Category Archives: Standards

Looking Forward to a New Year

By Steve Nunn, President & CEO, The Open Group

As another new year begins, I would like to wish our members and The Open Group community a happy, healthy and prosperous 2017! It’s been nearly 15 months since I transitioned into my new role as the CEO of The Open Group, and I can’t believe how quickly that time has gone.

As I look back, it was at The Open Group Edinburgh event in October 2015 that we launched the IT4IT™ Reference Architecture, Version 2.0. In just the short time since then, I’m pleased to report that IT4IT has garnered attention worldwide. The IT4IT Certification for People program that we launched last January—one of the first things I had the pleasure of doing as CEO—has also gained momentum quickly. Wherever I have traveled over the past year, IT4IT has been a topic of great interest, particularly in countries like India and Brazil. There is a lot of potential for the standard globally, and we can look forward to various new IT4IT guides and whitepapers as well as an update to the technical standard in the first few months of this year.

Looking back more at 2016, there were a number of events that stood out throughout the course of the year. We were excited to welcome back Fujitsu as a Platinum member in April. The Open Group global reach and continued work creating standards relevant to how technology is impacting the worldwide business climate were key factors in Fujitsu’s decision to rejoin, and it’s great to have them back.

In addition to Fujitsu, we welcomed 86 new members in 2016. Our membership has been increasingly steadily over the past several years—we now have more than 511 members in 42 countries. Our own footprint continues to expand, with staff and local partners now in 12 countries. We have now reached a point where not a month goes by without The Open Group hosting an event somewhere in the world. In fact, more than 66,000 people attended an Open Group event either online or in-person last year. That’s a big number, and it is a reflection on the interest in the work that is going on inside The Open Group.

I believe this tremendous growth in membership and participation in our activities is due to a number of factors, including our focus on Enterprise Architecture and the continued take up of TOGAF® and ArchiMate® – Open Group standards – and the ecosystems around them.  In 2016, we successfully held the first TOGAF User Group meetings worldwide, and we also released the first part of the Open Business Architecture standard. Members can look forward to additions to that standard this year, as well as updates to the ArchiMate certifications, to reflect the latest version of the standard – ArchiMate® 3.0.

In addition, our work with The Open Group FACE™ Consortium has had a significant impact on growth—the consortium added 13 members last year, and it is literally setting the standard for how government customers buy from suppliers in the avionics market. Indeed, such has the success of The Open Group FACE Consortium been that it will be spinning out its own new consortium later this year, SOSA, or the Sensor Open Systems Architecture. The FACE Consortium was also nominated for the 2017 Aviation Week Awards in Innovation for assuming that software conforming to the FACE technical standard is open, portable and reusable. Watch this space for more information on that in the coming months.

2017 will bring new work from our Security and Open Platform 3.0™ Forums as well. The Security and Architecture Forums are working together to integrate security architectures into TOGAF, and we can expect updates to the O-ISM3 security, and OpenFair Risk Analysis and Taxonomy standards later in the year. The Open Platform 3.0 Forum has been hard at work developing materials that they can contribute to the vast topic of convergence, including the areas of Cloud Governance, Data Lakes, and Digital Business Strategy and Customer Experience. Look for new developments in those areas throughout the course of this year.

As the ever-growing need for businesses to transform for the digital world continues to disrupt industries and governments worldwide, we expect The Open Group influence to reach far and wide. Standards can help enterprises navigate these rapid changes. I believe The Open Group vision of Boundaryless Information Flow™ is coming to fruition through the work our Forums and Working Groups are doing. Look for us to take Boundaryless Information Flow one step further in January when we announce our latest Forum, the Open Process Automation™ Forum, at our upcoming San Francisco event. This promises to be a real cross-industry activity, bringing together industries as disparate as oil and gas, mining and metals, food and beverage, pulp and paper, pharmaceutical, petrochemical, utilities, and others. Stay tuned at the end of January to learn more about what some prominent companies in these industries have in common, in addition to being members of The Open Group!

With all of these activities to look forward to in 2017—and undoubtedly many more we have yet to see—all signs point to an active, productive and fulfilling year. I look forward to working with all of you throughout the next 12 months.

Happy New Year!

by-steve-nunn-president-and-ceo

by-steve-nunn-president-and-ceoSteve Nunn is President and CEO of The Open Group – a global consortium that enables the achievement of business objectives through IT standards. He is also President of the Association of Enterprise Architects (AEA).

Steve joined The Open Group in 1993, spending the majority of his time as Chief Operating Officer and General Counsel.   He was also CEO of the AEA from 2010 until 2015.

