5 Questions to Ask About Your Business Transformation

Business transformation is the process of transforming (1) how things are made, (2) how things are bought, (3) how things are sold and/or (4) how services are provided. It has been pursued by organizations ever since the first organization came into being and would continue to be pursued in the foreseeable future. It is the way for organizations to know their current state (i.e., know where they are), their future state (i.e., know where they want to be) and their transition (i.e., what steps to take) by considering the people, business processes, services, products and technologies that can help them achieve their objectives. To be clear, business transformation is not merely a “business” only pursuit but rather it is an organizational pursuit that encompasses Information Technology (IT) and digital transformation journeys as well.

While the promise of business transformation is great, it is still something that organizations consistently struggle with. There are multiple factors that can lead to failed business transformation efforts but the number one reason seems to go back to a typical conversation within organizations. In the 21st century, technology for organizations is not just an enabler but paramount to their success. But how many times have you said or heard someone say, “business” wants this and “business” wants that and that “business” does not understand that systems cannot be developed overnight. Ingrained in this sort of thinking is the idea that somehow IT is different from “business”. Somehow there is this “us” vs. “them” mentality.

It is time to change this “us” vs. “them” culture. It is time to think about IT as not something that is outside of “business” but is part of “business”. To have this conversation there has to be mutual understanding that neither should downplay the importance of the other. This requires an understanding that all technical and non-technical aspects of the organization are there to support the end objectives of business transformation and that collaboration works much better than just mere animosity.

When organizations’ bread and butter business models are shattered in light of the new digital and sharing economy, “business” and technical folks have no one else to blame but themselves. As such it becomes imperative that organizations don’t get lost in complacency and infighting. These organizations should view business transformation as a holistic endeavor by paying enough attention to people, business processes, products, services and technologies that directly and indirectly affect them otherwise business transformation is just a pipe dream. In order for organizations to figure out their own business transformation journey, they need to ask the following questions from internal and external perspectives:

 

Currently

In the Future

1. Who is helped by business transformation? Who should be helped with business transformation? (E.g., management, employees, customers, shareholder etc.)
2. What does business transformation teach us? What should business transformation teach us? (E.g., better internal communications, governance, standardization, discipline, branding etc.)
3. Where does business transformation start? Where should business transformation start? (E.g., IT, marketing, operations, customers, vendors, partners etc.)
4. When is business transformation considered? When should business transformation be considered? (E.g., customer-employee conversations, competitors’ disruption/re-imagination of business models, new innovations, new methods etc.)
5. Why is business transformation is being done? Why should business transformation be done? (E.g., optimization, cohesiveness, long-term value, positive societal ripples etc.)

When you ask the above questions, keep in mind that without effective and unbiased feedback loops most business transformation journeys would be just nearsighted one-time initiatives and not something that would make organizations self-improving entities. Smart organizations have realized this and are taking advantage of not only technological changes but also setting themselves up for the future before they themselves get disrupted.

Business Transformation 5Ws

Lessons Learned in Creating a Corporate System

EXECUTIVE SUMMARY

This article discusses the various strategic, political and cultural factors that were associated with the decision to develop an online employee portal at SmFedCon. The cause and contributing factors that led to the software development project are explored in detail. Focus is placed on SmFedCon’s decision processes to make the initial decision not to develop the employee portal.

Examples are included that show how factors such as person biases and financial conservatism influenced SmFedCon from realizing the potential of the online employee portal.

ABOUT SMFEDCON AND THE PROBLEM REQUIRING A DECISION

SmFedCon was a small US Federal government contractor that provided Information Technology (IT) services in the areas of strategic planning, project management and software development. It had approximately 240 employees and 98% of these employees worked onsite at various government locations across 14 states and Washington DC.  It was growing rapidly and was involved with multiple high-level projects. Due to this rapid growth, a decision needed to be made if SmFedCon was going to spend time and resources to create an online employee portal.

HOW WAS THE PROBLEM IDENTIFIED

Within a few months of joining SmFedCon, CIO noticed a pattern where quality of documentation deliverables was declining due to lack of a version control system and no central document repository. What broke the camel’s back was an incident where one of the federal clients was about to receive different versions of the same document from the main office, project manager and the project team member. Although this was stopped in time, CIO realized that this as an issue and needed to be addressed. This issue was also confirmed by some of the employees who worked on site at federal client facilities.

ACTORS AND ROLES

The following table shows the reporting structure, roles and actors involved in the decision making process for creating an online employee portal:

Actors

Roles

Reported To

Chief Executive Officer (CEO)

  • Corporate priorities decision maker
  • N/A
Chief Financial Officer (CFO)
  • Corporate Financial Management
  • CEO
Chief Information Officer (CIO)
  • Corporate Technology Management
  • US Federal Government Projects Management
  • CEO

In regards to the online employee portal decision process, (1) the CFO’s role was to determine if new project budget requests made financial sense, (2) the CIO’s role was to provide a 2-page business case document to the CEO and (3) the CEO’s role was to decide.

BACKGROUND

Strategic Factors – Not in the Technology Roadmap

Although the initial decision not to develop the employee portal was overturned due to changing circumstances but at the beginning it was based on SmFedCon’s technology roadmap. The technology roadmap was written some year back before the company started to see rapid growth and did not take into account potential issues that might occur due to mismanagement and miscommunications.

Political Factors – Power

The CFO and CIO reported to the CEO however the CFO had more power at SmFedCon. CFO could easily influence the CEO in certain decisions. The CFO’s power came from the 20-year friendship with the CEO and as a trusted advisor to the CEO. The CFO was also responsible for IT prior to the CIO joining the company.

