1) The three key disciplines used to effectively construct a Foundation of Execution are: Operating Model
This dictates the level of business process integration and standardization for delivering goods and services to customers. Process Integration depicts the extent to which business units share data and enables end-to-end and a single interface for the customer The Operating Model involves a commitment to how the company will operate
This is the organizing logic for business processes and IT infrastructure which reflects the integration and standardization requirements of the company’s operating model. The Enterprise Architecture provides a long term view of a company’s process, systems, and technologies in order to build long term sustainable capabilities. IT Engagement Model
The IT Engagement Model is the governance mechanism that ensures business and IT projects achieve both local and companywide objectives. This Model influences projects decisions ensuring that individual solutions are designed according to the enterprise architecture. The IT Engagement Model provides alignment between IT and the business objectives of projects.
2) The Enterprise Architecture communicates the high-level business process and IT requirements of a company’s operating model. This differs from IT Architecture to the degree of granularity that is presented. Enterprise Architecture does not provide the necessary details to map out technical or process design requirements. The IT Architecture developed by the IT unit is a more detailed architecture of applications, data and information, and technology. IT Architecture when developed with a clear understanding of the Enterprise Architecture provides long-term value because they provide the long-term vision for immediate solutions.
3) The current market trends and speed at which technology and the competitive landscape is constantly changes make it difficult for companies to be able to adapt and survive. Complex Information systems restrain companies from being able to adapt in order to compete or leverage new technology and concepts.
Companies without a solid foundation face the following risks:
The effects of growing complexity on business operations
The pressure that agility places the foundation of execution Role of business discipline in current national and political environments Role of costs in absence of foundation of execution
Business agility increasingly depends on a Foundation of Execution. Implementing standardize, digitized processes results in simpler technology environments, lower cost operations and greater agility.
4) An operating model has two dimensions: business process standardization and integration. Companies are characterized into the following Operating Models:
Diversification: Low Standardization, Low Integration
Coordination: Low Standardization, High Integration
Replication: High Standardization, Low Integration
Unification: High Standardization, High Integration
a. Unification Model – Delta Airlines
Consisted of many IT platforms unable to communicate with each other Management and IT staff reached a common understanding of what capabilities the company would develop to support future strategies. In order to create a clear vision management defined four core processes.
b. Diversification Model – Carlson Companies
Each of Carlson’s portfolio of companies run more or less independently of each other. Carlson’s enterprise architecture core diagram shares technical infrastructure services while the business units retain control over local business processes and IT applications c. Coordination Model – MetLife
MetLife’s strategy and operating model focused on providing integrated customer service across products. This required extraction of customer information and making it centrally available
d. Replication Model – ING DIRECT
ING DIRECT’s service modules digitize standardized processes across its business units. The identification of major service categories helps management understand existing capabilities and target new opportunities.
5) The four stages of Architecture Maturity are:
Business Silo Architecture: where companies look to maximize individual business unit needs or functional needs
Standardized Technology Architecture: providing IT efficiencies through technology standardization and, in most cases, increased centralization of technology management
Optimized core architecture: provides companywide data and process standardization as appropriate for the operating model
Business Modularity Architecture: where companies manage and reuse loosely coupled IT-enabled business process components to preserve global standards while enabling local differences
6) The strategic implications of the four architecture stages are as follows: Business Silos – Local / Functional optimization
Standardized Technology / IT efficiency
Optimized core / Business Operational efficiency
Business Modularity / Strategic Agility
7) The three main ingredients 0f the IT Engagement Model:
Companywide IT governance: decision rights and accountability framework to encourage desirable behavior in the use of IT Project management: formalized project methodology, with clear deliverables and regular checkpoints Linking mechanisms: processes and decision-making bodies that align incentives and connect the project-level activities to the overall IT governance.
8) IT governance is the decision rights and accountability framework for encouraging desirable behaviors in the use of IT. IT governance reflects broader corporate governance principles while focusing on the management and use of IT to achieve corporate performance goals. IT governance encompasses five major decision areas related to the management and use of IT in a firm, all of which should be driven by the operating model:
I. IT principles: high level decisions about the strategic role of IT in the business II. Enterprise architecture: the organizing logic for business processes and IT infrastructure III. IT infrastructure: centrally coordinated, shared IT services providing part of the foundation of execution IV. Business application needs: business requirements for purchased or internally developed IT applications that both use and build the foundation for execution V. Prioritization and investment: decisions about how much and where to invest in IT, including project approval and justification techniques.
9) Linking mechanisms is the third essential ingredient of the IT engagement model. Linking mechanisms connect companywide governance and projects. Good IT governance ensures that there’s clear direction on how to evolve the company’s foundation. Good project management ensures that projects are implemented effectively, efficiently, and in a consistent manner to maximize learning. Good linking mechanisms ensure that projects incrementally build the company’s foundation and that the design of the company’s foundation is informed by projects. There are three types of linking mechanisms (architecture linkage, business linkage, and alignment linkage) that address the key alignment and coordination concerns of the company.
Architecture Linkage establishes and updates standards, reviews projects for compliance, and approves exceptions. Architecture linkage connects the IT governance decisions about architecture with project design decisions. Business linkage ensures that business goals are translated effectively into project goals. Business linkage coordinates projects, connects them to larger transformation efforts, and focuses projects on attacking specific problems in the best possible way. Alignment linkage mechanisms ensure ongoing communication and negotiation between IT and business concerns. Business IT relationship mangers and Business unit CIOs are typically a critical linkage fro translating back and forth between business goals and IT constraints.
10) The three ingredients of engagement that create business value are IT governance, Project management and Linking mechanisms.
Clear, specific, and actionable objectives: In order to be effective, IT engagement models clarify strategic objectives so standardization and integration requirements are clear.
Motivation to meet company goals: Formal incentives such as bonus plans, annual reviews, etc help ensure focus from business unit leaders and project managers on company, business unit and project goals
Enforcement authority: Formal enforcements such as complementary to formal incentives help build an effort’s credibility. Enforcement provides a process for changing, discontinuing, or granting an exception to a project that is not compliant with the target enterprise architecture.
Early Intervention and prevention: In order to prevent bad solutions form being deigned, IT groups engage with business projects during the earliest stages of development to prevent bad solutions from being designed in the first place and also to learn how to improve target architecture.
Transparent, regular, two-way communication: Good engagement ensures that everyone is clear on how the model works. Alignment and coordination are achieved and maintained through regular dialogue between business and IT and across business units.