Lecture 4: EA as a strategy Flashcards
What is the business network theory?
Organizations working together in IT enabled business networks or integrated supply chains to outperform other business networks.
What is the role of architecting according to McDonald?
EA is positioned as an instrument, a management tool to implement the business strategy.
What are key areas that went wrong with enterprise architecture originally?
- Traditional IT architecture efforts are remote from business
- Modeling for software development is not the same as modeling for understanding an organization.
What is the definition of Enterprise Archtecture according to Ross, Weil and Robertson?
The organizing logic for core business processes and IT infrastructure reflecting the standardization and integration of a company’s operating model.
What are indicators for trouble? (EA is not set up correctly)
- Different parts of the company give different answers to the same customer questions.
- The business lacks agility, every new strategic initiative is like starting from scratch (IT is a bottleneck for change).
- There are different business processes for completing the same activity across the company, each with a different IT system.
What is the foundation of execution?
The foundation of execution digitizes the routine processes, so that they are executed reliably and predictably without requiring any thought.
Why is it important to use a foundation for excecution
- It reduces complexity
- It enhances business agility
- To fulfill needs for regulatory and legal compliance (SOX, Basel II)
What is an operating model?
The operating model represents the necessary level of business process integration and standardization for delivering goods and services to customers.
It describes how a company wants to thrive and grow. The two strategies that can be chosen are: organic growth and acquisition driven growth.
What two dimensions does the operating model have?
- Business process standardization; choosing how a process will be excecuted regardless of who is perfomring the process.
- Business process integration; choosing how to link organizational units through shared data.
What are the four options of the operating model?
- Low BPS and low BPI = diversification
- Low BPS and high BPI = coordination
- High BPS and low BPI = replication
- High BPS and high BPI = unification
What are the characteristics of diversification?
Low BPS and low BPI
- BU’s have few shared products and independent transactions (low BPI);
- BU’s generate business of eachother; they are related but not integrated
- A scale benefit can be achieved through shared services (HRM, finance, IT-services, etc)
- Growth strategy:
- Organic growth: success of individual Business Units
- Acquisition: related business, strengthen portfolio
What are the characteristics of coordination?
Low BPS and high BPI
- Shared data on customers/suppliers/products (high BPI)
- Necessary coordination is centralized
- Operationally unique BU’s or functions (low BPS)
- Growth strategy:
- Organic: product innovations to existing customers
- Acquisitions: new customers for existing products new products for existing customers
What are the characteristics of replication?
High BPS and low BPI
- BU’s do more or less the same (High BPS)
- Every BU creates success in its own market.
- Growth strategy:
- Organic: replicate best practices in new markets
- Acquisition: expand market reach; rip & replace
What are the characteristics of unification?
High BPS and high BPI
- High interdependence between units (high BPI)
- Common processes, common systems, operational excellence (high BPS)
- Growth strategy:
- Organic: leverage economies of scale, grow products and markets incrementally
- Acquisition: leverage existing foundation; rip & replace infrastructure
What three business strategies are there and to which operating model do they belong?
- Operational excellence = Unification
- Product Leadership = Replication
- Customer Intimacy = Coordination
- Choice per business unit? = Diversification