Cultural Factors – Small Business Mentality

While costs should be kept under control in all organizations but small businesses are especially sensitive to this. However, this sensitivity can blind the small businesses from what is possible. This was the case with SmFedCon. Even though they saw how an online employee portal could help solve some of the issue they had it was just not in the budget to pursue this direction.

SMFEDCON DECISION PROCESSES – The 2-Page Business Case

After the issues were identified, CIO met with the CEO to discuss that an employee portal could be the answer. CEO requested a 2-page business justification document to show if the employee portal could address the current and perhaps future needs.

The 2-page business case linked current issues with quality degradation, loss of productivity and eventually loss of clientele. It also listed the various types of options that were considered to stand up an online employee portal. These options included proprietary software vs. open source, existing application customization vs. software development and associated costs. The document listed the only option that was most feasible for SmFedCon.

The CEO discussed the 2-page business case with the CFO during one late hectic evening. The next day CEO informed CIO that the company had decided not to move ahead with the online employee portal project.

Next week, the CEO was working on a federal solicitation response when the computer died. At that time CEO was the only person who had the latest version of the document. CEO was also collaborating with other writers but they only had previous versions. Although the documents were retrieved but CEO realized how the online employee portal with the documentation management system could have saved time and would have been beneficial. The next day SmFedCon won a contract that they were working on and the CEO asked the CIO to go ahead with managing the development of the online employee portal.

The following diagram shows the decision-making process at SmFedCon.

Decision Making Process at SmFedCon

Decision Making Process at SmFedCon

ANALYSIS

In hindsight, there are a number of things that could have been handled better.

As companies grow, they have to realize that what worked in the past when there were only a few employees would not be sufficient in the future. Processes and tools should be in place and scalable to the growing needs of the organizations. In regards to SmFedCon, this was not the case. Although the company was growing rapidly it did not invest in processes and tools that could have helped it become a well-oiled machine. In the case of an online employee portal it was a necessity not a luxury since a vast majority of the employees were not on corporate locations but they still needed to access correct version of documentation and be able to collaborate with other team members.

Framing the Problem

When CIO joined SmFedCon, the problem with documentation management, project management and team collaboration was not defined. There was no framing of what was going on. Although CIO was were not hired to improve operations but suspected that it might have been one of underlying Blink moments that the CEO had. CIO suspected this because CIO had worked with CEO as a consultant and helped one of SmFedCon’s clients improve operations. It would have been advantageous to the company if they had given CIO the opportunity to conduct a thorough study of the company to see what other areas could be improved upon.

Biases – We all had them

In the decision-making process for the online employee portal there were definitely some biases from all actors. CIO’s bias came from working with small business in the past where cost was always a major issue. Additionally, in those organizations CIO was responsible for recognizing patterns and improving operations and thus tried to do the same with SmFedCon. Due to CIO’s background in technology, CIO believed that most operational issues can be solved through well thought out management and technology systems which was another bias. CIO’s decision not to get buy-in from the CFO prior to giving the 2-page business case and not getting CFO involved in determining the project budget stemmed from an unpleasant experience working with a previous CFO. All of this played into the CIO developing the business case without working with the CFO.

There were some biases from the CFO as well. Since CFO handled IT before CIO joined, it seems like CFO was reluctant in giving up control. As CIO looks back, s/he remember an incident where the CEO had to have a closed door meeting with CFO so that CEO would give CIO login credentials for a corporate system. CFO was skeptical about IT projects and was quick to make judgments about them. CFO was also double the age of the CIO and might have not understood/accepted why SmFedCon hired a young CIO at the company only in their 20s. In regards to the online employee portal, all these biases might have played a role in the CFO convincing the CEO that it was not feasible to start this project.

Although the CEO was not quick to make judgments but the 20-year-old relationship with the CFO might have played a role in the decision. Additionally, the decision not to be move ahead on the project might have been exacerbated by that hectic late evening.

Alternatives to Recommended Direction

The 2 pages CIO chose to concentrate on stated what issues SmFedCon was having and how they could be solved through the online employee portal. The document did not have any alternatives to select from. It only listed that SmFedCon can create the online employee portal (1) using open source technologies, (2) CIO would guide the developers and vendors in the design and (3) CIO would manage its development.

CONCLUSION

Although a decision-making process was followed but initially it did not result in the desired outcome. As discussed earlier, while there are many reasons for this however establishing good relationships and getting buy-in would certainly have helped.  Some of the other decision-making processes that could have helped include:

  • Nominal Group Technique – This technique could have been helpful in determining the various issues employees were having. Since the online employee portal was the CIO’s idea even though s/he had been with the company only for few a months versus other employees who had been around for a long time. This might have created some resentment towards the idea. The Nominal Group Technique could have helped to make idea generation and problem solving more collaborative.
  • Framing – Proper framing of the issues would have helped too. CIO did not frame the issues correctly and jumped to the solution. It would have been great to just step back, frame each issue individually and then see how issues could be resolved.
  • Personality Types – CIO assumed that most people are people are like him/her. However, if CIO had understood the various personality types and their motivations then his/her recommendations could have appealed more to CEO and CFO.

 

5 Questions to Ask About Your Culture

Peter Drucker, one of the most influential management consultants in the world, is often attributed to coining the phrase “Culture eats strategy for breakfast.” Organizations that can harness the power of culture can create environments where everyone can contribute towards the attainment of strategic objectives. However, most organizations are unable to create such environments and hence their pursuit of strategic objectives never fully comes to fruition. The three main reasons for this failure are:

  1. The fallacy that culture is considered something fuzzy thus unquantifiable
  2. The lack of a holistic approach to forming/enhancing positive attributes of the inherent cultures
  3. The half-baked idea that culture equates to only people

An organization’s culture is a way of thinking, behaving and working within the physical, virtual, legal and mental organizational boundaries. What an organization thinks about its place in the world is shown by its vision, mission statement and (un)displayed values which directly influence internal and external stakeholders. How an organization behaves is shown by leadership examples, levels of (un)trustworthiness, encouragement and discouragement of cross-collaboration and camaraderie. How an organization works is shown by its (un)biased business processes, (non)adoption of technological advancements, (un)approved frameworks/methodologies/approaches, employee (non)recognitions, (un)real career ladders, risk averseness, salaries, (non)physical locations, clothing and subcultures.

