Tag Archives: enterprise architecture

Enterprise Architecture: A Practitioner View

By Prasad Palli and Dr. Gopala Krishna Behara, Wipro

Overview of Enterprise Architecture

IT organizations as usual are always ready to take challenges and start the journey in defining/refining their IT strategies and aligning with business strategies. During this journey, enterprises adopt a framework / methodology / best-practice / pattern / process called “Enterprise Architecture” which will help them to structure their processes and address growth together.

The effective management and exploitation of information through IT is a key factor to business success, and an indispensable means to achieving competitive advantage. Enterprise Architecture addresses this need, by providing a strategic context for the evolution of the IT system in response to the constantly changing needs of the business environment.

Without Enterprise Architecture

Based on our experience in Enterprise Architecture consulting, we highlight the common mistakes/frequent issues faced by the organizations in the absence of Enterprise Architecture.

Strategy

  • No link to business strategic planning and budget process
  • Slow and ineffective decision-making
  • Inability to rapidly respond to changes driven by business challenges
  • Lack of focus on enterprise requirements
  • Lack of common direction and synergies
  • Focusing on the art or language of EA rather than outcomes
  • Incomplete visibility of the current and future target Enterprise Architecture vision

Governance

  • Inability to predict impacts of future changes
  • Confusing “IT Architecture” With “Enterprise Architecture”
  • Lack of governance
  • Strict following of EA frameworks
  • “Ivory Tower” approach
  • Lack of communication and feedback
  • Limiting the EA team to IT resources
  • Lack of performance measures
  • No measurement criteria for EA metrics
  • Picking a tool before understanding your business needs

Technology

  • Increased gaps and architecture conflicts
  • Lack of commonality and consistency due to the absence of standards
  • Dilution and dissipation of critical information and knowledge of the deployed solutions
  • Rigidity, redundancy and lack of scalability and flexibility in the deployed solutions
  • Over-standardization
  • Non-adoption of Next Generation Technologies
  • Lack of integration, compatibility and interoperability between applications
  • Complex, fragile and costly interfaces between incongruent application

Enterprise Architecture Perspective

The main drivers of Enterprise Architecture of the enterprise are:

  • Highly optimized and flexible processes (Business & IT)
  • Ability to integrate seamlessly with systems within the enterprise and partners
  • Highly optimized and shared IT infrastructure
  • Loosely coupled systems to quickly respond to new processes or new product or new channel – Business value generation
  • Well mapping of business processes to application to information to technology
  • Strict adherence to regulatory and compliance factors

This article highlights our framework of Enterprise Architecture and its roadmap for the development and management of various components. It depicts how these components work together, what are the various measures of business units, enterprise and their outcome. The framework includes putting in place the proper organizational structure and hybrid business/IT roles, consolidating and standardizing information and data stores, and integrating applications and infrastructure to support the right business processes across the enterprise.

The key Components of Enterprise Architecture are depicted below.

EA1

EA – Practical Experience

Enterprise Architecture is not a one-time event, nor limited to specific projects or business units. EA is an on-going, iterative process that provides:

  • A common vision of the future shared by business and IT; business aware of IT and vice-versa
  • Guidance in the selection, creation and implementation of solutions driven by business requirements
  • Support for the various enterprise business lines through improved information sharing – provides plan for the integration of information and services at the design level across business lines
  • A means to control growing complexities of technology by setting enterprise-wide, leverageable standards for information technology
  • Defines an approach for the evaluation, consideration and assimilation of new and emerging technology innovations to meet business requirements

Some of the key aspects that teams will come across during EA execution:

  • EA is NOT a project: This is one of common mistake that most enterprises do. Enterprise Architecture is NOT a project, which can be delivered within specified timeframe. Enterprise Architecture is more of a culture that enterprises must adopt like SDLC process.
  • EA is NOT about review : Generally, people tend to think that EA is always for review and do policing team/individual performance and provide review reports to higher management. Instead EA is of bringing standards and making enterprise flexible to address changes as needed for business growth.
  • EA is NOT a one-time activity: The success of EA is possible only when enterprises will adopt it as part of their culture. For this to happen, Enterprise Architecture should execute as an iterative and on-going process and educate all stakeholders (business, portfolio managers, architects, program/project managers, designers, developers, operations, partners etc.) about the initiative and make them responsible for EA success.
  • EA is NOT for IT: Most of the times Enterprise Architecture initiative is driven by IT organizations without much involvement from Business. This is the first step towards a big failure. Depending upon the approach (whether it is top-down or bottom-up), business should be aware of what’s happening in the Enterprise Architecture initiative and be actively participating in the program when needed. Business is as equally responsible as IT for the success of an EA initiative.
  • EA is NOT a strategy: There is a common view across organizations that Enterprise Architecture is more of a strategy and teams like solution architecture, portfolio management and design & development and operations streams doesn’t have a role to play. In fact, the aforementioned teams are key contributors to Enterprise Architecture definition and its success by inculcating EA standards and best practices in their day-to-day activities.
  • EA is NOT all about cost-reduction: Most of the enterprises will look at EA from cost savings perspective that puts lot of pressure on IT to show some immediate benefits in terms of savings. With this kind of pressure, EA will get off track and be seen as more of a tactical initiative rather than strategic. Enterprises should start looking at EA more from Business-IT alignment, agility, innovation etc. which are strategic in nature along with cost savings.
  • EA is NOT one-man show: Enterprise Architecture is neither a CIO job or CFO or any CXO. It’s everybody’s job within an enterprise. During the EA strategy definition phase, probably more leadership involvement is needed and at EA implementation stage all the stakeholders will have a role to play and contribute one way or another.
  • EA is all about communication: One of the common mistakes that most enterprises do during the EA program is the team will work in silos and build huge pile of documents without having proper communication sessions within enterprise. At a minimum, the EA team should spend 50% of efforts towards communicating EA artifacts with the team and successful medium is through meetings rather than sending over emails or website.
  • Measure EA: During the initial stages of an EA program, the team should define measuring criteria/factors of EA (for ex: customer satisfaction, time to market, agility, cost savings, standardization, resources skills, trainings/certification etc.). Without these factors defined, EA will end up in ad-hoc planning which leads to chaos and frustrates leadership.
  • Adoption of Latest Technology Trends on EA: Traditional EA is more of the “Ivory Tower” approach which is modeled as framework-centered and tool-driven. Most of the EA function is technology-centric and defined as a one-time initiative. Application built on Traditional EA principles are business-constraint before they are completed. The Next Generation Enterprise Architecture (NGEA) is business-centric, global, agile, continuous and social digital network. Also, the organizations adopt latest digital capabilities like social web, SOA, big data analytics, omni channel customer management, cloud computing, virtualization, Internet of Things and so on. These technologies are interrelated and fit together to define Next Generation Enterprise Architecture for an organization.

