Business transformation involves significant changes to all areas of an enterprise. It focuses on the future strategies.
These includes strategies, business models, operating models, business processes, information & data, systems, products, business services and channels. These are exactly the deliverables developed by enterprise architecture to understand the current state of an enterprise, to envision and design the future state of the enterprise, to discover the gaps between them, to identify the opportunities for investment in change and to plan the enterprise architecture roadmap to achieve the change initiatives.
This sounds just like what Business Transformation approaches do, doesn’t it?
In fact Enterprise Architecture and Business Transformation disciplines have much more in common, than they have differences.
It’s clear that real Enterprise Architects play a critical role in business transformations. The Chief Enterprise Architect is the most important member of the senior management team leading a business transformation and ensuring that it is effective.
By the way Enterprise Architecture, by definition, should not be misunderstood as only being about IT Architecture or Technical architecture, used just to support IT solution development. This is not what real enterprise architecture is for. Business transformation is rarely limited just to IT projects.
The CxOs are the business leadership responsible for providing business direction, identifying the needs for the business transformation in the first place and making the investment decisions. But the Enterprise Architects will work directly with the CxOs to drive out the devil in the details, planning the future transformation roadmap, developing future scenarios, making projections and forecasting future options. Acting without enterprise architects is equivalent to failing to make proper preparations and is asking for trouble. The enterprise architects perform the important task of analysis and evaluating the impact of strategies and proposed changes in detail, identifying risks and prioritising the transformation initiatives into a viable roadmap. They manage the complexity of transformations and are essential to achieving success and effective transformational changes. Enterprise architecture is about bridging the gap between the transformation vision and strategy and its realisation.
What approach should be taken for leading business transformation?
The recommend approach is based on the books by John Kotter, “Leading Change”, “A Sense of Urgency” and The Heart of Change Field Guide”, together with real enterprise architecture approaches to managing strategic change.
Creating the conditions for business transformation
1 Increasing urgency
For Business Transformation to be successful, then the whole enterprise needs to understand the need for it. The whole enterprise needs to have a view of the current state and the motivation for change. Enterprise Architecture provides an understanding of the existing problems and the desired future vision. Avoid complacency and business as usual behaviours. Business transformation means new behaviours and new ways of working.
2 Building a joint Enterprise Architecture/Business Transformation team
A Business Transformation team should not be a group isolated from the enterprise architecture team, but completely integrated with it. Remember that a real enterprise architecture team is responsible for the future business change within the enterprise (and is not just an IT development function), typically up to between 2 and 5 years into the future. Seriously, how can they be kept separated from a business transformation programme?
Identify the members of the Enterprise Architecture/Business Transformation (EABT) team. Look for a mixture of strong management leaders and include a good influential people from a continuum of all job titles, levels of authority and statuses. Remember that enterprise architects are strong and effective change leaders and already cross cut the whole enterprise. Non-enterprise architects in the EABT team will probably have greater political and financial skills whereas Enterprise architects will have cross domain knowledge about the whole enterprise in detail, analytical skills and significantly greater modelling skills. All team members should have good vision and leadership skills.
Hold honest and convincing discussions, dialogues and workshops. Enterprise architects are often useful as facilitators at this stage.
Ask for emotional commitment from all EABT team members and commitment to work together for the common good of the enterprise.
3 Establishing the Target Transformation Vision models and Strategy
What does business transformation success look like?
Planning the strategies and confirm the business motivation. Enterprise Architects and C-level managers will use a Business Motivation Model for this, identifying Strategies, Goals, Objectives and performance measures.
Analyse the various ideas and options to develop an understanding the various Business Models for the target transformed enterprise. Alternative business models can be produced by the enterprise architects using a Business Model Canvas approach and these can be compared with multiple measures, including total cost of ownership and potential revenue.
Avoid thinking in terms of systems and IT solutions too early, after all this is the job of the enterprise architects later on and business transformation is a business problem. Allow for unfettered innovations to emerge from discussions.
Identify stakeholders including customers, partners and suppliers.
Examining the Outside In views from the perspective of these customers and partners.
Creating detailed Business Scenarios, Customer Journeys and Partner Journeys using any suitable story telling approach. Remember that stories are powerful, especially if they come directly from your customers. The enterprise architects will capture and analyse these business stories, but remember that at this stage these are not detailed IT requirements or user stories/use cases from an Agile software development perspective. Those kinds of deliverables will be defined much further downstream.
Identify opportunities and innovations. The team should consider approaches such as a Blue Ocean Strategy (see the book).
Definition the transformation Vision, Values, Motivations.
Defining the transformed value propositions
Analyse and understand the risks, their probabilities of occurring and their potential mitigation.
Engaging and enabling the Enterprise
4 Communicating the Transformation Vision and strategy
Communication is essential for all business transformations if they are to be successful.
There will be detractors and strong opposition to some of the transformation vision. The enterprise architects in the EABT team will ensure that fact based decisions can be made.
Publish and communicate the business transformation models as widely as possible. This will help make the right decisions and solve problems. Don’t assume either the C level managers or the enterprise architects have a monopoly on good decisions. Challenges need to be addressed and responded to.
