10 years, 7 months ago

Does Business Value Require Complexity?

Last time I talked about how to ensure success with Enterprise Architecture.  This week I would like to know if you think simplification negatively impacts business value.

Complexity is a part of any organization, but not managing it effectively can have adverse effects. There are a lot of discussions right now among fellow Enterprise Architects regarding whether or not EA should be trying to simplify organizations.  It seems to be a very polarizing topic because many do not see complexity as something that should be dealt with, while others believe that reducing complexity increases business value.  Regardless of the ongoing discussions, one of the main purposes of EA is to reduce complexity.

Should we focus on simplicity to increase business value? Is there any correlation between business value and complexity?

What is complexity?

In order to define complexity, let me start by defining simplicity.  Simplicity is having the minimum number of components in order for a business to be successful.  Complexity is the opposite. Complexity is diverse, ambiguous, and dynamic with unpredictable outcomes.  It is often erroneously confused with the term complicated.  Nevertheless complexity and complicated do not mean the same thing. Something that is complex is not necessarily difficult, but something that is complicated does have a high degree of difficulty.

Does complexity diminish business value?

Business value determines the overall health of an organization and encompasses aspects of profitability, stable cash-flow, and positive return on investment (ROI).  In order to stay competitive today, organizations have to manage a tremendous amount of uncontrolled complexity. There are many factors that contribute to this.

  • Global Marketplace
  • Geographically Distributed Resources
  • Competitive Pressures
  • People
  • Compliance Requirements
  • Speed of Innovation

This uncontrolled complexity negatively affects business value and costs companies millions. Nevertheless, complexity is not always bad. Some people refer to it as “value-creating complexity” which generates real competitive advantage.

Can any organization actively and efficiently control complexity to transform it into “value-creating” complexity? Yes… How? By controlling the factors that contribute the most to its complexity.

Out of the list above, which factor contributes the most to making organizations more complex?  Believe it or not, you and I and everyone else within your organization.

How do people contribute to complexity?

People are diverse and unpredictable which makes them complex by definition.  The more people you have in an organization the more complexity. Complexity increases greatly because coordination, control, communication, and execution become much more difficult to manage.  As a result, it becomes very challenging to make business decisions.

Complexity can have some of the following adverse effects and get in the way of being successful.

  • Lower Profits
  • Poor Employee Morale
  • Slow Down the Organization

In other words, complexity impacts business value negatively

EA should absolutely focus on reducing complexity within an organization to ensure business value.  Does that mean that we as architects should reduce our organizations to its simplest form without regard to the harm it may do to the business?  No way.  That would not make any sense.  We should, however, look for ways to reduce it to its simplest form while still allowing the organization to execute successfully on its mission and long-term vision.

See you next week, same time, same place.

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