What has a greater impact on Digital Transformation?
Enterprise Architecture VS Business Architecture.
Around 18 months ago, Gartner predicted that half of Enterprise Business Architecture initiatives in 2018 would focus on defining and enabling Digital Platform Strategies. While there hasn’t been follow-up research to prove whether this prediction has come true, anecdotal evidence would suggest that the real situation is pretty close.
In the research, Betsy Barton, Vice President, and Distinguished Analyst at Gartner stated:
“The increasing focus of EA Practitioners and CIO’s on their business ecosystems will drive organizations further toward supporting and integrating business architecture. This is to ensure that investments support a business ecosystem strategy that involves customers, partners, organizations, and technology.”
The core output of a Digital Transformation, from an IT perspective, is the development of supporting digital business platforms. However, with the growth of cloud-based services, success in this transformation process is less a technology challenge and more a Business Model challenge. Digital Transformation can provide an opportunity for organizations to do business in a completely different way. But the fundamentals of business in a digital and traditional world remain the same. To run a sustainable business, companies need to deliver a product/ service to customers that meet their needs and ensure that they continue to evolve that product/ service so that it continues to meet customer needs into the future. And they need to make a profit doing it. So the need for Business Model that achieves this arises.
Enterprise Architecture is very good at defining and bringing a semblance of order to the complex ecosystems that make up a business, particularly from a technology perspective. However, business architecture is what brings it alive. This is what Gartner calls this business-outcome-driven Enterprise Architecture, which emphasizes the importance of understanding the business and how it executes on its value streams.
TOGAF practitioners will proport that Business Architecture is an inherent part of the Architecture Development Method (ADM), which is true. However, I would argue that Business Architecture should be the key driver of the ADM to deliver a successful Digital Platform Strategy, rather than focusing on some of the more traditional governance elements of Enterprise Architecture.
The fascinating aspect of this Gartner research is that Ms. Burton advises that one of the keys to success for the implementation of successful digital platform strategies will be the ability of organizations to integrate with other businesses' digital platforms. While this will be a significant technical challenge the key to deriving real business value will be ensuring that the platform and integrations align with the organization's strategic intent and support its value streams. In this context Enterprise Architects will not only need to understand the business drivers and outcomes required by their business but also the needs of their partners in the digital ecosystem.
This ability to support the innovation agenda that is driving Digital Platform Strategies has also seen the rise of a new Architecture skill set, design-driven architecture. Gartner advises that “design-driven architecture will allow organizations to understand their ecosystem and its actors, gaining insight into them and their behavior which will allow organizations to develop and evolve the services that they need and consequently deliver on their business objectives”. In effect it will allow Architects to be more customer/ human-centric in their designs to align with the increasingly complex needs of customers/ stakeholders. The essential skill that is leveraged is “Design Thinking” or “Human Centric Design”.
With millions of dollars invested in digital platform strategies, the pressure on Architects is significant. They need to be able to manage the need to innovate organizations' business and operating models, often within Agile development environments, while ensuring the interoperability of these platforms with other players in the organization's ecosystem. Besides, they need to delight their customers/ stakeholders and in the private sector deliver a profit! With the continued development of cloud-based services the challenge of providing these objectives by developing successful Digital Platform Strategies will be less of a technology challenge and more a business challenge.
When we initially posed the question of which discipline, Business or Enterprise Architecture, has a more significant impact on Digital Transformation it was not to say that both are not important. However, if you look at the underlying value proposition of Digital Transformation it’s about doing business better and more efficiently by leveraging technology. To fully realize this promise the business models and value streams that deliver these outcomes need to be clearly defined and tested based on customer/ stakeholder needs (Design Thinking) before the development of the technology platform to support them. It is, for this reason, I believe that Business Architecture will have a more significant impact on Digital Transformation initiatives than Enterprise Architecture!