Obviously some aspects of the transformation vision and strategy will be commercially sensitive and should not be communicated to the competition without careful thought. However, ultimately remember that the enterprise will want support from all customers, internal stakeholders, outside stakeholders, partners and suppliers and this support and buy in cannot be won without communication. Talk often and modify the transformation visions as needed. The enterprise architects will keep track of alternatives and decisions in the transformation model. The Vision and strategies need to be tied back to all aspects of the transformation model. This becomes infinitely easier using a flexible EA management tool (such as ABACUS) and avoiding spreadsheets and Visio diagrams which rapidly become unmanageable.
Ensure that the joint Enterprise Architecture/Business Transformation (EABT) team is able to lead by example by speaking about the transformation vision at any time and to always evangelise about it.
5 Enabling Action
Enabling transformation change is about removing the barriers to change and empowering staff. It involves removing resistance. Often resistance to change from staff is tied to functional divisions and people who are not measured by enterprise’s transformation success but only by fulfilling their own their own personal goals. Paradoxically, it may be the way they are measured and rewarded by the C-level managers that causes people to resist and avoid supporting transformational change.
To enable the right actions, the authorities, responsibilities and rewards need to be re-aligned with the business transformation vision, goals and objectives.
It is the enterprise architect who takes the business strategies and business model and successfully realise them on behalf of the whole enterprise, so are often best placed to also identify the authorities and responsibilities needed to focus people on benefits to the enterprise.
Ensuring that the Enterprise Architecture /Business Transformation (EABT) team has the right authority is also essential, and is able to resolve competing priorities. This authority is also exercised in relation to the governance and compliance stage.
Establish the appropriate metrics and measures, and maintain a scorecard for the business transformation vision, goals and objectives. It is strange how often performance is ignored and enterprises do not know how to measure success, or align performance to desired outcomes. Costs and revenue need to be balanced with other measurement dimensions. Measures should be aligned to transformation changes in the EA management tool.
6 Define Investment Opportunities
Examine the investment opportunities and develop an investment case. The Enterprise Architects will be best placed to determine how realistic and feasible a specific investment opportunity will be, and determine the fine details. Whereas the C-level management will understand the balance of costs and revenue developed in the Business Model.
Enterprise Architects will use a Business Capability model to scope and plan which business capabilities will be modified by a transformational change.
Transformational changes will typically be classed as short term or long term changes. However by definition, transformational changes will tend to be large and disruptive rather than “low hanging fruit”. Short term transformational changes will however be useful for maintaining the transformation momentum across a number of iterations.
Changes to business capabilities are identified as a number of capability increments. The dependencies between these and their priorities will form the first draft enterprise architecture roadmap and provide the scope and context for subsequent change iterations.
Implementing and sustaining the business transformation
7 Keep up the momentum
It is important to keep up momentum for a business transformation. The EABT team must keep communicating and clarifying the business transformation changes.
The business transformation model must be regularly published and all opportunities taken to speak to all stakeholders about it and inform them on status and progress. Capture feedback and responses to continually validate the vision and measure its effectiveness.
Address the fear, uncertainty and doubt from detractors and sceptics and motivate supporters to evangelise about the transformation. Encourage desired culture and values that reinforce the transformation changes. Keep your eyes on the roadmap and don’t assume everything is done after the success of the first iteration and let performance and concentration levels drop. Don’t let the EABT team get diverted into other side projects. Perseverance is important. Remember that change is the only constant.
Develop communication material including web sites, brochures and posters. Posters can be very effective as information radiators.
8 Enterprise Architecture Governance and Compliance
C level managers will be making the investment decisions and providing funding for investments in change.
Establishing an enterprise architecture governance and compliance capability will ensure successful realisation of transformation changes, and help them become permanent business as usual.
Detractors will often try to derail changes but the formal governance and compliance approaches will enforce decisions made but will also provide a platform for challenges and objections to be discussed openly and objectively.
9 Realising Transformation Changes
Business transformation needs many kinds of potential future changes to occur, not least of which are the key cultural changes and organisational changes.
Business Process changes, Information changes, system changes and procurement changes are also important. However for these I recommend designing for flexibility and adaptability not going for a fixed solution which may be cheaper but will invariably be difficult to change the next time. Business transformation should be thought of as a continuous process, enabling an enterprise the rapidly respond to changing forces in the market environment.
Before changes are executed, it is a good idea to conduct a Change Readiness Assessment, if you have not already done this earlier in the Enabling Action stage. This will help find out how prepared the enterprise is for the transformational changes and identify the enterprise’s overall competence, knowledge, skills and capabilities. Any shortfalls will be addressed by planning suitable skills training, and addressing the shortfalls.
For maximum success in strategic business transformations, an enterprise needs to completely and fully use their enterprise architecture resources and enterprise architects. You have to work hard and plan carefully. Building the proper foundation with an enterprise architecture model for the scope of the business transformation will make everything very much easier.
There is no good reason why real Enterprise Architecture and Business Transformation should not be merged as a single discipline. The skills needed for each hugely overlap, especially the Business Architecture domain of enterprise Architecture.
A joint Enterprise Architecture Business Transformation team is essential to achieving successful and viable transformations.