Culture is not just one thing but it is a collection/combination of different things/subcultures that can be observed and also measured. Thus, how organizations measure, incentivize and reward from the selection of the right people to optimized processes and efficient use of technology becomes crucial towards achieving organizational objectives. In order to understand and effectively bring cultural change, the following questions need to be asked:

Strategic Perspectives on Culture:

 

Currently

In the Future

1.

Who is incentivized at the executive level to transform culture?

Who should be incentivized at the executive level to transform culture?
2. What governance structures are in place for strategic cultural transformation? What governance structures should be in place for strategic cultural transformation?
3. Where is technology integrated into transforming culture? Where should technology be integrated into transforming culture?
4. When and how often cultural transformation objectives are communicated? When and how often cultural transformation objectives should be communicated?
5. Why cultural transformation is critical to achieving strategic objectives?

Why transformation should be critical to achieving strategic objectives?

Tactical Perspectives on Culture:

 

Currently

In the Future

1.

Who is incentivized at the middle management level to be champions of transforming culture?

Who should be incentivized at the middle management level to be champions of transforming culture?
2. What business units, functional areas and teams are included to bring about transformation? What business units, functional areas and teams should be included to bring about transformation
3. Where technology hinders in cultural transformation? Where technology might hinder in cultural transformation?
4. When is the start and end of cultural transformation communicated? When should the start and end of cultural transformation communicated?
5. Why cultural transformation is critical to achieving tactical objectives?

Why cultural transformation should be critical to achieving tactical objectives?

Operational Perspectives on Culture:

 

Currently

In the Future

1.

Who sees cultural transformation as an obstacle?

Who might see cultural transformation as an obstacle?
2. What business processes provide views on the organization’s culture? What business processes should provide views on the organization’s culture?
3. Where is technology part of your understanding the organization’s culture? Where should technology be a part of understanding of the organization’s culture?
4. When were you informed about the cultural transformation objectives? When should you have been informed about the cultural transformation objectives?
5. Why cultural transformation is critical to achieving your daily tasks?

Why transformation should be critical to achieving your daily tasks?

Culture transcends most of our thoughts and how we function within organizations and outside of it. This overarching affect of culture can create biases in terms of what people we hire, what processes we put in place, what technologies we choose to use, who we talk to and what we care to observe. By asking the right questions and putting the right measurements in place, we can have a quantifiable understanding of the baseline cultures and enhance it for the better. In doing so we have to be cognizant of our own biases, biases of others and any prevailing biases that result in cultural stagnation.

Cultural Infleunces.jpg

Standing Up an Enterprise Architecture Center of Excellence and a Certification Program at Your University

EXECUTIVE SUMMARY

This article proposes the establishment of a Center for Operations, Research and Education (CORE) at your university. CORE would be a team of people that proactively and holistically help achieve university’s business outcomes. Its mission would be to provide comprehensive educational programs in Enterprise Architecture, conduct research and use this research to help transform the university.

For this article, the strategic direction and cultural factors in relationship to operations, research and education in Enterprise Architecture are considered. We assume status quo in regards to your university’s culture for this assessment, specifically the perception of Information Technology. The following table shows what we considered:

  Operations Research Education
Current State (Observations)
  • No one is responsible for Enterprise Architecture
  • No research is being conducted in this field
  • No comprehensive program in Enterprise Architecture
Future State (Recommendations)
  • CORE would be independent of your university’s President
  • Rotating leadership where every school, department and division has the opportunity to lead CORE
  • Conduct research by partnering with other elite institutions
  • Begin by providing a graduate certification program
  • Aim for providing Bachelor’s, Master’s and executive programs in the future

This assessment reveals that currently where Enterprise Architecture is placed in the organization, it will not be able to provide the organizational transformational value that is aspires to provide. Additionally, your university should start providing comprehensive programs in this field otherwise they would be left behind other educational institutions that are already moving in this direction.

1. ANALYSIS

This section provides an analysis of standing up CORE from an operational, research and educational prospective.

Assumptions

  1. Your university’s executive management would support this effort
  2. All university communities would help transform it to achieve operational excellence
  3. Perception of IT would not change instantly

1.1 What is Center of Excellence?

According to Tarek M. Khalil et al. (2001), within an organization, a Center of Excellence may refer to a group of people, a department or a shared facility. It may also be known as a Competency Center or a Capability Center. The term may also refer to a network of institutions collaborating with each other to pursue excellence in a particular area.

1.2 What is Enterprise Architecture?

Due to the evolving nature of this field, there are many academic and practitioner definitions of what is Enterprise Architecture. For our purposes we will use the one definition from the glossary on Gartner’s website that states Enterprise Architecture as a discipline for proactively and holistically leading enterprise responses to disrupt forces by identifying and analyzing the execution of change toward desired business vision and outcomes. Enterprise Architecture delivers value by presenting business and Information Technology (IT) leaders with signature-ready recommendations for adjusting policies and projects to achieve target business outcomes that capitalize on relevant business disruptions. Enterprise Architecture is used to steer decision-making toward the evolution of the future state architecture.

In a nutshell, “Enterprise Architecture bridges the Business and Information Technology via enterprise integration/standardization resulting in people becoming more efficient and effective in achieving their objectives.” Kevin Smith (2010)

It should be noted that Enterprise Architecture is not an Information Technology endeavor but in fact it sits in between Business and IT and works across organizational silos.

