An industrial company implemented an enterprise architecture (EA) approach to better support its strategy deployment. The EA bridged the gap between the company's strategy and its implementation by formally describing the operational layer and mapping strategic goals to IT systems. This allowed the company to align its resources and capabilities with its operations strategy and market requirements. The EA identified "hot areas" where business value could be exploited through components like customer management and product delivery.
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Enterprise Architecture in Strategy Deployment
1. University of Jyväskylä 19.9.2018
Supporting Strategy Deployment
with EA
Case: An Industrial Company
Jouko Poutanen
Enterprise Architect, IBM
2. Agenda
Theory
§ Perspectives into Strategy
§ Strategy Tools and EA
Practice
§ Bridging the Gap from Strategy to Implementation
§ Case: Industrial Firm
§ Use of Industrial Reference Architectures
2
3. Foreword: Sense and Respond...
§ Rather than follow the make-and-sell strategy of industrial-age giants, today’s successful companies focus on sensing and responding to rapidly
changing customer needs and environment. Information technology has driven much of this dramatic shift by vastly reducing the constraints
imposed by time and space in acquiring, interpreting, and acting on information.
§ As CEO Jack Welch has said, GE’s goal is not to become smaller but to “get that small-company soul and small-company speed inside our big-
company body.”
§ In today’s turbulent business environment, strategies have to be implemented in tactical timeframes. In response to this challenge, top-level
managers need to view information technology in a new light. Rather than investing in isolated IT systems—such as e-mail, reservation systems, or
inventory control systems—a company must invest in the IT capabilities that it will need to manage by wire.
§ The ideal manage-by-wire implementation uses an enterprise model to represent the operations of an entire business. Based on this model, expert
systems, databases, software objects, and other technical components are integrated to do the equivalent of flying by wire.
§ Many companies have spent decades automating pieces of their businesses, scattering networks and incompatible computer platforms throughout
their organizations. But the empowered, decentralized teams of the information economy need a unified view of what’s happening within an
organization
§ Coherent behavior requires more than blockbuster applications and network connections; it must be governed by an enterprise model that codifies
the corporation’s intent and “how we do things around here” More important, a coherent model should include “how we change things around
here”.
§ Adding the institutional ability to adapt in a dynamic environment has become a survival imperative for most companies.
And this ability will ultimately differentiate a manage-by-wire strategy from the static make-and-sell strategies of the past.
5. The Big Picture
StrategyIndustry key
success factors
Organisational
capabilities
Resources
Tangible
• Financial (cash,
securities,..)
• Physical (plant,
equipment,..
Human
- Skills/know-how
- Capacity for
communication
and collaboration
- Motivation
‘Individual resources do not confer
competitive advantage, they must
work together to create
organisational capabilities’
Intangible
- Technology (patents,
copyrights, ..)
- Reputation (brands,
relationships)
- Culture
Dynamic capability perspective:
‘the firm’s ability to integrate, build, and
reconfigure internal and external competences
to address rapidly changing environments’
The resource-based view (RBV) argues that resources that are simultaneously valuable, rare, imperfectly imitable and imperfectly
substitutable (VRIN) are a source of competitive advantage
Competitive advantage
6. Strategy ABC’s…
Successful strategy
Effective implementation
Simple, consistent,
long-term goals
Profound understanding
of the environment
Objective appraisal of
resources
source: Grant (2008)
‘A strategy that is formulated without regard to its implementation is likely to be fatally flawed. At
the same time it is through their implementation that strategies adapt and emerge’
...the determination of the basic long term goals and objectives of
an enterprise, and the adoption of courses of action and the
allocation of resources necessary for carrying out these goals…
Alfred P. Chandler (1962) Strategy and Structure: Chapters in the History of the
American Enterprise, Cambridge, Mass: MIT Press, p.13
7. Characteristics of Strategic Decisions…
§ Strategy is about the future
§ Strategy is about taking risk
§ Strategic decisions are complex
§ Strategic decisions take time to bring to fruition and are irreversible
§ Strategic decisions require the organisation and coordination of large numbers of people
within organisations
§ Strategies have implications for change
§ Strategic decisions have significant scale and importance
..makes you understand why implementing those are challenging
10. AM Positioned Amongts Other Strategy Tools by Its Characteristics
Boundary conditions and strategy tools, techniques and frameworks, JARZABKOWSKI (2006)
2 Speed IT !
12. Enterprise Strategy
Fire and
hope!
