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

Understanding and Applying Predictive Analytics

Executive Summary

This article proposes looking at Predictive Analytics from a conceptual standpoint before jumping into the technological execution considerations. For the implementation aspect, organizations need to assess the following keeping in mind the contextual variances:

Strategies

Tactics

Operations

  • Top Down
  • Bottom Up
  • Hybrid
  • Organizational Maturity
  • Change Management
  • Training
  • Practical Implications
  • Pros and Cons of Technology Infrastructure
  • Providing Enabling Tools to Users
  • Best Practices

Describing Predictive Analytics

Predictive Analytics is a branch of data mining that helps predict probabilities and trends. It is a broad term describing a variety of statistical and analytical techniques used to develop models that predict future events or behaviors. The form of these predictive models varies, depending on the behavior or event that they are predicting. Due to the massive amount of data organizations are collecting, they are turning towards Predictive Analytics to find patterns in this data that could be used to predict future trends. While no data is perfect in predicting what the future may hold there are certain areas where organizations are utilizing statistical techniques supported by information systems at strategic, tactical and operational levels to change their organizations. Some examples of where Predictive Analytics is leveraged include customer attrition, recruitment and supply chain management.

Gartner describes Predictive Analytics as any approach to data mining with four attributes:

  1. An emphasis on prediction (rather than description, classification or clustering)
  2. Rapid analysis measured in hours or days (rather than stereotypical months of traditional data mining)
  3. An emphasis on the business relevance of the resulting insights (no ivory tower analyses)
  4. An (increasing) emphasis on ease of use, thus making tools accessible to business users

The above description highlights some important aspects for organizations to consider namely:

  1. More focus on prediction rather than just information collection and organization. Sometimes in organizations it is observed that information collection becomes the end goal rather than using that information to make decisions.
  2. Timeliness is important otherwise organizations might be making decisions on information that is already obsolete.
  3. Understanding of the end goal is crucial by asking why Predictive Analytics is being pursued and what value it brings to the organization.
  4. Keeping in mind that if the tools are more accessible to business users then they would have a higher degree of appreciation of what Predictive Analytics could help them achieve.

Relationship of Predictive Analytics with Decision Support Systems or Business Intelligence

University of Pittsburg describes Decision Support Systems as interactive, computer-based systems that aid users in judgment and choice activities. They provide data storage and retrieval but enhance the traditional information access and retrieval functions with support for model building and model-based reasoning. They support framing, modeling and problem solving. While Business Intelligence according to Gartner is an umbrella term that includes the applications, infrastructure and tools, and best practices that enable access to and analysis of information to improve and optimize decisions and performance. These descriptions point to the fact that Decision Support Systems or Business Intelligence are used for decision making within organization.

Interestingly, it seems like Predictive Analytics is the underlying engine for Decision Support Systems or Business Intelligence. What this means is the predictive models that result in Predictive Analytics could be under the hood of Decision Support Systems or Business Intelligence. It should be noted that organizations should proceed with caution with regards to the Decision Support Systems or Business Intelligence since if the underlying assumption are incorrect in making the predictive models then the decision making tools would be more harmful then helpful. A balanced approach would be to create expert systems where Decision Support Systems or Business Intelligence is augmented by human judgment and the underlying models are checked and verified periodically.

Implementation Considerations for Predictive Analytics

As the descriptions above have indicated that the aim of Predictive Analytics is to recognize patterns and trends that can be utilized to transform the organization. This requires organizations to firstly educate themselves on what value they want and what can be derived from Predictive Analytics. Predictive Analytics is about business transformation and it needs to show what value it brings to the organization. In this regard, we have to assess people, processes and technologies of the organization in terms of current state (where the organization is right now) and future state (where the organization wants to be). Typically, this revolves around Strategies, Politics, Innovation, Culture and Execution (SPICE) as shown below.

