Dana Gardner's BriefingsDirect: MIT's Ross on how enterprise architecture and IT more than ever lead to business transformation

Wednesday, January 11, 2012

MIT's Ross on how enterprise architecture and IT more than ever lead to business transformation

Listen to the podcast. Find it on iTunes/iPod. Read a full transcript or download a copy. Sponsor: The Open Group.

This BriefingsDirect thought leadership interview comes in conjunction with The Open Group Conference this month in San Francisco.

The conference will focus on how IT and enterprise architecture support enterprise transformation. Speakers in conference events will also explore the latest in service oriented architecture (SOA), cloud computing, and security.

We’re now joined by one of the main speakers, Jeanne Ross, Director and Principal Research Scientist at the MIT Center for Information Systems Research. Jeanne studies how firms develop competitive advantage through the implementation and reuse of digitized platforms.

She is also the co-author of three books: IT Governance: How Top Performers Manage IT Decision Rights for Superior Results, Enterprise Architecture As Strategy: Creating a Foundation for Business Execution, and IT Savvy: What Top Executives Must Know to Go from Pain to Gain.

As a lead-in to her Open Group presentation on how adoption of enterprise architecture (EA) leads to greater efficiencies and better business agility, Ross explains how enterprise architects have helped lead the way to successful business transformations. The interview is moderated by Dana Gardner, Principal Analyst at Interarbor Solutions. [Disclosure: The Open Group is a sponsor of BriefingsDirect podcasts.]

Here are some excerpts:

Gardner: How you measure or determine that enterprise architects and their practices are intrinsic to successful business transformations?

Ross: That’s a great question. Today, there remains kind of a leap of faith in recognizing that companies that are well-architected will, in fact, perform better, partly because you can be well-architected and perform badly. Or if we look at companies that are very young and have no competitors, they can be very poorly architected and achieve quite remarkably in the marketplace.

But what we can ascribe to architecture is that when companies have competition, then they can establish any kind of performance target they want, whether it’s faster revenue growth or better profitability, and then architect themselves so they can achieve their goals. Then, we can monitor that.

We do have evidence in repeated case studies of companies that set goals, defined an architecture, started to build the capabilities associated with that architecture, and did indeed improve their performance. We have wonderful case study results that should be very reaffirming. I accept that they are not conclusive.

Architectural maturity

We also have statistical support in some of the work we've done that shows that high performers in our sample of 102 companies, in fact, had greater architecture maturity. They had deployed a number of practices associated with good architecture.

Gardner: Is there something that’s new about this, rather than just trying to reengineer something?

Ross: Yes, the thing we're learning about enterprise architecture is that there's a cultural shift that takes place in an organization, when it commits to doing business in a new way, and that cultural shift starts with abandoning a culture of heroes and accepting a culture of discipline.

Nobody wants to get rid of the heroes in their company. Heroes are people who see a problem and solve it. But we do want to get past heroes sub-optimizing. What companies traditionally did before they started thinking about what architecture would mean, is they relied on individuals to do what seemed best and that clearly can sub-optimize in an environment that increasingly is global and requires things like a single face to the customer.

Nobody wants to get rid of the heroes in their company. Heroes are people who see a problem and solve it.

What we're trying to do is adopt a culture of discipline, where there are certain things that people throughout an enterprise understand are the way things need to be done, so that we actually can operate as an enterprise, not as individuals all trying to do the best thing based on our own experience.

The fundamental difference of being an architected firm is that there is some underlying discipline. I'll caution you that what tends to happen is great architects really embrace the discipline. They love the discipline. They understand the discipline, and there is a reluctance to accept that that’s not the only thing we need in our organization. There are times when ad hoc behaviors enable us to be much more innovative and much more responsive and they are exactly what we need to be doing.

So there is a cultural shift that is critical to understanding what it is to be architected. That’s the difference between a successful firm that’s successful because it hasn’t gotten into a world of really tough competition or restrictions on spending and things like that and an organization that is trying to compete in a global economy.

Gardner: What then is the proper role of the architect?

