Transcript of a BriefingsDirect podcast in conjunction with The Open Group Conference in San Francisco on how enterprise architecture can lead to greater efficiency and agility.
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Implementation and Reuse of Digitized Platforms Helps Companies Remain Competitive and Gain and Advantage
1. Implementation and Reuse of Digitized Platforms Helps
Companies Remain Competitive and Gain and Advantage
Transcript of a BriefingsDirect podcast in conjunction with The Open Group Conference in San
Francisco on how enterprise architecture can lead to greater efficiency and agility.
Listen to the podcast. Find it on iTunes/iPod. Sponsor: The Open Group
Register for The Open Group Conference
Jan. 30 - Feb. 3 in San Francisco.
Dana Gardner: Hello, and welcome to a special BriefingsDirect Thought Leadership interview
series coming to you in conjunction with The Open Group Conference this
January in San Francisco. I'm Dana Gardner, Principal Analyst at Interarbor
Solutions and I will be your host throughout these discussions.
The conference will focus on how IT and enterprise architecture support
enterprise transformation. Speakers in conference events will also explore the
latest in service oriented architecture (SOA), cloud computing, and security.
[Disclosure: The Open Group is a sponsor of BriefingsDirect podcasts.]
Today, we're here with one of the main speakers at the conference, Jeanne Ross, Director and
Principal Research Scientist at the MIT Center for Information Systems Research. Jeanne studies
how firms develop competitive advantage through the implementation and reuse of digitized
platforms.
She is also the co-author of three books: IT Governance: How Top Performers Manage IT
Decision Rights for Superior Results, Enterprise Architecture As Strategy: Creating a
Foundation for Business Execution, and IT Savvy: What Top Executives Must Know to Go from
Pain to Gain.
As a lead-in to her Open Group presentation on how adoption of enterprise architecture (EA)
leads to greater efficiencies and better business agility, Jeanne and I will now explore how
enterprise architects have helped lead the way to successful business transformations.
To find out more, please join me now in welcoming Jeanne Ross, Director and Principal
Research Scientist at the MIT Center for Information Systems Research. Welcome back to
BriefingsDirect, Jeanne.
Jeanne Ross: Thank you, Dana. Nice to be here.
2. Gardner: Your upcoming presentation will describe how enterprise architecture has contributed
to success for such companies as Campbell Soup and Southwest Airlines, but before we go into
that, it has been typically difficult to concretely link things like IT productivity and general
business success. I wonder, then, how you measure or determine that enterprise architects and
their practices are intrinsic to successful business transformations? How do we link the two?
Ross: That’s a great question. Today, there remains kind of a leap of faith in recognizing that
companies that are well-architected will, in fact, perform better, partly because
you can be well-architected and perform badly. Or if we look at companies
that are very young and have no competitors, they can be very poorly
architected and achieve quite remarkably in the marketplace.
But what we can ascribe to architecture is that when companies have
competition, then they can establish any kind of performance target they want,
whether it’s faster revenue growth or better profitability, and then architect
themselves so they can achieve their goals. Then, we can monitor that.
We do have evidence in repeated case studies of companies that set goals, defined an
architecture, started to build the capabilities associated with that architecture, and did indeed
improve their performance. We have wonderful case study results that should be very
reaffirming. I accept that they are not conclusive.
Architectural maturity
We also have statistical support in some of the work we've done that shows that high
performers in our sample of 102 companies, in fact, had greater architecture maturity. They had
deployed a number of practices associated with good architecture.
So we do have evidence. It’s just that if you really don’t want to believe it, you could poke holes
in it. There still is a certain amount of faith attached to the link between performance and
architecture.
Gardner: I certainly get your point that repeatability would be a chief indicator, that if you
intend to do something repeatedly, you can point to the ways in which
you would carry that out. How about the intent from the
perspective of wanting to transform in a certain way that you
haven’t done before? Is there something that being an architect
allows that’s different from the past? Is there something that’s new about this,
rather than just trying to reengineer something?
Ross: Yes, the thing we're learning about enterprise architecture is that there's a cultural shift that
takes place in an organization, when it commits to doing business in a new way, and that cultural
shift starts with abandoning a culture of heroes and accepting a culture of discipline.
3. Nobody wants to get rid of the heroes in their company. Heroes are people who see a problem
and solve it. But we do want to get past heroes suboptimizing. What companies traditionally did
before they started thinking about what architecture would mean, is they relied on individuals to
do what seemed best and that clearly can suboptimize in an environment that increasingly is
global and requires things like a single face to the customer.
