When defining IT strategy, CIO ought to balance Business Division requirements and Enterprise global strategy. Sometimes it fears strategic swings which may wipe out some of his achievements. He usually keeps at some distance Business units and CEO.
For divisional companies, IT Divisions use to deal separately with business divisions which support the cost of their own systems, and share the cost of a few shared systems. Each business division defines its own strategy and setup its requirements to IT Division regarding maintenance improvement and new projects. Then budget is approved by CFO and CEO.
CFO is at the crossing point of budget process control. He challenges separately IT budget and Business Division budgets. After this round budgets are ready to go through CEO approval.
This type of relationships are on the pattern supplier/customer.
IT Division is view as cost unit. As soon as operations are engaged, CFO come back to request how much he could get back from initial budget according real timetable. IT division is challenged on delivering value to Business Divisions : Quality of Service is not good enough , new projects are not delivered as quick as wished. IT is challenged as well on costs by CFO : why are you setting up this infrastructure ? why are you planning to train your staff on this new method ?
When business processes management orientation comes up, it usually brings with it, big CRM or SCM projects which are undergone as big reingineering. The result is a disruption into IT and Business units relationships. Then business takes the lead and shape the projects with external IT suppliers which appear more reliable and more competent than internal IT.
It is urgent that IT Divisions target to exit from this position and develop a true partnership with Business Divisions. Therefore, it requires big changes in processes, in competences and in mindings.
From my point of view the first point is costs transparency. Business Divisions need to understand, besides the gains they get from IT, the costs they bear. Some CIO fear costs transparency because CFO and Business may find arguments to harden budget challenging. Benchmarks with external integrators costs may also get the things worse. But, when you consider that IT Divisions main goal is to manage the rolling out of the company IT Strategy for several years, it is much different than what external integrator companies aims to, which is to provide optimal cost for given operational services. Investments in IT Divisions, help them to better support company business and also to improve their own processes which will make them better to performing their first purpose. A kind of virtuous circle !
The second point is projects timely delivered. Time to market is a fundamental requirement from Business. Usually, this point is adressed by reviewing project execution performances and pointing out IT Division weaknesses. Removing weaknesses should not be taken as a change prerequisite, but been carry on in parallel with IT and IS infrastructure improvements. IT modernisation is not only matters of practice and competences, but as well matters of technical environments. What will be automotive plants performances without robots ? This point brings back again to strategy capabilities of IT Divisions.
When IT Divisions succeed in undertaking such changes, they may develop a true partnership with business and change their position regarding CFO and CEO.
Marcus Evans conference in Paris, March 2008
March 18, 2008
Last Thursday, I attended to a Marcus Evans conference in Paris on Enterprise Architecture. For those who are not familiar with, Marcus Evans is definitely not a new pub name, but a very serious organisation in the conferences business. Once a year, they use to cover the topic of Enterprise Architecture local ongoings which attracts more or less the same actors, attendees and speakers.
I like it, because most of the time, people present their feedbacks : successes, drawbacks and outcomes. I am always impressed because project managers used to be very talented when they talk about their projects. This time the purpose was : “Enterprise Architecture, 7 years after”.
Since 1996, France settled the practice of “Urbanisme” based on City Organisation paradigm which is fairly closed to Enterprise architecture.The principles are to group information functionalities according to the type of resources they require. For instance, operational functions require transaction oriented resources with high availability, while external exchange functions require resources for managing and securing exchanges with actors located outside Information system.
When SOA appeared, “Urbanisme” dodged the new questions it brougth forward : for instance how to identify the services ? how to identify service operations ? These were among the subjects addressed by the conference speakers.
The first, Michel Brouant, Architecture Manager at Unédic, presented the roadmap of the Unedic and Assedic systems merging. The timetable was impressive : four months for setting up the roadmap due to few systems overlaps except for support processes like human resources, accounting and so on… three years of duration.