The vision of an enterprise is shifting from Traditional EA to Digital Architecture which addresses Networked Community Capabilities (interacting with users through social media), globalization (Borderless Enterprise), innovation of products and services (open, closed & virtual innovation), collaboration (enable employees in decision-making, location flexibility, schedule flexibility), flexibility (flexibility to choose the technologies, infrastructure, applications).

The following diagram shows the Next Generation EA Model.

EA2

  • Network-centric enterprise: Online communities, workforce (network/social collaboration), business partners, customers and the marketplace
  • Enterprise resources: Teams, project-centric, process-based work conducted by communities
  • Business partners: Strategic partners and suppliers can be engaged together in operations
  • Customers: Customer care communities
  • Outside enterprise: Regulators, influencers, crowdsourcing participants, software developers and other interested parties
  • Third party vendors: Packaged vendors like SAP, Oracle ERP etc.
  • New channels: Web, mobile devices, Social business environments (communities of all functional types and audiences) and CRM

Conclusions

This article attempts to demonstrate practical views of an Enterprise Architect in improving the success rate of EA across the organizations. There is no hard and fast rule that enterprises should adopt to one particular framework or standard or approach. They can choose to adopt any industry specific framework, however it can be customized as per the needs of the enterprise. It does not force fit EA programs to any industry framework. The deliverables of EA should integrate with business planning, focus on business architecture and defining/streamlining business outcome metrics.

EA program definition should not span for years. It should deliver business value in months or weeks. Also, the program output should be actionable. Always measure impact but not activity.

Apart from these steps, enterprise should think about following other key aspects like:

  • Should have strong leadership commitments
  • Not always as-Is instead it can start with defining future state
  • Start with the highest-priority business outcomes

Use the right diagnostic tools — EAs must have a broad set of tools to choose from:

  • Ensure the program outputs are actionable
  • Measure impact, not activity
  • Adopt Next Generation Enterprise Architecture patterns
  • Socialize, listen, crowd source and be transparent
  • Do not re-architect legacy systems for the sake of re-architecting: most old systems should be wrapped, then replaced
  • Prepare to measure degree of success before starting on with the new architecture initiative
  • Do not over-design your systems of innovation or under-design the systems of differentiation or record

References

1.http://www.opengroup.org/architecture/togaf7-doc/arch/p4/comp/comp.htm

Acknowledgements

The authors would like to thank Hari Kishan Burle, Raju Alluri of Architecture Group of Wipro Technologies for giving us the required time and support in many ways in bringing this article as part of Enterprise Architecture Practice efforts.

Authors

PalliPrasad Palli is a Practice Partner in the Enterprise Architecture division of Wipro. He has a total of 17 years of IT experience. He can be reached at prasad.palli@wipro.com

 

BeharaDr. Gopala Krishna Behara is a Senior Enterprise Architect in the Enterprise Architecture division of Wipro. He has a total of 18 years of IT experience. He can be reached at gopalkrishna.behra@wipro.com

 

Disclaimer

The views expressed in this article/presentation are that of authors and Wipro does not subscribe to the substance, veracity or truthfulness of the said opinion.

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Now is the Time for Third Generation Enterprise Architecture Methods

By Erwin Oord, Principal Consultant Enterprise Architecture and Managing Partner at Netherlands-based ArchiXL Consultancy

Common methods for Enterprise Architecture used at present have been around for ages already. Although these methods have made a strong contribution to the development of the architecture discipline, they have reached the limits of their abilities. It is time to make a leap forward and for that we need a new generation of architecture methods. What characterizes architecture methods of this new generation?

Architects currently working with methods like TOGAF®, an Open Group standard, DYA or IAF might not realize it, but these methods stem from the early days of the architecture discipline. DYA originated in 2001 and the first version of TOGAF dates back to even 1995! Of course, these architecture methods are not dinosaurs that forgot to extinct. TOGAF produces new versions that are the result of lively discussion at The Open Group.

But an architecture method is like a car model. With annual facelifts you can adjust to the latest fashion, but you cannot hide the fact that the basic product reflects the spirit of the time in which it was developed. Car models, including those of the better car brands, reach their end after a decade or so. The automotive industry is used to this and knows that this cycle requires high investments, but also brings new opportunities. Enterprise Architecture is no different!

Let’s take a look back in history. The notion of Enterprise Architecture emerged in the mid-eighties. In that period, people like Zachman discovered that systems development models together create a coherent view on the enterprise. Thus arose the first architectural frameworks. This is the first generation of architecture methods, although a “method” was barely recognized.

The need for a repeatable process to develop and use architecture models emerged in the nineties. This is the time when the famous TOGAF Architecture Development Method came about, later followed by the concept of the strategic dialogue in DYA. This process-oriented approach to Enterprise Architecture was a great leap forward. We can therefore speak of a second generation of architecture methods.

A shocking discovery is that since then not much more has happened. Of course, methods have evolved with the addition of reference models and techniques for creating models. The underlying content frames have improved, now including architectural principles and implementation aspects. But all this is merely facelifting. We are still working with basic designs dating back more than a decade.

In order to make a leap forward again, we must escape the current process orientation. Instead of focusing on a fixed process to develop and use architecture, we must focus on the results of architecture. But that is only possible when we realize architecture is not a process in itself but an aspect of the overall change process in an organization. After all, governments and companies are constantly changing. An architecture method should therefore not be self-contained, but should be fully integrated in the change process.

A third generation architecture method has no fixed processes but focuses on essential architecture tasks, and integrates these tasks in the change methodology used by the organization. It provides a limited set of clearly defined architectural products that can be used directly in the change process. And it recognizes clearly defined roles that, depending on the situation, can be assigned to the right stakeholders. And that is certainly not always the Enterprise Architect. The key of a third generation Enterprise Architecture method is not the method itself but the way it is integrated into the organization.

OordErwin Oord, Principal Consultant Enterprise Architecture and Managing Partner at Netherlands based ArchiXL consultancy, has a rich experience in applying and customising Enterprise Architecture methods in both public sector and business organisations. Being co-author of a successful (Dutch) guide on selecting appropriate architecture methods, he is frequently asked for setting up an architecture practice or advancing architecture maturity stages in organisations. In his assignments, he focuses on effective integration of architecture with business and organisation change management.

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Filed under Enterprise Architecture, Standards, TOGAF®, Uncategorized

Using The Open Group Standards – O-ISM3 with TOGAF®

By Jose Salamanca, UST Global, and Vicente Aceituno, Inovement

In order to prevent duplication of work and maximize the value provided by the Enterprise Architecture and Information Security discipline, it is necessary to find ways to communicate and take advantage from each other’s work. We have been examining the relationship between O-ISM3 and TOGAF®, both Open Group standards, and have found that, terminology differences aside, there are quite a number of ways to use these two standards together. We’d like to share our findings with The Open Group’s audience of Enterprise Architects, IT professionals, and Security Architects in this article.

Any ISMS manager needs to understand what the Security needs of the business are, how IT can cater for these needs, and how Information Security can contribute the most with the least amount of resources possible. Conversely, Enterprise Architects are challenged to build Security into the architectures deployed in the business in such a way that Security operations may be managed effectively.

