advising on IT-business alignment Rethinking enterprise and infrastructure architecture Microsoft Infrastructure Architect Forum 24 October 2005 Neil Macehiter, Partner

© Macehiter Ward-Dutton 2005www.mwdadvisors.com2 Key messages for today  IT-business alignment has never been so important  Alignment must be pursued in the context of understanding business processes, priorities  Service-orientation is not just for applications  Contracts aren’t just about function: they encapsulate and communicate business priorities to IT delivery organisations  Enterprise architecture needs to be more inclusive, sophisticated  IT governance models must take all this into account

© Macehiter Ward-Dutton 2005www.mwdadvisors.com3 Agenda  Business and IT: new tensions  IT-business alignment  Alignment principle #1: service-oriented IT  Alignment principle #2: understanding business processes and their priorities  Enterprise architecture must reflect IT-business alignment principles  A governance model for service-oriented IT  Recommendations

© Macehiter Ward-Dutton 2005www.mwdadvisors.com4 A brief introduction to MWD  Strategic advice and consulting  Focus on issues concerning IT-business alignment –Driving more business value out of enterprise IT –Not about the “nuts and bolts” of individual technologies  Core: two highly experienced industry analysts / practitioners –Sun, Oracle, Sybase, Ovum, Deloitte Consulting, etc  Based in UK, Europe-wide focus

© Macehiter Ward-Dutton 2005www.mwdadvisors.com5 advising on IT-business alignment Business and IT: new tensions

© Macehiter Ward-Dutton 2005www.mwdadvisors.com6 Business pressures are driving change in new ways  Globalisation –Customers, partners, suppliers – and competition –Connectedness driving sophisticated value chains  Transparency –Industry regulations, consumer pressure and competition driving openness  Service focus –Differentiation and shareholder value increasingly derived from service experience

© Macehiter Ward-Dutton 2005www.mwdadvisors.com7 Common resulting business/technology change projects/scenarios  Managing and proving regulatory compliance  Refinement of approaches to business and technology outsourcing  Integration of processes horizontally across organisations  Integration of processes, products and offerings between organisations

© Macehiter Ward-Dutton 2005www.mwdadvisors.com8 The challenge: IT often fails to support these types of changes effectively  Technology integration is costly, risky and complicated  Information is everywhere, but getting access to the right information at the right time is very difficult  Modifying system behaviour takes too long and changes are difficult to communicate and implement effectively  Much of IT system and operations expenditure is bloated and fixed - operations run with excess redundant capacity The result: IT seen as a cost centre, not a source of business value

© Macehiter Ward-Dutton 2005www.mwdadvisors.com9 Dynamic, collaborative processes (product innovation, marketing, strategy setting, etc) Stable, predictable processes (accounting, order fulfilment, HR, logistics, etc) Web user experience (increasing numbers of ERP/CRM applications, content management, etc) Desktop user experience (office productivity, communication/ collaboration, etc) Unstructured information (office documents, web content etc) Structured information (customer records, order & fulfilment records, accounts, etc) Three fractures: information management, process support and user experience Information management Process support User experience Strong heritage of management; BUT tends to be application- specific Little heritage of formal management; storage is fragmented Strong heritage of management; BUT tends to be application- specific Little structured automated support from IT Familiar, highly interactive BUT tends to be application- specific Open and accessible environments but usability can be poor

© Macehiter Ward-Dutton 2005www.mwdadvisors.com10 advising on IT-business alignment IT-business alignment

© Macehiter Ward-Dutton 2005www.mwdadvisors.com11 IT-business alignment: multiple angles IT Business Change implications Change capabilities, limitations Investment in capability Delivery of value It’s not just about “building stuff that the business will use”

© Macehiter Ward-Dutton 2005www.mwdadvisors.com12 A common language is the essential starting point IT Business ? “Investment prioritised in terms of business need” “Systems that deliver value to the business” “Clear direction from the business about focus, strategy” “Collaborative approach to implementing business change” A common, agreed representation of business activity, goals + A common, agreed view of how current and future IT provides structured support to the business in this context