Steve is a lawyer by training, has an L.L.B. (Hons) in Law with French and retains a current legal practicing certificate.  Having spent most of his life in the UK, Steve has lived in the San Francisco Bay Area since 2007. He enjoys spending time with his family, walking, playing golf, 80s music, and is a lifelong West Ham United fan.

@theopengroup @stevenunn

 

 

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Filed under ArchiMate®, Boundaryless Information Flow™, Business Transformation, Digital Transformation, Enterprise Architecture, FACE™, IT4IT, Open Platform 3.0, Open Process Automation, Standards, Steve Nunn, Uncategorized

TOGAF® User Group Meetings

By The Open Group

Since its inception more than two decades ago, TOGAF®, an Open Group standard, has grown to become the de facto global framework for creating Enterprise Architectures.

Thousands of companies worldwide have adopted and adapted TOGAF to transform their businesses. Facts about TOGAF include:

  • 80% of the Fortune Top 50 companies use TOGAF
  • Over 60,000 individuals hold certifications in TOGAF 9
  • TOGAF users are based in 120 countries
  • Greater than 60 accredited training courses available globally

The Open Group wants to ensure that TOGAF maintains its momentum worldwide and realizes that doing so cannot be done without capturing the voices beyond the The Open Group members.  Additionally, there is an increase in the number of licensed TOGAF professionals who want to follow up their training with a forum for discussion and sharing. Thus, there is an opportunity to provide TOGAF Users to easily Share, get Enlightenment, and Express their needs (’SEE’ TOGAF).

The starting off point for The Open Group was to begin hosting TOGAF User Group Meetings, which move in a direction where users get more involved in their structure. With these meetings, The Open Group gets an opportunity to Harvest ideas on use, Educate users, have Access to larger user base and broader set of Requirements (‘HEAR’ about TOGAF use).

The User Group Meetings are open to all interested people and are free to attend.

So there is a win-win for TOGAF Users to meet. This part of the story is yet to be written!

For the upcoming TOGAF® User Group Meeting in San Francisco, CA on January 30, 2017, please visit here.

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Digital Transformation and Business Architecture (Part 3 of 3) – Presented by Dr. Giovanni Traverso, Huawei

At The Open Group Shanghai 2016 summit, we invited Dr. Giovanni Traverso, Chief Business Architect of HUAWEI Service Strategy and Architecture Practice, to give a keynote speech “New Open Business Architecture (O-BA) to Support the Construction of Digital Business and Smart Government”.

Huawei was a Diamond Sponsor of this summit, is a Platinum Member of The Open Group and is participating in the creation of the O-BA standard, whose first part was launched in July 2016 as a Preliminary Standard.

Giovanni, who is leading this effort within Huawei, presented Huawei’s perspectives on Business Architecture coming from best practices.

This is part three in a three-part series.

Part #3 – Business Architecture Answers the Business Questions

When undertaking our transformation efforts we need to answer, in a structured way, the inherent business questions, such as:

How to ensure a common understanding of the transformation within the organization? How to align an organization and its constituents towards the goal? Do we have the necessary skills and what changes should we drive, even in our organization’s culture? How to unleash technology-driven innovation to lead business model innovation, as well as the other way round? How processes and organization are going to be impacted? How to identify priorities? What about dependencies and risks?

More importantly: how to focus investments and ensure that the desired business outcomes will be achieved?

How our partners and channels are going to be impacted? How our customers/users’ experience is going to be impacted?

The O-BA standard reflects industry best practices addressing the business view of a transformation.

There are several techniques to uncover the capabilities that a business requires. Any of them will try to combine the business stakeholders’ views in a holistic picture.

For a digital business sake, as discussed in my first post, we want to start from the intended customer experience and make it our baseline.

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The relevant customer journeys – tailored to customer personas – represent the main value stream which is the backbone of the whole story.

Along with the customer’s perspective, we will align the relevant value streams of the other stakeholders, including their pursued goals.

Then we will analyze them and uncover the capabilities that enable each stage of the value streams and their respective relationships (e.g. information exchanges).

Capabilities will be mapped to organization and then we will identify respective enablers such as technology, application, process, information, skills.

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Business Architecture builds the overall picture and connects the dots in a logical a traceable framework, generating blueprints that represent the current state, future state and possible intermediate steps of a transformation. In this way we can find answers to our business questions.

O-BA describes a typical transformation lifecycle providing a framework for two dimensions of traceability: vertical (from strategy to competitive assessment to investment to implementation and outcomes) and horizontal (across different domains of the organization/ecosystem).