What we're trying to do is adopt a culture of discipline, where there are certain things that people
throughout an enterprise understand are the way things need to be done, so that we actually can
operate as an enterprise, not as individuals all trying to do the best thing based on our own
experience.
The fundamental difference of being an architected firm is that there is some underlying
discipline. I'll caution you that what tends to happen is great architects really embrace the
discipline. They love the discipline. They understand the discipline, and there is a reluctance to
accept that that’s not the only thing we need in our organization. There are times when ad hoc
behaviors enable us to be much more innovative and much more responsive and they are exactly
what we need to be doing.
So there is a cultural shift that is critical to understanding what it is to be architected. That’s the
difference between a successful firm that’s successful because it hasn’t gotten into a world of
really tough competition or restrictions on spending and things like that and an organization that
is trying to compete in a global economy.
Gardner: It’s interesting to me that we're focusing not so much on the individual, the enterprise
architect, but more the office of the enterprise architect.
Ross: Right. Would you like me to speak to an architect instead? Would that help?
Cultural phenomenon
Gardner: No, the point is that the champion that you're saying is important is not just an
individual. It’s that putting into place a repeatable office of the enterprise architect that is a
cultural phenomenon rather than a charismatic one.
Ross: Yes.
Gardner: What then is the role of the architect, if this isn’t just about a champion, but really
about change that’s repeatable and that’s culturally inculcated? What, then, is the role and what
should they do?
Ross: The architect plays a really critical role in representing the need for this discipline, for
some standards in the organization, and for understanding the importance of shared definitions
for data. The architect should be able to create a very constructive tension in the organization,
4. and that’s the tension between individuality, innovativeness, local responsiveness, and the need
for enterprise thinking, standardization, and discipline.
Normally, in most companies, the architect’s role will be the enforcer of discipline,
standardization and enterprise thinking. The tension will be created by all kinds of people who
are saying, "Wait, I'm different. I need this. My customer insists on that." When the tension is
working effectively, you get just enough architecture.
One thing we've learned over the years, as we've studied architecture, is that’s actually what we
want. We don’t want to be a tightly architected organization, because tomorrow we're going to
wake up and the world is going to change, and we have to be ready for that. We want to be
architected enough to be efficient, to be able to reuse those things we need to reuse, to be agile,
but we don’t want to start embracing architecture for architecture’s sake or discipline for
discipline’s sake.
We really just need architecture to pull out unnecessary cost and to enable desirable reusability.
And the architect is typically going to be the person representing that enterprise view and helping
everyone understand the benefits of understanding that enterprise view, so that everybody who
can easily or more easily see the local view is constantly working with architects to balance those
two requirements.
Register for The Open Group Conference
Jan. 30 - Feb. 3 in San Francisco.
Gardner: Let’s take a contextual view here. It’s 2012 already and there's a lot happening in IT
with disruption in the form of cloud computing trends, an emphasis on mobile computing, big
data, and the ability to harness analytics in new and interesting ways, all sort of churning
together. We're also still faced with a difficult environment, when it comes to the economy. Is this
a particularly good time, from your vantage point, to undertake enterprise architecture, or is this
perhaps not the best time?
Ross: It’s a great time for most companies. There will be exceptions that I'll talk about in a
minute. One thing we learned early on in the research is that companies who were best at
adopting architecture and implementing it effectively had cost pressures. What happens when
you have cost pressures is that you're forced to make tough decisions.
If you have all the money in the world, you're not forced to make tough decisions. Architecture is
all about making tough decisions, understanding your tradeoffs, and recognizing that you're
going to get some things that you want and you are going to sacrifice others.
If you don't see that, if you just say, "We're going to solve that by spending more money," it
becomes nearly impossible to become architected. This is why investment banks are invariably
very badly architected, and most people in investment banks are very aware of that. It’s just very
hard to do anything other than say, "If that’s important to us, let’s spend more money and let’s
5. get it." One thing you can't get by spending more money is discipline, and architecture is very
tightly related to discipline.
Tough decisions
In a tough economy, when competition is increasingly global and marketplaces are shifting, this
ability to make tough decisions is going to be essential. Opportunities to save costs are going to
be really valued, and architecture invariably helps companies save money. The ability to reuse,
and thus rapidly seize the next related business opportunity, is also going to be highly valued.
The thing you have to be careful of is that if you see your markets disappearing, if your product
is outdated, or your whole industry is being redefined, as we have seen in things like media, you
have to be ready to innovate. Architecture can restrict your innovative gene, by saying, "Wait,
wait, wait. We want to slow down. We want to do things on our platform." That can be very
dangerous, if you are really facing disruptive technology or market changes.
