performance driven architecture v2 august 2010
TRANSCRIPT
Booz & Company
This document is confidential and is intended solely for the use and information of the client to whom it is addressed.
Performance-Driven ArchitectureA strategy-led approach to focus and align an organisation’s architecture capabilities to create business value
Canberra, August 2010 Perspective
1Performance Driven Architecture - v2 August 2010.ppt
Overview
Strategy by Design
Booz & Company Approach
Our Experience
Booz & Company 2Performance Driven Architecture - v2 August 2010.ppt
This document outlines a strategy-led approach to focus and align an organisation’s architecture capabilities to create business value
Document Overview
� For years, many companies have experienced a problematic tension between their IT departments and business units - one approach to close the distance is the discipline called ‘architecture’ which can be
described as the logical framework and design that establishes the links between strategy and organisational structures, business processes, information and underlying technologies
Background
Strategy by Design
Our Global Study
Linking Maturity & Value
Performance-driven Architecture
� Whilst organisations have been heavily investing in architecture over several years and many consider it
core to their strategic advantage, senior business & IT executives still question the value it actually delivers.
Many also question the role of an architecture capability within an organisation in terms of its accountability across the enterprise, domain and solution levels
� To this end, Booz & Co. recently completed a global study by surveying executives across a mix of financial
services and government organisations to determine how much value architecture can contribute to the
business and to understand the key challenges and best practices adopted by mature organisations
� The results of the study are revealing - the amount of value realised through architecture was clearly linked
to the organisation’s architecture maturity level, however, many organisations struggle to manage their performance. This was particularly evident in terms of measuring and communicating to the business, the effectiveness of their architecting capabilities and the impact of their design decisions
� To address these challenges, Booz & Co. have developed a comprehensive framework aimed at enabling a
strategy-led approach to focus and align an organisation’s architecture capabilities and demonstrably create business value including revenue generation, customer intimacy, reduced costs, increased agility, reduced risks and lower complexity
Note: These are the highlights of a recent Booz & Company viewpoint, released in June 2009; For more information, see http://www.booz.com/media/file/Enterprise_Architecture.pdf
3Performance Driven Architecture - v2 August 2010.ppt
Overview
Strategy by Design
Booz & Company Approach
Our Experience
Booz & Company 4Performance Driven Architecture - v2 August 2010.ppt
4
Organisations have been investing in architecture to address keychallenges in the current economic environment
Optimisation of operations & infrastructure
1
Customer intimacy & speed to market
2
Changes to business models
3
Increased focus on risk & compliance
4
Core systems replacement
5
Challenges & Themes (1) Description
� Cost pressures and across-the-board budget cuts forcing organisations to do ‘more-with-less’ including leverage and re-use of existing assets
� Optimisation of operations and infrastructure including standardisation,
consolidation and integrated portfolio planning between business & IT
� Achievement of integrated customer services & products across multiple
delivery channels with a strong focus on meeting customer’s preferences
� Increased agility / speed to market with customer service and new products
� Changes to industry structures and consolidation of market following
mergers and acquisitions
� Evolution and readjustment to develop new business models and
emergence of new value chains
� Increased focus on corporate governance and enterprise risk management
� New regulatory and legislative requirements will increase role of compliance and interactions with key regulatory bodies
� Many organisation’s driving major transformation programs to upgrade or
replace their core business platforms
� New platforms will drive changes in business processes, systems and structures including the broader IT operating model required to support them
(1) Sourced from Senior Business Executives & CIO interviews with over 60 Financial Services & Government organisations in Australia, US, Middle East. UK & GSA
Booz & Company 5Performance Driven Architecture - v2 August 2010.ppt
However, architecture remains a fuzzy concept in modern corporate strategic planning - no common industry definition exists
The process of translating business vision and strategy into effective enterprise change by creating, communicating
and improving the key principles and models that describe the enterprise’s future state and enable its evolution
Source: MIT Sloan Information Systems Research Centre, Wikipedia, The Open Group, Gartner, ANSI/IEEE
A complete collection of artifacts to describe the logical organization of business strategies, metrics, business capabilities, business processes, information resources, business systems, and networking infrastructure within the
enterprise.
