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Business architecture case studies

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Enterprise Business Architecture
Case Studies
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EXECUTIVE SUMMARY
In the context of today’s demanding market companies are experiencing the
need for multi layered chang...
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CONTENTS
Executive Summary.................................................................................................
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Business architecture case studies

  1. 1. 1 Enterprise Business Architecture Case Studies
  2. 2. 2 EXECUTIVE SUMMARY In the context of today’s demanding market companies are experiencing the need for multi layered change. The additional challenge to this environment is addressing the speed of required change, both from a customer and technology perspective, using dated tools and techniques. These forces at work are driving organizational impact which reaches far beyond conventional thinking. IAG believe architecting the business, through strategic planning, understanding the holistic enterprise and collective change agendas, is the way forward. Having a viable business strategy is fundamental to the success of organizations facing increased competition, shifting customer demands, globalization, new markets and economic pressures. But having a strategy is not enough. Organizations must be able to execute against that strategy and demonstrate quantitative, measurable value. The challenge facing executive is how to turn business strategy into actionable results. Business architecture provides a vehicle for interpreting business strategy in concrete ways that can be deployed as coordinated, clearly articulated business initiatives. Executive require a different kind of dashboard. One which is provided through the tools and techniques deployed in the context of building and practicing business architecture. This whitepaper discusses business architecture in practice and the benefits realized by the firms who used their own business architecture to achieve the desired business outcomes.
  3. 3. 3 CONTENTS Executive Summary.......................................................................................................................2 CONTENTS .....................................................................................................................................3 Case Study Overview ....................................................................................................................4 Human Capital Management Transformation:...........................................................................5 Divisional Non-Core Outsourcing.................................................................................................6 Centralization FTE and Enterprise Restructuring study ...........................................................7 Spans of Control Cost Study capability/function, FTE, role .....................................................8 Data and Process Ownership.......................................................................................................9 Strategic Project Portfolio Development ...................................................................................10 Strategic Alignment......................................................................................................................12 Portfolio Management..................................................................................................................12 Closing Thoughts .........................................................................................................................14
  4. 4. 4 CASE STUDY OVERVIEW Business Architecture methods and techniques really come into their own when applied to a broad range of critical business problems. At the same time, methods and techniques comprising the discipline of business architecture continue to evolve. The following Case Studies are not an exhaustive list yet illustrate the vast number of ways where value has been driven through the use of the business architecture collateral to the benefit of achieving the strategic objectives. The discipline of business architecture applies to multiple common business drivers some of which are —customer centricity, financial planning, lower operating costs, optimized application portfolio, modernization and program management Mature and successful Business Architecture practices work collaboratively with business leaders, IT Architects, and executives to address current and future challenges. Adoption and acceptance of Business Architecture, in strategic planning, has led to an increase in the maturity of the discipline and a business- centric architecture that focuses on the needs of the business.
  5. 5. 5 HUMAN CAPITAL MANAGEMENT TRANSFORMATION: A Large Tier 1 bank engaged the use of the capability model to transform the HR function to a future state operating model with the strategic objectives of outsourcing non-core capabilities, process redesign, and process distribution across centers of excellence, with Online Delivery and Contact Centre channels.  They strategically defined what Human Resources will provide in future state services, support and built a capability model  Using the capability model they designed the organization around what functions HR does  Then decided where those business functions and organizations would be located  Knowing the location preferences, to drive lower cost operating models, they decided which functions could be performed by a 3rd Party Outsourcing arrangement  Researching the vendor catalogue leveraged existing relationships and Offshoring strategies to reduce costs  Remaining business functions determined the organizational structure and roles based on spans of control / management and shared services  In the delivery of those business functions Value Streams where produced to understand how they would flowed through the organization  Process Ownership was assigned to ensure future state process were optimized, efficient and effective with appropriate controls and metrics Business Model was fully deployed in less than 2 years with supporting technologies driven off the business needs and design.