Enterprise Architecture
Business Operating Environment
and IT Infrastructure
Transition
Planning
Architecture
Governance
Bus Arch’ture IT Architecture
AEI
Corporate
Yankee
Group
Saturn
Group
Yarn
Division
Knits
Division
Seneca
Plant
Raleigh
Plant
Cash
Management
Shipping
Accounting
Component
Design
Yarn Buying
Order Entry
Component
Scheduling
Yarn
Dyeing
Inventory
Assortment
Planning
Component
Knitting
Tagging &
Packing
Business
Structure
Business
Locations
EA as the “planning” function between strategy formulation and
delivery
ProgramfocusEnterprisewidefocus
Strategy
Planning
Design
and
Delivery
Change Programs
Soln Outline Macro Design Micro Design Devt, etc.
Program Architecture
Soln Outline Macro Design Micro Design Devt, etc.
Program Architecture
Enterprise
Architecture
= “the city plan”
System Design
= “the buildings”
Strategy
= “the city’s purpose & goals”Technology
Availability
Business
Opportunity
Bus Strategy IT Strategy
14. Enterprise Architecture ABC’s…
e.g. DATA
ENTERPRISE ARCHITECTURE - A FRAMEWORK
Builder
SCOPE
(CONTEXTUAL)
MODEL
(CONCEPTUAL)
ENTERPRISE
Designer
SYSTEM
MODEL
(LOGICAL)
TECHNOLOGY
MODEL
(PHYSICAL)
DETAILED
REPRESEN-
TATIONS
(OUT-OF-
CONTEXT)
Sub-
Contractor
FUNCTIONING
ENTERPRISE
DATA FUNCTION NETWORK
e.g. Data Definition
Ent = Field
Reln = Address
e.g. Physical Data Model
Ent = Segment/Table/etc.
Reln = Pointer/Key/etc.
e.g. Logical Data Model
Ent = Data Entity
Reln = Data Relationship
e.g. Semantic Model
Ent = Business Entity
Reln = Business Relationship
List of Things Important
to the Business
ENTITY = Class of
Business Thing
List of Processes the
Business Performs
Function = Class of
Business Process
e.g. Application Architecture
I/O = User Views
Proc .= Application Function
e.g. System Design
I/O = Data Elements/Sets
Proc.= Computer Function
e.g. Program
I/O = Control Block
Proc.= Language Stmt
e.g. FUNCTION
e.g. Business Process Model
Proc. = Business Process
I/O = Business Resources
List of Locations in which
the Business Operates
Node = Major Business
Location
e.g. Business Logistics
System
Node = Business Location
Link = Business Linkage
e.g. Distributed System
Node = I/S Function
(Processor, Storage, etc)
Link = Line Characteristics
e.g. Technology Architecture
Node = Hardware/System
Software
Link = Line Specifications
e.g. Network Architecture
Node = Addresses
Link = Protocols
e.g. NETWORK
Architecture
Planner
Owner
Builder
ENTERPRISE
MODEL
(CONCEPTUAL)
Designer
SYSTEM
MODEL
(LOGICAL)
TECHNOLOGY
MODEL
(PHYSICAL)
DETAILED
REPRESEN-
TATIONS
(OUT-OF
CONTEXT)
Sub-
Contractor
FUNCTIONING
MOTIVATIONTIMEPEOPLE
e.g. Rule Specification
End = Sub-condition
Means = Step
e.g. Rule Design
End = Condition
Means = Action
e.g., Business Rule Model
End = Structural Assertion
Means =Action Assertion
End = Business Objective
Means = Business Strategy
List of Business Goals/Strat
Ends/Means=Major Bus. Goal/
Critical Success Factor
List of Events Significant
Time = Major Business Event
e.g. Processing Structure
Cycle = Processing Cycle
Time = System Event
e.g. Control Structure
Cycle = Component Cycle
Time = Execute
e.g. Timing Definition
Cycle = Machine Cycle
Time = Interrupt
e.g. SCHEDULE
e.g. Master Schedule
Time = Business Event
Cycle = Business Cycle
List of Organizations
People = Major Organizations
e.g. Work Flow Model
People = Organization Unit
Work = Work Product
e.g. Human Interface
People = Role
Work = Deliverable
e.g. Presentation Architecture
