Business and Strategic Alignment in EA – Practical Guidelines Based on Industry Best Practices - Dave Guevara As IASA members we are constantly reminded that architects are responsible for connecting business to IT. Business alignment is indicated in architecture frameworks like TOGAF or Zachman as an important step. However, the challenge comes in getting this done where EA is not top-down driven, short term deadlines always win over strategic efforts and standards like ITIL, COBIT and BPMN help but don’t really answer how There is a great deal of writing about EA, SOA, their benefits and how they need to be driven by business needs. The architect is still left with diverse guidance that provides little practical help on how exactly to conduct line-of-sight alignment between business strategy and system implementation. In this discussion, we will look at this issue from four perspectives: 1. Practical means of determining business value and impact, then creating alignment to your future state architectures. 2. Top-down view using an EA framework. 3. Bottoms up view in a future state architecture 4. Business functional model related to an application functional model 5. Practical suggestions that work now and can scale over time

1. The Business of
Architecture
Please have pen/pencil and paper ready
BEFORE we start.
Dave Guevara
303.694.9394
daveg@bt-review.com
1

2. What in IASA are we
Talking About?
Source: IASA Architect Training Program
2 Dave Guevara – June 5, 2008

3. Agenda
Business Architecture
Business Value & Business Impact
Business Impact – Do an Example
Business Alignment Guidelines & Examples
What Can You Apply Tomorrow?
Networking & Open Discussion
3 Dave Guevara – June 5, 2008

4. Business of Architecture
Conclusions
Begin with the end in mind, meaning know what
success looks like
Simply to the core, common capabilities and
architectural components
Know how your architectures and solutions will
deliver Business Impact to create value
Be clear on which architectural level & context
you are working
Communicate, Sell, Listen, Communicate
4 Dave Guevara – June 5, 2008

5. Business Architecture
What is it?
How do we architects define it?
What does it do for us?
5

6. Business Architecture is
Just as Confusing as SOA
Lot’s being written
Same words/phrases being used to mean
different things
Lack of clarity about where to start or end
Technical/software architectures often assume
business requirements and business
architecture have been defined.
Business stakeholders don’t know this type of
abstraction in their tasks, workflow, and entities
(orders, invoices, POs, etc.)
6 Dave Guevara – June 5, 2008

7. FEA Approach to
Business Alignment
Source: “FEA Practice Guidance, Value to Mission”
Federal Enterprise Architecture Program Management Office, OMB
7 Dave Guevara – June 5, 2008

8. FEA Definition of
Segments
Segments are the
vertical bars,
Business & Core
Mission Areas
Segments are also
the common
Enterprise Services
8 Dave Guevara – June 5, 2008

9. TOGAF Architecture
Development Method (ADM)
TOGAF Guidelines
Phase A: Architecture Vision
Set the scope, constraints, and
expectations for a TOGAF project;
create Vision;
define stakeholders;
validate the business context and
create the Statement of Architecture
Work;
obtain approvals
Phases B, C, D: Develop architectures
at three levels:
1. Business
2. Information Systems
3. Technology
In each case develop the Baseline (“as is”) and Target (“to be”)
TOGAF™ is a trademark of The Open Group Architecture and analyze gaps
9 Dave Guevara – June 5, 2008

10. TOGAF Business Scenarios
Business Scenario describes:
The business processes, applications or
sets of applications that can be enabled by
the architecture
The business and technology environment
The people and computing components
(called “actors”) who execute the processes
in the scenario
The desired outcome of proper execution
<of processes and applications>
Think UML 2.0 10 Dave Guevara – June 5, 2008

11. Remember?
Begin with the end in mind, meaning know what
success looks like
Simply to the core, common capabilities and
architectural components
Know which Business Impact(s) your
architectures and solutions must affect
Be clear on which architectural level &
context you are working
Communicate, Sell, Listen, Communicate
11 Dave Guevara – June 5, 2008

12. Economic Resource
Economic Agent
inside
participation
Economic Event
stock-flow
Economic Agent
outside
participation
Give duality
Take outside
Economic Agent
participation
Economic Event
stock-flow
Economic Agent
inside
participation
Economic Resource
REA model of cookie sale from
entrepreneur’s (ELMO) perspective
Resource-Event-Agent (REA) Model developed by William E McCatthy, Michigan State University
Example of TOGAF Common Business Model 12 Dave Guevara – June 5, 2008