The roadmap combined 3 types of projects : Accessing IS (agent, customer, partners), streamlining systems, business functions like master data…
In a context with a lot of organisational questions left, the success came from a mature team which already had tools like systems maps and inventories. These helps to boost as is assessment.
Rafaël Gutierrez, Project Manager at Environment State department, presented the implementation of a generic Business Process Management engine. The approach of rolling out quickly such a service and connecting systems after, allows to start quickly with simple projects and skip more easily to more complex projects.
Nicolas Bogucki, Chief Architect at INA, presented the tool out of a tool which automate some parts systems mapping. It helps as well as functional and business mapping. The project choose Telelogic System Architect because it allows to customise metamodel and support automation like VBA.
Christophe Rémy-Neris, Editing Domain Director at Canal Plus, presented the benefits of SOA for a migration projects.
Stephan Chraibi, IT Strategy and Architecture Director at Aviva, presented a global project which allow to rearrange and group systems using virtualization technology.
Then François Rougier, CIO at MACIF, presented a system architecture evolution project toward multichannel customers relationship management. His model spans 4 layers = business systems which provide basic services, business procedures which orchestrate services, system procedures specific to a channel and human interface. He seeks the target of maximising service reuse, since his cost model shows that return on investment increase as services are reused. His main issue was to manage changes of services .
The last speaker has been Olivier Guerin, Director of “Urbanisation and SOA Strategy” at Dreamsoft. He developed the point of view that “Urbanisme” practise and SOA are tightly linked. He draw the prospect that “Urbanisme” helps to succeed in SOA.
The day finished with a round table on more feedbacks regarding SOA projects.
The conference presenter was Claude Durand, Strategy Director at Osiatis. He fare well in introducing and concluding briefly each presentation and in boosting questions and answers sessions.
The lesson of this day may be to demonstrate that the steps to SOA don’t always start with business transformation projects. It requires also a maturity level of technical infrastructure. Projects which contribute to improve technical architecture, may be a lever for the SOA roadmap. However even such projects need to be supported by a strong business case.
Two weeks ago, while exchanging views on business with a CIO of a medium sized enterprise, he put the question of IT architecture governement on the table. What benefit could he expect by setting up a new process, consuming resources and budget ? Is it really necessary when the project backlog overwhelms his IT teams ? For sure, architects are useful within projects, but keeping them outside with the result of adding burden to project plans is not an attractive option. He set his first priority not to be Cobit or ITIL compliant, but to be really aligned with enterprise business.
As an experienced consultant, I was thrilling about throwing out good practice for a short term view. But, was my speaker right after all ?
For him, the value of governing architecture depends on what the enterprise is able to obtain in return. Indeed, when IT Division is scattered into application teams which manage change within their domain, settling transverse processes may appears to increase dependencies and risks.
According to the enterprise information system maturity, there is an appropriate level of architecture governance.
Level one
Medium sized enterprise with Commercial off the shelves for accounting, payroll, sales and production management. Several sales points and production plants. Each department focus on its own process, and exchange files with others when necessary.
Focus : Technical architecture for streamlining hardware use and purchase
Level two
The same medium sized entreprise which would like to tie its COTS with middleware like a Message Oriented Middleware or an automated file transfer for improving back-office and statistics. Each department would like to have feedback on its performance more quickly.
Focus : application architecture for enabling exchange capabilities
Level three
The same medium sized enterprise which would like to supervise customers from sales to delivery across points of sales and production plants. For example with business intelligence capabilities.
Focus : information architecture for sharing information meaning across different COTS
Level four
The same medium sized enterprise which would like to run business as processes
Focus : Business architecture for supporting, improving and automating business processes
Often, during their history, companies go through each of these levels. Skipping to next level requires to improve IT and IS management skills. Jumping 2 levels requires a true transformation of IT processes. Frequently blue chips are at level four and have mature IT governance processes, but paying attention to SME information system maturity allows to identify the appropriate level of Architecture governance and being successful in setting it up.
