Vice President and Principal Analyst, Constellation Research
Constellation Research
Andy Mulholland is Vice President and Principal Analyst focusing on cloud business models. Formerly the Global Chief Technology Officer for the Capgemini Group from 2001 to 2011, Mulholland successfully led the organization through a period of mass disruption. Mulholland brings this experience to Constellation’s clients seeking to understand how Digital Business models will be built and deployed in conjunction with existing IT systems.
Coverage Areas
Consumerization of IT & The New C-Suite: BYOD,
Internet of Things, IoT, technology and business use
Previous experience:
Mulholland co authored four major books that chronicled the change and its impact on Enterprises starting in 2006 with the well-recognised book ‘Mashup Corporations’ with Chris Thomas of Intel. This was followed in…...
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The emergence of Digital Business models based on decentralized Enterprises and Ecosystems brings a challenge to the long-established methods of Enterprise Architecture. Enterprise organizational and operational models are moving to embrace agility with de-centralization to be able to compete in the dynamics of Digital Business models. This game changing Business transformation is driven by an equal transformation in the type and role of Technology moving beyond the current generation of Enterprise IT systems. Whole Industry sectors are ‘un-bundling’ into fast moving ecosystems of highly efficient and specialist ‘Services’ providers; whilst internally Enterprises are strengthening their abilities to engage with new aspects Digital Markets and increase their ability to competitively win through dynamic ‘read and respond’ optimization.
This new generation of Enterprise Digital Business models are engaged with a myriad of new data types and sources that are not part of the existing IT systems, and plan to use AI to drive the orchestrate of their business assets and capabilities. The question is whether Enterprise Architecture, as currently understood, with its focus on centralized, stabile enterprise wide integration through State-full, Tight Coupling, still provides the right Technology methodology to design this new generation of Business defined deployments.
It seems difficult to believe that methods developed to deploy data centric permanently connected internal Enterprise Applications based on State-full and Tight Coupled technology systems can be deployed unchanged to deploy a new generation of Business solutions based on technology that is both Stateless and Loose Coupled.
At both Enterprise and Industry sector levels the need for extreme flexibility, or agility, to provide the responsiveness to constant rapid change has resulted in the emergence of a new generation of decentralization, or unbundled, Digital Business models. Strangely little attention seems to have been given to question as to how these new Business Models translate into existing Enterprise Architectures deployments.
Usually innovation starts with isolated pilots that play little to no regard to the long term in order to make an impact and start Enterprise change. Before too long individual success powerfully illustrates that that Enterprise success in Digital Business will come from the collective, and integrated ability to make use of all available assets and resources. The advent of AI will increase this pressure, and not diminish it as there is no Artificial Intelligence with the ability to make sense of any complex situation without a reference model for guidance!
Correctly referred to as Augmented Intelligence, AI, requires identified and defined group of activities as a base for Machine Learning before transferring the ‘learnings’ into AI powered dynamic optimization. A structured understandable method is required to define activity groups comprised of known collection of interacting activity inputs and with their relationship to a creating a high value business outcome.
Fully forty years ago Business Management experts identified such groups as Business Frameworks. Enterprise Business models contain operational models that are made up from Business Frameworks; examples would include; Purchasing, Production planning, Service Management, etc. Business Frameworks have become overlooked through being hidden inside Enterprise IT Applications, where the input data is collating into transaction and the resulting data record.
Enterprise IT Applications replaced the costly, and, often less than optimized performance of workers, with an optimized process that could scale to support volumes, and was predictable in outcomes. The price, acceptable in the times of higher business stability was to turn dynamic decision making into static predictable outcomes. Managing marketing and sales transformed, since the advent of the Internet, is an excellent example of this.
Many Business Managers will have been introduced at some stage in their career to Porter’s Five Forces Framework. Developed back in the late 70s as a Framework to analyze and quantify the dynamics of a competitive market it remains an excellent example of a Business Framework; see diagram. Porter’s five forces are certainly still recognizably present today, but radically transformed by the dynamic interconnected online business markets of today. Past static analysis to drive three year planned strategic response cycles is no more, as strategy is transformed into continual agile responsiveness to the Business Framework forces.
After several decades Enterprise IT has automated many, if not all, of the internal Business Frameworks that contribute to operational efficiency as well as integrating the individual Frameworks by Enterprise Architecture. But it’s important to recognize that this success has been possible because of the inherent stability of the internal environment, (controlled by the Enterprise), and the need for auditable records for legal compliance, (controlled by legislation), actively encouraging static predictable process outcomes.
Digital Business introduces a complete Game Change in business activities, with AI extending the change even further. There is a need to identify and separate where and how Technology is applied to these new different Digital Business activities. This has led to the introduction of the terms Systems of Engagement, Systems of Intelligence and Systems of Record.
Systems of Record aligns with the traditional role of Enterprise IT in providing internal, or Back Office, client-server based Enterprise Applications, for standardizing processes and data into transaction Records. The development of Enterprise Architecture was, and is, essential to understand the relationship between transacting systems, (closed coupled), and the maintenance of one common updated data record, (state), across the entire Enterprise and its Systems.