13. Top-Down with Bottoms-Up
Approach in ITPM and EPM
Strategies Initiatives IT Portfolio
Management
ITPM Business Value Governance (ITPM)
Value Risk Management Roadmaps
Management Investments Architecture
Blueprints
Projects Phases/Stages
WBS Schedules
PMO Work Breakdown Structure
Resources Requirements
Enterprise
Execution Project
Management Tasks Budgets Timekeeping Management
(EPM)
13 Dave Guevara – June 5, 2008

14. Top-Down with Bottoms-Up
Approach in EA and SOA
Strategies Initiatives
Business Enterprise
Business Value Governance Architecture
Architecture
Risk Management Roadmaps (EA)
Value
Management Investments FSA Blueprints
Comm Plans Business Models
Business Business Business
Services Logic Processes
Technical, Info Activity / Technical
Composition
& Software Event Mgt Governance
Service
Architectures Lifecycle &
Budgets Repositories Oriented
Environ Mgt
Solution Messaging Metadata Security Architecture
Management (SOA)
Infrastructure Services Architecture
14 Dave Guevara – June 5, 2008

15. Recall the Great
Enterprise Service Bus (ESB)
Talk by
Kevin Geminiuc
& Jason Barrios
15

16. Converging to the integrated ESB
Business Custom Code
Message Processes adapters,
RPC
Queues (e..g EbXML, Stove Pipe
(Corba, DCOM)
(MQSeries) MOM?) systems
Stand-alone apps
Business
Message EAI Adapters
Web Services Processes
Queues (WebMethod
(SOAP, SOA, (e..g WS-BPEL,
(JMS, s), JCA -
Restful) BizTalk, Human
MSQMQ) connectors
workflow)
EAI, MOM,
SOA
ESB
ESB
(Message routing, Component
event- driven arch, Standards (SCA,
policy WSDL),
management) B2B Adapters
Wiring
Messaging Composite
Protocols Applications App Adapters
(http, queues, (JBI - JSR208, (SAP, Document
ftp, xmp) SCA-Oasis, workflow, ETL)
SDO - Oasis)
16 Dave Guevara – June 5, 2008

17. Component view
Identity
BAM ETL
Management
Core
Process Components
Orchestrator ESB UDDI Policy
(BPEL/ Engine Registery Manager External
BizTalk) Partners
Routing
Engine
SOA
Tier Rule Engine
Data FTP ... Portal
Adapter Adapter Applications
Deployed
Composite App
Swift CICS Human
(SCA, JBI)
Adapter Adapter ... Workflow
Reliable Messaging (JMS, MSMQ, ..)
17 Dave Guevara – June 5, 2008

18. Case Study 1: Healthcare
Eligibility Processing
Background: How to create business process templates for reuse for
healthcare processing with agile and decoupled services processing
complex rules based on “life events”
1. External user healthcare paper application entered into system
2. Listener to changes on beneficiary demographic change events
3. Message routed to appropriate BPEL orchestration process (New
application or existing person/family)
4. Human task to evaluate data quality (random sampling)
5. Eligibility Rule Engine calculation
6. Invoke web service to generate appropriate document
Result:
Interface decoupled from data-change events
routing by application type
swap in “state” level orchestration processes & rules
scalable (load tested to 20K applications per hour)
18 Dave Guevara – June 5, 2008

19. Case Study 1:
Eligibility Info Flow
User
Demographic -
Data-Entry Domain Objects
Staff
Demographic
Updates,
Aspects- Application
Attribute XML
Inspector -Doc
System
Web App
Content Composite
s
Router Application
Healthcare
Application
paperwork <Invoke> <invoke>
New Existing
State healthcare Application insured
applicant data recipient
New Application Process <BPEL> New Application Process <BPEL>
Process Rule Invoke Process Invoke
Human
Application Task Engine
Call
Letter
Process
Application ... Letter
Process
DB Task Rule
adapter Adapter Adapter
Add to Task
Queue
Item
Completed
-Pass/Fail
QA Task
Eligibility
Screen
Specialist
Eligibility
Data
Eligibility Denial Letter Process Approval Letter Process
<Rule Engine> result <BPEL> <BPEL>
HealthCare
Invoke Invoke
Eligibility
... Letter
Service
... Letter
Service
Approval
Letter
<Web Service>
GenerateLetter
Denial
Letter
19 Dave Guevara – June 5, 2008

