January 12, 2011
As a primary direction to create and sustain competitive advantage, some executives have decided it is more important to be different, than better. This is not to say that there is no consideration for operational efficiency, only that it is not the primary driver for many companies seeking sustainable competitive advantage. Many market leaders separate themselves from their competition by operating differently, offering different services, delivering via different channels, providing different information or producing different products. Because success breeds imitation, many competitors will change also, eliminating the differentiating factors. In order to sustain their advantage, companies must differentiate themselves again and force the market in which they compete to continually react to their changes. Consequently, executives of competitive differentiator companies understand the need for an adaptive environment and have enabled corporate agility with an adaptive enterprise architecture (EA) strategy.
What is Competitive Differentiation? Companies with a differentiation strategy strive to provide uniqueness in their industry along dimensions that are widely valued by buyers. They position themselves to provide one or more needs that buyers perceive as important that is different from the competitors in their industry or a specific focus within that market. Differentiation can be presented through a product or service itself, the channels through which the product or service is provided, marketing, procurement and other factors. Each industry has its own factors for differentiation.
Competitive differentiation strategies require faster than average business process change and high demand for information access, both requirements for an adaptive EA. For instance, one market leader has an internal metric for measuring its business process change rate — with a goal of once every 6 months. This compares to the average of once every 12-18 months for other fast-change organizations. This company, like others engaged in competitive differentiation, has placed a high priority on developing an adaptive EA to facilitate this degree of rapid change. The need for information access is derived from the requirement for faster decision making among hyper-competitive organizations. Providing access to the right information to the right people at the right time becomes a key architectural requirement.
The key linkage between the business and enterprise architecture is the identification of the fast-change business capability changes and the parallel business information capability changes affected by the competitive differentiation strategies. Not all processes are affected as dramatically as others by differentiation. For example, a manufacturer that is differentiating itself through multiple distribution channels is more likely to have fast-change within the processes that interact with distributors and customers, rather than its internal manufacturing process. This change will also impact the type and amount of information that is shared between the manufacturer, distributors and customers. Likewise a manufacturer striving for competitive advantage through product differentiation would impact engineering, design and manufacturing processes more than customer service, accounting and billing, while increasing the amount of information sharing necessary between product designers, engineers and the manufacturing floor. The impact of these fast-change strategic capability changes on EA is that they become the basis for the common set of drivers which the business and the IT organization agree to pursue with their EA.
Is your company pursuing competitive differentiation? How is that effecting your EA plans?
June 2, 2010
As organizations continue to struggle with the complexity and amount of change to deal with, the EA team plays a crucial role in laying a foundation of adaptability for the organization to build from. Once an organizations has done an acceptable job of providing a standardized infrastructure and at least basic governance of infrastructure standards, focus tends to shift towards the application portfolio and integration approaches. This is natural and seems to conform to most of the evolutionary models of EA, such as the one from MIT Sloane CISR in Enterprise Architecture as Strategy. However, I would like to provide you with an alternative to consider as I see organizations continually struggle with business units demanding more uniqueness to the functional systems they need to run their part of the business.
I think the key for some organizations to achieve a more adaptive environment is to focus on architecting the information and integration environments. If information was more standard and consistent BETWEEN information systems with a common integration architecture (standard methods, components, messages, and middleware), then the information systems themselves could be unique functionally. The architecture would need to provide the means of translating information formats and content from systems into the standard format and content for sharing outside the system. This would also support SOA approaches, cloud computing strategies, mobility, and other approaches being pursued today.
As an EA team, are you focusing on the functionality of a specific area or are you leaving that to the project team, so that you can focus on the shared aspects of an application environment, namely the information assets and integration capability across the enterprise?
December 1, 2009
Recently, we have discussed the HL classes for Business Archtiecture (functions, processes, services) and Application Architecture (application classes and platforms) and Technology Architecture (domains and components). Now let’s turn to Information Architecture, not Data Architecture.
In order to get started with Information Architecture, you need to identify all of the major “things” that your business produces or acquires information about. We will call these information classes. They are not databases or objects or attributes. They are conceptual in nature, but they represent the major entities that your enterprise requires information about. These typically include entities such as customer, supplier, product or service, orders, items, employees, facilities, and inventory. Of course, each enterprise may have their own language. For instance, a financial services company may call their products by a different name, such as policy or account or fund. And public sector organizations may not use the term customers, but rather citizens, constituents or voters. And those in the healthcare related businesses would say patients. In any case, you are primarily concerned with the group of people the enterprise is providing a service or product to, the sources of those products, and the major entitities involved in the production, stocking, logistics, ordering and delivery of said product or service. You may have subclasses, as well, but for the purposes of getting started, we suggest no more than one level of decomposition.
Once the High Level Information Classes have been identified, they become more meaningful to EA work once you map them to the functional heirarchy and application classes. For more information and examples related to this type of information mapping, please see our Jump Start materials.