegistery

FTPAdapter

HumanWorkflow

ETL

DataAdapter

CICSAdapter

SwiftAdapter

...

...

ExternalPartners

PortalApplications

PolicyManager


Case Study 1: Healthcare Eligibility Processing

Background: How to create business process templates for reuse for healthcare processing with agile and decoupled services processing complex rules based on “life events”

1. External user healthcare paper application entered into system2. Listener to changes on beneficiary demographic change events3. Message routed to appropriate BPEL orchestration process (New

application or existing person/family)4. Human task to evaluate data quality (random sampling)5. Eligibility Rule Engine calculation6. Invoke web service to generate appropriate document

Result: Interface decoupled from data-change eventsrouting by application typeswap in “state” level orchestration processes & rules scalable (load tested to 20K applications per hour)


Case Study 1: Eligibility Info Flow

<Rule Engine>HealthCareEligibility

ProcessApplication

sContentRouter

Data-EntryStaff

HealthcareApplicationpaperwork

UserDemographic -

Domain Objects

SystemWeb App

State healthcareapplicant data

DemographicUpdates,

ApplicationAspects-AttributeInspector

XML-Doc

<Invoke>New

Application

<invoke>Existinginsured

recipient

HumanTask

QA TaskScreenEligibility

Specialist

RuleEngine

Call

InvokeLetter

Process

New Application Process <BPEL>

ProcessApplication

InvokeLetter

Process

New Application Process <BPEL>

...

Denial Letter Process<BPEL>

Approval Letter Process<BPEL>

InvokeLetter

Service

InvokeLetter

Service... ...

DBadapter

TaskAdapter

<Web Service>GenerateLetter

RuleAdapter

Add to TaskQueue

ItemCompleted-Pass/Fail

EligibilityData

Eligibilityresult

ApprovalLetter

DenialLetter

CompositeApplication


SOA Service Layers

Business Process Layer

Applications Layer

orchestration service layer

business service layer

application service layer

Services Interface Layer

Source: “Service-Oriented Architecture, Concepts, Technology and Design”

ERP

SCM

CRM

Custom


Be Aware of the Level Your Working At & Your Context

Service Oriented

Architecture (SOA)


(EA)

Strategies

Risk Management

Infrastructure



Initiatives

Metadata

Composition

Business Services

Roadmaps



IT

Solution Management


Value Management

Activity Mgt

Business Logic

Business Processes

Messaging Security




Applications Technology, Design and Management

SOA, MS Capabilities Modeling


SOA Example in Future State Architecture (FSA) Framework

Architecture Viewpoints

Business Information Technical

Logical

Implementation

Perspectives

Business Context

Conceptual

Solution

SOA

Example


Future State Architecture (FSA, ‘To Be’)

FrameworkArchitecture Viewpoints

• Logical Business Process Pattern

• Business Process dependencies on applications

• Use case descriptions e.g. UML 2.0

• SOX process flows

• BPM/BPEL models

• Conceptual Info Patterns & Models

• Biz Info Entities (workflow docs, structured data, taxonomy, content, master data…)

• Logical Info Process (flow) Pattern

• Logical data models• Systems of record

• ETL process logic• Data hygiene and

quality logic• Source/target maps,• Physical data

models & stores

• Apps Mapping to Business Value & Process Models

• Services Model

• Define Domains

• Services Arch• Application Arch• Security Arch• Infrastructure Arch• Presentation Layer

• Physical diagrams of all domains & layers

• Security constructs

Business Information Technical

• Business Process Model

• Conceptual Process Patterns

Logical

Implementation

Perspectives

• IT Goals & Objectives

• Business Solution Requirements

• Business Value Model

Business Context

Conceptual

Solution

• Integrated View

• Role-Based Skills Matrix

• Life Cycle Mgt Architectures

• Solutions Patterns

• Interface Patterns

• Testing, O&M, Distribute Patterns

• Implementation Architecture Patterns

• Life Cycle Mgt Patterns

• Architecture Principles

• Gap Analysis

• ROI/Value/Economic Analysis

Note: This is not intended as a complete list of all models and artifacts.