There are parts of Enterprise Architecture that make the process of understanding the dependencies between the business and IT pretty straightforward. For example:

  • The TOGAF® 9 document “Business Principles – Goals – Drivers” will help inform the O-ISM3 practitioner what the business is about, in other words, what needs to be protected.
  • The TOGAF 9 document – Architecture Definition contains the Application, Technology and Data Domains, and the Business Domain. As a TOGAF service is a subdivision of an application used by one or several business functions, the O-ISM3 practitioner will be able to understand the needs of the business, developed and expressed as O-ISM3 Security objectives and Security targets, by interviewing the business process owners (found in the TOGAF Architecture Definition).
  • To determine how prepared applications are to meet those Security objectives and Security targets the O-ISM3 practitioner can interview the owner (found in the TOGAF Application Portfolio Catalog) of each application.
  • To check the location of the Components (parts of the application from the point of view of IT), which can have licensing and privacy protection implications, the O-ISM3 practitioner can interview the data owners (found in the TOGAF Architecture Definition) of each application.
  • To check the different Roles of use of an application, which will direct how access control is designed and operated, the O-ISM3 practitioner can interview the business process owners (found in the TOGAF Architecture Definition).
  • To understand how Components depend on each other, which has broad reaching implications in Security and business continuity, the O-ISM3 practitioner can examine the TOGAF Logical Application Components Map.

TOGAF practitioners can find Security constraints, which are equivalent to O-ISM3 Security Objectives (documented in “TOGAF 9 Architecture Vision” and “Data Landscape”) in the documents TSP-031 Information Security Targets and TSP-032 Information Requirements and Classification.

The Application Portfolio artifact in TOGAF is especially suitable to document the way applications are categorized from the point of view of security. The categorization enables prioritizing how they are protected.

The Security requirements which are created in O-ISM3, namely Security objectives and Security targets, should be included in the document “Requirements TOGAF 9 Template – Architecture Requirements Specification”, which contains all the requirements, constraints, and assumptions.

What are your views and experiences of aligning your ISMS + Enterprise Architecture methods? We’d love to hear your thoughts.

 

JMSalamanca photoJosé Salamanca is Regional Head of Solutions & Services at UST Global Spain. Certified in TOGAF9®, Project Management Professional (PMP®), and EFQM®. Jose also holds a MBA Executive by the Business European School (Spain) and achieved his BSc. at Universidad Complutense of Madrid. He is Vice President of the Association of Enterprise Architects Spanish chapter and Master Teacher at Universidad de Antonio de Nebrija of Madrid. José has built his professional career with repeated successes in Europe and the Middle East.

 

 

JulioVicente Aceituno is Principal author of O-ISM3, an experienced Information Security Manager and Consultant with broad experience in outsourcing of security services and research. His focus is information security outsourcing, management and related fields like metrics and certification of ISMS. Vicente is President of the Spanish chapter of the Information Security Systems Association; Member of The Open Group Security Forum Steering Committee; Secretary of the Spanish Chapter of the Association of Enterprise Architects; ISMS Forum Member.

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Filed under Enterprise Architecture, Enterprise Transformation, Information security, Security, Security Architecture, Standards, TOGAF®, Uncategorized

Q&A with Marshall Van Alstyne, Professor, Boston University School of Management and Research Scientist MIT Center for Digital Business

By The Open Group

The word “platform” has become a nearly ubiquitous term in the tech and business worlds these days. From “Platform as a Service” (PaaS) to IDC’s Third Platform to The Open Group Open Platform 3.0™ Forum, the concept of platforms and building technology frames and applications on top of them has become the next “big thing.”

Although the technology industry tends to conceive of “platforms” as the vehicle that is driving trends such as mobile, social networking, the Cloud and Big Data, Marshall Van Alstyne, Professor at Boston University’s School of Management and a Research Scientist at the MIT Center for Digital Business, believes that the radical shifts that platforms bring are not just technological.

We spoke with Van Alstyne prior to The Open Group Boston 2014, where he presented a keynote, about platforms, how they have shifted traditional business models and how they are impacting industries everywhere.

The title of your session at the Boston conference was “Platform Shift – How New Open Business Models are Changing the Shape of Industry.” How would you define both “platform” and “open business model”?

I think of “platform” as a combination of two things. One, a set of standards or components that folks can take up and use for production of goods and services. The second thing is the rules of play, or the governance model – who has the ability to participate, how do you resolve conflict, and how do you divide up the royalty streams, or who gets what? You can think of it as the two components of the platform—the open standard together with the governance model. The technologists usually get the technology portion of it, and the economists usually get the governance and legal portions of it, but you really need both of them to understand what a ‘platform’ is.

What is the platform allowing then and how is that different from a regular business model?

The platform allows third parties to conduct business using system resources so they can actually meet and exchange goods across the platform. Wonderful examples of that include AirBnB where you can rent rooms or you can post rooms, or eBay, where you can sell goods or exchange goods, or iTunes where you can go find music, videos, apps and games provided by others, or Amazon where third parties are even allowed to set up shop on top of Amazon. They have moved to a business model where they can take control of the books in addition to allowing third parties to sell their own books and music and products and services through the Amazon platform. So by opening it up to allow third parties to participate, you facilitate exchange and grow a market by helping that exchange.

How does this relate to the concept of the technology industry is defining the “third platform”?

I think of it slightly differently. The tech industry uses mobile and social and cloud and data to characterize it. In some sense this view offers those as the attributes that characterize platforms or the knowledge base that enable platforms. But we would add to that the economic forces that actually shape platforms. What we want to do is give you some of the strategic tools, the incentives, the rules that will actually help you control their trajectory by helping you improve who participates and then measure and improve the value they contribute to the platform. So a full ecosystem view is not just the technology and the data, it also measures the value and how you divide that value. The rules of play really become important.

I think the “third platform” offers marvelous concepts and attributes but you also need to add the economics to it: Why do you participate, who gets what portions of the value, and who ultimately owns control.

Who does control the platform then?

A platform has multiple parts. Determining who controls what part is the art and design of the governance model. You have to set up control in the right way to motivate people to participate. But before we get to that, let’s go back and complete the idea of what’s an ‘open platform.’

To define an open platform, consider both the right of access and the right to manipulate platform resources, then consider granting those rights to four different parties. One is the user—can they access one another, can they access data, can they access system resources? Another group is developers—can they manipulate system resources, can they add new features to it, can they sell through the platform? The third group is the platform providers. You often think of them as those folks that facilitate access across the platform. To give you an example, iTunes is a single monolithic store, so the provider is simply Apple, but Android, in contrast, allows multiple providers, so there’s a Samsung Android store, an LTC Android store, a Google Android store, there’s even an Amazon version that uses a different version of Android. So that platform has multiple providers each with rights to access users. The fourth group is the party that controls the underlying property rights, who owns the IP. The ability modify the underlying standard and also the rights of access for other parties is the bottom-most layer.