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While O-BA is meant to be the overarching framework for a transformation, technology, data and application architectures complete the view according to TOGAF®, an Open Group standard.

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Diagrams like the one reported below show the overall transformation and traceability across business objectives (customer’s being on top), capabilities and their interconnections allowing to achieve the objectives, metrics that audit capabilities, applications and relevant investments enabling the desired capabilities. In a closed loop, business architecture provides a framework to control the return on investment from a complex transformation.

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More details on this example are given in the linked whitepaper produced by Huawei and published by The Open Group: https://www2.opengroup.org/ogsys/catalog/W166

The O-BA is an initiative in the Architecture Forum of The Open Group, driven by six Platinum Members (Capgemini, Hewlett Packard Enterprise, Huawei, IBM, Oracle, Philips) It intends to standardize a common understanding of Business Architecture, reflecting the best practices in the industry (most notably with a contribution by the Business Architecture Guild).

Members of The Open Group can download this presentation at http://www.opengroup.org/public/member/proceedings/Shanghai-2016-08/Presentations/Giovanni%20Traverso-Keynote4.pdf

The Open Group Shanghai 2016 event proceedings are available for members here.

@theopengroup

by-the-open-group

Giovanni Traverso
• 28 years in telecom business, Product Management, R&D Management, Business Unit GM and Transformation Management
• Now leading the Enterprise Architecture team at Huawei Global Services, Standard and Industry Development Dept.
• Certified Business Architect (CBA)
• Contributor to The Open Group Open Business Architecture (O-BA) Standard and the Business Architecture Body of Knowledge (BizBOK)

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The Open Group Open Process Automation™ Forum

Recently, a new Forum commenced operation in The Open Group, the Open Process Automation™ Forum. This new Forum is focused on developing a standards-based, open, secure, interoperable process control architecture.

The first Members Meeting of the Forum was held in San Francisco, CA, November 16-17, 2016. The industry turnout for this initial meeting was impressive with 57 individuals from 30 different organizations attending.

Forum membership (as of December 7, 2016) includes the following companies:

ABB Fujitsu nxtControl
Accenture
Aramco Services Georgia-Pacific Praxair
ARC Advisory Group Process Systems Enterprise
Aspen Technology Hewlett-Packard Enterprise
ATE Enterprises Honeywell International, Inc. Radix
Huawei RealIRM
BASF Relcom
IBM RTI
Cirrus Link Solutions Inductive Automation
Cisco Intel Schneider Electric
Conexiam Invista Shell
Curtiss-Wright Siemens
Koch Industries
Dow Chemical TATA
Lockheed Martin
Emerson Process Yokogawa Electric Corporation
Ernst & Young Merck & Co.
ExxonMobil MITRE
Mocana

 

A bit of history about this initiative:

ExxonMobil has been describing the need for a new standards effort in the process control automation area for several years. In early 2016, having seen how a similar Open Group standards effort transformed the avionics industry, ExxonMobil approached The Open Group to potentially initiate a new open standards activity. From March to September 2016, ExxonMobil and staff of The Open Group worked to build a “coalition of the willing” comprising end-users in the process control-using industries, and their key suppliers. During this time, several public outreach meetings were held including face-to-face meetings and webcasts to build interest and identify early participants. As the incubation work proceeded, it became clear that there was interest from at least seven different industry sectors who use similar systems from the same community of suppliers in their process manufacturing environments:

  • Food and Beverage
  • Mining and Metals
  • Oil and Gas
  • Petrochemical
  • Pharmaceutical
  • Pulp and Paper
  • Utilities

During the first Members Meeting, a few things quickly became very clear:

  • There are common pain points spanning multiple sectors, such as aging control systems and the need for more rapid technology insertion, which the proposed standards effort can address to the benefit of customers,
  • There are common pain points shared by suppliers in current business models,
  • The supplier community is eager to work collaboratively on an open standard for process control, and,
  • The participants had a common understanding that a “win-win” outcome providing benefits to end users and suppliers is essential, and the members of the Forum are keen to deliver on this.

During the meeting, the scope of the standards effort was discussed, the Forum organization was created, and interim leadership roles were identified for the Forum and for specific work groups. Interim co-chairs for the Forum will be Don Bartusiak of ExxonMobil and Trevor Cusworth of Schneider Electric. The Business work group described a number of specific sub-groups in the areas of outreach, business guide development and certification. An Enterprise Architecture work group was formed, as was a Technical workgroup. The Technical workgroup conducted a pain points brainstorming exercise that will be useful in shaping and defining the technical standard. In addition, the Forum is working on a standards landscape document, which will survey other standards for possible incorporation into the “standard of standards” that we expect to create. Outreach and engagement with other standards organizations is currently being discussed and planned.

