Gaps between business strategy and architecture can cause a failure to execute new business strategies; hampering your ability to demonstrate and deliver significant business value outcomes.
"85% to 90% of organizations fail to execute on their strategy,” according to Dr. David Norton, who originated the “balanced scorecard” strategic planning methodology.
Business strategic planning guides a rigorous analysis of an organization’s business capabilities, its environment and the disruption it faces in the digital age.
In successful companies, enterprise architecture (EA) supports business strategic planning. EA enables fact-based decisions about how to optimize or transform the company’s processes and resources (both human and technology). However, in too many companies, EA is disconnected from business strategic planning and, at best, it only supports IT planning. If watered down to just “IT architecture for IT people,” EA will fail to demonstrate and deliver business value outcomes of the business initiatives.
Organizations that fill the gap and embrace business strategic planning supported by EA have a significantly higher ability to execute on their business strategy. This is because they have a deeper understanding of the business initiatives and their impact on processes, technology, people and information. It becomes a joint business/IT effort with better guidance to drive successful delivery.
What needs to be solved?
Even with this knowledge, it is difficult to get the collaboration between business and IT organized. A Gartner survey noted that 43% of all EA practitioners said one of their top three challenges was "integrating EA with business and IT strategic planning to deliver business value." This challenge demands a practical approach with a dominant role for architecture, directly related to the business initiatives and outcomes.
How can we make it work?
In many customer discussions, we have discovered that companies can optimize their potential for successful strategy execution when they follow the following six step approach:
- Clarify the business’s strategic intentions, scope the relevant business initiatives and identify targeted business outcomes with clear measures of success.
An example of a business initiative and outcome statement could be: "Process Standardization Program - Streamline sales processes.” The measure of success is to shorten the sales lead time by 25% (business metric) in 12 months (time frame), decreasing the cost of sales by 10% (financial value).
- Analyze the current (as-is) architecture.
Assess the current business capabilities and their fitness to support the business initiatives.
- Identify the obstacles you need to overcome to achieve the targeted business outcomes.
For example, the as-is may contain the following obstacles:
- Inconsistent sales processes (unrewarded complexity)
- Inflexible process automation and insufficient control across systems
- Incomplete and/or late visibility of sales performance and issues in the sales process
- Define the target (to-be) architecture, e. a future-state operating model built on digital business capabilities that will overcome the obstacles.
Architect the optimized operating model and supporting technology landscape.
- Articulate the enablers in the to-be situation.
In the example, the enablers could be specific digital business capabilities (like those provided by a digital business platform), e.g.:
- Transformation – supported by “B/IT Transformation” capabilities
- Applications – supported by “B/IT Transformation,” “Process” and “Integration” capabilities
- Visibility – supported by “Analytics & Decision” capabilities
- Create a value proposition (including a business case) demonstrating that the target architecture will enable the business initiatives and that realization is feasible.
Based on this, the decision whether to go ahead with the transformation can be made. After receiving a “Go,” the business and IT planning and implementation will start.
In this way, organizations cannot only define and communicate actionable strategic or business initiatives and outcomes, but they also have the methods and discipline to drill down into the ripple effects of that strategy (like implications for the future organization, risks and interdependencies). The gaps in your architecture will be filled and, together, business and IT can make informed decisions and execute a strategy with confidence.
Where to start?
There are multiple entry points connecting business strategy and architecture, but why not start with an industry benchmark using the online Digital Fitness Assessment. Check it out now!