1.3 What is CORE?

If we combine the two definitions above then a definition for center of excellence in enterprise architecture emerges which is a team of people that proactively and holistically helps achieve business outcomes. For your university and breadth of this center’s agenda, it would be called Center for Operations, Research and Education (CORE).

1.4 What is the Operational Perspectives?

1.4.1 Why should Your University Pay Attention to Enterprise Architecture?

One of the biggest proponents and users of Enterprise Architecture is the most powerful office in the world – The White House. The United States Federal Government has been using Enterprise Architecture for more than a decade and continues to see it as a way to look across organizational silos.

What this means for your university is that, huge organizations are trying to improve their operations and they are turning towards Enterprise Architecture to help them do that. Your university can tap into this, apply Enterprise Architecture effectively and perhaps get involved in Enterprise Architecture discussions for organizational improvements. This involvement could also translate into future research grants and job opportunities for students.

1.4.2 Why putting Enterprise Architecture under Information Technology is Not a Good Idea?

All organizations are a composition of many cultures and subcultures. Some of these cultures develop over time and then become part of the routine mentality of an organization. Your university is not immune from this. In order to understand the perception of Information Technology at your university, look at how the university’s strategic plans were developed. Was Information Technology involved/invited to help in the development of your university’s strategic plan?

If not, then this is a cultural issue and often the cause of misalignments within organizations. Whenever Information Technology is not involved in strategic planning, it gives the perception that Information Technology is not important, it is just a commodity and it is just back office activities. This lack of involvement is the reason that according to the 2013 Chief Information Officer ‘State of the CIO’ survey, “63% [of the respondents] say the majority of their time and focus is spent on aligning Information Technology initiatives with business goals.” This shows there are gaps in aligning Business and Information Technology. This alignment can be achieved through Enterprise Architecture. According to a Gartner study (G00146809), Business-Information Technology alignment is the primary driver for Enterprise Architecture as shown below:

Primary Driver for Enterprise Architecture

Taking into consideration the current culture at your university, placing Enterprise Architecture under Information Technology would not make sense. If Enterprise Architecture continues to be placed under Information Technology then at your university Enterprise Architecture would be perceived as an “Information Technology thing”. This perception would defeat the overarching purpose of Enterprise Architecture. Enterprise Architecture needs to have a holistic understanding of your university going beyond Information Technology. A Gartner study (G00245986) supports this thought of Enterprise Architecture going beyond Information Technology as shown below:

Enterprise Architecture beyond IT

From the above figure, we can learn that while technology is a consideration in Enterprise Architecture but it is certainly not the only aspect that needs to be considered. A well-run CORE at your university would consistently produce qualitative and quantitative for both Business and IT. Some of examples of these are:

  • Qualitative Benefits
    • Improved Communications Across Organizational Silos
    • Increased Productivity
    • Efficient Portfolio Management
    • Effective Business Intelligence
  • Quantitative Benefits
    • Reduced Costs
    • Revenue Generation

1.4.3 What are the Maturity Levels for Enterprise Architecture?

According to a Gartner study (G00252206), it outlines the five levels of Enterprise Architecture maturity shown below:

Enterprise Architecture Levels of Maturity.png

What this means is that a lot of work needs to be done in this area and your entire university has to be involved in it so that it can be used effectively across organizational boundaries.

1.4.4 How will CORE Measure its Success?

From an operational prospective, a Gartner study (G00247593) indicates the following ways to align Enterprise Architecture to strategic business initiatives:

Align Enterprise Architecture to Strategic Business Objectives

At your university, success of Enterprise Architecture would depend upon how it can help your university transform itself to achieve its strategic visions.

1.5 What are the Educational and Research Perspectives?

1.5.1 Is Enterprise Architecture Taught at Your University?

Are Enterprise Architecture courses taught at your university in various schools (e.g., business school, engineering school, professional studies school etc.)? If yes, do you know if these schools at your university are talking to each other about Enterprise Architecture? If not, then there is no comprehensive Enterprise Architecture program at your university. From this observation, we can decipher that although Enterprise Architecture might be part of certain programs but overall it is fragmented at your university.

1.5.2 Why Should Your University Teach or Do Research in Enterprise Architecture?

In order to be an elite institution, your university needs to look at what other elite institutions are doing, assess what programs they offer and what kinds of research they are pursuing. Your university should then look at how these programs can be stood up.

For the purpose of this article, we will only focus on the institutions that teach, conduct research and/or have comprehensive programs in Enterprise Architecture. These include:

  Institutions Name Country
1 Harvard University USA
2 Massachusetts Institute of Technology USA
3 Dartmouth College USA
4 Carnegie Mellon USA
5 Pennsylvania State University USA

2. Recommendations

Due to the importance of Enterprise Architecture as a catalyst in organizational transformation, in the current culture at your university, CORE should not be under IT. CORE’s mission is to help your university continuously evolve, conduct/use research and provide comprehensive educational programs. It should be an interdisciplinary entity whose members include all schools, divisions and departments of your university. Thus, it should be placed where it has the most influence as shown below:

CORE at your university.png

CORE should start as a chartered center initially led by School of Business and in collaboration with Engineering School, Professional Studies School and IT. Within the first year this would develop relationships across all the university.

CORE’s leadership should be on a rotating basis where each school, department and division of your university has the opportunity to lead CORE for at least 1 year. This will create an atmosphere of collaboration and help break down organizational silos. This governance structure would also encourage participants to be actively involved in CORE’s advancement and they can use it to also enhance their own schools, divisions and departments.