Ross: The architect plays a really critical role in representing the need for this discipline, for some standards in the organization, and for understanding the importance of shared definitions for data. The architect should be able to create a very constructive tension in the organization, and that’s the tension between individuality, innovation, local responsiveness, and the need for enterprise thinking, standardization, and discipline.

Normally, in most companies, the architect’s role will be the enforcer of discipline, standardization and enterprise thinking. ... We want to be architected enough to be efficient, to be able to reuse those things we need to reuse, to be agile, but we don’t want to start embracing architecture for architecture’s sake or discipline for discipline’s sake.

We don’t want to be a tightly architected organization, because tomorrow we're going to wake up and the world is going to change, and we have to be ready for that.

We really just need architecture to pull out unnecessary cost and to enable desirable reusability. And the architect is typically going to be the person representing that enterprise view and helping everyone understand the benefits of understanding that enterprise view, so that everybody who can easily or more easily see the local view is constantly working with architects to balance those two requirements.

Gardner: Is this a particularly good time, from your vantage point, to undertake enterprise architecture?

Ross: It’s a great time for most companies. There will be exceptions that I'll talk about in a minute. One thing we learned early on in the research is that companies who were best at adopting architecture and implementing it effectively had cost pressures. What happens when you have cost pressures is that you're forced to make tough decisions.

If you have all the money in the world, you're not forced to make tough decisions. Architecture is all about making tough decisions, understanding your tradeoffs, and recognizing that you're going to get some things that you want and you are going to sacrifice others.

If you don't see that, if you just say, "We're going to solve that by spending more money," it becomes nearly impossible to become architected. This is why investment banks are invariably very badly architected, and most people in investment banks are very aware of that. It’s just very hard to do anything other than say, "If that’s important to us, let’s spend more money and let’s get it." One thing you can't get by spending more money is discipline, and architecture is very tightly related to discipline.

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Tough decisions

In a tough economy, when competition is increasingly global and marketplaces are shifting, this ability to make tough decisions is going to be essential. Opportunities to save costs are going to be really valued, and architecture invariably helps companies save money. The ability to reuse, and thus rapidly seize the next related business opportunity, is also going to be highly valued.

The thing you have to be careful of is that if you see your markets disappearing, if your product is outdated, or your whole industry is being redefined, as we have seen in things like media, you have to be ready to innovate. Architecture can restrict your innovative gene, by saying, "Wait, wait, wait. We want to slow down. We want to do things on our platform." That can be very dangerous, if you are really facing disruptive technology or market changes.

So you always have to have that eye out there that says, "When is what we built that’s stable actually constraining us too much? When is it preventing important innovation?" For a lot of architects, that’s going to be tough, because you start to love the architecture, the standards, and the discipline. You love what you've created, but if it isn’t right for the market you're facing, you have to be ready to let it go and go seize the next opportunity.

Gardner: Perhaps this environment is the best of all worlds, because we have that discipline on the costs which forces hard decisions, as you say. We also have a lot of these innovative IT trends that would almost force you to look at doing things differently. I'm thinking again of cloud, mobile, the big data issues, and even social-media types of effects.

Ross: Absolutely. We should all look at it that way and say, "What a wonderful world we live in." One of the companies that I find quite remarkable in their ability to, on the one hand, embrace discipline and architecture, and on the other hand, constantly innovate, is USAA. I'm sure I'll talk about them a little bit at the conference.

This is a company that just totally understands the importance of discipline around customer service. They're off the charts in their customer satisfaction.

This is a company that just totally understands the importance of discipline around customer service. They're off the charts in their customer satisfaction.

They're a financial services institution. Most financial services institutions just drool over USAA’s customer satisfaction ratings, but they've done this by combining this idea of discipline around the customer. We have a single customer file. We have an enterprise view of that customer. We constantly standardize those practices and processes that will ensure that we understand the customer and we deliver the products and services they need. They have enormous discipline around these things.

Simultaneously, they have people working constantly around innovation. They were the first company to see the need for this deposit with your iPhone. Take a picture of your check and it’s automatically deposited into your account. They were nearly a year ahead of the next company that came up with that service.