20. SOA Service Layers
Business Process Layer
orchestration service layer
Services Interface Layer business service layer
application service layer
ERP CRM
Applications Layer
SCM Custom
Source: “Service-Oriented Architecture, Concepts, Technology and Design”
20 Dave Guevara – June 5, 2008

21. Be Aware of the Level Your
Working At & Your Context
Strategies Initiatives
Enterprise
Business Business Value Governance Architecture
Architecture
Risk Management Roadmaps (EA)
Value
Investments FSA Blueprints
Management
Comm Plans Business Models
Business Business Business
Services Logic Processes
Technical
Activity Mgt Composition
ITApplications Technology, Design and Management
Governance
Lifecycle &
Service
Solution Budgets Repositories Oriented
Environ Mgt
Management SOA, MS Capabilities Modeling
Messaging Metadata Security Architecture
(SOA)
Infrastructure Services Architecture
21 Dave Guevara – June 5, 2008

22. SOA Example in Future State
Architecture (FSA) Framework
Architecture Viewpoints
Perspectives Business Information Technical Solution
Business
Context
Conceptual SOA
Logical Example
Implementation
22 Dave Guevara – June 5, 2008

23. Future State Architecture (FSA, ‘To Be’)
Framework
Architecture Viewpoints
Perspectives Business Information Technical Solution
• IT Goals & Objectives • Architecture Principles
Business • Business Solution Requirements • Gap Analysis
Context
• Business Value Model • ROI/Value/Economic Analysis
• Conceptual Info • Apps Mapping to • Integrated View
• Business Process Business Value &
Patterns & Models • Role-Based Skills
Model Process Models
Conceptual • Biz Info Entities Matrix
• Conceptual (workflow docs, structured • Services Model
Process Patterns data, taxonomy, content, • Life Cycle Mgt
master data…) • Define Domains Architectures
• Logical Business
• Logical Info Process • Services Arch • Solutions Patterns
Process Pattern • Application Arch
(flow) Pattern • Interface Patterns
Logical • Business Process • Logical data models
• Security Arch
dependencies on • Infrastructure Arch • Testing, O&M,
• Systems of record • Presentation Layer Distribute Patterns
applications
• Use case • ETL process logic • Implementation
• Physical diagrams
descriptions e.g. • Data hygiene and Architecture
of all domains &
UML 2.0 quality logic Patterns
Implementation • Source/target maps,
layers
• SOX process flows • Security • Life Cycle Mgt
• Physical data
constructs Patterns
• BPM/BPEL models models & stores
Note: This is not intended as a complete list of all models and artifacts.
23 Dave Guevara – June 5, 2008

24. Enterprise Architecture
Management (EAM) Framework
Influences
Portfolio
Business
Supported Stakeholder Management
Alignment Influences EA Team
By Analysis Ranking of
Process Business
Alternatives
Strategy
Business Stakeholder EA Team
Alignment Analysis ITPM Tools Charter &
Defines Business Plans
Performance Strategy
Metrics Defines Supports
In DefinesSupports Identifies Best Assists in Defining
Alternatives & Participates
Implemented By
EA Future State Communication Governance Oversight Board
Measurement Shares Guides
Architecture Plan Strategy Charter
Program
Supports
Success Future State Communication Governance ESC Board
Metrics Architecture Plan Strategy Charter
Deliverables
Identifies ARB Charter
Strategic Supports
Goals
& Gaps Defines Viable Constrains
Alternatives Defines Defines Costs, Benefits & Risks
Future
States
Aligns Defines Financial Attractiveness ROI Analysis
With
IT Strategy Defines Phasing Migration Plan
LEGEND: Current State Budgetary Compliance
Architecture
Strategic Migration Financial / Risk
Deliverable Roadmap Plan Attractiveness
Group
Current State NPV / TCO
Defines Initial
Architecture Assessment
Baseline
Coversheet
Within Group Defines Viable Alternatives
© 2008 Dave Guevara IASA Members are authorized to reuse, copy and modify.
Such use much include a note “© 2008 Dave Guevara reproduced with permission” 24 Dave Guevara – June 5, 2008

