SIDEBAR: Enterprise Architecture: Far Too Important to Be Left to the IT Team

by Alexander Drobik

To avoid hobbling the business, a company must define its business model and enterprise architecture at the same time

Enterprise architecture has long been seen as purely a matter for the IT department. Only IT departments had the relevant expertise, and companies saw IT applications as strictly back-office functions. The big change that made information and communications technology a business issue was the advent of the Internet. Suddenly, companies could talk to their customers quickly, cheaply and easily. For the first time, business models were being driven by computer-mediated applications. In the rush to the Web, many companies saw, for the first time, that their enterprise architectures were hindering business, rather than supporting it. The increasing need to respond fast to competition caused many enterprise architectures to fall behind in their ability to serve business goals.

Today, IT-related delays continue to hinder business growth. CRM projects, real-time operations, and business process outsourcing plans all suffer from technology-related hold-ups and inflexibility. As C K Prahalad and M S Krishnan commented in a recent MIT Sloan School study, managers rarely know how "to fix the disconnection between the quality of IT infrastructures and the need for strategic change".

A new approach. A gap exists between the needs of business and IT's ability to satisfy them. The delays involved will lead to a lack of support for businesses, particularly where IT is an essential driver or enabler of rapid market change.

Current ways of tackling the situation - handing over a specification, forming a virtual project team or taking Prahalad and Krishnan's favoured route, the portfolio-managed scorecard approach, which lets companies thoroughly analyze what they need from IT applications - all suffer from inherent delays. But there is room for a fourth option, and one that is more in tune with fast-moving markets, especially where IT is both a supporting element and an agent of change.

This new approach involves focusing on a single, unifying, overarching concept - the business architecture.

The business architecture removes the artificial distinction between business and IT planning. It tackles the rules for how a business is put together and the enterprise architecture that dictates the shape of the IT environment at the same time, and brings them into alignment from the start. Both are architectural concepts, and they are much more likely to work smoothly together if they are linked from the outset.

When both architectures are devised at the same time, the company can plan for the optimum use of IT investments. The enterprise architecture will avoid producing IT systems that are expensively over-specified to cover every eventuality, or unable to adapt to serve new demands and urgent business needs.

Building a business architecture. The starting point for developing a comprehensive business architecture should always be a clear understanding of the company's main source of competitive advantage.

Michael Treacy and Fred Wiersema's concept of value disciplines can be valuable here. It can help companies decide whether their main focus is on customer intimacy, operational excellence or product leadership (or, in Gartner's extended version of Treacy's model, the fourth value discipline of brand mastery). A company striving for customer intimacy, for example, should design its business model, IT systems and operational activities to support this strategy at the process level.