In regards to education and research, CORE should develop a graduate certificate program with the goal of creating Bachelor’s, Master’s and executive programs in the future.

References:

  1. Tarek M. Khalil; L.A. Lefebvre; Robert McSpadden Mason (2001). Management of Technology: The Key to Prosperity in the Third millennium: Selected Papers from Ninth International Conference on Management of Technology, Emerald Group Publishing, pp.164
  2. IT Glossary, Enterprise Architecture, http://www.gartner.com/it-glossary/enterprise-architecture-ea/
  3. Kevin Smith (2010), Pragmatic EA: The 160 Character Challenge, Version 1.3, pp.12
  4. White House (2012), http://www.whitehouse.gov/sites/default/files/omb/assets/egov_docs/common_approach_to_federal_ea.pdf
  5. CIO Magazine (2013), ‘State of the CIO’ Survey, pp.4
  6. Robert A. Handler (2007). Key Issues for Enterprise Architecture. Retrieved from Gartner database.
  7. Julie Short (2013). Agenda Overview for Enterprise Architecture. Retrieved from Gartner database.
  8. Chris Wilson (2013). ITScore Overview for Enterprise Architecture. Retrieved from Gartner database.
  9. Betsy Burton (2013). EA Business Value Metrics You Must Have Today . Retrieved from Gartner database.
  10. Harvard University, IT for Management, http://hbsp.harvard.edu/list/it-for-management-toc
  11. Massachusetts Institute of Technology, Center for Information Systems Research, http://cisr.mit.edu/research/research-overview/classic-topics/enterprise-architecture/
  12. Dartmouth College, Auburn Cyber Research Center, http://www.ists.dartmouth.edu/events/abstract-hamilton.html
  13. Carnegie Mellon, Institute for Software Research, http://execed.isri.cmu.edu/elearning/enterprise-architecture/index.html
  14. Pennsylvania State University, Center for Enterprise Architecture, http://ea.ist.psu.edu

CEO and Service Orientated Architecture

EXECUTIVE SUMMARY

This article discusses what is Service Orientated Architecture (SOA), how it is used, what are its benefits and what are the challenges when adopting it for your organization. It explores the business and technology perspectives of where SOA can be applied internally and externally by showing the following benefits of SOA to your organization:

  • Enhanced Operational Insights
  • Increased Business Agility
  • Better Customer Experience
  • Reduced Technology Costs
  • Creation of New Business Models

Keeping the benefits in mind, your organization has to also assess the following challenges that SOA brings for your organization:

In a nutshell, SOA is a framework that allows business processes to be highlighted to deliver Information Technology (IT) interoperability and rapid delivery of application functionality. A successful adoption of SOA would result in enhanced alignment between Business and IT. So, while there are challenges to overcome by your organization but overcoming these challenges would make your organization aligned from top to bottom and across people, processes and technologies.

1. WHAT IS SOA?

1.1. What is a Service?

In order to understand SOA, lets first explore the concept of a ‘service’. Depending upon the context, Merriam-Webster defines a service in 11 different ways. These include a service being “the occupation or function of serving”, “the work performed by one that serves” to many other religious, military, public utilities and organizational definitions (“Service.” Merriam-Webster. Merriam-Webster, n.d. Web.). In economics and marketing, a service is the exchange of non-material equivalent of a good.

In organizations, a service can have business contexts and technological contexts. From a business context, a service can be activities that are performed inside the organization (e.g., Accounts Receivables), outsourced to another organization (e.g., Payroll Processing) and performed for the internal or external customers (e.g., Helpdesk Support). From a technological context, a service can be provided within an operating system (e.g., Windows EventLog), for software (e.g., log service) and where a user exchanges messages with a program to interact with it.

1.2. What is Service-Orientation and Service-Orientated Architecture?

Now that you have an understanding of what a service is, lets define what is service-orientation and what is service-orientated architecture. Microsoft defines SOA to be “a design philosophy independent of any vendor, product, technology or industry trend” (Linthicum, David. “Chapter 1: Service Oriented Architecture (SOA).” Chapter 1: Service Oriented Architecture (SOA). Microsoft, n.d. Web.). Oracle on the other hand says SOA “provides a unified approach with a single interface for all of your current and future integration requirements” (“Oracle SOA – Service-Oriented Architecture.” Service Oriented Architecture. Oracle, n.d. Web.)

In light of the varying definitions from vendors and practioners, a working group was established in 2009 to remove the confusion. This working group had a mix of practioners and vendors and came up with the SOA Manifesto that states “service-orientation is a paradigm that frames what you do” and that “SOA is a type of architecture that results from applying service-orientation” This group also prioritized SOA as a business initiative rather than a technological initiative and thus states the importance of (1) business value over technical strategy, (2) strategic goals over project-specific benefits, (3) intrinsic interoperabilityover custom integration, (4) shared services over specific-purpose implementations, (5) flexibility over optimization and (6) evolutionary refinement over pursuit of initial refinement. (Erl, Thomas et al. “SOA Manifesto.” SOA Manifesto. N.p., Oct. 2009. Web.)

As you can see, SOA is an organizational journey that spans across business and technology. From a business perspective, business objectives drive the integration of applications within the organization and between business partners. From a technological perspective, integration of applications is modeled using loosely coupled services that can be combined and orchestrated to achieve business objectives. Thus, you can say that SOA is a framework that allows business processes to be highlighted to deliver interoperability and rapid delivery of functionality.

1.3. How does SOA work?

In SOA, you have three roles that include the Service Provider, the Service Requester and the Service Registry. The Service Provider role (1) describes what the service does, (2) deploys the service over the network and (3) publishes service in a service registry. The Service Requester role (1) finds service in a service registry and (2) uses the service description to invoke the service. The Service Registry advertises the availability of a service that is published by the Service Provider. The interaction between Service Provider, Service Requester and Service Registry is shown below:

Business Objectives and SOA

From the above figure, you can see that business objectives are the drivers for SOA within an organization. While the main idea behind SOA is the reuse of generalized software components modeled as services, but due to its ability to encourage collaboration between business and IT, it can create alignment and can help the organization respond to the rapidly changing business environments.

