Business Modularity

Very few enterprises are at Stage 4. They account for just 6 percent of the roughly 450 companies CISR surveyed.

Still, CIOs in the latter part of Stage 3 can already see how Stage 4 might look. At Celanese, CIO Wachs says parts of his organization are in Stage 4, focusing on modular processes that can be easily managed within an enterprise-wide architecture. "Companies can be agile only if they can turn specific functions on and off," Wachs asserts, and that requires understanding what the functions are, where they are used and what they affect. That in turn requires having an architecture designed for both flexibility and consistency, he says.

State Street also believes it is in the beginning of Stage 4, says Saul. "We know we'll have to get the IT people better at understanding business processes and at communication," he says. "The lines between IT and business are blurring," he continues, "and it's clear that someone will have to manage both." For some companies, that means IT may become part of a shared-services effort. (For more on the role the CIO will play in this type of organizational structure, see "EA Changes Everything", page 38.)

Less clear is what a mature Stage 4 organization will be, what it will look like, says MeadWestvaco's McGrane. "The understanding of how to use IT for agility and game-changing things versus incremental improvements is just starting," he notes. And he's not sure the enabling technologies are really there yet. One thing McGrane is sure of: "You can't move to Stage 4 until the entire enterprise has achieved Stage 3, because Stage 3 sets up the process orientation necessary to view the enterprise as modules, as Stage 4 requires."

A Journey, Not a Place

While it's tempting to think of each stage as a place to arrive at, a truer way to see it is as a transformative process with the enterprise gradually transitioning from one stage to another, CISR's Ross says. That's because the volume of change is immense, and more important, people must change along with the technology. (For more on managing change, see "The New Science of Change", CIO October 2006.) That's why CIOs should promote incremental deployments and promise incremental value, both to ease the impact of change and to nurture management's enthusiasm for the effort, says Celanese's Wachs.

In fact, because of the legacy of mergers, different levels of business need and buy-in, or external forces such as regulation, companies often find that they're in different stages simultaneously. For example, at Celanese, the HR system is still in Stage 2 because of payroll requirements, while other parts of the company are entering Stage 4, says Wachs.

No matter the pressure to improve enterprise efficiency and agility — Today! If not sooner! — companies, unlike the X-Men, cannot leap over stages in their evolution, says CISR's Ross. Each stage lays the technological, procedural, cultural and behavioural foundation for the next. The impossibility of skipping stages holds true even in companies where one entity is ahead of the others. For example, in 2002 McGrane considered Mead to be at Stage 3, but then the company merged with Westvaco, which was at Stage 1. As CIO of the new MeadWestvaco, McGrane had to bring the newly acquired parts of the company through Stage 2 before moving them to Stage 3. Now, the unified organization is moving closer to the same maturity level.

Enterprises should also understand that architecture is never done, says ZapThink analyst Schmelzer. "The idea is to continuously adjust the service — not necessarily the implementation — such as composing two finer-grained services into a more composite one or vice versa," he says. Typically, CIOs don't have those skills, so they should have a chief architect or architecture team reporting to them, Schmelzer advises.

However an enterprise manages its architectural evolution, it must remember that the journey is the reward. Says CISR's Ross, "The end point is much less important than the continuous improvement you gain. You need to get a little better every day. It's not about how to get to Stage 4."