So you always have to have that eye out there that says, "When is what we built that’s stable
actually constraining us too much? When is it preventing important innovation?" For a lot of
architects, that’s going to be tough, because you start to love the architecture, the standards, and
the discipline. You love what you've created, but if it isn’t right for the market you're facing, you
have to be ready to let it go and go seize the next opportunity.
Gardner: Perhaps this environment is the best of all worlds, because we have that discipline on
the costs which forces hard decisions, as you say. We also have a lot of these innovative IT trends
that would almost force you to look at doing things differently. I'm thinking again of cloud,
mobile, the big data issues, and even social-media types of effects. So is that the case from your
perspective?
Ross: Absolutely. We should all look at it that way and say, "What a wonderful world we live
in." One of the companies that I find quite remarkable in their ability to, on the one hand,
embrace discipline and architecture, and on the other hand, constantly innovate, is USAA. I'm
sure I'll talk about them a little bit at the conference.
This is a company that just totally understands the importance of discipline around customer
service. They're off the charts in their customer satisfaction.
They're a financial services institution. Most financial services institutions just drool over
USAA’s customer satisfaction ratings, but they've done this by combining this idea of discipline
around the customer. We have a single customer file. We have an enterprise view of that
customer. We constantly standardize those practices and processes that will ensure that we
understand the customer and we deliver the products and services they need. They have
enormous discipline around these things.
Simultaneously, they have people working constantly around innovation. They were the first
company to see the need for this deposit with your iPhone. Take a picture of your check and it’s
6. automatically deposited into your account. They were nearly a year ahead of the next company
that came up with that service.
The way they see it is that for any new technology that comes out, our customer will want to use
it. We've got to be there the day after the technology comes out. They obviously haven't been
able to achieve that, but that’s their goal. If they can make deals with R&D companies that are
coming up with new technologies, they're going to make them, so that they can be ready with
their product when the thing actually becomes commercial.
So it's certainly possible for a company to be both innovative and responsive to what’s going on
in the technology world and disciplined and cost effective around customer service, order-to-
cash, and those other underlying critical requirements in your organization. But it's not easy, and
that's why USAA is quite remarkable. They've pulled it off and they are a lesson for many other
companies.
Gardner: And as you pointed out, being able to repeat this is really essential. So that gets back
to that discipline. But you've mentioned that you've got ongoing research, and you've mentioned
a company, USAA that you're working with and you're familiar with. I suppose this gives us a
chance then to step back and take a look at what the MIT Center for Information Systems
Research is and does and your role there.
Value from IT
Ross: The Center for Information Systems Research is part of the Sloan School of Management.
We were formed in 1974 to study how companies get value from information technology.
In 1974, we were studying mainframes and IT directors. There was no such thing as a CIO yet,
but we have certainly gone through the stages of the increasing importance of IT in
organizations. We went through the end-user computing. We went through enterprise resource
planning (ERP) and e-business. We've followed, and hopefully led, thinking around how IT adds
value in organizations.
You mentioned this is a good time to be introducing architecture. This is a good time to be at the
Center for Information Systems Research, because IT is so central now to business success, and
many companies that didn't start as digital companies are really struggling to understand what it
means to transform for the digital economy, and that's exactly what we study.
Gardner: You've mentioned one company, USAA. Let’s take a look at a number of companies. I
know you're going to be mentioning several during your presentation. Are there any salient
lessons that are common among them? Are they all different and therefore you can't draw such
common denominators, or are there a couple that jump out?
Ross: Well, our established research on this, and this is the work that appeared in the Enterprise
Architecture as Strategy book. We find that the things we learned as we prepared that book are
7. still very true. Companies indeed go through stages, and they're very predictable -- we've not yet
seen an exception to this -- and they're hard.
Stage one is the stage of, don't worry about the discipline, just have fun, learn how to use IT,
apply it to any strategic need where it makes sense, and go out there and do your thing, but
eventually all of that will lead to a fairly messy legacy environment.
We saw, when we studied these stages, that as companies understood these stages, they would
avoid stage one, but it turns out that, if you are a fast growing innovative company, you can't
avoid that stage. You actually don't know how you're going to make money. You have to respond
to the marketplace. You have to do whatever it takes. Then, as you get really good at things, you
start to establish yourself in what is often now a new industry.
You've created an industry. That's how you succeeded. But because you're making money, you're
going to attract competitors. When you get to the stage that you actually have competitors, then
you look at what you created and you say, "Oh no, we really have to clean up some of this
legacy." That’s really what stage two is about. It's the underlying technology.