The structure of a business, or the documents and diagrams that describe that structure; the business methods that seek to understand and document that structure; a business team that uses EA methods to produce architectural
descriptions of the structure of an enterprise
The organising logic for business processes and IT infrastructure reflecting the integration and standardization
requirements of the firm’s operating model
Definitions of Architecture
Architecture is the fundamental organisation of a system embodied in its components, their relationships to each
other and to the environment, and the principles guiding its design and evolution
Booz & Company 6Performance Driven Architecture - v2 August 2010.ppt
We see architecture as a key strategy to bridge the business-IT divide and address the key challenges facing organisation’s today
Source: Booz & Company
Results (for business and customer)
Business Vision and Strategies
(*) Note: Example business processes. Not exhaustive.
(Enterprise) Business Processes *
� Strategy planning� Sales and marketing
� Customer services
� Product processing� Account management
� Payment processing
� Financial management� Portfolio management
� Regulatory reporting
� Structure� Roles and responsibilities
� Skills / competencies� Performance management
Organisation Information Technology
� Data architecture and management
� Business information� Customer data
� Application services� Product platforms
� Integration layers� Infrastructure
Extended Enterprise
� Associations � Third party service providers � External systems
Alignment
Standards
Integration
Key Components of Architecture
Services
Requirements
Our Architecture Definition
� Provides an end-to-end holistic view of the capabilities within an organisation at the enterprise, domain and solution levels and supports the decision-making process needed to continuously improve and transform the business
� Serves as a guiding reference and a communication bridge connecting business operations with IT
� The blueprint and the road map for the development and management of two views: the existing enterprise, and the enterprise of the future as it is envisioned to achieve its business goals
Booz & Company 7Performance Driven Architecture - v2 August 2010.ppt
Organisations typically focus their architecture efforts across 3 distinct levels: Enterprise, Domain and Solution
Source: Booz & Company IC
� Architecture operates across breadth of
organisation (i.e. multiple lines of business)
and is aligned to the corporate strategy and
outcomes
Capability Scope Description
� Architecture relevant to specific business
unit(s) or operating models within an
organisation
� Also referred to as segment architecture and
is aligned to business strategy & outcomes
� Architecture supports detailed design and
technology implementation relevant to support
specific projects or capability outcomes
Enterprise
Domain
Solution
Continuum Level
Architecture Capability Continuum
Low
High
Level of Detail
Booz & Company 8Performance Driven Architecture - v2 August 2010.ppt
Our recent global study re-enforces the benefits of architecture through the compelling link of architecture maturity and value
Architecture Maturity & Value
� Over 60% surveyed mature organisation’s realise all 4 sources of value through architecture
� Organisations that report little or no value through their architecture capabilities are all within the ‘Emerging’ maturity level
� Agility is the most challenging source of value through architecture and is ultimately the product of realised reduced complexity & innovation to enhance the speed to market for new products & services
Link between Architecture Maturity & ValueResults of Booz & Company Global Study
Booz & Company 9Performance Driven Architecture - v2 August 2010.ppt
The drive business value, organisations should focus on three key value drivers across both architecting and architecture disciplines
To drive business value, organisations should focus on maturing three key value drivers1: 1). Strategic Alignment, 2). Competency &
3). Performance
Value Drivers
Architecture
�Architecture refers to the actual products, artifacts & decisions created by the architecting capability within the organisation
Architecting
�Architecting refers to the effectiveness and role of the architecture function within an organisation operating at the enterprise, domain and solution levels
Maturity Elements
Strategic Alignment
Process
Competency
Performance
Organisation
Booz & Company 10Performance Driven Architecture - v2 August 2010.ppt
Our research highlights many organisations face challenges in maximising the performance of their architecture capabilities
Operationalised architecture
function
Organisation’s have significant
investment in architecture (people,
process and tools) but outputs are
often limited to the definition of
theoretical end states and are
contained within an “Ivory Tower”
Fully operationalise the architecture
function by maintaining role in
strategic planning whilst also informing
day-to-day operations and technology
investment decisions within the
business and projects
Measured outcomes
Emphasis on the architecture function
being a necessary evil and input to
either co-design, governance and/or
compliance processes
Formalise accountability through the
definition of metrics and targets.