© Macehiter Ward-Dutton 2005www.mwdadvisors.com13 Alignment demands that IT becomes a service provider Business IT Business process Managed IT service Managed IT service Managed IT service Managed IT service Managed IT service A P P L I C A T I O N S & I N F O R M A T I O N I N F R A S T R U C T U R E B U S I N E S S S T R A T E G Y Business processes form the foundation of a common language IT defines and delivers “business level” services which support the right processes, the right way

© Macehiter Ward-Dutton 2005www.mwdadvisors.com14 advising on IT-business alignment Alignment principle #1: understanding service-oriented IT

© Macehiter Ward-Dutton 2005www.mwdadvisors.com15 So what is an IT service? “CRM database” “Provide automated support for my sales force” “Update customer details” Line of business perspective IT operations perspective Developer perspective

© Macehiter Ward-Dutton 2005www.mwdadvisors.com16 Managed IT services – aligned with business processes Lifecycle services Managing the lifecycles of business functions and infrastructure Business function services Automating business functions Infrastructure services Providing the platform Users’ experiences of “managed IT service”

© Macehiter Ward-Dutton 2005www.mwdadvisors.com17 Contracts bring obligations for suppliers and consumers Message Format Message Sequence Functions Security Response Time Throughput Usage Cost Liability Clauses Trust Functional Terms QoS Terms Commercial Terms

© Macehiter Ward-Dutton 2005www.mwdadvisors.com18 advising on IT-business alignment Alignment principle #2: understanding business processes and their priorities

© Macehiter Ward-Dutton 2005www.mwdadvisors.com19 A universe of business processes [1] EEEEE MMM S “Execution” processes – instances handle particular units of work within business activities “Management” processes – instances oversee instances of execution processes “Strategy” processes – instances oversee instances of management processes A hierarchy of business processes

© Macehiter Ward-Dutton 2005www.mwdadvisors.com20 A universe of business processes [2] E E E M M S Contribution to competitive differentiation E E E M M S Non-differentiating (focus should be on efficiency) Differentiating (focus should be on flexibility)

© Macehiter Ward-Dutton 2005www.mwdadvisors.com21 Observations on the nature of business processes E E E M M S E E E M M S Increased structure, predictability Increased collaboration, ad-hoc nature Non-differentiating (focus should be on efficiency) Differentiating (focus should be on flexibility)

© Macehiter Ward-Dutton 2005www.mwdadvisors.com22 Implications for business function service design Level of process abstraction Low High Non-differentiating (focus should be on efficiency) Differentiating (focus should be on flexibility) Business activity role “Strategy” business processes “Management” business processes “Execution” business processes Activity functions Technical functions Reusability importance increases Openness, flexibility demands increase Efficiency demand increases

© Macehiter Ward-Dutton 2005www.mwdadvisors.com23 advising on IT-business alignment Enterprise architecture must reflect IT-business alignment principles

© Macehiter Ward-Dutton 2005www.mwdadvisors.com24 The real world FromTowards Build, or buy vs. build Application implementation Buy AND build AND integrate Back office Business area investment focus Front office and beyond “Personal productivity” desktop IT access environment Productivity desktop + global access to resources Data processing Technology innovation focus Communication, collaboration, integration Older approaches fail to capture reality re: integration, communication, collaboration, supply complexity Outsourcing vs. in-house delivery Capability supply “Multi-sourcing”

© Macehiter Ward-Dutton 2005www.mwdadvisors.com25 A “traditional” view of EA [1]: The Zachman framework Source: John Zachman, ZIFA

© Macehiter Ward-Dutton 2005www.mwdadvisors.com26 A “traditional” view of EA [2]: TOGAF ADM Source: Open Group

© Macehiter Ward-Dutton 2005www.mwdadvisors.com27 The good and the bad of EA frameworks The good  The frameworks give us a useful “language” for communicating and sharing ideas about how IT systems can/should support business needs  Methodologies like the TOGAF ADM give solid templates for EA process work  Starting to consider more dynamic aspects of EA –as-is, to-be, vision views The bad  The roots of most frameworks are in the creation or change of transactional information processing systems  The real world of IT is much more ugly and complicated  Still documentation-oriented – not focused on the process of architecture evolution & governance