2. WHAT ARE THE BENEFITS OF SOA?

In order to understand how SOA can help your organization, you have to explore some of its benefits and how other organizations were able to use SOA for their strategic advantage. Following are some of the benefits of SOA:

2.1 Enhanced Operational Insights:

It is often observed in organizations that the left hand is unaware of what the right hand is doing. This type of disconnects cause organizational silos where the approach to developing business processes and the technologies that support it have a very narrow focus. Due to this, the business processes and technologies are tightly coupled with the functional needs at the time when they were created. While this gets the job done for a particular functional need but now if you multiple this scenario across the entire organization and its various functions then you start to see a spaghetti of business processes and its enabling technologies (“Why Enterprise Architecture?” YouTube. Mastering ArchiMate, 19 Apr. 2013.)

The ‘spaghetti architecture’ can result in duplicative business processes and technologies across different organizational divisions. These business processes and enabling technologies are rarely documented which increases the risk of costly mistakes when these business processes change and when the underlying technologies that support these business processes become outdated. In spaghetti architecture, there is also rarely any thought put into the future needs of the organization as whole, this can also result in using technologies that might become obsolete for future needs.

SOA addresses the spaghetti architecture head-on by creating operational insights into the different organizational processes of the organization. Since the main driver of SOA is business objectives that encompass business processes, your organization can start to view the various unique, duplicative and interdependent business processes holistically across the entire company. This holistic view gives your organization the ability to see which business processes can be completely eliminated, which ones can be combined and which ones can be used to make rapid decisions. An example of an organization that used SOA to address its spaghetti architecture is FedEx, a $32 billion multinational organization. By overhauling FedEx’s entire spaghetti architecture to SOA, within 3 years it was able to better manage acquisitions and process changes (Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. b.)

2.2 Increased Business Agility:

In today’s competitive business environment, business agility is the ‘holy grail’ that organizations strive to achieve. This business agility can entail many things and can range from bringing a product/solution quicker to the market to providing efficient troubleshooting support for customers. This also implies that business agility is a moving target and can be achieved partially and holistically depending upon the business objectives. The underlying thought behind business agility is the idea of continuous improvement to get better and better at what the organization does.

As your organization looks to be agile, SOA provides the foundation to do this. Due to operational insights and an understanding of the shared services within your organization, SOA can help accelerate what you are trying to achieve. An example of an organization that used SOA to become agile was Wachovia Bank. Using SOA, Wachovia was able to promote a product engineering mentality and make IT an advisor to the business (Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. Web.). In 2008, Wells Fargo bought Wachovia for $15.4 billion and when in 2014 Wells Fargo became the highest earning bank in the United States, its CEO gave credit to their smooth acquisition of Wachovia due their cultural similarities (Raice, Shayndi. “As Wells Fargo Hits Profit Milestone, CEO Gives Credit to Wachovia.” MoneyBeat RSS. The Wall Street Journal, 14 Jan. 2014. Web.). You can extrapolate that Wachovia’s SOA might also have been a factor in the smooth acquisition since most acquisitions fail due to cultural and technological differences.

2.3 Better Customer Experience:

If customer is king, then customer experience must be the only priority. Traditionally, organizations have considered customer experience to be the point of transaction when a purchase is made. But a more holistic view of customer experience entails the pre-sales and post-sale processes as well. Due to the many touch points (e.g., physical, website, mobile, social media etc.) of the customers with business; customer experience is not a point of transaction anymore. Forrester® goes on to say that in today’s era of empowered and always connected customers, organizations need customers more than the customers need organizations. [9] Forrester® goes on and talks about creating a “customer experience ecosystem” that entails the people, processes, policies and technologies. (Fenwick, Nigel. “Nigel Fenwick’s Blog.” Why Customer Experience Will Become The #1 CIO Priority. Forrester Research, 27 June 2013. Web.)

When you talk about customers, you have to take into account both the internal customers and the external customers. The ease by which internal customers can provide customized and quick services to external customers can increase productivity and improve the bottom line for your organization. An example of an organization where SOA was used to improve customer experience was The Hartfort Group, a $26 billion organization. By implementing SOA, The Hartfort Group was able to enable its agents to create, assemble and complete transactions with the external customers (Ganesan, Suresh et al., “What Business Executives Must Know About SOA”).

2.4 Reduced Technology Costs:

As discussed earlier, “spaghetti architecture” can prove to be costly to the organization due to duplicative business processes and the underlying technologies. These costs can quickly add up and start to affect the bottom line of your organization. On the flip side, since SOA allows reuse of services across many functional domains, this can free up money for other endeavors that your organization might be interested in pursuing. An example of this would be Starwood Hotels who are on their way to saving $20 million per year simply by moving from tightly coupled mainframe applications to loosely coupled SOA services (Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. Web.).

2.5 Creation of New Business Models:

In today’s competitive business landscape, organizations are continuously looking for ways to differentiate themselves from their competitors. This differentiation can also come in the form of determining new business models enabled by SOA services that would not have been possible in the past. Due to SOA, your organization can look across the various services and make intelligent decisions on what services can be combined to create additional value for the customer that in turn can increase the bottom line. An example of where SOA is best used and enforced is that of Amazon, a $74 billion online retailer (“Amazon Booms in 2013 With $74.45 Billion in Revenue.” Digital Book World. Digital Book World, 30 Jan. 2013. Web.). In 2002, Jeff Bezos of Amazon issued a mandate that stated, “All teams will henceforth expose their data and functionality through service interfaces” and “anyone who doesn’t do this will be fired” “The Secret to Amazons Success Internal APIs.” The Secret to Amazons Success Internal APIs. API Evangelist, 12 Jan. 2012. Web.). Bezos’s commitment to SOA and betting the entire future of the company speaks volumes about what SOA can do for an organization.