IT Strategy

Communication Plan

Oversight Board Charter

Stakeholder Analysis

Current State Architecture

Governance Strategy

Business Strategy

Business Alignment

Stakeholder Analysis

Strategic Roadmap

Migration Plan

Current State Architecture

Communication Plan

ARB Charter

ESC Board Charter

Governance Strategy

Shares

Defines InitialBaseline

Influences

Influences

Supports

GuidesFuture State Architecture

Future State ArchitectureDeliverables

Defines

Defines ViableAlternatives

Budgetary Compliance

Financial / Risk Attractiveness

ROI AnalysisDefines Financial Attractiveness

Defines Costs, Benefits & Risks

Business Strategy

SupportedBy

Sup

ports

EA Team Charter &

PlansITPM Tools

Portfolio Management Ranking of Alternatives

EA Team

Supports Identifies BestAlternatives

Defines Viable Alternatives

Migration Plan

Constrains

Defines Phasing

Deliverable Group

Coversheet Within Group

LEGEND:

Impl

emen

ted

By

IdentifiesStrategic

Goals& Gaps

NPV / TCO Assessment

DefinesAssists in Defining

& Participates

Supports

DefinesFutureStates

EAMeasurement

Program

Success Metrics

DefinesPerformance

MetricsIn

AlignsWith

Business Alignment Process

Enterprise Architecture Management (EAM) Framework

© 2008 Dave Guevara IASA Members are authorized to reuse, copy and modify.Such use much include a note “© 2008 Dave Guevara reproduced with permission”

25

Business Value & Business Impact

Value is more than just ROIImpact is evident by how it affects people, money, economics & risk


Where is the Struggle?

Business Case at Program and Project Level (ROI)

Selecting Which Projects to Fund & the Sequence

Requirements Discovery (driven by value or capability)

Architectural Design Aligned to Business Impact

Change Adoption Planning & Implementation

Adapting When Things Change

Not Using a Repeatable, Effective Process

Losing the Voice of the Customer


ROI May Not Be What You Think?

ROI analysis methods range from the simple/qualitative analysis to more rigorous/quantitative.

More rigorous

Simple

Complexity of Analysis Methods

Type of AnalysisMore qualitative

More quantitative

Source: “Measuring the Business Value of IT”, Craig Symons, Forrester © Sept 2006

Applied Information Economics

Total Economic ImpactVal IT

Business Value Index

Value: Simple to Complex

NPV/IRR

Practical ROI or Value Analysis is about Business Impact.

Use Cash Flow Schedules for large, complex projects with Business Impact.

Benefits AnalysisWe Want


Only 5 Ways to ImpactBusiness Value

Culture & soft values has to produce or contribute to one of these 5

Increase Revenues

Reduce Costs

Improve Efficiencies

Governance Compliance – Risk Mitigation

Change/Create Core Capabilities


Business Value within IT

Assume you have a business driven IT group that delivers great business value

What have you done in IT to increase productivity, reduce costs, eliminate redundancy, create needed new capabilities and terminated unnecessary capabilities, sustained those that need to be in O&M, created BI that improves decision making

IT Efficiencies Throughout Asset LifecyclesConcept & AnalysisDesign & DevelopmentTestingDeploymentOperations & MaintenanceTermination (End of Life - EOL)


Failure FailureRequires

Incremental IT Budget

Failure Necessary but Low Value

Improved Business Value at No/LimitedIT Efficiency

Penalty

CreatesLOB/User

Resistance

Improved ITEfficiencyWith No

Business Value Penalty

Improved Business

Value ANDIT Efficiency

+_

Intel’s IT Business Value Matrix

Source: “Managing Information Technology for Business Value”

Business ValueIT

Effi

cien

cy

+

_

31

Business ImpactLet’s Do an Example


Business Impact Analysis Exercise in Small Groups

IT Budget Growth this year is 3%IT Budget $10.0M last yearNeed $1.3M for new projects (innovation)IT Budget Categories (last year)

Overhead (OH), includes EA = $1.5MSW/HW Maintenance = $1.5MO&M (excluding Maint) = $3.3M“Must Do” Infrastructure & Upgrade Projects = $0.7MTest & QA = $0.5MSW Dev = $1.5MNew Projects = $1.0M

Budgets this year reflect COL & Growth PlansFigure out: Cost reductions, where & how.