SPICE Factors

SPICE Factors

The assessment of people for Predictive Analytics means to understand what users will be leveraging Predictive Analytics and if they understand that simply relying on Predictive Analytics is not enough but in order to have an effective system they need to be part of the system. This means that the analytics insights need to be augmented by human expertise to make intelligent decisions. The assessment of processes for Predictive Analytics entails looking at how organizations make decisions right now and how future decisions would be made if Predictive Analytics is put into place. This includes having appropriate governance structures in place. The assessment of technology entails looking at what technologies exist within the organization and if they could be leveraged for Predictive Analytics. If not then looking at what Predictive Analytics products are in the market that would work for the organization and are they flexible enough in case the underlying assumptions for the predictive models change and when predictive models become obsolete.

The advanced techniques mentioned in the book, Seven Methods for Transforming Corporate Data into Business Intelligence would be applicable to Predictive Analytics. These methods are:

  1. Data-driven decision support
  2. Genetic Algorithms
  3. Neural Networks
  4. Rule-Based Systems
  5. Fuzzy Logic
  6. Case-Based Reasoning
  7. Machine Learning

Technologies Used for Predictive Analytics

Gartner has been publishing their Magic Quadrant on Business Intelligence and Analytics Platforms since 2006. Due to the increased importance of Predictive Analytics in the marketplace, Gartner decided to create a separate Magic Quadrant for Advanced Analytics Platforms which focuses on Predictive Analytics and published its first version on February 2014. Since it is the first version of the Magic Quadrant, all vendors listed are new and no vendors were dropped.

 

Gartner's Magic Quadrant for Advanced Analytics Platforms

Gartner’s Magic Quadrant for Advanced Analytics Platforms

As we can see from this Magic Quadrant that it includes well-known vendors but also vendors that are not as big or as well-known. It is interesting to note that open-source vendors such as RapidMiner (a Chicago company) and Knime (a European company) are in the same Leaders Quadrant as well-established vendors such as SAS and IBM. While there are some issues with these open-source vendors as stated in the report but perhaps this Magic Quadrant is also an indication of where the next generation of analytics would come from. Due to the very nature of open-source, there are more opportunities for cheaper customization which would give the organizations the flexiblity to be as granular as they want to be. Ofcourse code stablity and lack of proper documentation are issues that organizations need to be cognizant about. Organizations may also want to “try out” these open source tools before they make a big commitment to propertary software to see if Predictive Analytics is something they want to invest heavily in.

Using Predictive Analytics in Specific Industries

There are many industries that utilize Predictive Analytics. The organizations in these industries either use Predictive Analytics to transform their business and/or to address certain areas that they would like to improve upon. Following is a list of some of the industries that utilize Predictive Analytics:

Industry How is Predictive Analytics used?
Retail
  • Customer Retention
  • Inventory Optimization
  • Low-Cost Promotions
Oil and Gas
  • Well and Field Asset Surveillance
  • Production Optimization
  • Equipment Reliability and Maintenance
Automotive
  • Adjust production schedules
  • Tweak marketing campaigns
  • Minimize Inventory
Food
  • Human Resources Allocation
  • Supply Chain Optimization
Healthcare
  • Electronic Health Records
Government
  • Nation-wide Blood Levels
Social Media
  • New Business Models

While there are many examples of industries that have embraced Predictive Analytics but there are other industries that have not fully accepted it as a new reality. These industries have many excuses for not considering Predictive Analytics but typically revolve around scope, quality, cost and fear of the known. However, the tide might be changing for these industries as well since industry bloggers are beginning to insist how Predictive Analytics could be leveraged for competitive advantages.

My Opinion

Predictive Analytics can come in handy in making organizations analytical and becoming a better version of themselves. However, Predictive Analytics can be a deal-breaker if organizations have attempted and failed in the past and for this very reason Predictive Analytics should start as a discussion first. This discussion should revolve around asking which areas need improvements and among other things determine if Predictive Analytics could be something that could help. After a successful Predictive Analytics initiative other areas could be potential candidates as well.

An important thing to note is that Predictive Analytics is an organization-wide initiative that has touch points across the organization and thus the maturity of the organization has to be seriously considered prior to going on a Predictive Analytics journey. No matter how good Predictive Analytics can be for the organization but if the organization is not mature enough and it does not have the right governance, processes and feedback mechanisms in place then it might turn out to be another attempt at glory but nothing to show for it.