Measure value attributed through
architecture and communicate the
realisation of the target state over time
Integrationacross domains
Conflicting strategies and tension
between the enterprise and business
driven “solutions”. Architectural
integrity often loses and increased
complexity is the outcome
Integrate function across domains -
enterprise, domain and solution
architecture functions integrated at a
design, governance and
organisational level. Architecture
function taking the lead in pragramatic
trade-offs between specific business
demands and enterprise alignment
Challenge Optimal End State
11Performance Driven Architecture - v2 August 2010.ppt
Overview
Strategy by Design
Booz & Company Approach
Our Experience
Booz & Company 12Performance Driven Architecture - v2 August 2010.ppt
To address these challenges, the Booz & Co. Performance Driven Architecture Framework can be used to manage performance…
Business Value
Booz & Company Performance Driven Architecture Framework
… and developing integrated core capabilities
spanning people, process, governance & technologyUnlock and deliver
business value…
… by applying an
operational lifecycle …
Discipline
Capability
Continuum Level
LifecycleBusiness Value
Booz & Company 13Performance Driven Architecture - v2 August 2010.ppt
… by providing the capabilities necessary to align architectural efforts within an organisation and unlock business value
Overview
� Delivers a robust and transparent framework to effectively manage the performance of architecture at all levels: Enterprise, Domain and Solution
� Aligns to the typical operational lifecycle of capability development within an organisation and provides an integrated view of core capabilities required to manage performance spanning people, process, governance & technology
� Formalises the accountability of the architecture capability and provides the basis reduce risk and increase business value associated with architectural decisions and strategy
Booz & Co. Performance Driven Architecture Framework
Business Value
Booz & Company 14Performance Driven Architecture - v2 August 2010.ppt
The framework outlines a capability toolkit and sample outputs to assist architecture practitioners across the performance lifecycle
Performance Driven Architecture Capability Toolkit
Ob
jecti
ves
Ou
r A
pp
roach
Exam
ple
O
utp
uts
Ben
efi
ts D
elivere
d
� Post project reviews � Annual architecture
maturity assessment � Scenario-based reviews
and before-and-after
impact assessments of key design decisions
� Monthly or Quarterly Architecture Heartbeat Report (underpinned by a balanced scorecard performance
management framework)
� Data collection processes & tools
� Proxy data based on industry-specific benchmarks and best
practices
� Balanced Scorecard Framework
� Business Benefits Realisation Plan
� Architecture
Performance & Value Metrics / KPIs
� Corporate & Business Strategy
� Value Chain� Strategy Map
� Implement a capability that will drive continuous improvement of architecture by providing
the mechanisms to manage change and track the results delivered
� Implement a performance management framework that provides clear visibility & transparency of
the performance / value delivered through architecture
� Ensure mechanisms are used to capture / collect metric data in an effective efficient manner providing
the information necessary to facilitate performance management
� Determine how the realisation of business objectives and value within the organisation
will be measured in both qualitative and quantitative terms
� Identify strategic business objectives across the organisation including those within individual
business units
� Embed the concept of continuous improvement across the architecture
continuum by develop revised measures and stretch targets each year
� Establish a governance model to communicate performance across the
continuum using agreed communication methods tailored to stakeholders needs
� Develop a data collection approach within projects, operations & forums to
measure performance across the lifecycle and architecture continuum
� Highlight data quality &
availability constraints
� Define and align measures across the enterprise, domain and
solution levels� Utilise lead and lag
measures that address architecting and
architecture disciplines
� Map alignment between the business units and the corporate strategy
� Identify key value drivers� Highlight any trade-offs
and prioritise business objectives
� Enables remedial actions and key decisions to be taken on a timely basis
� Measures value delivered from changes made
� Enables understanding of architecture impact on business outcomes
� Fosters accountability and senior leadership to achieve outcomes
� Reinforces cultural changes required to manage / improve performance across the architecture function
� Measures effectiveness of decisions made
� Enables early identification of root causes and potential flow-
on effects which may impact performance and objectives
� Highlights constraints and availability of data to
manage performance
� Alignment across architecture levels linked to business objectives
� Accountability and transparency of performance - agnostic of organisation structures and business
unit constructs
� Ensures a “top-down” and enterprise approach to performance