A great deal of progress was made in a short period of time, and the members are eager to move forward quickly with development of the technical standard, marketing and outreach activities, and consideration of a certification program. During the meeting, it was also clear that the proposed standard could be transformational in a way that is positive for all industry participants. The word “renaissance” was used (and embraced by the participants) to describe the potential impact of this standards effort on the industry at large.

Launch events are being planned to coincide with The Open Group San Francisco 2017, January 30 – February 2 and the ARC Industry Forum meeting in Orlando, February 6-9, 2017.

Last but not least, we encourage customer organizations, suppliers, academics, systems integrators, and others who want to help influence the direction of the standards development to become members and get directly involved. Details on how to join may be found here.

For those who want to track the progress of this initiative, we have established an open LinkedIn group for the Forum, and will use this to communicate upcoming events and ongoing progress. To follow, join and/or invite others who may be interested, please click here.

The website for the Open Process Automation Forum is accessible here.

Presentation about automation to improve reliability and productivity

http://www.opengroup.org

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Digital Transformation and Business Architecture (Part 1 of 3) – Presented by Dr. Giovanni Traverso, Huawei

At The Open Group Shanghai 2016 summit, we invited Dr. Giovanni Traverso, Chief Business Architect of HUAWEI Service Strategy and Architecture Practice, to give a keynote speech “New Open Business Architecture (O-BA) to Support the Construction of Digital Business and Smart Government”.

This is part one in a three-part series.

Part 1 – The Digital Transformation Challenges

Huawei was a Diamond Sponsor of this summit, is a Platinum Member of The Open Group and is participating in the creation of the O-BA standard, whose first part was launched in July 2016 as a Preliminary Standard.

Giovanni, who is leading this effort within Huawei, presented Huawei’s perspectives on Business Architecture coming from best practices.

The O-BA standard focuses on transformation as a discipline to support business decision-making and bridge business and ICT. It does so on one hand, by aligning all aspects and actors of a transformation with business vision and goals while, on the other hand, answering the business questions regarding structural investments, especially in ICT.

Giovanni’s speech introduced the O-BA standard and illustrated how it can serve governments and businesses striving to become “digital”.

First, we should characterize what is digital transformation is about. According to Huawei practice, digital business entails three constituents driving (left to right) and enabling (right to left) each other: experience, operations and (ICT) infrastructure. Each one of these involves its own challenges that have to be addressed holistically.

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Experience is the ultimate front-end between a digital business and its users, customers, partners, employees. Digital businesses deliver experience to them through products, services and their combination, individually or as part of an ecosystem. In order to help focus, Huawei has encoded the key principles of experience as “ROADS” (Real-time, On-demand, All-online, DIY, Social).

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For example, customers of digital service providers typically will learn about new services through their social network, will want to be empowered to subscribe and consume their services in real-time when they need it, typically through app or portal.

Operation had been revolutionized by digital disruptors in terms of agility, personalization, innovation speed. Thanks to digital technologies, operations are going to be automated, simplified, precisely informed, promptly reactive and even predictive. The new mode of operations is open and collaborative, goes by fast cycles delivering incremental functionality, which allows for adaptive “fail-fast” approach with limited risk.

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For example, Amazon makes a production change every 11 seconds, Google deploys over 2 billion containers each week, Netflix launched simultaneously in 131 countries (source: state of DevOps report 2015).

ICT Infrastructure is consistently pushed to become open, resilient, self-healing, scalable.

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Business Architecture coordinates all these evolutions, ensuring that investments will actually deliver the desired business outcome. Beyond decision-making, Business Architecture can also facilitate the actual execution of the new agile service delivery model. We will discuss this in the next post.

Members of The Open Group can download this presentation at http://www.opengroup.org/public/member/proceedings/Shanghai-2016-08/Presentations/Giovanni%20Traverso-Keynote4.pdf

The Open Group Shanghai 2016 event proceedings are available for members here.

@theopengroup

by-the-open-group

Giovanni Traverso
• 28 years in telecom business, Product Management, R&D Management, Business Unit GM and Transformation Management
• Now leading the Enterprise Architecture team at Huawei Global Services, Standard and Industry Development Dept.
• Certified Business Architect (CBA)
• Contributor to The Open Group Open Business Architecture (O-BA) Standard and the Business Architecture Body of Knowledge (BizBOK)

 

 

 

 

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Customer Experience and Transformation in Financial Services – Part 2

By Stuart Macgregor, CEO, Real IRM and The Open Group South Africa

This is Part 2 of a two part series.  Part 1 can be found here.