Now, we're learning how to not make quite as big a mess, but there is still this stage of, "Okay,
let's refrain from kind of the crazy innovation and be more disciplined about what we put in and
how we reuse" and all that kind of thing.
In the third stage, we get much more emphasis on building platforms that wire in those core
processes that enable us to do high-volume transactions. These are things around order-to-cash,
human resources (HR), or finance. There will be some of that in the earlier stages, but we really
worry about scale in this third stage, scaling up so that we can manage large volume transactions.
We think this third stage is going to look different in a world of software as a service (SaaS) and
cloud, because in the past, third stage often meant you put in Oracle, SAP, or something like that.
Nowadays, it's much more about piecing together some cloud services. It does look different. It
goes in faster, but it's still pretty tricky. If you're not architected well, you can really create a
mess in stage three.
Working smarter
Stage four is really about working smarter on this platform, learning how to innovate off the
platform. And companies are struggling to get there, because once you get in this platform, it
takes a while to really make it solid and learn how to use it well. We've been studying that for
some time, and companies get there.
This is the story of Campbell Soups and the Southwest Airlines. They're trying to use the
platforms they've created, even though the process of putting them in takes a very long time. So
you're still putting them in, while you are trying to learn to get good at using them. It's a
challenging world out there.
8. Gardner: So I shouldn’t reach the conclusion that the enterprise architecture kicks in, in stage
three and four. It should be something that would be there and useful throughout these stages.
Ross: That's correct. What happens is that in stage one you don't think a lot about architecture. If
you don’t think at all, you are going to regret it. But you just can't predict what are going to be
the critical capabilities in your organization. When you can't predict the critical capabilities in
your organization, it limits how much you can architect.
You can bet on some things. There are some things around finance and HR that are pretty
predictable even in stage one. But that early stage is where you're really defining yourself as a
company, and that can last for some years, as you grow. As long as you're under $500 million in
sales or at least, let's say, $200 million in sales, you've got some leverage there, because you can
only create so big of a mess.
If you start growing beyond that, you're going to need more architecture. That’s when you really
get into stage two and start seriously defining your standards and the processes that enable you to
get them in and recognize when you need exceptions and when they're out of date and that kind
of thing.
Gardner: So even as we have had this evolution in these stages that happen within these
enterprises, we have also had historical evolution in the definition, standardization, and
certification around the architects themselves. Where are we there? Is there a stage three or four
that we are at with the architects?
Ross: I think we'll be constantly tweaking the certification processes for architects. We get
smarter about what they need to know and what they need to be good at, but I don’t know that I
would so much call it stages for the architect certification as just getting smarter and smarter
about what great architects will excel at. We have the basics in place. I haven't been involved a
lot in certification programs, but I think there is a good sense of the basics that are required.
Gardner: We certainly seem to be well into a professionalization phase and we've got a number
of different groups within The Open Group that are working on that across different disciplines.
So I'm curious. Is The Open Group a good forum for your message and your research, and if so,
why?
Ross: The Open Group is great for me, because there is so much serious thinking in The Open
Group about what architecture is, how it adds value, and how we do it well. For me to touch base
with people in The Open Group is really valuable, and for me to touch base to share my research
and hear the push back, the debate, or the value add is perfect, because these are people who are
living it every day.
Major themes
Gardner: Are there any other major themes that you'll be discussing at the conference coming
up that you might want to share with us? Did we cover them all? What did we leave out?
9. Ross: Well, we're still doing the analysis on our latest survey. So I'm not exactly sure what the
key findings will be that I'll be sharing. One thing we have observed in our cases that is more and
more important to architects is that the companies are struggling more than we realized with
using their platforms well.
I'm not sure that architects or people in IT always see this. You build something that’s
phenomenally good and appropriate for the business and then you just assume, that if you give
them a little training, they'll use it well.
That’s actually been a remarkable struggle for organizations. One of our research projects right
now is called "Working Smarter on Your Digitized Platform." When we go out, we find there
aren't very many companies that have come anywhere close to leveraging their platforms the way
they might have imagined and certainly the way an architect would have imagined.
It's harder than we thought. It requires persistent coaching. It's not about training, but persistent
coaching. It requires enormous clarity of what the organization is trying to do, and organizations
change fast. Clarity is a lot harder to achieve than we think it ought to be.
The message for architects would be: here you are trying to get really good at being a great
architect. To add value to your organization, you actually have to understand one more thing:
how effectively are people in your company adopting the capabilities and leveraging them
effectively? At some point, the value add of the architecture is diminished by the fact that people
don't get it. They don’t understand what they should be able to do.