  6. 6. 6 DIVISIONAL NON-CORE OUTSOURCING Organizations quite often look at parts of their business which are non-core, are necessary to be managed but not necessarily provided internally, as they are not a core strength. In this regard they look at other organizations, with highly developed specific capabilities, which can be provided at a lower price point, or can fill a short-term skills gap. Using the business architecture to deconstruct the business to functions and process exposes the dimensions of the capabilities, you might consider outsourcing, or clarify the best options for alternative capability sourcing. An Investment division, of a large tier 1 bank, focused on operational provisioning and used the business architecture mapping of capability, business functions, locations, processes and vendors to deconstruct the business. This analysis exercise:  Exposed several outsourcing possibilities from Real Estate Operations to Documentation Archive and Retrieval processes  Brought clarity to the opportunity of consolidation of current multi-vendor relationships  Produced Cost of Ownership analysis to support the business case  Enabled the RFP to be very specific as to the capabilities, business functions and processes which needed to be contracted. CEO was impressed with the speed of discovery and the foundational basis for decisions.
  7. 7. 7 CENTRALIZATION FTE AND ENTERPRISE RESTRUCTURING STUDY Good organizational design is built on the basis of functional alignment, spans of control and the right balance between distributed and centralized capabilities. Distributed capabilities support agility and centralizing capabilities will grow expertise, reduce cost and address complexity. Using the business architecture a retail organization wanted to know what was being done, where, by who and what was the driver of effort. A socialized and executive agreed business functional model was available. This was used as the foundation for a global survey of the business unit managers. The FTE data set, by business unit, by location was extracted from the HR system and aligned to the business functions being performed. Additionally the business processes were catalogued against the business functions. Survey was structured to reflect Business Function- Business Unit-Location- Business Processes, number of FTE. A drop down was provided to discover what events where drivers of effort. The Survey resulting analysis drove a global off-shore, near-shore and centralization location strategy with approximately 30% reduction in cost base.
  8. 8. 8 SPANS OF CONTROL COST STUDY CAPABILITY/FUNCTION, FTE, ROLE Finance Transformation, of a large Tier 1 bank, used the business architecture mapping of capability to business function to business process to role. It was quickly discovered the number of managers to staff members was on average 3 to 1. The Spans of control for Industry best practice was a ratio of 6-9. Adding the dimensions of transactional Time, Frequency and Volume, to determine the correct number of FTE required to complete the processes, the business units were Right Sized to the number of people necessary to perform the work and organized to reflect the industry benchmark number of staff members to manager ratio. Sales & Marketing Products & Services Operations & Processing Risk & Financial Compliance Strategy & Governance Market Research & Analytics Product Development Resource Planning Regulatory Advisory Business Strategy Mgmt Customer Mgmt Strategy Product Research & Analytics Operations Policy & Procedure Alliance Planning HR Planning & Governance Segment Analysis & Planning Channel Mgmt Channel Mgmt Risk Mgmt Programme & Change Mgmt Marketing Mgmt Business Continuity Financial Accounting & Reporting Regulatory & Compliance Policy Brand Mgmt Information Tech Decision Support Mergers & Acquisition Sales & Contract Monitoring Product Catalogue Mgmt Central Service Management Balance Sheet Project Mgmt Office Relationship Mgmt Product & Service Monitoring Vendor Management Credit Oversight Audit End to End Service Level Perf Monitoring Channel Performance Statistics & Measurement Legal Advisory Business Policy Oversight Authorization/Approvals Risk & Financial Control Compensation & Benefits Auth & Limits Delegation Financial Data Mgmt Regulatory Compliance Monitoring Client Acquisition & Referrals Transactional Processing Customer Data Mgmt Accounts Payable / Receivables Project Cost Acct Contact Mgmt Order Mgmt Statement Prep Investigations Learning & Development Compliant Mgmt Document Mgmt Collections & Recovery Regulatory Reporting Prospecting & Sales Credit Processing Credit Approval & Processing Business Procedures Campaign Execution Fees & Billing Mgmt Financial Consolidation M&A Due Diligence End Consumer Sales Payments Tax Reporting Vendor Mgmt Strategic Control Execute CAPABILITY MODEL ILLUSTRATIVE Product Performance Mgmt Campaign Management Pricing Policy Channel Delivery Mgmt Product Configuration Mgmt