The financial services industry is undergoing massive change. For financial services companies to achieve transformation and digitisation, addressing the architectural foundations is the starting point.

Chapter 4 – Customer Engagement Model (Part 2)

So, this is not simply about technological advancement. The harsh reality is that financial companies have fallen out of touch with customer needs. These disruptors have arrived to serve an unmet need.

In the era of the modern-day customer, more demanding and empowered than that of decades ago, should banks still be rolling out vanilla services like cheque accounts, credit cards, and rewards programmes?

Should banks still be classifying customers into vast segments based primarily on monthly income? Should they still be quantifying affordability and risk in the same way? Should they still seek to derive their non-interest income from monthly fees and transaction fees?

The entrance of new disruptors proves that most of these practices, embedded into the anatomy of a bank, often prevent the bank from meeting the modern customers’ expectations.

For another perspective on the needs and expectations of digital customers, we can look at The Open Group ‘ROADS principles’. These can be summarised as follows:

  • Real Time: The customer can commence or progress a journey at any time, with responses and updates tailored in real-time to meet the customer’s evolving needs.
  • On Demand:The service provider has the flexibility to adapt and adjust the services delivered to the customer on demand.
  • All-Online: The customer is able to accomplish all activities and transactions associated with the journey online. An offline channel need only be used if absolutely required to handle a physical product or service.
  • Do-It-Yourself: The customer is provided with the capability, and has the choice, to complete the activities and transactions associated with the journey alone. Interaction with a service provider representative is not required.
  • Social: The journey is tightly integrated with digital social media, so at any stage of the journey the customer is able to access social media for advice, recommendations and feedback.

Financial companies’ general inability to respond  to these demands can often be linked back to fundamental architectures and tools.

These are the outdated architectures that are unable to conduct impact assessments, not able to fully leverage resources and technical capabilities, and not able to find meaning in the masses of customer data and documentation stored inside their four walls.

We can define this as the concept of Big Data: teasing out the learnings from the masses of structured and unstructured customer data streamed from various sources and systems – with the goal of creating customer-specific engagement tactics.

Chapter 5 – Customer Engagement Model (Part 3)

To survive the onslaught from advancing attackers to the financial services industry, we advocate ‘outside-in thinking’ – working backwards from the customer frontline (designing the experiences that customers will love) – and then plotting the internal processes that support the customer experience vision.

This systems-thinking approach uncovers the optimal roles and relationships within the organisation, the metrics on which to evaluate success, and maps the reinforcing loops that will accelerate change and enhance value delivery. Keeping EA at the centre of the reengineering process ensures a sharp focus on the information that’s required to make these new processes successful.

Organisations can now understand where underlying data is housed, how it can be best integrated between systems and across functions, and how information should be delivered to  those team members that are tasked with supporting customers. This is brought to bear in business capability maps, causal loop diagrams, process models, value-chain diagramming, and the like.

The leading financial services firms of tomorrow will use these these insights, to invest in architectures and systems that creates superior customer experiences. Ultimately, this is the only approach that can help financial companies stay relevant in the face of new and disruptive threats.

It goes without saying that customer experience is felt at the various digital and traditional touchpoints with which customers engage. But ‘touchpoints’ in the truest sense of the word incorporate any engagement that the consumer has with the financial services brand, products, services, or staff.

A number of models seek to define these customer touchpoints. The Open Group’s Customer Experience Reference Model, for example, notes that any organisation needs to look beyond itself, and take a wider view of the broader ecosystem when understanding the customer journey.

To measure progress, the Customer Experience Reference Model suggests defining a set of key performance indicators. Depending on the organisation and its strategy, these could take a multitude of forms – including Net Promoter Scores, click-through rates, churn rates, average revenue per customer, cart abandonment rates, valency indexes, conversion rates, and much more.

Scenario: customer journey in the Insurance sector

Insurance policies traditionally involve reams of paper, reliance on customers to enter information accurately, and high back-office administration costs. They are typically updated on an annual basis, and do not reflect an accurate assessment of risk.

As a result of the inefficiencies in the system, insurance tends to be a very expensive item in household budgets.

But in the next few years, insurers will start consolidating feeds from connected devices within cars, geolocation data from smartphones, smart keys, as well as wearables (like smartwatches) and even ‘digestibles’.