People = User
Work = Screen Format
e.g. Security Architecture
People = Identity
Work = Job
e.g. ORGANIZATION
Planner
Owner
to the BusinessImportant to the Business
What How Where Who When Why
SCOPE
(CONTEXTUAL)
Architecture
e.g. STRATEGY
ENTERPRISE
e.g. Business Plan
TM
Zachman EA Framework
16. Operations
resources
Capacity
Supply networks
Process technology
Development and
organisation
Market
requirements
Quality
Speed
Dependability
Flexibility
Cost
Top - down
Corporate strategy
Business strategy
Functional strategy
Bottom - up
Emergent sense of
what the strategy
should be
Operational
experience
Operations
Strategy
Operations strategy must reflect four
perspectives – top-down, bottom-up,
market requirements, and operations
resources.
Operations Strategy
EA contributes to the alignment of organisation’s resources
source: Slack & Lewis (2008)
17. Tangible and
intangible
resources
Operations
capabilities
Operations
processes
Operations
strategy
decision areas
Operations strategy is the strategic reconciliation of market requirements with operations
resources
Customer
needs
Market
positioning
Competitors’
Actions
Performance
objectives
Understand
your resources
and processes
Strategic decisions
Capacity
Supply networks
Process technology
Development and
organization
Required performance
Quality
Speed
Dependability
Flexibility
Cost
Understand
your markets
source: Slack & Lewis (2008)
18. Transformation Needs to Link Business to IT
18
Classic Transformation
Semi-formal strategy description
Stated in business terms
Unstructured links to operations
Informal models – at best
IT implementation needs formality
Stated in IT terms
Model-Driven Transformation
Formally describe operation layer
Identify strategic goals
Stated in business terms
Map-able to IT
Strategy
Models
Manage
Customers
Strategy
Tactics
Execution
Merchandising Store/Channel
Operations
Supply Chain &
Distribution
Finance
Administration
Business
Administration
Business
Perf. Mgmt.
External Market
Assessment
Legal and
Regulatory
Indirect
Procurement
Real Estate,
Facilities and
Equipment
HR
Administration
Corporate
Finance and
Controls
Customer
Insights
Vendor and
Product
Performance
Execution and
Management
Distribution
Center
Transportatio
n Resources
Product
Directory
Accounting
and GL
Outbou
nd
Logisti
cs
Store/Off-site
Services
Execution
Inventory
Planning
Channel, Category Strategy and
Planning
Assortment and Space Planning
Management and Execution
Supply
Chain
Strategy and
Planning
Financial
Management
and Planning
Organization and
Process Design
Corp.
Planning
Alliance
Management
Line of Business
Planning
Develop and
Operate IT
Systems
Distribution
Oversight
Market Risk
Management
Customer
Relationship
Planning and
Strategies
Product
Planning,
Development &
Pricing
Strategies
Customer
Insights
Vendor
Relationship
Strategies
Assessing
Customer
Satisfaction
Matching
Supply and
Demand
Order
Management
Customer
Account
Servicing
Item
Management
Treasury
Store
Operations
Management
Transportation
Resources
Event,
Promotion
Strategy and
Planning
Customer
Directory
Inventory, Product Tracking and
Tracing
Operations
Back Office
Financial
Outbound
Logistics
Store/Channel
Design and
Layout
Store/Channel
Labor
Strategy
Store/Channel
Objectives &
Strategy
Planning
Manage
Customers
Strategy
Tactics
Execution
Merchandising Store/Channel
Operations
Supply Chain &
Distribution
Finance
Administration
Business
Administration
Business
Perf. Mgmt.
