Your organization has been researching what digital transformation means, speaking with vendors about digital strategies and solutions, maybe even trying to find applications for artificial intelligence or other emerging technologies, and implementing agile approaches. But are you really ready for digital transformation?
Digital readiness focuses on the organization, not the technology.
The Institute emphasizes that to successfully transform into a Digital Enterprise, an organization must exhibit its readiness across four dimensions: Operational Sustainability, Organizational Agility, Strategic Agility and Disruptive Culture. Digital readiness starts at the operational level with Operational Sustainability, which ensures a sound base of organizational discipline. Strategic Agility is the ability to know when to pivot, while Organizational Agility is the ability to rapidly adjust an organization’s operating model of people, process and technology to adapt to changing market conditions. These three dimensions create the structural support within an organization to enable transformation into a digital enterprise, but the final dimension, Disruptive Culture, is critical to truly shift the culture and ensure continuous transformation.1
Being ready for digital transformation isn’t about the technology. That’s the easier part. It’s about having a solid organization with the structures, culture and mindset in place to withstand the rigors of transformation – and to embrace and create the perpetual change necessary to adapt and lead in an evolving world.
This means we still need to embark upon the hard work within our organizations because digital transformation does not make it go away. Where does an organization begin to increase readiness? This can be an overwhelming decision, especially because there are many disciplines, management techniques, approaches and frameworks that can help and need to be in place to deliver on the four digital readiness dimensions defined by The Institute. Should an organization focus on business process management? Change the strategic planning process? Implement a customer experience design or innovation practice? Establish an agile delivery approach? Something else?
Business architecture is a keystone and starting point for digital readiness.
Business architecture is a keystone for digital readiness. It is a business framework and discipline that not only contributes its own unique value, but it enables many of the other enablers. This makes business architecture a logical starting point for increasing an organization’s digital readiness: it provides the foundation that accelerates and locks together all of the other teams, disciplines and approaches.
In The Gateway to Successful Digital Transformation, we described a business architecture as a set of high-level views or “blueprints” representing an organization and the ecosystem in which it operates, entirely business-focused and owned. It is the big picture representing what an organization does, where it wants to go, and how it will get there – visualized at a high-level, across business units. An enterprise capability map and value streams are two core views that make up an organization’s business architecture. We will now highlight five key ways in which business architecture contributes across the four dimensions of digital readiness.
Business architecture provides a mental image and framework for grasping the complexity of change.
The business architecture knowledgebase serves as an enterprise-wide impact analysis tool – for proactive or reactive change – supporting a variety of purposes across the digital readiness dimensions. This is a key enabler for Organizational Agility as it helps to quickly and comprehensively catalog all aspects of business and technology which will need to evolve as a result of a change in direction. For example, if an organization shifts its business model to focus on new value propositions, customer segments and products/services, its business architecture will reveal new capabilities and value streams to target, enhance or retire, along with the full “butterfly effect” of impacted information, business units, stakeholders, products, policies, strategies, initiatives, processes and IT assets. This is more effective than taking a bottom-up approach and identifying the detailed people, process and technology impacts first. With business architecture we can drill down to the details once we have identified the bigger picture focus. The planned business and technology changes can even be visualized in a target state architecture, which provides a shared picture of the organization of the future at a more actionable level of detail than strategy documentation – to help everyone see and work towards the same vision.
As part of an organization’s Strategic Agility, business architecture can help with proactive “what if” analysis to help eliminate any strategic options which are not viable before they consume precious resources. Or, it can be used more reactively such as to assess the impact of a new or changing regulation resulting from digital business models and technology or otherwise.
A digital ready enterprise must also exhibit evidence-based decision-making. An organization’s business architecture is fact-based and structured to be business unit and politically agnostic, so
leveraging business architecture ensures that decisions are data-based and objective. It also gives leaders confidence to work within chaos and take on risks since decisions are better informed.
Business architecture gives structure to and scales strategy formulation and innovation.