25. Business Value &
Business Impact
Value is more than just ROI
Impact is evident by how it affects
people, money, economics & risk
25

26. Where is the Struggle?
Business Case at Program and Project Level (ROI)
Selecting Which Projects to Fund & the Sequence
Requirements Discovery (driven by value or capability)
Architectural Design Aligned to Business Impact
Change Adoption Planning & Implementation
Adapting When Things Change
Not Using a Repeatable, Effective Process
Losing the Voice of the Customer
26 Dave Guevara – June 5, 2008

27. ROI May Not Be What You Think?
ROI analysis methods range from the simple/qualitative
analysis to more rigorous/quantitative.
Practical ROI or
More
Value Analysis is rigorous
Applied Information
Economics
about NPV/IRR
Val IT
Business Impact.Complexity of Total Economic Impact
Analysis Methods Business Value Index
x
pl e
Use Cash Flow l e to
Co
m
Benefits Analysis mp
Schedules for Va
lu e
:S
i
We Want
large, complex Simple
projects with More Type of Analysis More
qualitative quantitative
Business Impact.
Source: “Measuring the Business Value of IT”, Craig Symons, Forrester © Sept 2006
27 Dave Guevara – June 5, 2008

28. Only 5 Ways to Impact
Business Value
Increase Revenues
Reduce Costs
Improve Efficiencies
Governance Compliance – Risk Mitigation
Change/Create Core Capabilities
Culture & soft values has to produce or contribute to one of these 5
28 Dave Guevara – June 5, 2008

29. Business Value within IT
Assume you have a business driven IT group that
delivers great business value
What have you done in IT to increase productivity, reduce
costs, eliminate redundancy, create needed new capabilities
and terminated unnecessary capabilities, sustained those
that need to be in O&M, created BI that improves decision
making
IT Efficiencies Throughout Asset Lifecycles
Concept & Analysis
Design & Development
Testing
Deployment
Operations & Maintenance
Termination (End of Life - EOL)
29 Dave Guevara – June 5, 2008

30. Intel’s
IT Business Value Matrix
_ Business Value +
+ Improved IT Improved
Creates Efficiency
Business
LOB/User With No
Resistance Business Value Value AND
Penalty IT Efficiency
IT Efficiency
Improved
Business Value
Necessary but
Failure at No/Limited
Low Value
IT Efficiency
Penalty
Requires
Failure Failure Incremental IT
Budget
_
Source: “Managing Information Technology for Business Value”
30 Dave Guevara – June 5, 2008

31. Business Impact
Let’s Do an Example
31

32. Business Impact Analysis
Exercise in Small Groups
IT Budget Growth this year is 3%
IT Budget $10.0M last year
Need $1.3M for new projects (innovation)
IT Budget Categories (last year)
Overhead (OH), includes EA = $1.5M
SW/HW Maintenance = $1.5M
O&M (excluding Maint) = $3.3M
“Must Do” Infrastructure & Upgrade Projects = $0.7M
Test & QA = $0.5M
SW Dev = $1.5M
New Projects = $1.0M
Budgets this year reflect COL & Growth Plans
Figure out: Cost reductions, where & how.
32 Dave Guevara – June 5, 2008

33. Business Alignment
What is it?
How do we architects define it?
What does it do for us?
33

34. Why Business Alignment?
“The world is changing very fast.
Big will not beat small anymore.
It will be the fast beating the slow.”
Robert Murdoch
Chairman and CEO
News Corporation
34 Dave Guevara – June 5, 2008

35. So What to Do?
Look at how what you DO and CREATE
Affects Peoples’
Behaviors
Environments
Performance Feedback
PERSONAL needs
As evidenced in the Business Impact
35 Dave Guevara – June 5, 2008

36. What’s Business Really
Care About?
You as Whether Anybody Cares Is
architects: determined by how you answer
WIIFM making Their Job:
Manage
Easier
Architect
Faster
Specify
More Profitable
Govern
Safer
Sustain
Understandable
Evolve
Actionable
Retire
Adaptive
Assets &
Resources! Higher Quality
36 Dave Guevara – June 5, 2008