References:

  1. Predictive Analytics for Dummies
  2. Seven Methods for Transforming Corporate Data Into Business Intelligence
  3. IBM Journal Paper on A Business Intelligence System by H.P. Luhn
  4. Gartner report (G00258011) Magic Quadrant for Advanced Analytics
  5. Gartner IT Glossary on Predictive Analytics
  6. Gartner IT Glossary on Business Intelligence
  7. SAP Predictive Analytics
  8. Decision Support Systems by Marek J. Druzdzel and Roger R. Flynn
  9. 5 Questions to Ask About Predictive Analytics
  10. 5 Factors for Business Transformation

Identifying Organizational Maturity for Data Management

The maturity of an organization is determined by how that organization can collect, manage and exploit data. This is a continuous improvement process where data is used to make strategic decisions and strategic decisions are made to collect data that creates competitive advantages. But in order to create strategic advantages through data, an organization needs to have data management and related processes in place to discover, integrate, bring insight and disseminate data within the entire organization. In terms of data, organizations need to understand where they are currently and where they want to be in the future and thus they need to ask the following questions:

Currently

In the Future

Who receives the data? Who should received the data?
What happens to data? What should happen to data?
Where does data come from? Where should data come from?
When is the data being shared? When should data be shared?
Why data is collected? Why should data be collected?

After an organization understands and documents the above then they need to develop metrics to measure the relevance of their data as it pertains to the entire organization. Since being a data-driven organization is a continuous improvement journey, organizations can use the following adaptation of the Capability Maturity Model (CMM) to determine their maturity of data management and related processes:

Data Management Maturity Levels

Data Management Maturity Levels

Additionally, organizations can have governance and processes that can help them assemble, deploy, manage and model data at each level of CMM as shown below:

 

Governance

Governance

References:

  1. Khan, Arsalan. “5 Questions to Ask About Your Information.” Arsalan Khan. WordPress.com, 16 May 2014. Web. https://arsalanakhan.wordpress.com/2014/05/16/5-questions-to-ask-about-your-information/

2 Management Challenges with Really Simple Syndication (RSS)

According to the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) US, in the first quarter of 2014 Internet advertising revenues reached USD $11.6 billion. The President of IAB indicated that “Digital screens are a critical part…” of why these numbers are so high. Typically, these advertisements are done through images and/or text ads displayed with online articles and websites.

Really Simply Syndication (RSS) and other types of syndicated Internet sharing protocols strip away the images and/or text ads and only display content such as title, first sentence, summary or complete article. This content is read typically through third party feed readers. In addition to content ownership issues, the other two management challenges include tracking subscribers and higher traffic demands.

Tracking of Subscribers 

In order to address the tracking of subscribers, organizations should request that the RSS readers provide this information to them. In order to get this information, organizations should incentivize the owners of the RSS feed readers and also the content subscribers to provide tracking information. One of the other ways to track and direct subscribers to the their website would be to create some sort of paywalls that either ask subscribers to pay for content and/or ask them to create free login accounts to access more content.

Higher Traffic Demands 

One of the other issues that RSS feeds create are higher traffic demands on the servers that house the content. These feed readers access content on websites more frequently than if a person was reading the information. In order to address this, a possible solution is to integrate desktop applications into a P2P network that would distribute the load among hundreds of clients.

RSS Management Challenges

RSS Management Challenges

As we can see from the above management challenges, beyond ownership issues there are issues of maintenance (e.g., optimize server capacities for repeated requests) and standardization (e.g., creating standard ways of tracking subscribes from multiple feed readers).

References:

  1. “Pros and Cons for RSS.” Pros and Cons for RSS. FeedforAll.com, n.d. Web. 05 July 2014. http://www.feedforall.com/pros-and-cons-of-rss-feeds.htm
  2. Singel, Ryan. “Will RSS Readers Clog the Web?” WIRED. WIRED, 30 Apr. 2004. Web. 05 July 2014. http://archive.wired.com/techbiz/it/news/2004/04/63264?currentPage=2