  9. 9. 9 DATA STEWARDSHIP: GOLDEN SOURCE, OWNERSHIP, RATIONALIZATION, MI REPORTING Data stewardship is of primary focus in these days of privacy yet regulatory transparency. Organizations are looking to produce single version of the truth data sets to streamline redundant information, improve business intelligence and provide effective reporting. DATA AND PROCESS OWNERSHIP Large Tier 1 Insurance Company Enterprise Architecture team used the business architecture capability model to map the application inventory. Each application was reviewed for business value and the data was catalogued to the business capability it underpinned. The analysis revealed the opportunity to rationalize, or componentize the data, to a Golden Source and the applications which would consume or provide data to it. It also identified the logical business owner and stewardship. Strategy & Governance Business Architecture & Operating Model Global MIS Strategy Governance Business Strategy Management Alliance Planning Mgmt End to End Service Level Management Executive & Stakeholder Management IT Architecture Risk Operational Risk Control Management Balance Sheet Management Treasury Management Financial Accntg & Reporting Decision Support Financial Internal Audit Regulatory & Compliance Compliance Sales/Product Monitoring Sales, Market & Relationships Market Management External Corporate Comms Marketing Management Brand Management Client Relationship Management Sales & Distribution Independent Asset Management Electronic Service Channel Management Market Risk Control Management Settlement Risk Control Management Legal Awareness & Compliance Regulatory & Legal Doc. Management Products & Services Business resource & sales planning Client mkt research & analytics Branch Telephone Post Online Email IntermediaryPDA Hedge Funds Management Securities Product Management Funds Product Management Trade Services Management Product / Servicing Sourcing FX & MM Management Cash Management Structured Product Management Card Product Management Insurance Products Management Operations & Processing Merchant Operations Corporate Actions Management Client Tax Reporting Performance Measurement Safe Keeping Management Payments Custody Nostro Cash Management Market Data Management Involved 3rd Party Maintenance Specific Product Processing Credit Processing Securities Processing Card Processing Fund Processing FX & MM Processing Structured Products Processing Trade Services Processing Insurance Processing Hedge Fund Processing Product Management Service Management Product & Services Support Execution Management Trade Reporting Order Management & Grouping Execution Services Confirmation & Matching Allocations Product & Service Control Processing & Execution Support Research & Analysis Customer & Transaction Services Client Support Customer Insight Customer Management Strategy Business Policies and Procedures Operations strategy & policy Correspondent Banking Authorisations Cash Services Rewards Admin Securitisation (incl. Syndications) Segmented Servicing Credit Risk Control Management Contact Management Relationship Management Client Acquisition & Referrals Counter/ Branch Services Product Catalogue Management Credit Management Client Account Admin Reconciliation Credit Approval Management Document Management Fees & Billing Management Client Accounting & Reporting Operational Monitoring Clearing Settlement Segment Analysis & Planning Customer Behaviour Models Collections and Recovery Collateral Handling Prospecting & Sales Sales Execution Sales Force Management Group / PB Advisory Services Client Risk Profiling Discretionary Portfolio Mgt Services Family Office Services Trust & Estate Planning Strategic Asset Allocation Tactical Asset Allocation Cross-Product/Service Client Facing Processing Design apps & IT infrastructure Build apps & IT infrastructure Operate & maintain apps & IT i/f Business continuity Security Information Technology Legal Programme & Change Management Facilities Operation & Maintenance Procurement HR & Payroll Internal Comms (excl. customer) Support & Logistics Support Infrastructure OPS Design & Implement Centralised Service Centre Management Cross-Product/Service Non-Client Facing Processing GSC Monitoring Service Centre Mgmt AML/Fraud Detection Lending Deposits Underwriting Claims ATM Pricing /Quotes Reference Data Financial Planning Trust Administration Valuation Investigations Legal & Regulatory Risk Mgmt Direct In-Direct
