Ross & Weil - Chapter 4 (Enterprise Maturity) Flashcards
What is the description of the ‘four/five stages of architecture maturity’?
The predictable path that companies navigate to achieve a foundation for execution and for building their EA
What are the 5 stages of architecture maturity?
- Business Silos
- Standardized Technology
- Optimized Core
- Business Modularity
- Dynamic Enterprise (Smits)
How can companies move through these stages?
- First by building and leveraging the foundation of execution.
- Then shifting focus of IT investments and practice business process redesign.
- Looking for global synergies instead of local autonomy
What are the benefits if moving through these stages?
- Organizational learning on applying IT and business process discipline as strategic capabilities IN EACH STAGE
- Reduced IT cost
- Greater strategic agility
What are the characteristics of stage 1 - Business Silo’s?
- IT investments for local problems and opportunities
- Focus IT: Automate specific business processes
- Might have shared data, but not technology standards
- IT investments are justified on cost-reduction base, capital to invest by BU’s is acquired by cost-benefit analysis
- Local solutions can increase company competitiveness through local specialization
- One-off solutions create a legacy of system - complex
- Obstruct standardization and integration
- Often focus on solving immediate business needs, not developing future capabilities.
When do companies go from business silo’s to standardized technology?
When there is a need for efficiency in IT operations and a desire to build a solid data and process platform.
What are the characteristics of stage 2 - Standardized Technology?
- IT investment shift from local applications to shared infrastructure
- Technology standards and fewer platforms (lower cost, but fewer choices)
- Focus IT: automate specific processes, but more focus on cost-effectiveness and reliability
- IT shapes the business solutions no, NOT BU managers
- Creation of CIO: standardizing and consolidating platforms, providing shared infrastructure;
- Solutions are based on the best solution given the acceptable technology platforms.
- Problem: data still embedded in individual applications
What are the characteristics of stage 3 - Optimized Core?
- Move from local view to enterprise view
- Eliminate data redundancy by developing interfaces to corporate data and standardizing business processes
- IT investments: Enterprise systems and shared data
- Role of IT: Build reusable data and business process platforms based on predictable core processes
- Managers to be convinced that standardization enables innovation and better delivery to customers
- Standardized processes means taking over control over business process design from BU leaders
What are the characteristics of stage 4 - Business Modularity?
- Enables strategic agility through customized and reusable modules
- Digitized processes are refined and modularized
- Role IT: provide linkages between process modules
- Process modules are built on the standard core and link to other processes through standardized interfaces (so still standardization)
- Platform for innovation by ensuring predictability of core processes; enabling local experiments
- Companies need to learn to identify strategic opportunities and how to develop and reuse modules to extend their core.
- Reusable modules -> thicker core -> greater efficiencies while allowing global customization
Which two ways are there to refined digitized processes and modularize them?
- Create reusable modules and allow BU’s to select customer-oriented processes from a menu of options
- Grant BU managers discretion in the design of front-end processes, which can be built or bought as modules.
Either way, managers get more freedom again.
What are the characteristics of stage 5 - Dynamic Enterprise (Smits)?
- Extending the concept of reusable modules to enable companies to rapidly reconfigure their portfolios of businesses.
- Based on core capabilities managers look for opportunities to partner in the network(extended supply chain) and acquire (firms with resources and capabilities needed)
- Extend the concept of reusable modules
How can companies extend the concepts of reusable modules in stage 5 - dynamic enterprise?
- Internally: enable fast reconfiguration of business portfolios
- Externally: grab opportunities for partnerships, joint ventures –> support external networks
- Dynamic: create and recreate business processes with changing partners
How is organizational flexibility in stage 1?
- BU Managers full control over business and IT decisions
- Local flexibility, global inflexibility (latter: all BU managers need to agree for global change)
- 100% solution for local problems
How is organizational flexibility in stage 2?
- BU managers give up some control due to technical standards
- 80% solution for local problems
- Standardized technology increases global flexibility
How is organizational flexibility in stage 3?
- Local BU managers lose control over core processes and people and systems executing them
- Local processes might become sub optimal for global flexibility (due to process and data standardization)
- Global flexibility increases due to data transparency, comparability and predictability.
How is organizational flexibility in stage 4?
- Flexibility grows locally and globally
- Executives can decide on how flexible local managers can be
- The company can customize global capabilities
Can companies skip stages?
No, because of the major organizational changes encountered at each stage and organizations benefit form incremental enhancement to their architecture
Which two learning characteristics are found in every stage?
- IT capabilities being developed
2. Governance - The strategic business implications of that capability
What are IT capabilities and Governance capabilities in stage 1?
IT: Local IT applications
Governance: Measuring and communicating value
What are IT capabilities and Governance capabilities in stage 2?
IT: Shared Technical Platforms
Governance: IT Efficiency
What are IT capabilities and Governance capabilities in stage 3?
IT: Company-wide standardized processes or database
Governance: Balancing project priorities with architecture objectives
What are IT capabilities and governance capabilities in stage 4?
IT: Plug-and-play process modules
Governance: Defining, sourcing and funding business modules
What are IT capabilities and governance capabilities in stage 5?
IT: Seamless merging with partner’s system
Governance: Governance of contracts / joint ventures
What do companies learn IT wise by going through the stages one by one?
- Better invest IT for greater impact
- Estimate value from IT
- Manage technology standards
- Secure compliance
- Assess and communicate value of IT
