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The Key to Aligning IT Capabilities with Business Needs

David Baum

As technology has evolved, CIOs have responded by implementing new capabilities and processes across the enterprise. There is no question that IT has changed the business for the better. But amidst this forward march of progress, IT leaders are sometimes accused of not really understanding the needs of the business. CIOs are often pressured to show quick results from their IT investments, so the natural inclination is to push systems into production without always stopping to revisit the fundamental question: Why are we doing this in the first place?

Enterprise Architecture (EA) helps align IT activities with an organization’s business strategy—to grow, innovate, and respond to market demands, supported by an IT practice that is 100% in accord with business objectives.

Avoiding the Narrow IT-Only Focus
According to Gayle Fitzpatrick, Group Vice President of Architecture Services at Oracle, making the transformation from a technology-centric to a business-centric approach can be quite challenging—mainly because most companies are overly focused on IT architecture, including applications, information, and technology. “That’s the comfort zone for most of the professionals working in this space,” she points out.

In addition to IT architecture, enterprises need business architecture. Together, these twin pillars support an effective EA strategy that can transform an IT organization from simply delivering IT solutions to optimizing business processes and enabling business capabilities and services. Figure 1 reveals the progression.

Table showing relationship between technology-centric architecture and business-centric architectureFigure 1. From technology-centric architecture to business-centric architecture.

Taking a Look Under the Covers
Inside every company is a core set of systems and processes that executes the thousands of daily transactions that keep a firm in business, such as taking orders, purchasing supplies, delivering products, and paying employees. The way these systems and processes are structured—the company’s EA—can help or hinder its efforts to execute its strategy.

EA is a proven way to align functional business objectives and strategies with an IT strategy and execution plan. By formulating an enterprisewide perspective that cuts across business services, business processes, information, applications, and technology, EA ensures that an organization’s goals and objectives are addressed in a holistic way across all IT projects.

To be successful, EA should be woven into the culture and embedded into the lifecycle of the organization, including capital planning, project management, asset management, resource allocation, and strategy formulation.

According to Jeanne Ross, PhD, principal research scientist, MIT Sloan Center for Information Systems Research, most companies have architects, usually in IT, who are tasked with designing and improving information systems. Yet their efforts usually focus on IT architecture and have little impact on the business. By contrast, EA provides a long-term view of a company’s processes, systems, and technologies, so that CIOs can devise general-purpose capabilities—not just fulfill immediate needs.1

Executing the Vision
Ross and her colleagues at the MIT Sloan Center believe that in order to build an effective foundation for execution, companies must master three key disciplines:

  1. Operating model
  2. Enterprise Architecture
  3. IT engagement model

The following figure illustrates how companies apply these three disciplines.

Diagram showing how companies apply the three disciplines Source: MIT Sloan Center for Information Systems Research and IMD.

The operating model defines the necessary level of business process integration and standardization for delivering goods and services to customers.

The Enterprise Architecture is the organizing logic for business processes and IT infrastructure. It provides a long-term view of a company’s processes, systems, and technologies, so that individual projects can provide general-purpose capabilities—not just fulfill immediate needs.

The IT engagement model is the system of governance mechanisms ensuring that business and IT projects achieve both local and companywide objectives.

Developing a More-Discerning View
Traditional software development lifecycles tend to start with a requirements analysis. EA comes one step before that. It examines corporate goals and strategies—before you start talking about specific projects or solutions. Unfortunately, as Fitzpatrick points out, some companies never step back that far. Thus they miss the opportunity to consider the big picture, the fundamental business precepts and architectural principles that underlie every project.

EA is an iterative process. Enterprise architects constantly assess where an organization is going to ensure that it implements solutions defined by agreed-upon governance models, roadmaps, and architectures. The overriding objective is to align each technology initiative with the company’s stated corporate direction.

“Most Oracle customers have made great strides embedding technology in their processes so that they can execute the core operations of the company,” Fitzpatrick notes. “These organizations have already identified an operating model, figured out what operations they must execute well, and implemented the IT systems they need to digitize those operations. As a rule, these companies tend to experience faster time to market and get more value from their IT investments.”

Summary
As IT initiatives continue to grow in complexity, CIOs need more than project management, technical savvy, and large budgets to be responsive. Top-performing companies use EA to guide the evolution of their systems and processes and leverage this capability for profitable growth.

EA reduces risk, improves quality, and ensures alignment between the business strategies and the IT capabilities required to achieve them. It provides a blueprint that describes how to design and build a core foundation of processes and systems, and how to use this foundation to seize market opportunities and drive profitable growth.

Glossary
Enterprise Architecture frameworks define an organization’s business objectives along with the technology components required to achieve those objectives. These frameworks also assess the technical maturity of the organization and suggest an operating model for implementing the chosen business strategy.

Reference architectures articulate both vendor-neutral and vendor-specific best practices. Enterprise architects leverage these proven models for implementing common business capabilities and the supporting technologies that implement those capabilities.

Solution architectures, also known as horizontal architectures, help customers embrace new computing paradigms such as cloud computing, service-oriented architecture and master data management. Enterprise architects implement these broad technology solutions by assessing their maturity and establishing roadmaps for adopting the fundamental components, often via a series of transitional architectures.

EA governance refers to the application of standardized IT principles, policies, and processes across the enterprise initiatives. EA governance ensures that all projects honor business alignment and accountability as the foundation for developing future state architectures.

1 Enterprise Architecture as Strategy: Creating a Foundation for Business Execution, Harvard Business School Press, 2006.

Executive Viewpoints: Q&A

  • Executive Interview: Enterprise Architecture

    David Baum spoke with Hamidou Dia, vice president of Enterprise Architecture in Oracle's Advanced Technology Services Group, about how EA can have a decisive impact on the business.

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