So to answer the question of what is ‘open,’ you have to consider the rights of access of all four groups—the users, developers, the providers and IP rights holders, or sponsors, underneath.

Popping back up a level, we’re trying to motivate different parties to participate in the ecosystem. So what do you give the users? Usually it’s some kind of value. What do you give developers? Usually it’s some set of SDKs and APIs, but also some level of royalties. It’s fascinating. If you look back historically, Amazon initially tried a publishing royalty where they took 70% and gave a minority 30% back to developers. They found that didn’t fly very well and they had to fall back to the app store or software-style royalty, where they’re taking a lower percentage. I think Apple, for example, takes 30 percent, and Amazon is now close to that. You see ranges of royalties going anywhere from a few percent—an example is credit cards—all the way up to iStock photo where they take roughly 70 percent. That’s an extremely high rate, and one that I don’t recommend. We were just contracting for designs at 99Designs and they take a 20 percent cut. That’s probably more realistic, but lower might perhaps even be better—you can create stronger network effect if that’s the case.

Again, the real question of control is how you motivate third parties to participate and add value? If you are allowing them to use resources to create value and keep a lot of that value, then they’re more motivated to participate, to invest, to bring their resources to your platform. If you take most of the value they create, they won’t participate. They won’t add value. One of the biggest challenges for open platforms—what you might call the ‘Field of Dreams’ approach—is that most folks open their platform and assume ‘if you build it, they will come,’ but you really need to reward them to do so. Why would they want to come build with you? There are numerous instances of platforms that opened but no developer chooses to add value—the ecosystem is too small. You have to solve the chicken and egg problem where if you don’t have users, developers don’t want to build for you, but if you don’t have developer apps, then why do users participate? So you’ve got a huge feedback problem. And those are where the economics become critical, you must solve the chicken and egg problem to build and roll out platforms.

It’s not just a technology question; it’s also an economics and rewards question.

Then who is controlling the platform?

The answer depends on the type of platform. Giving different groups a different set of rights creates different types of platform. Consider the four different parties: users, developers, providers, and sponsors. At one extreme, the Apple Mac platform of the 1980s reserved most rights for development, for producing hardware (the provider layer), and for modifying the IP (the sponsor layer) all to Apple. Apple controlled the platform and it remained closed. In contrast, Microsoft relaxed platform control in specific ways. It licensed to multiple providers, enabling Dell, HP, Compaq and others to sell the platform. It gave developers rights of access to SDKs and APIs, enabling them to extend the platform. These control choices gave Microsoft more than six times the number of developers and more than twenty times the market share of Apple at the high point of Microsoft’s dominance of desktop operating systems. Microsoft gave up some control in order to create a more inclusive platform and a much bigger market.

Control is not a single concept. There are many different control rights you can grant to different parties. For example, you often want to give users an ability to control their own data. You often want to give developers intellectual property rights for the apps that they create and often over the data that their users create. You may want to give them some protections against platform misappropriation. Developers resent it if you take their ideas. So if the platform sees a really clever app that’s been built on top of its platform, what’s the guarantee that the platform simply doesn’t take it or build a competing app? You need to protect your developers in that case. Same thing’s true of the platform provider—what guarantees do they provide users for the quality of content provided on their ecosystem? For example, the Android ecosystem is much more open than the iPhone ecosystem, which means you have more folks offering stores. Simultaneously, that means that there are more viruses and more malware in Android, so what rights and guarantees do you require of the platform providers to protect the users in order that they want to participate? And then at the bottom, what rights do other participants have to control the direction of the platform growth? In the Visa model, for example, there are multiple member banks that help to influence the general direction of that credit card standard. Usually the most successful platforms have a single IP rights holder, but there are several examples of that have multiple IP rights holders.

So, in the end control defines the platform as much as the platform defines control.

What is the “secret” of the Internet-driven marketplace? Is that indeed the platform?

The secret is that, in effect, the goal of the platform is to increase transaction volume and value. If you can do that—and we can give you techniques for doing it—then you can create massive scale. Increasing the transaction value and transactions volume across your platform means that the owner of the platform doesn’t have to be the sole source of content and new ideas provided on the platform. If the platform owner is the only source of value then the owner is also the bottleneck. The goal is to consummate matches between producers and consumers of value. You want to help users find the content, find the resources, find the other people that they want to meet across your platform. In Apple’s case, you’re helping them find the music, the video, the games, and the apps that they want. In AirBnB’s case, you’re helping them find the rooms that they want, or Uber, you’re helping them find a driver. On Amazon, the book recommendations help you find the content that you want. In all the truly successful platforms, the owner of the platform is not providing all of that value. They’re enabling third parties to add that value, and that’s one reasy why The Open Group’s ideas are so important—you need open systems for this to happen.

What’s wrong with current linear business models? Why is a network-driven approach superior?

The fundamental reason why the linear business model no longer works is that it does not manage network effects. Network effects allow you to build platforms where users attract other users and you get feedback that grows your system. As more users join your platform, more developers join your platform, which attracts more users, which attracts more developers. You can see it on any of the major platforms. This is also true of Google. As advertisers use Google Search, the algorithms get better, people find the content that they want, so more advertisers use it. As more drivers join Uber, more people are happier passengers, which attracts more drivers. The more merchants accept Visa, the more consumers are willing to carry it, which attracts more merchants, which attracts more consumers. You get positive feedback.

The consequence of that is that you tend to get market concentration—you get winner take all markets. That’s where platforms dominate. So you have a few large firms within a given category, whether this is rides or books or hotels or auctions. Further, once you get network effects changing your business model, the linear insights into pricing, into inventory management, into innovation, into strategy breakdown.

When you have these multi-sided markets, pricing breaks down because you often price differently to one side than another because one side attracts the other. Inventory management practices breakdown because you’re selling inventory that you don’t even own. Your R&D strategies breakdown because now you’re motivating innovation and research outside the boundaries of the firm, as opposed to inside the internal R&D group. And your strategies breakdown because you’re not just looking for cost leadership or product differentiation, now you’re looking to shape the network effects as you create barriers to entry.

One of the things that I really want to argue strenuously is that in markets where platforms will emerge, platforms beat product every time. So the platform business model will inevitably beat the linear, product-based business model. Because you’re harnessing new forces in order to develop a different kind of business model.

Think of it the following way–imagine that value is growing as users consume your product. Think of any of the major platforms, as more folks use Google, search gets better, the more recommendations improve on Amazon, and the easier it is to find a ride on Uber, so more folks want to be on there. It is easier to scale network effects outside your business than inside your business. There’s simply more people outside than inside. The moment that happens, the locus control, the locus of innovation, moves from inside the firm to outside the firm. So the rules change. Pricing changes, your innovation strategies change, your inventory policies change, your R&D changes. You’re now managing resources outside the firm, rather than inside, in order to capture scale. This is different than the traditional industrial supply economies of scale.