Known in technology circles as the Internet of Things, this example shows how an insurer can far more accurately assess and mitigate risk – by tracking everything from driving behaviour, to cardiovascular activity, smoking habits, or whether or not a person has locked their house.

By developing customer insights at this level of detailed granularity, insurers are able to package accurate, personalised insurance premiums (rather than segmenting customers into broad risk groups, as they do today). Of course, customers who want to benefit from preferential, personalised rates, will sacrifice some level of personal privacy.

This leads us to the ethics of tracking intimate customer details for use in designing such personalised and fluid insurance policies – which dynamically adjust based on customer behaviour (for example, a trip overseas to a country with high crime statistics many cause a temporary increase in one’s premium).

Chapter 6 – Development Agenda

When considering the financial services enterprise of the future, it’s not enough to simply aim for excellent customer service. Unless this generates higher levels of profitability, better customer retention or improved customer acquisition, any customer service effort is going to be in vain.

These three questions above – relating to a financial services company’s business goals – should be guiding forces for the architecture team, as they create the optimal design for the future.

In essence, the firm’s architecture needs to enable the flow of information and investment of resources to the markets, segments, demographics and regions that offer the most profitable opportunities at any given time.

As financial companies come under increasing threat from new competitors, narrowing the focus to certain services, or markets, is a way of maintaining profitable leadership positions in certain areas – while exiting over-traded, hyper-competitive or unprofitable markets.

However, this is no longer a static, consistent landscape. To succeed, financial services firms should be “striving for continuous improvement and renewal”, as a recent Backbase/Efma Report describes.

From an EA perspective, this means one’s technology and application architecture must support the rapid and continuous delivery of new services and features to customers.

“The innovation planning cycle is far too slow for today’s high-speed digital banking environment,” notes the report, adding: “Today’s big digital players in other industries test and learn as part of an iterative process. They’re agile and experiment in real-time with their own customer base. The decision-making process is much faster and the rollout is fast … very fast!”

Across the breadth of architecture realms – from business, information, data, applications and technology – one’s EA frameworks should be designed with rapid prototyping and delivery in mind. By doing so, financial companies are able to capture new windows of profitable opportunity, react faster to changing customer demands, and produce new services in a cost-effective manner.

This could come in the form of instant home loan approvals, new services for wearable technology, or a concerted focus on a niche insurance segment. The specific opportunities depend on the company in question and where they are at a given point in time.

In short, having the architecture to unleash digital transformation, opens up new value streams for the bank and increasing satisfaction and loyalty for the customer.

Chapter 7 – Capabilities and Insights

The final McKinsey “timeless tests” looks at how to anchor customer centricity within the organisation, and align governance approaches and staff incentives to fit with the new customer service ethos.

From an Enterprise Architecture perspective, this is reflected in the maturity from ‘EA execution’ to ‘EA leadership’. The concluding article in our series on change management in EA highlights the hallmarks of a mature-state EA practice – the state of EA leadership.

EA helps to create the structures that will thrust customer-centricity to the forefront of all business decision-making. Specifically, it can support the organisation’s customer experience vision in the areas of:

  • Mandate and governance
  • Strategy
  • Performance management
  • Organisational transformation

But the reality is that so few firms ultimately realise the value of EA in their customer experience and digital transformation ambitions. Another of our series – on what catastrophes often cause the EA practice to implode – addresses the common reasons for this.

Because so few organisations fully leverage the power of EA, those financial services firms that do get it right, have a tremendous competitive advantage over their peers – who continue struggle away in disjointed silos, bondaged in unnecessary red tape.

Addressing these final two McKinsey tests requires a relentless focus on customer insights; and then ensuring the voice of the customer be heard when structuring, integrating or re-designing all business processes.

Without EA at the core of these endeavours, the organisation’s leadership cannot take full advantage of these rich sources of insights. More specifically, they wouldn’t have the architectural work products to improve resource allocation, reduce decision-making biases, assess strategic alternatives, manage change and complexity, or chart the innovation journey.

In this way, EA provides deeper insights into the unintended consequences of certain potential decisions – like company restructuring or deciding to enter a new market.

To conclude, the McKinsey tests represent the important questions that financial services organisations need to ask themselves as they seek to put the customer at the heart of their digital transformation initiatives.

And, as we’ve teased out in this series, having the fundamental architecture to support these goals, and prepare for an uncertain and volatile future, is an absolute prerequisite for success.

by-stuart-macgregor-ceo-real-irmStuart Macgregor is the CEO, Real IRM Solutions and  The Open Group South Africa. Through his personal achievements, he has gained the reputation of an Enterprise Architecture and IT Governance specialist, both in South Africa and internationally.