� Fosters alignment across the C-suite on the priorities of the business as opposed to managing performance within
individual business units or functional silos
1. Align Business Objectives
3. Capture Data2. Define Measures
4. Communication & Reporting
5. Continuous Improvement
Business Value
Booz & Company 15Performance Driven Architecture - v2 August 2010.ppt
Our approach draws on insight and expertise from other industries that specialise in non-IT architecture and design disciplines
Cross-industry Best Practices in Architecture & Design Performance Management
� Lend Lease has developed a performance reporting framework to communicate its
performance to shareholders and internal stakeholders. Leading construction firms also
follow a industry-defined ‘Construction Design and Productivity Framework’ which
outlines performance targets and benchmarks for architecture and design including re-
work %, energy efficiency ratings, quality and safety
Construction
� GE implemented a centralised ‘digital cockpit’ to feed its balanced scorecard to enable
the aggregation and capture of performance data. This approach includes the
digitisation of performance data from projects, operational and decision-support
repositories to capture business value (i.e. NPV, savings, operational efficiencies)
Manufacturing
� As part of its product leadership strategy, Intel defines specific design and innovation
performance measures including product development time: from idea to market. These
are cascaded through a balanced scorecard across the business with a core focus on
information capital (design and manufacturing), internal processes and financials
Semiconductors
� Lockheed Martin aligns its 10 functional business units to the corporate strategy through
a Strategy Map and EIS. This approach ensures that business objectives are commonly
understood and aligned horizontally (across similar design capabilities) and vertically
across the organisation’s functions to ensure that ‘strategy is everyone’s business’
Aerospace
� Toyota follows 14 foundational management principles which underpin its “Lean
Production”. A key principle for its design function includes ‘becoming a learning
organisation through relentless reflection (Hansei) and continuous improvement
(Kaizen)’. This includes identifying root causes in design systems and processes,
scenario-based solution development, before-and-after comparisons of designs and the
development of stretch improvement metrics to continually improve performance
Automotive
Performance Capability DescriptionIndustryExamples
Align Business Objectives
Align Business Objectives
Define MeasuresDefine Measures
Capture DataCapture Data
Communication & Reporting
Communication & Reporting
Continuous Improvement
Continuous Improvement
Booz & Company 16Performance Driven Architecture - v2 August 2010.ppt
We recommend a multi-phased approach to drive a typical ‘Performance-driven’ Architecture Project for an organisation
Performance Driven Architecture Into Action: A Typical Project Approach
� Led by core team
� Embed changes as
part of ongoing
architecture
operating model
� Led by core team
and executed by
sub-teams -
leveraging tools
and processes
� Led by senior
architecture
management team
� Led by senior
architecture
management with
input from CIO /
CTO
� Led by senior
architecture
management with
input from sub-
teams
� Led by CIO / CTOProcess
� Identify capability
improvement
opportunities
� Manage capabilities
improvement by
defining changes
required to execute
improvement
recommendations
� Capture the
benefits of changes
made
� Understand current
key alignment
issues and define
business objectives
� Understand and
define key drivers
of architecture
value across the
continuum
� Define core team to
manage / execute
Performance Driven
Architecture
process
� Implement
communication &
reporting
capabilities to
communicate
performance of
architecture
� Establish
governance model
to communicate
performance of the
architecture
function
� Note key
constraints
� Define agreed and
understood metrics
for measuring
architecture
performance with
key stakeholders
� Develop the
mechanisms to
efficiently and
accurately capture /
collect data
� Establish sub
teams to assist with
performance
management
� Establish
appropriate change
management
capability that will
manage execution
of the identified
improvements
across the
architecture
continuum
� Capture baseline
data from defined
data sources
� Assess baseline
results to identify
key problem areas
� Extrapolating
insights for each of
the levels of
architecture
capability
� Assess overall
architecture
function maturity
and drivers of value
Outcomes
Executive Teams
Architecture Teams
Together
Rapid Capability Design and Setup: 4-6 weeks(Strategy Development)
Baseline Data Gathering & Results Assessment
Define Continuous Improvement Tools & Processes
Define Communication & Reporting Framework
Define Measures & Data Collection Approach
Business Strategy Alignment
Ongoing Capabilities Development
Continuous Improvement: Ongoing(Strategy Execution)
A B C D
17Performance Driven Architecture - v2 August 2010.ppt
Overview
Strategy by Design
Booz & Company Approach
Our Experience
Booz & Company 18Performance Driven Architecture - v2 August 2010.ppt
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