Old systems are giving away to new systems. It’s not that the whole system breaks down, it’s simply that you’re looking to manage network effects and manage new business models. Another way to see this is that previously you were managing capital. In the industrial era, you were managing steel, you were managing large amounts of finance in banking, you were managing auto parts—huge supply economies of scale. In telecommunications, you were managing infrastructure. Now, you’re managing communities and these are managed outside the firm. The value that’s been created at Facebook or WhatsApp or Instagram or any of the new acquisitions, it’s not the capital that’s critical, it’s the communities that are critical, and these are built outside the firm.

There is a lot of talk in the industry about the Nexus of Forces as Gartner calls it, or Third Platform (IDC). The Open Group calls it Open Platform 3.0. Your concept goes well beyond technology—how does Open Platform 3.0 enable new business models?

Those are the enablers—they’re shall we say necessary, but they’re not sufficient. You really must harness the economic forces in addition to those enablers—mobile, social, Cloud, data. You must manage communities outside the firm, that’s the mobile and the social element of it. But this also involves designing governance and setting incentives. How are you capturing users outside the organization, how are they contributing, how are they being motivated to participate, why are they spreading your products to their peers? The Cloud allows it to scale—so Instagram and What’s App and others scale. Data allows you to “consummate the match.” You use that data to help people find what they need, to add value, so all of those things are the enablers. Then you have to harness the economics of the enablers to encourage people to do the right thing. You can see the correct intuition if you simply ask what happens if all you offer is a Cloud service and nothing more. Why will anyone use it? What’s the value to that system? If you open APIs to it, again, if you don’t have a user base, why are developers going to contribute? Developers want to reach users. Users want valuable functionality.

You must manage the motives and the value-add on the platform. New business models come from orchestrating not just the technology but also the third party sources of value. One of the biggest challenges is to grow these businesses from scratch—you’ve got the cold start chicken and egg problem. You don’t have network effects if you don’t have a user base, if you don’t have users, you don’t have network effects.

Do companies need to transform themselves into a “business platform” to succeed in this new marketplace? Are there industries immune to this shift?

There is a continuum of companies that are going to be affected. It starts at one end with companies that are highly information intense—anything that’s an information intensive business will be dramatically affected, anything that’s community or fashion-based business will be dramatically affected. Those include companies involved in media and news, songs, music, video; all of those are going to be the canaries in the coalmine that see this first. Moving farther along will be those industries that require some sort of certification—those include law and medicine and education—those, too, will also be platformized, so the services industries will become platforms. Farther down that are the ones that are heavily, heavily capital intensive where control of physical capital is paramount, those include trains and oil rigs and telecommunications infrastructure—eventually those will be affected by platform business models to the extent that data helps them gain efficiencies or add value, but they will in some sense be the last to be affected by platform business models. Look for the businesses where the cost side is shrinking in proportion to the delivery of value and where the network effects are rising as a proportional increase in value. Those forces will help you predict which industries will be transformed.

How can Enterprise Architecture be a part of this and how do open standards play a role?

The second part of that question is actually much easier. How do open standards play a role? The open standards make it much easier for third parties to attach and incorporate technology and features such that they can in turn add value. Open standards are essential to that happening. You do need to ask the question as to who controls those standards—is it completely open or is it a proprietary standard, a published standard but it’s not manipulable by a third party.

There will be at least two or three different things that Enterprise Architects need to do. One of these is to design modular components that are swappable, so as better systems become available, the better systems can be swapped in. The second element will be to watch for components of value that should be absorbed into the platform itself. As an example, in operating systems, web browsing has effectively been absorbed into the platform, streaming has been absorbed into the platform so that they become aware of how that actually works. A third thing they need to do is talk to the legal team to see where it is that the third parties property rights can be protected so that they invest. One of the biggest mistakes that firms make is to simply assume that because they own the platform, because they have the rights of control, that they can do what they please. If they do that, they risk alienating their ecosystems. So they should talk to their potential developers to incorporate developer concerns. One of my favorite examples is the Intel Architecture Lab which has done a beautiful job of articulating the voices of developers in their own architectural plans. A fourth thing that can be done is an idea borrowed from SAP, that builds Enterprise Architecture—they articulate an 18-24 month roadmap where they say these are the features that are coming, so you can anticipate and build on those. Also it gives you an idea of what features will be safe to build on so you won’t lose the value you’ve created.

What can companies do to begin opening their business models and more easily architect that?

What they should do is to consider four groups articulated earlier— those are the users, the providers, the developers and the sponsors—each serve a different role. Firms need to understand what their own role will be in order that they can open and architect the other roles within their ecosystem. They’ll also need to choose what levels of exclusivity they need to give their ecosystem partners in a different slice of the business. They should also figure out which of those components they prefer to offer themselves as unique competencies and where they need to seek third party assistance, either in new ideas or new resources or even new marketplaces. Those factors will help guide businesses toward different kinds of partnerships, and they’ll have to be open to those kinds of partners. In particular, they should think about where are they most likely to be missing ideas or missing opportunities. Those technical and business areas should open in order that third parties can take advantage of those opportunities and add value.

 

vanalstynemarshallProfessor Van Alstyne is one of the leading experts in network business models. He conducts research on information economics, covering such topics as communications markets, the economics of networks, intellectual property, social effects of technology, and productivity effects of information. As co-developer of the concept of “two sided networks” he has been a major contributor to the theory of network effects, a set of ideas now taught in more than 50 business schools worldwide.

Awards include two patents, National Science Foundation IOC, SGER, SBIR, iCorp and Career Awards, and six best paper awards. Articles or commentary have appeared in Science, Nature, Management Science, Harvard Business Review, Strategic Management Journal, The New York Times, and The Wall Street Journal.

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The Open Group Boston 2014 – Day One Highlights

By Loren K. Baynes, Director, Global Marketing Communications

The Open Group kicked off Enabling Boundaryless Information Flow™  July 21 at the spectacular setting of the Hyatt Boston Harbor. Allen Brown, CEO and President of The Open Group, welcomed over 150 people from 20 countries, including as far away as Australia, Japan, Saudi Arabia and India.

The first keynote speaker was Marshall Van Alstyne, Professor at Boston University School of Management & Researcher at MIT Center for Digital Business, known as a leading expert in business models. His presentation entitled Platform Shift – How New Open Business Models are Changing the Shape of Industry posed the questions “What does ‘openness’ mean? Why do platforms beat products every time?”.

Van AlstyneMarshall Van Alstyne

According to “InterBrand: 2014 Best Global Brands”, 13 of the top 31 companies are “platform companies”. To be a ‘platform’, a company needs embeddable functions or service and allow 3rd party access. Alystyne noted, “products have features, platforms have communities”. Great standalone products are not sufficient. Positive changes experienced by a platform company include pricing/profitability, supply chains, internal organization, innovation, decreased industry bottlenecks and strategy.