We're going to see architects spending a little more time understanding what their leadership is
capable of and what capabilities they'll be able to leverage in the organization, as opposed to
which on a rational basis seem like a really good idea.
We've been studying companies, and the easiest ones to study are ones like 7-Eleven Japan and
Protection One, which is a security company. These are companies that have replicated models.
You look at one branch or one store and you say, "How are you doing this?" Then you say,
"Okay, here is the best one. How are we going to make sure that everybody uses our technology
and the information that's coming from it? How are we going to do that throughout the
company?"
That’s even harder than designing and implementing an architecture. Architects are going to have
to be well aware of that, because if companies are not driving value from what they have built,
you may as well stop spending the money. That’s a tough thing for an architect to admit, because
there’s so much you can do just on a rational basis to make the company look better. But if they
are not using it, it's not worth anything.
Gardner: That might explain some of the attention that’s been given to things like cloud and
mobile, because there is a sense of an organic adoption going on, and if the workers, the
managers, the departments, specific functional groups like marketing, for example, are going to
SaaS, cloud, mobile for "bring your own device," or consumerization of IT benefits, perhaps
10. there's an opportunity to take advantage of that, learn from it, and then standardize it and
implement as a platform. Is that somewhere close to what you are seeing?
Ross: Yes, absolutely.
Getting started
Gardner: Before we segue out, let's consider advice about getting started. When you're an
organization and you've decided that you do want to be a level three or four maturity, that you
want to transform and take advantage of unique opportunities for either technical disruption or
market discipline, how do you go about getting more structure, more of an architecture?
Ross: That's idiosyncratic to some extent, because in your dream world, what happens is that the
CEO announces, "This is what we are going to be five years from now. This is how we are going
to operate and I expect everyone to get on board." The vision is clear and the commitment is
clear. Then the architects can just say, and most architects are totally capable of this, "Oh, well
then, here are the capabilities we need to build. Let’s just go build them and then we'll live
happily ever after."
The problem is that’s rarely the way you get to start. Invariably, the CEO is looking at the need
for some acquisitions, some new markets, and all kinds of pressures. The last thing you're getting
is some clarity around the vision of an operating model that would define your critical
architectural capabilities.
What ends up happening instead is architects recognize key business leaders who understand the
need for, reused standardization, process discipline, whatever it is, and they're very pragmatic
about it. They say, "What do you need here to develop an enterprise view of the customer, or
what’s limiting your ability to move into the next market?"
And they have to pragmatically develop what the organization can use, as opposed to defining
the organizational vision and then the big picture view of the enterprise architecture.
So in practice, it's a much more pragmatic process than what we would imagine when we, for
example, write books on how to do enterprise architecture. The best architects are listening very
hard to who is asking for what kind of capability. When they see real demand and real leadership
around certain enterprise capabilities, they focus their attention on addressing those, in the
context of what they realize will be a bigger picture over time.
They can already see the unfolding bigger picture, but there’s no management commitment yet.
So they stick to the capabilities that they are confident the organization will use. That’s the way
they get the momentum to build. That is more art than science and it really distinguishes the most
successful architects.
Gardner: We'll be looking forward to learning more through your research and through the
examples that you provide.
11. We've been talking with Jeanne Ross, the Director and Principal Research Scientist at the MIT
Center for Information Systems Research. Jeanne and I have been exploring how enterprise
architects have helped lead the way to successful business transformations as a lead-in to her
upcoming Open Group presentation.
This special BriefingsDirect discussion comes to you in conjunction with The Open Group’s
Conference, which is January 30 to February 3 in San Francisco. You'll hear more from Jeanne
and many other global leaders on the ways that IT and enterprise architecture support enterprise
transformation.
So thank you, Jeanne, for joining us in this fascinating discussion. I really had a good time.
Ross: Thanks so much, Dana, I enjoyed it.
Gardner: And I look forward to your presentation in San Francisco and I encourage our listeners
and readers to attend the conference, if they're able. There’s more information available on our
website and through this content.
This is Dana Gardner, Principal Analyst at Interarbor Solutions, your host and moderator
throughout this Thought Leader Interview Series. Thanks again for listening, and come back next
time.
Listen to the podcast. Find it on iTunes/iPod. Sponsor: The Open Group
Transcript of a BriefingsDirect podcast in conjunction with The Open Group Conference in San
Francisco on how enterprise architecture can lead to greater efficiency and agility. Copyright
Interarbor Solutions, LLC, 2005-2012. All rights reserved.
Register for The Open Group Conference
Jan. 30 - Feb. 3 in San Francisco.
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