External Market
Assessment
Legal and
Regulatory
Indirect
Procurement
Real Estate,
Facilities and
Equipment
HR
Administration
Corporate
Finance and
Controls
Customer
Insights
Vendor and
Product
Performance
Execution and
Management
Distribution
Center
Transportatio
n Resources
Product
Directory
Accounting
and GL
Outbou
nd
Logisti
cs
Store/Off-site
Services
Execution
Inventory
Planning
Channel, Category Strategy and
Planning
Assortment and Space Planning
Management and Execution
Supply
Chain
Strategy and
Planning
Financial
Management
and Planning
Organization and
Process Design
Corp.
Planning
Alliance
Management
Line of Business
Planning
Develop and
Operate IT
Systems
Distribution
Oversight
Market Risk
Management
Customer
Relationship
Planning and
Strategies
Product
Planning,
Development &
Pricing
Strategies
Customer
Insights
Vendor
Relationship
Strategies
Assessing
Customer
Satisfaction
Matching
Supply and
Demand
Order
Management
Customer
Account
Servicing
Item
Management
Treasury
Store
Operations
Management
Transportation
Resources
Event,
Promotion
Strategy and
Planning
Customer
Directory
Inventory, Product Tracking and
Tracing
Operations
Back Office
Financial
Outbound
Logistics
Store/Channel
Design and
Layout
Store/Channel
Labor
Strategy
Store/Channel
Objectives &
Strategy
Planning
Meetings, Presentations
Documents, Discussions
Informal
Operational
Models
Autonomic
management of
infrastructure
Orchestrated
business process
mgmt with sense &
respond capabilities
Open, standards
based integration
Autonomic
management of
infrastructure
Orchestrated
business process
mgmt with sense &
respond capabilities
Open, standards
based integration
Key is an operation model w/ enough structure to connect the pieces
Very
Structured
IT Models
26. Sources: Acatech: Recommendations for implementing the strategic initiative Industrie 4.0, April 2013;Gartner: Industrie 4.0- The Ten Things the CIO Needs to Know; Deutsche
Bank Research: “Upgrading of Germany’s industrial capabilities on the horizon “, April 2014
Autonomous
Systems
Internet of
Services
Analytics
& Cognitive
Flexible
Mfg
Internet of
Things
+
Internet of
People
Industry 4.0
§ Ability to connect and manage
devices
§ Near real-time data collection
§ Insights of what is happening
§ New business models
§ Flexible machines
§ 3D printing
§ Machine to machine
§ New standards and
protocols
§ The API economy
§ Vertical / horizontal integration across
value chains
§ New delivery channels and business
models
§ Embedded in equipment, products and
services
§ Predict what may happen
§ Prescribe actions for best outcomes
§ Self learning
§ Communicate in natural language
§ Smart and networked products
§ Ability to communicate thru the Internet
§ Self diagnose / self awareness
Capabilities required to enable the 4th Industrial Revolution
Reference Semantic
Information Model
27. • The embedded manufacturing systems are vertically networked with business
processes within factories and enterprises
• And horizontally connected to disperse value networks that can be managed in real
time – from the moment an order is placed right through to outbound logistics.
Horizontal integration through value networks
Final report of the Industrie 4.0 working group
Vertical integration within factories & enterprises
Vertical & Horizontal Integration
Source: ISA 95
27
32. IBM’s Industrie 4.0 Reference
Architecture
Balancing load with lifecycle capabilities at Edge, Plant and
Enterprise
33. Business drivers
Requirements
Functional requirements Non-functional requirements
01 02 03
Productivity gains:
higher throughput and
efficiency, eliminating non-
value-adding activities
Failure prevention:
highest OEE, avoiding re-work,
scrap, outages, bad product
quality
Flexibility:
hiding complexity, low (re-)
configuration effort,
plug&produce, avoiding
technology gaps
• Vertical & horizontal integration
• Lifecycle integration, digital twin
• Universal connectivity between processes,
systems, machines and people
• Intelligent worker assistance
• Historical data collection and (predictive)
analytics
• Flexible, business-oriented configuration at
all levels – shopfloor, integration and edge
Function offload to the Edge
• Decisions, analytics, streaming, aggregation
Autonomous factory operation
• All directly related production system locally
Security
• At all levels
Modular design
• Microservices, service orientation
+ Innovation
matters!