Platforms benefit from broad contributions, as long as there is control of the top several complements. Alstyne commented, “If you believe in the power of community, you need to embrace the platform.”

The next presentation was Open Platform 3.0™ – An Integrated Approach to the Convergence of Technology Platforms, by Dr. Chris Harding, Director for Interoperability, The Open Group. Dr. Harding discussed how society has developed a digital society.

1970 was considered the dawn of an epoch which saw the First RAM chip, IBM introduction of System/370 and a new operating system – UNIX®. Examples of digital progress since that era include driverless cars and Smart Cities (management of traffic, energy, water, communication).

Digital society enablers are digital structural change and corporate social media. The benefits are open innovation, open access, open culture, open government and delivering more business value.

Dr. Harding also noted, standards are essential to innovation and enable markets based on integration. The Open Group Open Platform 3.0™ is using ArchiMate®, an Open Group standard, to analyze the 30+ business use cases produced by the Forum. The development cycle is understanding, analysis, specification, iteration.

Dr. Harding emphasized the importance of Boundaryless Information Flow™, as an enabler of business objectives and efficiency through IT standards in the era of digital technology, and designed for today’s agile enterprise with direct involvement of business users.

Both sessions concluded with an interactive audience Q&A hosted by Allen Brown.

The last session of the morning’s plenary was a panel: The Internet of Things and Interoperability. Dana Gardner, Principal Analyst at Interarbor Solutions, moderated the panel. Participating in the panel were Said Tabet, CTO for Governance, Risk and Compliance Strategy, EMC; Penelope Gordon, Emerging Technology Strategist, 1Plug Corporation; Jean-Francois Barsoum, Senior Managing Consultant, Smarter Cities, Water & Transportation, IBM; and Dave Lounsbury, CTO, The Open Group.

IoT PanelIoT Panel – Gardner, Barsoum, Tabet, Lounsbury, Gordon

The panel explored the practical limits and opportunities of Internet of Things (IoT). The different areas discussed include obstacles to decision-making as big data becomes more prolific, openness, governance and connectivity of things, data and people which pertain to many industries such as smart cities, manufacturing and healthcare.

How do industries, organizations and individuals deal with IoT? This is not necessarily a new problem, but an accelerated one. There are new areas of interoperability but where does the data go and who owns the data? Openness is important and governance is essential.

What needs to change most to see the benefits of the IoT? The panel agreed there needs to be a push for innovation, increased education, move beyond models of humans managing the interface (i.e. machine-to-machine) and determine what data is most important, not always collecting all the data.

A podcast and transcript of the Internet of Things and Interoperability panel will be posted soon.

The afternoon was divided into several tracks: Boundaryless Information Flow™, Open Platform 3.0™ and Enterprise Architecture (EA) & Enterprise Transformation. Best Practices for Enabling Boundaryless Information Flow across the Government was presented by Syed Husain, Consultant Enterprise Architecture, Saudi Arabia E-government Authority. Robert K. Pucci, CTO, Communications Practice, Cognizant Technology Solutions discussed Business Transformation Justification Leveraging Business and Enterprise Architecture.

The evening concluded with a lively networking reception at the hotel.

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Loren K. BaynesLoren K. Baynes, Director, Global Marketing Communications, joined The Open Group in 2013 and spearheads corporate marketing initiatives, primarily the website, blog and media relations. Loren has over 20 years experience in brand marketing and public relations and, prior to The Open Group, was with The Walt Disney Company for over 10 years. Loren holds a Bachelor of Business Administration from Texas A&M University. She is based in the US.

 

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The Open Group Boston 2014 – Q&A with Proteus Duxbury, Connect for Health Colorado

By The Open Group

The U.S. healthcare industry is undergoing a major sea change right now due in part to the Affordable Care Act, as well as the need to digitize legacy systems that have remained largely paper-based in order to better facilitate information exchange.

Proteus Duxbury, the CTO for the state of Colorado’s health insurance exchange, Connect for Health Colorado, has a wide and varied background in healthcare IT ranging from IT consulting and helping to lead a virtual health medicine group to his current position running the supporting technologies operating the Colorado exchange. Duxbury joined Connect for Health Colorado early 2014 as the exchange was going through its first major enrollment period.

We spoke to Duxbury in advance of his keynote on July 22 at The Open Group Boston 2014 conference about the current state of healthcare IT and how Enterprise Architecture will play an integral part in the Connect for Health Colorado exchange moving forward as the organizations transitions from a start-up culture to a maintenance and run mode.

Below is a transcript of that conversation.

What factors went into making the roll-out of Connect for Health Colorado healthcare exchange a success?

There were three things. The first is we have an exceptional leadership team. The CEO, especially, is a fantastic leader and was able to create a strong vision and have her team rally quickly behind it. The executive team was empowered to make decisions quickly and there was a highly dedicated work force and a powerful start-up culture. In addition, there was a uniformly shared passion to see healthcare reform successfully implemented in Colorado.

The second reason for success was the flexibility and commitment of our core vendor—which is CGI—and their ability to effectively manage and be agile with rapidly changing regulatory requirements and rapidly changing needs. These systems had never been built anywhere else before; it really was a green field program of work. There was a shared commitment to achieving success and very strong contracting in place ensuring that we were fully protected throughout the whole process.

The third is our COTS (Commercial Off-The-Shelf) solution that was selected. Early on, we established an architecture principle of deploying out-of-the-box products rather than trying to build from scratch, so there was minimal customization and development effort. Scope control was tight. We implemented the hCentive package, which is one of the leading health insurance exchange software packages. Best-of-breed solutions were implemented around the edges where it was necessary to meet a niche need, but we try to build as much into the single product as we can. We have a highly resilient and available architecture. The technical architecture scales well and has been very robust and resilient through a couple of very busy periods at the end of open enrollment, particularly on March 31st and toward the end of December, as the deadline for enrollment in 2014 plans approached.

Why are you putting together an Enterprise Architecture for the exchange?

We’re extremely busy right now with a number of critical projects. We’re still implementing core functionality but we do have a bit of a breather on the horizon. Going into next year things will get lighter, and now is the time for a clear roadmap to achieve the IT strategic objectives that I have set for the organization.

We are trying to achieve a reduction in our M&O (maintenance and operations) expense because we need to be self-sustaining from a budgetary point of view. Our federal funding will be going away starting 2015 so we need to consolidate architecture and systems and gain additional efficiencies. We need to continue to meet our key SLAs, specifically around availability—we have a very public-facing set of systems. IT needs to be operationalized. We need to move from the existing start-up culture to the management of IT in a CMM (Capability Maturity Model) or ITIL-type fashion. And we also need to continue to grow and hold on to our customer base, as there is always a reasonable amount of churn and competing services in a relatively uncertain marketplace. We need to continue to grow our customer base so we can be self-sustaining. To support this, we need to have a more operationalized, robust and cost-efficient IT architecture, and we need a clear roadmap to get there. If you don’t have a roadmap or design that aligns with business priorities, then those things are difficult to achieve.