Macgregor participated in the development of the Microsoft Enterprise Computing Roadmap in Seattle. He was then invited by John Zachman to Scottsdale, Arizona to present a paper on using the Zachman framework to implement ERP systems. In addition, Macgregor was selected as a member of both the SAP AG Global Customer Council for Knowledge Management, and of the panel that developed COBIT 3rd Edition Management Guidelines. He has also assisted a global Life Sciences manufacturer to define their IT Governance framework, a major financial institution to define their global, regional and local IT organizational designs and strategy. He was also selected as a core member of the team that developed the South African Breweries (SABMiller) plc global IT strategy.

Stuart, as the lead researcher, assisted the IT Governance Institute map CobiT 4.0 to TOGAF®, an Open Group standard. This mapping document was published by ISACA and The Open Group. He participated in the COBIT 5 development workshop held in London in 2010.

 

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Customer Experience and Transformation In Financial Services – Part 1

By Stuart Macgregor, CEO, Real IRM and The Open Group South Africa

This is Part 1 in a two part series.

Chapter 1 – Introduction

The financial services industry is undergoing massive change.

Around the world, organisations offering banking, lending, insurance, trading, and payments services are realising that customer-centric, design-led approaches can revolutionise the way that financial services are delivered to a new generation of consumers.

But to achieve practical, sustainable transformation, financial services firms must turn their attention to their business architecture. Combined with sage business strategies, having the right architecture unleashes the dynamism and agility to succeed in the new digital era.

In other words, for financial services companies to achieve transformation and digitisation, addressing the architectural foundations is the starting point.

In this series, we’ll apply an Enterprise Architecture lens to McKinsey’s ‘10 timeless tests’ from its ‘Banking on customer centricity’ white paper’ – a litmus test for an organisation’s customer experience qualities.

These ‘tests’ are essentially questions that financial services companies need to ask themselves, areas to address, and activities they need to perform as they steer their way towards transformation and customer-centricity. They are housed within four distinct (but inter-related) groupings:

  • Vision and positioning: shaping the strategic direction, so that customers want to use your products and services, and employees feel highly engaged within your organisation.
  • Customer engagement model: defining the solutions and developing the go-to-market approach that will deliver exceptional customer value.
  • Development agenda: Ensuring your short-term growth and long-term success, with customer-oriented activities rooted in the pursuit of economic goals (and not just customer satisfaction).
  • Organisation, capabilities and insights: Anchoring customer-centricity within your organisation by creating optimal structures, incentives, capabilities and governance frameworks.

In this series, we’ll explore how the right business architecture is essential for your organisation to progress along any of these four dimensions.

Business architecture becomes the common vocabulary to define your organisation – across business units, silos, or geographies. It allows leaders to understand the complex, organic structures of the organisation. It forms the basis for strategy implementation and the context for programmes and projects.

More broadly, we’ll look at how Enterprise Architecture helps to free financial services firms from the tangled mess of legacy infrastructure, entwined over decades and decades, which hold them back from delivering exceptional customer experiences.

We’ll explore the ways in which Business Architecture supports rapid innovation and helps financial services companies to fend off the challenges from leaner start-ups in the FinTech space, from local telcos and retailers, and borderless digital giants like Google, Apple and Facebook.

And we’ll show how business architecture brings a new richness of customer insights – to develop closer customer engagement and tailor-made solutions.

Chapter 2 – Visioning and Positioning

Across nearly all industries, a brand’s value is increasingly dependent on the delivery of exceptional customer experiences.

In fact, services-oriented industries are those with the most burning need to create superb experiences that surround the direct (transactional) engagement.

Whether they’re in wealth management, business asset financing, general retail banking, insurance, or anything in-between, financial services firms will only remain relevant by continually delighting their customers. For this reason, embedding experience design into every facet of their services has become the mantra for any forward-thinking financial services organisation.

But – with often millions of customers to look after – so many financial organisations are struggling to translate these lofty ideals into tangible reality.

As noted by this Open Group paper titled Roads to a digital customer experience new technologies “are rendering obsolete the traditional frameworks and models that companies have been using to capture and design customer journeys and customer experiences”.

The answer? Start with the architectural building blocks

It’s only by developing the right architectures, processes, and systems that the organisation’s customer experience vision can find solid footing. By taking an Enterprise Architecture (EA) approach to experience design, the vision becomes a defined set of behaviours, incentives, and operational processes.