  10. 10. 10 STRATEGIC PROJECT PORTFOLIO DEVELOPMENT All transformation programs will be strategic. Not all strategy implementations will be transformational. One common application of capability modeling is in developing strategic project portfolios. Organizations struggle with identifying strategic projects because each business lead submits project proposals, based on how or what their organization can do to support a strategic plan. This approach is flawed as it will not address an end to end solution to execute on the strategy. Strategic plans need to be broken down to reveal the objectives and therefore the projects necessary to fulfill the plan. A clear disconnect in a strategy development and therefore deployment. A capability approach resolves this problem by identifying first the capabilities necessary to support the strategic plan and then assessing their ability to affect the plan. It is only then projects can be identified to address capability gaps. Finance Division of a large global Investment bank used this strategy mapping and deployment methodology to ensure all projects were aligned to strategic goals.
  11. 11. 11 PROJECT PRIORITIZATION There are always more projects than discretionary funding can support. A project tabled for funding should have positive ROIs but the important question is “Which projects create the most business value?” A quick alignment of projects to capability to business strategy provides a fast first pass. Then a more detailed assessment of each project’s impact to capability improvement will narrow the prioritization. Large Global Organization had a year over year spend exceeding 75MM. Project names were nebulous and clarity was limited as to the business outcomes and strategic alignment. Project scope and Business Outcomes were mapped to the capability model definitions which identified a number of projects operating/impacting the same capabilities, projects which had delivery dependencies and projects which were not directly related to a strategic capability. These results prompted;  a reorder of project delivery in line with the clear dependencies  project deliverables were able to be reused or consumed by other concurrent projects  non-strategic projects were stopped and funding redirected,  a Consolidation of the portfolio mix where associated projects were bundled into programmes  Redirection of funding from realized savings Domain Competency Capability Definition Project1 Project2 Project3 Project4 Total Budget in MM 0.5 10 15 7 32.5 Strategy 0 Management activities to analyse environment and to establish and monitor the strategic direction, ensuring it aligns to the overall corporate mission, vision, principles, goals etc Includes value analysis and planning. May include client profitability and segmentation as well as product profitability. Input of Group Strategy requirements into product and service development developments.Also includes M&A activity Note there are Business Strategy Planning activities carried out by business support which fall into this domain Refers to annual planning of business resources and sales . Plan and allocate budgets across all lines of activity for both revenue and cost centers at the macro and executive level (normally annual) Make buy/rent decision for physical (e.g. property) Includes profitability reporting (client, products, teams, enterprise etc) Also capture, analyse and report for other process and performance metrics (e.g. volume, exceptions, statistics and general reporting). Conduct and consolidate market research and information on client segments internally. Incorporate information on competitor, participant, and customer behaviors (e.g. channel behaviour, access devices). Analyse customer satisfaction. Develop guidelines and approach to gather, store, analyse data and draw conclusions based on customer needs and review of competitive landscape. Identify trends: buying behaviors, risk profiles, customer segmentation by agent channel, customer segmentation by product, etc. Sales / Product Monitoring The functions undertaken as part of the strategy to monitor the sales of products and services, covering profitability, client distribution, risk profiles of products to company and coverage of products and services taken up by clients. 1 1 Identify potential alliance partners, screen them and develop high-level commercial agreements. Manage alliance partners relationship. Includes all non product related alliances & partnership, including Sourcing, BPOs, Management Providers, IT Outsourcers. Includes Sourcing Strategy. Operations Strategy & Policy Design and select operational processes and the major policies and plans around them 1 1 Customer Insight Provides data and analysis on customer wants, needs and behaviours that can be used by other competency areas 0 Customer Management Strategy Management activities to establish customer direction (e.g. customer growth and loyalty), ensuring it aligns to the overall strategy. Includes client profitability analysis. 