Finally, I am building up an IT team. To date, we’ve been highly reliant on contractors and consultants to get us to where we are now. In order to reduce our cost base, we are building out our internal IT team and a number of key management roles. That means we need to have a roadmap and something that we can all steer towards—a shared architecture roadmap.

What benefits do you expect to see from implementing the architecture?

Growing our customer base is a critical goal—we need to stabilize the foundations of our IT solution and use that as a platform for future growth and innovation. It’s hard to grow and innovate if you haven’t got your core IT platform stabilized. By making our IT systems easier to be maintained and updated we hope to see continued reduction in IT M&O. High availability is another benefit I expect to see, as well as closer alignment with business goals and business processes and capabilities.

Are there any particular challenges in setting up an Enterprise Architecture for a statewide health exchange? What are they?

I think there are some unique challenges. The first is budget. We do need to be self-sustaining, and there is not a huge amount of budget available for additional capital investments. There is some, but it has to be very carefully allocated, managed and spent diligently. We do work within a tightly controlled federal set of regulations and constraints and are frequently under the spotlight from auditors and others.

There are CMS (Center for Medicaid Services) regulations that define what we can and cannot do with our technology. We have security regulations that we have to exist within and a lot of IRS requirements that we have to meet and be compliant with. We have a complex set of partners to work with in Colorado and nationally—we have to work with Colorado state agencies such as the Department of Insurance and Medicaid (HCPF), we have to work very closely with a large number—we’ve currently got 17—of carriers. We have CMS and the federal marketplace (Federal Data Services Hub). We have one key vendor—CGI—but we are in a multi-vendor environment and all our projects involve having to manage multiple different organizations towards success.

The final challenge is that we’re very busy still building applications and implementing functionality, so my job is to continue to be focused on successful delivery of two very large projects, while ensuring our longer term architecture planning is completed, which is going to be critical for our long-term sustainability. That’s the classic Enterprise Architecture conundrum. I feel like we’ve got a handle on it pretty well here—because they’re both critical.

What are some of the biggest challenges that you see facing the Healthcare industry right now?

Number one is probably integration—the integration of data especially between different systems. A lot of EMR (electronic medical record) systems are relatively closed to the outside world, and it can be expensive and difficult to open them up. Even though there are some good standards out there like HL7 and EDI (Electronic Data Interchange), everyone seems to be implementing them differently.

Personal healthcare tech (mHealth and Telehealth) is not going to take off until there is more integration. For example, between whatever you’re using to track your smoking, blood pressure, weight, etc., it needs to be integrated seamlessly with your medical records and insurance provider. And until this data can be used for meaningful analytics and care planning, until they solve this integration nightmare, it’s going to be difficult really to make great strides.

Security is the second challenge. There’s a huge proliferation of new technology endpoints and there’s a lot of weak leaks around people, process and technology. The regulators are only really starting to catch up, and they’re one step behind. There’s a lot of personal data out there and it’s not always technology that’s the weak leak. We have that pretty tightly controlled here because we’re highly regulated and are technology is tightly controlled, but on the provider side especially, it’s a huge challenge and every week we see a new data breach.

The third challenge is ROI. There’s a lot of investment being made into personal health technology but because we’re in a private insurance market and a private provider market, until someone has really cracked what the ROI is for these initiatives, whether it’s tied to re-admissions or reimbursements, it’s never going to really become mainstream. And until it becomes part of the fabric of care delivery, real value is not going to be realized and health outcomes not significantly improved.

But models are changing—once the shift to outcome-based reimbursement takes hold, providers will be more incentivized to really invest in these kind of technologies and get them working. But that shift hasn’t really occurred yet, and I’ve yet to see really compelling ROI models for a lot of these new investments. I’m a believer that it really has to be the healthcare provider that drives and facilitates the engagement with patients on these new technologies. Ultimately, I believe, people, left to their own devices, will experiment and play with something for a while, but unless their healthcare provider is engaging them actively on it, it’s not something that they will persist in doing. A lot of the large hospital groups are dipping their toe in the water and seeing what sticks, but I don’t really see any system where these new technologies are becoming part of the norm of healthcare delivery.

Do you feel like there are other places that are seeing more success in this outside of the US?

I know in the UK, they’re having a lot of success with their Telehealth pilots. But their primary objective is to make people healthier, so it’s a lot easier in that environment to have a good idea, show that there’s some case for improving outcomes and get funding. In the US, proving outcomes currently isn’t enough. You have to prove that there’s some revenue to be made or cost to be saved. In some markets, they’ve experienced problems similar to the US and in some markets it’s probably been easier. That doesn’t mean they’ve had an easy time implementing them—the UK has had huge problems with integration and with getting EMR systems deployed and implemented nationally. But a lot of those are classical IT problems of change management, scope control and trying to achieve too much too quickly. The healthcare industry is about 20 years behind other industries. They’re going through all the pain with the EMR rollouts that most manufacturing companies went through with ERP 20 years ago and most banks went through 40 years ago.

How can organizations such as The Open Group and its Healthcare Forum better work with the Healthcare industry to help them achieve better results?

I think firstly bringing a perspective from other industries. Healthcare IT conferences and organizations tend to be largely made up of people who have been in healthcare most of their working lives. The Open Group brings in perspective from other industries. Also reference architectures—there’s a shortage of good reference architectures in the healthcare space and that’s something that is really The Open Group’s strong point. Models that span the entire healthcare ecosystem—including payers, providers, pharma and exchanges, IT process and especially IT architecture process—can be improved in healthcare. Healthcare IT departments aren’t as mature as other industries because the investment has not been there until now. They’re in a relative start-up mode. Enterprise Architecture—if you’re a large healthcare provider and you’re growing rapidly through M&O (like so many are right now), that’s a classic use case for having a structured Enterprise Architecture process.

Within the insurance marketplace movement, things have grown very quickly; it’s been tough work. A handful of the states have been very successful, and I think we’re not unique in that we’re a start-up organization and it’s going to be several years until we mature to fully functional, well measured l IT organization. Architecture rigor and process is key to achieving sustainability and maturity.

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duxbury_0Proteus Duxbury joined Connect for Health Colorado as Chief Technology Officer in February 2014, directing technology strategy and operations. Proteus previously served at Catholic Health Initiatives, where he led all IT activities for Virtual Health Services, a division responsible for deploying Telehealth solutions throughout the US. Prior to that, Proteus served as a Managing Consultant at the PA Consulting Group, leading technology change programs in the US and UK primarily in the healthcare and life science industry. He holds a Bachelor of Science in Information Systems Management from Bournemouth University.

 

 

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The Open Group Boston 2014 Preview: Talking People Architecture with David Foote

By The Open Group

Among all the issues that CIOs, CTOs and IT departments are facing today, staffing is likely near the top of the list of what’s keeping them up at night. Sure, there’s dealing with constant (and disruptive) technological changes and keeping up with the latest tech and business trends, such as having a Big Data, Internet of Things (IoT) or a mobile strategy, but without the right people with the right skills at the right time it’s impossible to execute on these initiatives.