3. WHAT ARE THE CHALLENGES OF SOA?

So, while SOA provides great promise for your organization, it is by no means a panacea. Thus, you have to also carefully assess the following challenges that SOA brings to your organization:

3.1. Governance & Organizational Maturity:

Governance in a way is the policy of how things ought be done. It provides a framework in which business processes can operate under regulatory, time and other constraints. Thus, governance is an organizational responsibility even for SOA and not only an IT activity. In order to accomplish this, your organization should setup a governance board that consists of a cross-functional team from both business and IT. Additionally, governance should not only include the overall organization and management of SOA activities but also creation of success and failure measurements. These measurements should be used to actually determine the state of SOA within your organization instead of people doing vaporware measurements that have no grounds in reality.

3.2 Not Only an IT thing:

If the burden of implementing SOA across your entire organization is on IT then it takes away the business-side’s responsibility and involvement. While IT is responsible for creating SOA services but business has to work collaboratively with IT to define what those services are. Additionally, the business-side has to understand how did the current state of misalignment between business and IT came into being and how this can be avoided in the future. Thus, SOA is not an IT issue but an organizational endeavor that affects all parts of your organization.

3.3. Organizational Processes Need Reevaluation:

While the presence of too many point-to-point integrations in your organization can reduce your ability to be agile but there is a bigger perspective that you also have to consider. This perspective revolves around your organizational processes that led to misalignment in the first place. These organizational processes not only entail IT but also the business-side. Typically, IT does what business asks but then there has to be some mutual understanding that the requests for services have to be understood holistically. Even after SOA migrations, if your organizational processes are not optimized they might still result in ad-hoc requests from the business leading back to point-to-point tightly couple services that you try to avoid in SOA.

3.4. Long-Term View of Legacy Systems is Needed:

In the short term, it may seem like a good idea to not replace your organizational legacy systems but in the long term there are issues when you do this. These issues entail the constant “patching” to upgrade underlying hardware and software in addition to overburdening legacy systems where new services are being added on top of systems that should be replaced rather than being continued to extend their life. While it may not be possible to replace legacy systems altogether but you should have a plan to retire these systems with new systems eventually.

3.5. No Measurement Means No ROI:

If your organization does not measure pre-SOA activities then how would you know if what SOA promised for your organization is what you really wanted to achieve. So, since SOA often requires long-term commitment from both business and IT, you have to develop performance metrics upfront before you embark on your journey towards SOA-fication.

4. CONCLUSION

Due to your organization’s desire to compete in today’s competitive business landscape, you have to carefully weigh the benefits of SOA’s value in terms of operational efficiencies and organizational improvements. Based on the information provided above, using SOA will help your organization have enhanced operational insights which can increase your organization’s agility to provide better customer experiences, reduce technology costs and explore new business models. Also, you need to keep in mind that SOA presents the challenges of honestly looking at yourselves in terms of maturity and business-IT collaboration by having a long-term view of what you want your systems to accomplish and how you measure what success looks like. Consequently, if you lack foresight into how SOA can be used as a business transformation effort then your desire to be the best would just be a pipedream.

References:

  1. “Service.” Merriam-Webster. Merriam-Webster, n.d. Web. <http://www.merriam-webster.com/dictionary/service&gt;.
  2. Linthicum, David. “Chapter 1: Service Oriented Architecture (SOA).” Chapter 1: Service Oriented Architecture (SOA). Microsoft, n.d. Web. <http://msdn.microsoft.com/en-us/library/bb833022.aspx&gt;.
  3. “Oracle SOA – Service-Oriented Architecture.” Service Oriented Architecture. Oracle, n.d. Web. <http://www.oracle.com/ca-en/products/middleware/soa/overview/index.html&gt;.
  4. Erl, Thomas et al. “SOA Manifesto.” SOA Manifesto. N.p., Oct. 2009. Web. <http://www.soa-manifesto.org/&gt;.
  5. “Why Enterprise Architecture?” YouTube. Mastering ArchiMate, 19 Apr. 2013. Web. <http://www.youtube.com/watch?v=qDI2oF1bASk&gt;.
  6. Ganesan, Suresh et al. “What Business Executives Must Know About SOA.” Cognizant White Paper (2007): n. pag. Bloom Group, 2007. Web. <http://bloomgroup.com/sites/all/files/Cognizant%20SOA%20paper.pdf&gt;.
  7. Raice, Shayndi. “As Wells Fargo Hits Profit Milestone, CEO Gives Credit to Wachovia.” MoneyBeat RSS. The Wall Street Journal, 14 Jan. 2014. Web. <http://blogs.wsj.com/moneybeat/2014/01/14/as-wells-fargo-hits-profit-milestone-ceo-gives-credit-to-wachovia/&gt;.
  8. Fenwick, Nigel. “Nigel Fenwick’s Blog.” Why Customer Experience Will Become The #1 CIO Priority. Forrester Research, 27 June 2013. Web. <http://blogs.forrester.com/nigel_fenwick/13-06-27-why_customer_experience_will_become_the_1_cio_priority&gt;.
  9. “Amazon Booms in 2013 With $74.45 Billion in Revenue.” Digital Book World. Digital Book World, 30 Jan. 2013. Web. <http://www.digitalbookworld.com/2014/amazon-booms-in-2013-with-74-45-billion-in-revenue/&gt;.
  10. “The Secret to Amazon’s Success Internal APIs.” The Secret to Amazon’s Success Internal APIs. API Evangelist, 12 Jan. 2012. Web. <http://apievangelist.com/2012/01/12/the-secret-to-amazons-success-internal-apis/&gt;.