37. Value Based Business Alignment
thru Resources Planning
Portfolios
Business Value
Voice of Customer Initiatives
Projects
Industry Standards,
Best Practices
Requirements Stages
Business Value Activities
Demand
Milestones
Roles
Supply
New/Expanded Resources
Solutions
37 Dave Guevara – June 5, 2008

38. Business Value Milestone
Connects Your Decision Space
Capability
Development Business Impact &
Budgets (Opexp, Capex) Performance Goals
& Cash Flow
Future State
Architecture
Risk Assessment
& Management Functions &
Business Features
Value
Scope, Change, Milestone
and Cost Control Resource
Planning
Opportunity Resource &
Management Asset Allocation
Time
Sequencing
38 Dave Guevara – June 5, 2008

39. Business Alignment
Guidelines & Examples
(ask Dave for the handout)
Refer to the handout titled
“Practical Guidelines for Strategic
and Business Alignment”
39

40. Pick Alignment that Fits
Strategies Initiatives
Business Enterprise
Strategic Alignment
Business Value Governance Architecture
Architecture
Is done
Risk Management at Roadmaps (EA)
Value
Management Corporate, Enterprise or Division
Investments FSA Blueprints
Comm Plans Business Models
Business Business Business
Services Logic Processes
Technical, Info Activity / Technical
Composition
& Software Event Mgt
Business Alignment Governance
Service
Architectures Lifecycle &
Budgets Repositories Oriented
Environ Mgt
Is within Architecture
Solution Messaging Metadata Security
ManagementBusiness Unit or Workgroup or Process (SOA)
Infrastructure Services Architecture
40 Dave Guevara – June 5, 2008

41. Strategic Alignment
Guidelines (handout)
Inputs:
Strategic Intent
Strategic Goals
IT Strategies, Goals and Objectives
Strategic Model Questions
Outputs
Business Value Model
Business Economic Metrics
Architecture Principles
41 Dave Guevara – June 5, 2008

42. Strategic Alignment
Guidelines (handout)
Process Steps
Determine strategic intent and goals
Define Porter Value Chain Model
Define Business Value Model
Business Value Milestones
Strategic Alignment Process Questions
42 Dave Guevara – June 5, 2008

43. Porter Value Chain Model
Support Activities
(what we do to support making money)
Primary Activities
(how we make money)
Source: “Competitive Advantage”, Michael E. Porter
Value Chain Activities
43 Dave Guevara – June 5, 2008

44. Example of Business Value Model
for Manufacturer
Suppliers Sub-Contractors Customers
Example:
Info Process
Mapped C Supply Chain Channels Distribution Channels
onto BVM
PO
Fulfillment
Fulfillment
3rd Party
P
Procurement Inbound Logistics Manufacturing Inventory Management
Regulators
Product Development
Research & Development Product Management Product Design Product Integration Product Test
Corporate Functions
Vendors
Sales Marketing Production Development Customer Service Operations Management
Advertising
Support Services
Agency
MIS / IT Corporate Affairs Legal Accounting Finance HR PMO
Business Partners
44 Dave Guevara – June 5, 2008

45. Business Value Milestone
Capability
Development Business Impact &
Budgets (Opexp, Capex) Performance Goals
& Cash Flow
Risk Assessment
& Management Functions &
Business Features
Value
Scope, Change, Milestone
and Cost Control Resource
Planning
Opportunity Resource &
Management Asset Allocation
Time
Sequencing
45 Dave Guevara – June 5, 2008

46. Business of Architecture
Conclusions
Begin with the end in mind, meaning know what
success looks like
Simply to the core, common capabilities and
architectural components
Know how your architectures and solutions will deliver
Business Impact to create value
Be clear on which architectural level & context you are
working
Communicate, Sell, Listen, Communicate
Recommendation: Get an EA tool
PowerDesigner, Troux, System Architect
46 Dave Guevara – June 5, 2008

47. EA Tools & Repository Really
Help Manage Complexity
47 Dave Guevara – June 5, 2008

48. The Business of
Architecture
Questions?
Dave Guevara
303.694.9394
daveg@bt-review.com
48