33

Business Alignment

What is it?How do we architects define it?

What does it do for us?


Why Business Alignment?

“The world is changing very fast.

Big will not beat small anymore.

It will be the fast beating the slow.”

Robert MurdochChairman and CEO

News Corporation


So What to Do?

Look at how what you DO and CREATEAffects Peoples’

BehaviorsEnvironmentsPerformance FeedbackPERSONAL needs

As evidenced in the Business Impact


What’s Business Really Care About?

You as architects:

ManageArchitectSpecifyGovernSustainEvolveRetire

Assets & Resources!

Whether Anybody Cares Is determined by how you answer WIIFM making Their Job:

EasierFasterMore ProfitableSaferUnderstandableActionableAdaptiveHigher Quality


Indu

stry

Sta

ndar

ds,

Bes

t Pra

ctic

es

Voice of Customer

Requirements

Initiatives Projects

Stages

Activities

RolesDemand

Supply

Resources

Portfolios

Business Value Milestones

Value Based Business Alignment thru Resources Planning

New/Expanded Solutions

Business Value


Business Value Milestone Connects Your Decision Space

Resource & Asset Allocation

Budgets (Opexp, Capex) & Cash Flow

Scope, Change, and Cost Control

Opportunity Management

Time Sequencing

Capability Development

Resource Planning

Risk Assessment & Management

Business Impact & Performance Goals

Functions & Features

Future State Architecture

Business Value

Milestone

39

Business Alignment Guidelines & Examples

(ask Dave for the handout)

Refer to the handout titled“Practical Guidelines for Strategic

and Business Alignment”


Strategies

Risk Management

Infrastructure



Initiatives

Metadata

Composition

Business Services

Roadmaps



Activity / Event Mgt

Business Logic

Business Processes

Messaging Security




Pick Alignment that Fits

Service Oriented

Architecture (SOA)


(EA)

Technical, Info & Software

Architectures

Solution Management


Value Management

Business AlignmentIs within

Business Unit or Workgroup or Process

Strategic AlignmentIs done at

Corporate, Enterprise or Division


Strategic Alignment Guidelines (handout)

Inputs:Strategic IntentStrategic GoalsIT Strategies, Goals and ObjectivesStrategic Model Questions

OutputsBusiness Value ModelBusiness Economic MetricsArchitecture Principles


Strategic Alignment Guidelines (handout)

Process StepsDetermine strategic intent and goalsDefine Porter Value Chain ModelDefine Business Value ModelBusiness Value MilestonesStrategic Alignment Process Questions


Porter Value Chain Model

Primary Activities

(how we make money)

Support Activities

(what we do to support making money)

Value Chain Activities Source: “Competitive Advantage”, Michael E. Porter


Example of Business Value Model for Manufacturer

Business Partners

Vendors

CustomersSuppliers

3rd Party

Fulfillment

Regulators

Advertising A

gency

Supply Chain Channels

PMO Corporate Affairs Legal HRMIS / IT FinanceAccounting

Sales Marketing Operations ManagementCustomer ServiceProduction Development

Product IntegrationProduct DesignProduct Management Product TestResearch & Development

Inbound Logistics Manufacturing Inventory Management

Corporate Functions

Product Development

Support Services

Fulfillment

Distribution Channels

Procurement

Sub-Contractors

P

C

PO

Example:Info Process

Mapped onto BVM


Business Value Milestone

Resource & Asset Allocation

Budgets (Opexp, Capex) & Cash Flow

Scope, Change, and Cost Control

Opportunity Management

Time Sequencing

Capability Development

Resource Planning

Risk Assessment & Management

Business Impact & Performance Goals

Functions & FeaturesBusiness

Value Milestone


Business of Architecture Conclusions

Begin with the end in mind, meaning know what success looks likeSimply to the core, common capabilities and architectural componentsKnow how your architectures and solutions will deliver Business Impact to create valueBe clear on which architectural level & context you are workingCommunicate, Sell, Listen, CommunicateRecommendation: Get an EA tool

PowerDesigner, Troux, System Architect


EA Tools & Repository Really Help Manage Complexity

48

The Business of Architecture

Questions?

Dave Guevara303.694.9394

[email protected]

mailto:[email protected]