The way they see it is that for any new technology that comes out, our customer will want to use it. We've got to be there the day after the technology comes out. They obviously haven't been able to achieve that, but that’s their goal. If they can make deals with R&D companies that are coming up with new technologies, they're going to make them, so that they can be ready with their product when the thing actually becomes commercial.

So it's certainly possible for a company to be both innovative and responsive to what’s going on in the technology world and disciplined and cost effective around customer service, order-to-cash, and those other underlying critical requirements in your organization. But it's not easy, and that's why USAA is quite remarkable. They've pulled it off and they are a lesson for many other companies.

Gardner: Is The Open Group a good forum for your message and your research, and if so, why?

Ross: The Open Group is great for me, because there is so much serious thinking in The Open Group about what architecture is, how it adds value, and how we do it well. For me to touch base with people in The Open Group is really valuable, and for me to touch base to share my research and hear the push back, the debate, or the value add is perfect, because these are people who are living it every day.

Major themes
Gardner: Are there any other major themes that you'll be discussing at the conference coming up that you might want to share with us?

Ross: One thing we have observed in our cases that is more and more important to architects is that the companies are struggling more than we realized with using their platforms well.

I'm not sure that architects or people in IT always see this. You build something that’s phenomenally good and appropriate for the business and then you just assume, that if you give them a little training, they'll use it well.

That’s actually been a remarkable struggle for organizations. One of our research projects right now is called "Working Smarter on Your Digitized Platform." When we go out, we find there aren't very many companies that have come anywhere close to leveraging their platforms the way they might have imagined and certainly the way an architect would have imagined.

It's harder than we thought. It requires persistent coaching. It's not about training, but persistent coaching. It requires enormous clarity of what the organization is trying to do, and organizations change fast. Clarity is a lot harder to achieve than we think it ought to be.

We find there aren't very many companies that have come anywhere close to leveraging their platforms the way they might have imagined and certainly the way an architect would have imagined.

The message for architects would be: here you are trying to get really good at being a great architect. To add value to your organization, you actually have to understand one more thing: how effectively are people in your company adopting the capabilities and leveraging them effectively? At some point, the value add of the architecture is diminished by the fact that people don't get it. They don’t understand what they should be able to do.

We're going to see architects spending a little more time understanding what their leadership is capable of and what capabilities they'll be able to leverage in the organization, as opposed to which on a rational basis seem like a really good idea.

Getting started

Gardner: When you're an organization and you've decided that you do want to transform and take advantage of unique opportunities for either technical disruption or market discipline, how do you go about getting more structure, more of an architecture?

Ross: That's idiosyncratic to some extent, because in your dream world, what happens is that the CEO announces, "This is what we are going to be five years from now. This is how we are going to operate and I expect everyone to get on board." The vision is clear and the commitment is clear. Then the architects can just say, and most architects are totally capable of this, "Oh, well then, here are the capabilities we need to build. Let’s just go build them and then we'll live happily ever after."

The problem is that’s rarely the way you get to start. Invariably, the CEO is looking at the need for some acquisitions, some new markets, and all kinds of pressures. The last thing you're getting is some clarity around the vision of an operating model that would define your critical architectural capabilities.

What ends up happening instead is architects recognize key business leaders who understand the need for, reused standardization, process discipline, whatever it is, and they're very pragmatic about it. They say, "What do you need here to develop an enterprise view of the customer, or what’s limiting your ability to move into the next market?"

And they have to pragmatically develop what the organization can use, as opposed to defining the organizational vision and then the big picture view of the enterprise architecture.

When they see real demand and real leadership around certain enterprise capabilities, they focus their attention on addressing those.

So in practice, it's a much more pragmatic process than what we would imagine when we, for example, write books on how to do enterprise architecture. The best architects are listening very hard to who is asking for what kind of capability. When they see real demand and real leadership around certain enterprise capabilities, they focus their attention on addressing those, in the context of what they realize will be a bigger picture over time.

They can already see the unfolding bigger picture, but there’s no management commitment yet. So they stick to the capabilities that they are confident the organization will use. That’s the way they get the momentum to build. That is more art than science and it really distinguishes the most successful architects.