As part of Strategic Agility, a digital ready enterprise continuously monitors and formulates strategy in response to shifts in the market and emerging technologies. Disruptive Culture also requires a culture of continual innovation. Business architecture provides a high-level structure for strategy formulation and innovation activities that articulate what is in place today and unlocks new creative ideas. This may seem counterintuitive, but an organization’s documented business model canvas is an ideal structure upon which many different analyses can be performed to assess and reimagine it. Or, capabilities, an organization’s “lego blocks,” can be reused in new ways to create value. Of course, we can use business architecture to test strategy and innovation viability and impact as mention above with the “what if” concept.
Business architecture can also help to enable scale. For example, where an innovation idea may have been identified for just one use case, a business architecture pinpoints additional ways of leveraging it for other business units, capabilities and products.
Business architecture creates agility.
Agility is a hallmark of a digital enterprise, from the ability to adapt to change through Organizational Agility to the agile values which permeate a Disruptive Culture. At its most basic level, business architecture establishes a shared language and mental model for an organization and its partners, so this alone creates agility through clearer and more effective communication.
In addition, a business architecture represents an organization by its components and their connections to each other, providing a unique view which highlights the similarities within an organization, versus focusing on the differences and nuances in regions, business units and products. A business architecture lens can be used to identify simplification opportunities such as a potential reduction in the number of system applications supporting the same capability. The modularity of business architecture also allows for smarter design and reuse of capabilities, value streams, information and other aspects. Both a simpler environment and a modular design enable an organization to respond more rapidly and effectively to change.
Business architecture also enables end-to-end organizational agility by translating business strategy and other changes into a coordinated set of initiatives, scoped in the most effective way across business units — without redundancy, conflicts or dependency issues. Even with agile teams in place, this approach first ensures that teams are focused on the right work at the right time in alignment with the bigger picture.
Business architecture facilitates cross-team communication, coordination and collaboration.
A digital ready enterprise is also characterized by high functioning teams, which is reflected across all the readiness dimensions in attributes such as inter-functional integration, communication and coordination, team and organizational autonomy, collaboration, mission-driven governance, and agile values. The business architecture framework helps empower teams to work more autonomously since they can readily identify key intersection and collaboration points. A shared language is of course a necessity for effective team communication, but capabilities also serve as a Rosetta stone to facilitate team collaboration. For example, teams can identify when they are building or enhancing the same capabilities to identify opportunities for reuse, consistency or coordination. Capabilities also illuminate dependencies, such as when a capability (or service) like customer preference management must be established before other capabilities like communication delivery can leverage it. Value streams provide additional context for capabilities to identify all usage scenarios so that solutions can be built holistically, such as for a payment capability which is used by customers, partners and employees.
An organization’s business architecture can also be heat-mapped to reflect current strategic priorities. This enables teams, such as agile or continuous improvement teams, to decide where they focus, making sure they are focused on only the highest strategic priorities aligned with the mission. If policies are tied to capabilities, teams can also become readily aware of regulations, internal policies, ethics or other guidelines that should be adhered to.
The big picture view of business architecture is also a highly effective way for team members to understand how they fit within the organization and contribute to the overall value delivery. For example, value streams provide a higher-level, value-based context for processes. This not only helps team members understand where they fit, but also what happens upstream and downstream. This type of knowledge can ultimately lead to more effective, proactive and empowered team members.
Business architecture shifts an organization’s mindset.
Finally, the establishment of a business architecture is about much more than creating a shared blueprint. The use of a business architecture over time naturally creates shifts in the behavior and mindsets of people throughout the organization – all of which are necessary for a digital ready enterprise. For example, business architecture helps to create a mission-driven organization by reframing everything from the bigger picture and what is best for the enterprise, not just an individual business unit or silo. This perspective applies to anything from investments to prioritization. Business architecture is oriented around value delivery, so it also helps to institute customer orientation, critical for digital success.
In summary, digital readiness is a necessity, not an option, for digital transformation success. Business architecture is a logical starting point for increasing digital readiness. It not only contributes directly to many of the necessary digital readiness attributes, but it also provides the foundation, cohesiveness and acceleration to other teams, making it a keystone for digital readiness.
1 Granito, Frank. “What is a Digital Enterprise?” Institute for Digital Transformation, 27 Feb. 2017, www.institutefordigitaltransformation.org/what-is-a-digital-enterprise/.