Ultimately, this spawns a new culture of customer-centricity that delivers meaningful enhancements to customers’ experiences. Empowered by new technologies and unshackled from outdated ways-of-working, staff are given the tools to execute on the customer experience vision.

EA enables the organisation to build a clear roadmap to transition from its current state, to its desired target state – by looking through the lenses of Business, Information, Data, Applications, and Technology (BIDAT).

By developing the roadmap in the context of these five domains, the organisation can pinpoint exactly how EA can facilitate the organisation’s goals of delivering exceptional customer experiences.

It unearths the complex inter-relationships within the organisation that impact customer experience, supports those that are responsible for designing and implementing the change.

For instance, EA helps firms understand where their customers’ data is housed, helps to eliminate duplications of this content, or identify overlapping systems that are trying to achieve the same objectives.

Ensure the brand and vision are guiding behaviour

As the financial services organisation moves from a product focus, to a customer experience focus, it becomes imperative to look at the internal company culture –  and eliminate the ways-of-working, cultures and habits that are no longer competitive.

This requires all areas of the organisation to come together and agree on the vision, and the definition of the target state that everyone will work towards.

By taking a transformative, almost ‘entrepreneurial’ approach to one’s operations, it becomes possible to start optimising and digitising processes, and decluttering wherever inefficiencies exist.

At a foundational level, EA enables the organisation to clearly delineate and distinguish between one’s functions, processes and capabilities.

EA enables the organisation’s leadership to link roles to processes, generate useful process guides, and define the training needs analysis for those various roles. Not only does this give individuals clear career paths; it also reduces the costs of producing training material (now that roles and processes are clarified and standardised).

Chapter 3 – Customer Engagement Model (Part 1)

In its paper ‘Disrupting beliefs: a new approach to business-model innovation’ McKinsey’s starting point is that “every industry is built around long-standing, often implicit, beliefs about how to make money”.

In retail banking for example, these beliefs include industry concepts like ‘share of wallet’, ‘cross-sell opportunities’, ‘acquisition costs’, and ‘lifecycle value’, among many others.

“[These beliefs] are often considered inviolable, “ continues the McKinsey paper, “until someone comes along to violate them. Almost always, it’s an attacker from outside the industry.”

Nowhere is this more apt than in financial services. Attackers from other industries are certainly threatening to invade the hallowed turf once reserved exclusively for banks, insurers, investment and trading providers, and others.

In retail banking, for example, these disruptive forces include the likes of:

  • Mobile wallets (such as M-Pesa)
  • New payments solutions (like Apple Pay or Square)
  • Cryptocurrencies (such a bitcoin)
  • Social lending (eg The Lending Club or Prosper)
  • Personal financial management tools (like Moven)
  • Crowdfunding (eg KickStarter)
  • Non-banks offering financial services (like Virgin or Discovery)

Other areas of financial services are certainly not immune to change as well. In the insurance realm, for example, disruptions like:

  • Usage-based vehicle insurance using GPS and accelerometers in smartphones or sensors
  • Online insurance aggregators and marketplaces
  • Other industries encroaching (eg insurance bundled offers from cellular providers or retailers)
  • Peer-to-peer insurance networks
  • Autonomous, self-driving vehicles in the not-too-distant future.

For incumbents, this presents a worrying reality: newer and more agile attackers won’t have the internal cost structural issues, the legacy infrastructure and higher head-counts – meaning these cost-efficiencies can be passed down to the consumer.

Part 2 to be published on The Open Group blog on November 29, 2016.

by-stuart-macgregor-ceo-real-irmStuart Macgregor is the CEO, Real IRM Solutions and  The Open Group South Africa. Through his personal achievements, he has gained the reputation of an Enterprise Architecture and IT Governance specialist, both in South Africa and internationally.

Macgregor participated in the development of the Microsoft Enterprise Computing Roadmap in Seattle. He was then invited by John Zachman to Scottsdale, Arizona to present a paper on using the Zachman framework to implement ERP systems. In addition, Macgregor was selected as a member of both the SAP AG Global Customer Council for Knowledge Management, and of the panel that developed COBIT 3rd Edition Management Guidelines. He has also assisted a global Life Sciences manufacturer to define their IT Governance framework, a major financial institution to define their global, regional and local IT organizational designs and strategy. He was also selected as a core member of the team that developed the South African Breweries (SABMiller) plc global IT strategy.

Stuart, as the lead researcher, assisted the IT Governance Institute map CobiT 4.0 to TOGAF®, an Open Group standard. This mapping document was published by ISACA and The Open Group. He participated in the COBIT 5 development workshop held in London in 2010.

 

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