34. Architectural Principles
q Scalable component architecture that can be applied to specific plant sizes
q Vendor and device independent based on open standards for interfaces and protocols aligned
with XXX requirements
q Open information model as common base for non-intrusive integration
q Delegated Configuration concept leveraging rule- and template based configuration to
reduce complexity for business users
q Authenticated access and encrypted communication (e.g. TLS) between all components
q Consistent Plant/Enterprise topology utilizing (proposed) dedicated model for data security,
scalability and maintainability.
q Controlled release process with three-stage deployment model: development, integration, production
q Resilience concepts leveraging load balancing and clustering
q Choice between local (low latency, privacy) and cloud (scale, advanced capabilities)
q Expandability through component architecture and open interfaces
q Event/analyze/action model supported with combination of data collection, analytics and services based
actions.
35. IBM’s three-layered Industrie 4.0 Reference Architecture balancing load with lifecycle capabilities at
Edge, Plant and Enterprise
*Refer to Industrie 4.0 Implementation at: https://www.ibm.com/cloud/garage/content/architecture/iotArchitecture/industrie_40
EDGE PLANT ENTERPRISE
EDGE DEVICES
ENTRY POINT:
Cyber-Physical Systems
ENTRY POINT: ENTRY POINT:
Cross-plant
Insights /
Analytics
New models,
speed, functions,
channel
Watson IoT
Platform & IBM
Cloud Cognitive
Services
Edge
functionality:
¨ Device/SCADA
Integration
¨ Rules
¨ Store
¨ Analytics
scoring
¨ Filtering/Transf
ormation
In-plant or remote
functionality:
¨ Connectivity
¨ Data collection
¨ Conditional
Monitoring
¨ Predictive
analytics
¨ Workflow
Cognitive IoT
functionality:
¨ Innovation
¨ Disruption
¨ Scalability
¨ Advice/Guidance
Edge - Level Plant - Level
ENTRY POINT:
Plant Service Bus
Shopfloor Analytics
& Workflow
In-plant
functionality:
¨ Integration/Con
nectivity
¨ Rules
¨ Message Hub
Enterprise - Level
collect
control
analyse
improve
36. Industrie 4.0 IT Architecture
Edge
Platform (Hybrid Cloud)
Enterprise
This three-layered distributed architecture takes into account the
requirements for autonomy and self-sufficiency of each productive site
and balances workload between Edge, Plant and Enterprise.
Security DEVOPSRules, Config Mgt
& Composition
Shopfloor
Workflow
PRODUCTION
MACHINES
Transformation &
Connectivity
Plant Service Bus
Plant
Data Store
Shop Floor
Analytics
Rule Based
Analytics
Enterprise
Analytics
Analytics Based
Insights & Actions
Smart
Devices &
Tools
Cognitive
Services
Enterprise IT
Composite
Applications
User
Directory
Enterprise
Data Store
Visualization
Equipment/Device
Layer
Enterprise IIoT Hub
Data
Integration
Enterprise
Workflow
DeviceMgt
Enterprise
Systems of Record
(E.G. ERP, EAM,
CRM, PLM)
Partner
Systems
OT/IT
Gateway
Transformation &
Connectivity
Mgt
Transformation &
Connectivity
Plant
Plant IT
Plant Systems of
Record
(e.g. MES, Line
Scheduler)
Edge
Data StoreLEGEND
Application
Infrastructure
Management
Data Store
DevOps
Security
Analytics
Capabilities
Edge-Plant–
Enterprise Flow
(Edge-Plant-Enterprise Flow)
1
72
3
7
4
5
6
-Enterprise
1 5
3
2
4
Edge
Information
Model
Plant
Information
Model
Enterprise
Information
Model
3
3
4
5
6
7
4
5
Composite
Applications
Supply Chain
Integration &
Provenance
*Refer to Industrie 4.0 Implementation at: https://www.ibm.com/cloud/garage/content/architecture/iotArchitecture/industrie_40
Rule Based
Analytics
Rule Based
Analytics
Partner IT