1 1 2 Customer Behaviour Models Consolidate internal/external customer insight & activity data (spending patterns, share of wallets, delinquency data). Develop/refine behavioral models (production feedback). Oversee roll-out & track value of models. Maintain comprehensive internal and external customer and transaction data. Develop hypotheses, refine rules and models. Assess coverage and impact of models 1 1 Segment Analysis and Planning Determine market segmentation and set coverage and performance targets. Analyze competitive environment, compare and determine competitive responses 1 1 2 Governance The administration of: business direction, organasition, target performance, accomplishing continual improvement in the business reorganisation; interaction of the enterprises business assets & resources. 0 Develop and maintain the business capability model that defines the scope and mechanics of operations. Develop and refine business architectures. Support interpretation and deployment. Define underlying procedures and techniques. Map selected industry standards into the blueprint. Executive & Stakeholder Management Executive Management of the business and its alliance partners (as a high performing team) to achieve strategic and operational management objectives. Includes a direct input from performance measurement component 0 IT Architecture Develop and maintain the Application IT architecture that adapts to the business architecture requirements via the IT Strategy of the . Develop and maintain the IT models that define the scope and mechanics of the 's operations 0 End to End Service Level Management Driving and monitoring the meeting of customer service standards, income generation and cost management and the delivery of the customer service (linked to proposition devt and deployment). Includes external partners. - i.e. control of alliances. Planning and control of business SLAs. 0 4 1 1 1 0 1 Business Architecture & Operating Model Alliance Planning & Management 1 1 Client Market Research and Analytics 1 Global MIS 1 1 1 Business Resource & Sales Planning 1 Business Strategy Management 1
  12. 12. 12 STRATEGIC ALIGNMENT Given the significant regulatory agenda a Global Credit Risk CEO wanted to know what projects were globally working on Credit Risk capabilities and functions. The Global Enterprise Business Architecture team had the ability to provide the CEO with a report which focused on Risk Capabilities, to business function, to projects, to region, to total spend. His department assessments lead to a prioritization and rationalization of regional efforts to global focus driving cost down and raising the global strategic risk profile. PORTFOLIO MANAGEMENT A second case study is an example of the most active application of business architecture in organizations. Business vision is the driver of the strategy, the strategy is the driver of Portfolio Planning and subsequently approved projects ensuring overlap and duplication of spend or effort is not present. This highly valuable and strategic application of business architecture ensures the entire organization is focused on the end game. If we consider the regulatory agenda, in play at the moment, we will recognize organizations are aligning approved projects to the regulator or the regulation and not the business capability or process. As a result Dodd Frank, SOX, Basel, all focused on Finance capability and financial reporting process, are predominantly funded, resourced and managed separately within the same portfolio. Accenture released a white paper in 2011 warning to “Tear up the Road Once”. By design, in the current state practice of the annual budget cycle and project funding, most regulatory programmes are “tearing up the road” a multitude of times as each regulator publishes new/revised regulations. We present here a Portfolio Management case study from Ford.
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  14. 14. 14 CLOSING THOUGHTS Strategic change initiatives are rapidly growing and the number is increasing in many organizations. This demands an architected view to ensure investment is focused on strategically aligned initiatives. The holistic viewpoint of the business architecture exposes multiple programs impacting the same business capabilities, i.e. improve customer experience, or compete against each other with conflicting objectives, in effect countering expected business outcomes. Business Architecture is an enabler to your organization's capability to manage change and the challenges of change. To get all key stakeholders on board and demonstrate efforts are contributing toward a valuable goal, you need a well- defined, documented, and visible strategic plan using business architecture.

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