Technology jobs are notoriously difficult to fill–far more difficult than positions in other industries where roles and skillsets may be much more static. And because technology is rapidly evolving, the roles for tech workers are also always in flux. Last year you may have needed an Agile developer, but today you may need a mobile developer with secure coding ability and in six months you might need an IoT developer with strong operations or logistics domain experience—with each position requiring different combinations of tech, functional area, solution and “soft” skillsets.

According to David Foote, IT Industry Analyst and co-founder of IT workforce research and advisory firm Foote Partners, the mash-up of HR systems and ad hoc people management practices most companies have been using for years to manage IT workers have become frighteningly ineffective. He says that to cope in today’s environment, companies need to architect their people infrastructure similar to how they have been architecting their technical infrastructure.

“People Architecture” is the term Foote has coined to describe the application of traditional architectural principles and practices that may already be in place elsewhere within an organization and applying them to managing the IT workforce. This includes applying such things as strategy and capability roadmaps, phase gate blueprints, benchmarks, performance metrics, governance practices and stakeholder management to human capital management (HCM).

HCM components for People Architecture typically include job definition and design, compensation, incentives and recognition, skills demand and acquisition, job and career paths, professional development and work/life balance.

Part of the dilemma for employers right now, Foote says, is that there is very little job title standardization in the marketplace and too many job titles floating around IT departments today. “There are too many dimensions and variability in jobs now that companies have gotten lost from an HR perspective. They’re unable to cope with the complexity of defining, determining pay and laying out career paths for all these jobs, for example. For many, serious retention and hiring problems are showing up for the first time. Work-around solutions used for years to cope with systemic weaknesses in their people management systems have stopped working,” says Foote. “Recruiters start picking off their best people and candidates are suddenly rejecting offers and a panic sets in. Tensions are palpable in their IT workforce. These IT realities are pervasive.”

Twenty-five years ago, Foote says, defining roles in IT departments was easier. But then the Internet exploded and technology became far more customer-facing, shifting basic IT responsibilities from highly technical people deep within companies to roles requiring more visibility and transparency within and outside the enterprise. Large chunks of IT budgets moved into the business lines while traditional IT became more of a business itself.

According to Foote, IT roles became siloed not just by technology but by functional areas such as finance and accounting, operations and logistics, sales, marketing and HR systems, and by industry knowledge and customer familiarity. Then the IT professional services industry rapidly expanded to compete with their customers for talent in the marketplace. Even the architect role changed: an Enterprise Architect today can specialize in applications, security or data architecture among others, or focus on a specific industry such as energy, retail or healthcare.

Foote likens the fragmentation of IT jobs and skillsets that’s happening now to the emergence of IT architecture 25 years ago. Just as technical architecture practices emerged to help make sense of the disparate systems rapidly growing within companies and how best to determine the right future tech investments, a people architecture approach today helps organizations better manage an IT workforce spread through the enterprise with roles ranging from architects and analysts to a wide variety of engineers, developers and project and program managers.

“Technical architecture practices were successful because—when you did them well—companies achieved an understanding of what they have systems-wise and then connected it to where they were going and how they were going to get there, all within a process inclusive of all the various stakeholders who shared the risk in the outcome. It helped clearly define enterprise technology capabilities and gave companies more options and flexibility going forward,” according to Foote.

“Right now employers desperately need to incorporate in human capital management systems and practice the same straightforward, inclusive architecture approaches companies are already using in other areas of their businesses. This can go a long way toward not just lessening staffing shortages but also executing more predictably and being more agile in face of constant uncertainties and the accelerating pace of change. Ultimately this translates into a more effective workforce whether they are full-timers or the contingent workforce of part-timers, consultants and contractors.

“It always comes down to your people. That’s not a platitude but a fact,” insists Foote. “If you’re not competitive in today’s labor marketplace and you’re not an employer where people want to work, you’re dead.”

One industry that he says has gotten it right is the consulting industry. “After all, their assets walk out the door every night. Consulting groups within firms such as IBM and Accenture have been good at architecting their staffing because it’s their job to get out in front of what’s coming technologically. Because these firms must anticipate customer needs before they get the call to implement services, they have to be ahead of the curve in already identifying and hiring the bench strength needed to fulfill demand. They do many things right to hire, develop and keep the staff they need in place.”

Unfortunately, many companies take too much of a just-in-time approach to their workforce so they are always managing staffing from a position of scarcity rather than looking ahead, Foote says. But, this is changing, in part due to companies being tired of never having the people they need and being able to execute predictably.

The key is to put a structure in place that addresses a strategy around what a company needs and when. This applies not just to the hiring process, but also to compensation, training and advancement.

“Architecting anything allows you to be able to, in a more organized way, be more agile in dealing with anything that comes at you. That’s the beauty of architecture. You plan for the fact that you’re going to continue to scale and continue to change systems, the world’s going to continue to change, but you have an orderly way to manage the governance, planning and execution of that, the strategy of that and the implementation of decisions knowing that the architecture provides a more agile and flexible modular approach,” he said.

Foote says organizations such as The Open Group can lend themselves to facilitating People Architecture in a couple different ways. First, through extending the principles of architecture to human capital management, and second through vendor-independent, expertise and experience driven certifications, such as TOGAF® or OpenCA and OpenCITS, that help companies define core competencies for people and that provide opportunities for training and career advancement.

“I’m pretty bullish on many vendor-independent certifications in general, particularly where a defined book of knowledge exists that’s achieved wide acceptance in the industry. And that’s what you’ve got with The Open Group. Nobody’s challenging the architectural framework supremacy of TOGAF that that I’m aware of. In fact, large vendors with their own certifications participated actively in developing the framework and applying it very successfully to their business models,” he said.

Although the process of implementing People Architecture can be difficult and may take several years to master (much like Enterprise Architecture), Foote says it is making a huge difference for companies that implement it.

To learn more about People Architecture and models for implementing it, plan to attend Foote’s session at The Open Group Boston 2014 on Tuesday July 22. Foote’s session will address how architectural principles are being applied to human capital so that organizations can better manage their workforces from hiring and training through compensation, incentives and advancement. He will also discuss how career paths for EAs can be architected. Following the conference, the session proceedings will be available to Open Group members and conference attendees at www.opengroup.org.

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footeDavid Foote is an IT industry research pioneer, innovator, and one of the most quoted industry analysts on global IT workforce trends and multiple facets of the human side of technology value creation. His two decades of groundbreaking deep research and analysis of IT-business cross-skilling and technology/business management integration and leading the industry in innovative IT skills demand and compensation benchmarking has earned him a place on a short list of thought leaders in IT human capital management.

A former Gartner and META Group analyst, David leads the research and analytical practice groups at Foote Partners that reach 2,300 customers on six continents.

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