Written by Ralph Whittle, Enterprise Business Architect & Independent Consultant
Organizations which are frequently involved in M&A activities can develop templates which will speed up the development of the PMI Matrices and Initiatives for each new M&A project.
How does one define the term “Business Architecture” (BA)? Before an enterprise undertakes a Business Architecture initiative, it must have a clear understanding of what it is and how it is defined. Perhaps by first parsing the term “Business Architecture,” and then characterizing it as a whole and complete term, one can bring clarity to its definition. And of course, the Business Architecture requires an association and some context with the enterprise as well. This article will offer one perspective on the definition of Business Architecture; hopefully, stimulating discussion and analysis without introducing controversy.
First, what is an architecture? In simple, conversational terms, architectures are like blueprints, drawings or models. This definition came from Steven Spewak in his book Enterprise Architecture Planning. This is fairly easy to comprehend as we all understand “blueprints” from the construction industry and using this as a metaphor for the enterprise works quite well.
Those preferring a more formal definition of architecture must consider the one referenced in The Open Group Architecture Framework (TOGAF); the fundamental organization of a system, embodied in its components, their relationships to each other and the environment, and the principles governing its design and evolution. For the enterprise, using the word “architecture” in a term or phrase must also include or inherit this formal definition. Using the term “architecture” and failing to consider, for example, the relationships between components or governance, corrupts and degrades its meaning.
In economics, a business (also called firm or enterprise) is a legally recognized organizational entity designed to provide goods and/or services to consumers while earning a profit and increasing the wealth of its owners. Businesses persevere and prosper because they make a fair profit and sustain a competitive advantage. Improving performance is an imperative in order to grow and expand the business.
Considering the above and thinking first in simple, conversational terms, the Business Architecture is a blueprint of the enterprise built using architectural disciplines to improve performance. This might suffice as a definition in casual conversations and discussions as it is easy to understand. However, many will prefer a more formal definition of Business Architecture and require it in the context of an Enterprise Architecture (EA) framework. Therefore a more comprehensive and formal definition is required.
In order to understand the complexity of a typical business, an organizing principle or internal structure for its components is required. Many will initially assume this organizing principle is a business function, such as web ordering or accounts receivable. But, the business function as an organizing principle is unsuitable as its limited view impedes analysis of enterprise results. Describing the Business Architecture in terms of its business functions will yield results similar to the children’s story of the “blind men describing the elephant.” Business functions are usually classifications or categories of processes and from the enterprise perspective; sometimes their integration is poorly understood.
Referring back to the construction “architecture” metaphor, the blueprint is defined by the architect, and understood by the builders and future homeowners. All can visualize the home’s structure, the relationships between various living areas, and the integration with the surrounding community to determine any specific needs of the homeowners. This visualization of the future home is most important to the homeowners and this analysis of the blueprint helps ensure their requirements are met. You can not achieve the same visualizations by viewing a classification of the building materials. Putting the bricks, stone, lumber, piping, wiring, roofing materials and appliances in neatly defined categories does not enable the same visualization and analysis afforded by the blueprint. While both blueprints and classifications of building materials are important, each has a different purpose and benefit to the homeowner.
Since most business functions do not view enterprise results in customer centric terms, a more complete and comprehensive structure or blueprint of these components and their relationships are required. The enterprise needs a structure that is cross-functional in nature, with a focus on measurable outcomes that are important to its success. In his book The Great Transition, James Martin defined a term called value streams. A value stream is an end-to-end collection of activities that create a result for a customer. The value stream has a clear goal: to satisfy or to delight the customer.
Structuring the business around integrated components called value streams fit very nicely from the perspective of TOGAF’s definition of architecture; the fundamental organization of a system, embodied in its components, their relationships to each other and the environment, and the principles governing its design and evolution. Value streams are customer centric, integrate well with one another and the enterprise’s external environment, align with the strategy, have appropriate metrics and measures for judging success, benefit value chain analysis, and with proper leadership and governance; improve, mature and evolve. Value streams are also commonly used and well understood, for example, in Six Sigma initiatives.
Considering the previously parsed terms of architecture and business, choosing value streams as the internal structure and organizing principal, and keeping in mind the context of a Business Architecture in an EA framework, one can develop a BA definition and subject it for review and analysis: The Business Architecture defines the enterprise value streams and their relationships to all external entities, other enterprise value streams, and the events that trigger instantiation. It is a definition of what the enterprise must produce to satisfy its customers, compete in a market, deal with its suppliers, sustain operations, and care for its employees. Using this definition of Business Architecture, the enterprise may now create a strategic initiative to build and use the BA to improve corporate performance.
The formality of the Business Architecture may overwhelm some and others may feel it unnecessary. Besides, we have survived so far without one, so why do we need it. After all, an architecture including one of a business seems “too disciplined, too engineering like and too technical” for a business person! Many still prefer the informality of loosely defined diagrams and business models presented in colorful and creative presentations. However, these are mostly useless during the life cycle of a strategic initiative as they provide little “substance beyond the show.” Building the Business Architecture complements and completes any EA framework, enabling the enterprise to formally link the corporate strategy to tangible and demonstrable results.