Systems of Engagement refers to the many new and innovative sources that are form Digital Markets and online Business activities, a range that covers social media to IoT, and much else. In fact, anything that is not part of the internal structured Enterprise IT systems! The use of term engagement is reflective of a very different type of relationship, more value and emotive driven, than that traditional imposed by technology. Whilst Systems of Intelligence, (IBM say Systems of Interaction), reflect where and how the business value is delivered from the activities of Systems of Engagement. There is little in either to resemble the Business or Technology architecture of the current Enterprise IT Systems of Record!
Is the Technology profession in danger of taking its own definition of Enterprise Architecture to mean an all-embracing Enterprise methodology, at a time when Business Managers are moving to radical transformation of their Business Architecture? The definition of Enterprise Architecture, see below, is not necessarily the problem, but the interpretation and the deployment methods within the definition do seem to be in need of rethinking.
An enterprise architecture (EA) is a conceptual blueprint that defines the structure and operation of an organization. The intent of an enterprise architecture is to determine how an organization can most effectively achieve its current and future objectives. Whatis.com
If the definition is sound, then the devil lies in the detail of finding appropriate models with Business Managers that can capture requirements and translate into documented, repeatable, understandable formats to support technology alignment. Business Frameworks have much to commend themselves for this role starting with the fact of their very existence, and recognition by Business management. However, it may require some thought to understand exactly how and why Business Frameworks align well to Systems of Engagement and Systems of Intelligence.
The standard definition of Business Architecture suffers from the same problem as Enterprise Architecture seeming to embrace static more than dynamic; see Wikipedia;
Business Architecture is defined as "a blueprint of the Enterprise that provides a common understanding of the organization and is used to align strategic objectives and tactical demands”. At the most basic level Business Architecture is an integrated set of logical statements that define the manner, and therefore the processes, by which a business creates, and collects, revenues through its operations.
The fit with IT driven Enterprise Architecture and the highly integrated role of Systems of Record is excellent. It simply does not work to define the Business Architecture of Systems of Engagement and Systems of Intelligence with their emphasis on decentralized Enterprises, unbundling their Business assets/capabilities and the focus on the dynamic optimization of operational forces.
This is where Business Frameworks with their identification of ‘forces’ as dynamic entities that interact, offering the potential for different optimized outcomes according to the variation in the inputs from each force offer an alternative method to capture business requirements. come into the picture as the potential way to architect solutions in a rational, related manner across the Digital Business model.
To look more carefully into the benefit case of using Business Frameworks then recommended reading is the highly informative article on the differences between Business Architecture and Business Frameworks, (See CustomerThink.com). As a quick summary the following quote makes clear the role and function of a Business Framework in the context as the basis for a Digital Technology Architecture;
Operationally, the Business Framework generally describes (sic any or all of the following), the corporate organization, or management structure, or may generally outline company policies, or an organization might develop a framework to achieve a particular goal, or an innovations framework (that) may outline policies, procedures and management changes the company will use to achieve innovation and growth etc.
Effective leaders provide a business framework in which people and business partners can work efficiently and effectively, both individually and collectively, and succeed for mutual benefit.
A good business framework creates an organizational environment in which people think and act for themselves, yet collaborate to achieve common goals and objectives. Quote; The Difference between the Business Model Framework and Business Architecture.
Summary;
Enterprise Architecture principles to deploy individual Business requirements within an overall structure, or Architecture, that aligns and supports the Enterprise business model are unchanged. Enterprise Architecture should ensure that individual projects are non-disruptive to the Enterprise as a whole, benefiting from integration with, and reuse of other Enterprise Assets. However, these statements should not be taken as meaning that existing Enterprise Architecture methods can be applied to the new generation of Digital Business requirements.
The Business-driven definitions of Systems of Engagement and Systems of Intelligence clearly define innovative new Business models with entirely different roles and capabilities to those of IT Systems of Record. Changes in Business models and architecture require a realignment of Technology models and architecture. New methods are required for the deployment of Digital Business solutions that allow operational Business Forces to be identified, documented and transferred into Loose Coupled, Stateless solutions.
The development of Enterprise Architecture methodologies to make use of Business Frameworks offers a existing Business management basis for examination and development. This is not intended to be a replacement for existing the Enterprise Architecture methodology which will continue to serve Systems of Record, but to add supplementary Enterprise Architecture methods that will align to new Business requirements in the form of Systems of Engagement and Systems of Intelligence.
Addendum
Blog; Systems of Engagement and Enterprise Business Architecture – defining nine different business activities that together comprise activities that an Enterprise may wish to engage with in gain access to new types of data.
Blog; Salesforce IoT Explorer Edition transforms IoT into a Business Manager’s tool – linked to and part of the Salesforce vision that five Transformations are required to Enterprise IT for Digital Business
New C-Suite