© Macehiter Ward-Dutton 2005www.mwdadvisors.com28 Business process Applications Data The challenge Activities, processes The business The real world doesn’t “decompose” nicely – and IT isn’t just about things you build in-house

© Macehiter Ward-Dutton 2005www.mwdadvisors.com29 Providing structured support for business processes means understanding scope & scale of interactions From Data design tightly coupled to application design, and application design to “user requirements” – very restricted view of process needs B u s i n e s s p r o c e s s Towards B u s i n e s s p r o c e s s Loosely-coupled resources provide services which are designed to support the interactions that take place within a business process

© Macehiter Ward-Dutton 2005www.mwdadvisors.com30 EA approaches must consider business process support more broadly B u s i n e s s p r o c e s s Transactional services Information services Communication & collaboration services Support scenario: a mesh of interactions We have to model more than just transactional applications

© Macehiter Ward-Dutton 2005www.mwdadvisors.com31 An alternative enterprise architecture model Business architecture - activities, entities - goals, strategy, differentiation Process architecture - roles, flows, resources Business function service architecture Infrastructure architecture - security, identity management - resource management Transactional / information management Analytics, discovery, reporting Communication, collaboration Historically the focus of architecture has been here Historical disconnect here

© Macehiter Ward-Dutton 2005www.mwdadvisors.com32 advising on IT-business alignment Enterprise Architecture and IT Governance

© Macehiter Ward-Dutton 2005www.mwdadvisors.com33 Enterprise architecture…  Needs to be driven in partnership with the business IT Business Lifecycle Business function Infrastructure FunctionalQoS Commercial  Should consider all the different views of service provision – not just functional considerations  Should follow a service- oriented model – but one which is about more than application functionality

© Macehiter Ward-Dutton 2005www.mwdadvisors.com34 These perspectives are the key dimensions for IT governance, too Investment Delivery Change Functional QoS Commercial Business function Infrastructure Lifecycle Contract aspects Service types Relationships Business processes, priorities

© Macehiter Ward-Dutton 2005www.mwdadvisors.com35 Enterprise architecture and IT governance should be considered together Investment Delivery Change Functional QoS Commercial Business function Infrastructure Lifecycle Contract aspects Service types Relationships Business architecture Process architecture Captures the iterative process of architecture change Infrastructure architecture Business fn architecture TX/IMA/RC/C

© Macehiter Ward-Dutton 2005www.mwdadvisors.com36 You can use the model to…  Identify strengths and weaknesses in your current IT governance approach  Identify the contributions made by particular technologies to business objectives  As above for IT vendors  Consider the dimensions that affect sourcing decisions

© Macehiter Ward-Dutton 2005www.mwdadvisors.com37 advising on IT-business alignment A worked example: the role of DSI

© Macehiter Ward-Dutton 2005www.mwdadvisors.com38 DSI: the “design for operations” approach today… Investment Delivery Change Functional QoS Commercial Business function Infrastructure Lifecycle Contract aspects Service types Relationships Capability today is in designing business function services with explicit reference to runtime QoS directives and validate them against a static infrastructure model

© Macehiter Ward-Dutton 2005www.mwdadvisors.com39 DSI: with planned “Longhorn wave” technology Investment Delivery Change Functional QoS Commercial Business function Infrastructure Lifecycle Contract aspects Service types Relationships With planned future capabilities, design-time QoS directives form the basis of a “live model” which is interpreted and maintained by server infrastructure to perform goal-oriented infrastructure monitoring and management

© Macehiter Ward-Dutton 2005www.mwdadvisors.com40 A call to action  For architecture to contribute to IT-business alignment, you have to follow a holistic approach –Not just applications but infrastructure and lifecycle services –Proactively consider the links between all three –Look for technologies and patterns which support the linkages  Set up an architecture governance practice which doesn’t just allow change, but promotes it –Not a project-focused approach but an ongoing process with senior level sponsorship –Close links to business stakeholders and their priorities –Think about using contracts, policies and processes as the foundation of a common language

© Macehiter Ward-Dutton 2005www.mwdadvisors.com41 advising on IT-business alignment Thank you