 

Future Considerations for Hewlett Packard Enterprise

A year ago Hewlett Packard (HP) decided that it was going to split into two companies. This decision became real last week when HP officially split into HP Inc. and Hewlett Packard Enterprise (HPE) as announced by Meg Whitman on her LinkedIn post. The main reason given for this split was focus. HP Inc. would focus on selling consumer products such as personal computer and printers. HPE would focus on selling enterprise products, enterprise software and enterprise services such as cloud computing, big data, cyber security to improve operations.

It seems that on the surface the announcement of the split of HP into HP Inc. and HPE has received a mix bag of optimism and skepticism from different corners of the tech industry. On the optimistic side, this is a good move since it would help these companies focus on their core competencies and provide focused customer service and client experience. On the skeptical side, this is a little too late since the tech industry has been moving from merely selling computer products to selling more technology software and services for at least 20 years.

If we observe the tech industry from a modern economics lens we would find that this split is not something that is novel but it is very predictable. From a modern economics lens, the ‘primary sector’ for the tech industry focused on hardware and products, the ‘secondary sector’ for the tech industry focused on software and the ‘tertiary sector’ for the tech industry focuses on technology services. What is interesting is that this split lets HP Inc. focus on the ‘primary tech sector’ for consumers while HPE focuses on both the ‘secondary tech sector’ and the ‘tertiary tech sector’ simultaneously for enterprises. Eventually though, HPE would increase their focus on the ‘tertiary tech sector’ since the margins are much better in services as compared to just products and software. In order for HPE to become a bigger player in the services market, they should consider the following:

Currently

In the Future

Who is leading the services division?

 

Who should be leading the services division?
What processes are being followed to provide services? What processes should be followed to provide services?
Where mix of tech and non-tech services are being provided? Where mix of tech and non-tech services should be provided?
When are services bundled with hardware and software? When should services be bundled with hardware and software?
Why standalone services are provided? Why should standalone services be provided?

HPE leadership has to realize that any organizational splits are not without consequences. These consequences could entail: (1) Stocks becoming more volatile as any budget cuts with client enterprises could affect the bottom line, (2) Competitors might be able to provide same level of service at a cheaper cost with better client experiences and (3) Lack of optimized processes with no flexibility to adjust for enterprise clients needs could reduce overall reputation of HPE.

One of the ways to address the above mentioned split issues would be to create independent mock enterprise client teams that would rate how easy or difficult it was to deal with HPE in light of changing economic conditions, client experiences and efficient and effective processes. These independent mock enterprise client teams would be used to further refine HPE and put itself in the shoes of its enterprise clients.

Organizational Changes - HPE

Future Considerations for Alphabet Inc.

A couple of weeks ago Alphabet Inc. emerged as a parent holding company of Google as announced by Larry Page on Google’s blog. The two main reasons given for this move is to make the company cleaner and more accountable. By cleaner, it means that products that are not related to each other would become separate wholly owned subsidiaries of Alphabet Inc. which includes Google, Calico, X Lab, Ventures and Capital, Fiber and Nest Labs. By becoming more accountable, it means that leaders of these wholly owned subsidies would be held to even higher standards and accountability of where money is and should be spent. This move would help Wall Street understand that Alphabet is willing and structurally capable of going into areas that are unrelated.

It seems that on the surface the announcement of creating Alphabet Inc. has deemed to be a good move as many pundits and professors have pointed out ever since its emergence. The reasons of cleanliness and accountability are great for internal purposes. However, if we dig a little deeper we would find that there are external purposes that are at play here as well. Firstly, due to Alphabet Inc.’s cleaner approach, mergers and acquisitions of unrelated industries would become much easier and thus accountability of each wholly owned subsidiaries would be justifiable to Wall Street. Secondly, Alphabet Inc. would now be able to enter into industries or create new industries altogether. This move could mean that Alphabet Inc. could also be the next big 3D manufacturer of electronic equipment or even the next Big Bank that finally removes paper-based transactions. While both of these examples are interesting and achievable due to Alphabet Inc.’s deep pockets. In order for Alphabet Inc. to really disrupt or create new industries, strategic consideration should be taken into the following:

Currently

In the Future

Who is leading the organization(s)?

 

Who should lead the organization(s)?
What processes are being followed? What processes should be followed?
Where are products and services being deployed? Where products and services should be deployed?

 

When do people, process, technologies, products and services disrupt/create markets? When should people, process, technologies, products and services disrupt/create markets?
Why already bought companies make sense? Why companies should be bought?

Alphabet Inc. leadership also has to realize that any organizational structural changes are not without consequences. These consequences could entail: (1) Stocks could become more volatile as even any slightly negative news concerning the wholly owned subsidiaries could affect Alphabet Inc. stocks, (2) Due to autonomy and fiefdom creation, collaboration across people, process, technologies, products and services among the wholly owned subsidiaries could be compromised and (3) There could be rise of duplicative functional teams (e.g., HR, Finance etc.) across all wholly owned subsidiaries thus taking resources away from core business pursuits.

One of the ways to address the above mentioned conglomerate issues would be to create a task force with enough teeth within Alphabet Inc., and cross-organizational teams across all wholly owned subsidiaries who can help find and remedy these issues. This task force and its teams could be similar to internal consultants whose lessons learned and methodologies could help Alphabet Inc. become more efficient and effective. Perhaps these practices could also open the door for Alphabet Inc. to dominate the Management Consulting industry as well.

Organizational Changes