Business architecture is one domain of EA that describes various architectural aspects of businesses. SMEs that create business architecture are the business architects. Business architecture articulates the functional structure of enterprise including the business process and business capabilities. One of the key outputs of business architecture is business capability models. The business capability is a certain business functionality that delivers business values under specific conditions. The business capabilities are provided via business services and business processes which in turn implement business functionality:
Figure 16: Business capability map
Business architecture is the operating structure and represents the business functions, flows, and information. Business architecture defines key business entities that interact to deliver value to the business stakeholders. Business architecture is a big picture showing all key business functions, operating models, and business flows. Developing BA requires that each function and flow has to be expanded, documented, and road mapped until it properly supports the vision of all stakeholders.
Purpose of business architecture
Business architecture enables insight and improvements of operational models. BA shapes people and technology and enables alignment of business and technology to delivery enterprise objectives and goals. Business processes and functions drive the type of technology that implements them. Over time, enterprises transform into technology silos, as a result of take-overs or mergers, or due to lack of processes. The absence of business architects hinders organizations to be able to align to the demands of the future quickly. Non-nimble enterprises in a competitive market fast-past landscape will not last long. The business environment constantly changes requiring enterprises to align with compliance or regulatory measures and frameworks. Business architecture is a vehicle for enterprises to analyze the impact of transformation and respond swiftly to these demands.
By leveraging reusable assets created by business architects, an enterprise can articulate the impact of changes, without expensive investments. Business architects enable appropriate repeatable processes and models to swiftly move from a strategic vision to execution.
Business architecture is a set of strategic tools for aligning capability models and business operations as shown in the following figure:
Figure 17: Business architecture
Business reference models examples
The following are examples of business reference models or reference architectures for different industries:
- Federal EA Business Reference Model-US Federal Government DoD Business Reference Model-Defense Open Group Exploration-Mining Business Reference Model
- Frameworx (eTOM) - Telecom Supply Chain Operations Reference (SCOR) model -SCM SAP R/3 reference model - ERP
- Oracle Industry Reference Model IRM - Banking Oracle Retail Reference Model-Retail IBM Insurance Framework-Insurance
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Business architects are the bridge between strategy and execution for enterprises. Business strategy and business requirements drive the business architecture. Business architecture ensures that articulating these objectives into incremental steps can be implemented in a consistent manner across all LOBs to achieve the end results. Business architects drive the definition of business strategy, planning, and organizational processes.
Business architects create the target state business state entities which include process, capability, organization and their interconnections. These entities are the key inputs to the solution design process along with the other EA domains. In all cases, the focus of business architecture is on the following:
- Organization structure: The organizational structure, identifying business locations, and relating them to organizational units. The organizational chart can be used to map out this structure.
- Business goals and objectives: Business goals and objectives for each organizational unit.
- Business functions (maps): Decomposition of major functional areas into sub-functions/sub-domains.
- Business services: This is the services that each of the enterprise units provides to its customers, both internally and externally.
- Business processes: The business processes that the organizations supports, including measures and deliverables (KPIs and KRAs).
Relationship to enterprise architecture
Business architecture is one domain of EA and the other domain are application, data, and infrastructure, as illustrated in the following figure will illustrate:
Figure 18: Relationship to enterprise architecture
The five views of business architecture
Business architecture provides a comprehensive asset for organizations or LOBs. Typically, five different views of the enterprise are created:
Figure 19: Five views of business architecture
The business architecture is split into:
- Strategy view: Strategic roadmap for fulfilling the business goals and KPIs that can be leveraged to track an organization's progress
- Capabilities view: Explains business services including core business, business management, customer-facing, and partner relationship capabilities
- Knowledge view: Enterprise taxonomy and interconnect between core concepts such as customer, supplier, products, services
- Process view: Key business processes and scenarios that cross enterprise boundaries. Describes roles, responsibilities, and resources parts of each process
- Organizational view: Mapping of business capabilities to roles, groups, and business units
Current versus target business architecture
Business architecture articulates the current state and the target state basis of the business goals. It is a common mistake to spend too much effort documenting the current state. The current state is required in order to identify and analyze issues and gaps and their impacts. Gaps in capabilities such as people, processes, services, integrations, and technologies are identified and scored.
Value of business architecture
Business architecture is a cornerstone that facilitates accountability and improves decision making .This results in better value in IT investment, improved operations, and legal compliance. This results in benefits such as reduced costs, higher sales, reduced risk, increased customer retention, and better relationships with suppliers and vendors.
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These are the typical work products related to the business architecture phase of the TOGAF Architecture Development Method (ADM). The following figure provides a detailed description:
Figure 20: Business architecture inputs and outputs
This list of baseline deliverables serves as a reference. Work products are usually tailored to each organization to meet the organization's needs and conform to other frameworks and standards such as CMMI.
- Business architecture defines current and target business capabilities and processes.
- Business architecture is a library of current business capabilities and strategy for rolling out new capabilities in support of business goals.
- Business architecture models the services, processes, people, and tools the business requires to achieve its strategic goals.
- Business architecture is a current and future view of business capabilities, business knowledge, processes, and organizational structure.
- Business architecture is a disciplined approach to realizing the business vision and goals.
- Business architecture builds a common understanding of the enterprise and is used to align strategic objectives and tactical demands.
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The benefits of business architecture are as follows:
- Better decision-making ability. Business architecture articulates the impact of decisions before making them, thus reducing risk and providing mitigation.
- Driven and cohesive strategy. Business architecture outlines the strategy into actionable steps and aligned investment.
- Higher efficiency and capacity. Business architecture enables and rationalizes operations for efficiency and scale.
- Agility in business and IT execution. An archive of reusable business assets and processes that outlines strategies and expedites the ability to implement changes.
- Business architecture improves organizational competitive advantage by focusing investment on strategic roadmap.
- Business architecture is a foundation to enhance accountability and improve organizational decision-making.
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Methodology
An enterprise can rapidly articulate the impact of changes by leveraging reusable assets produced by business architects, without elaborate investment in current-state analysis. To rapidly move from the strategic vision to execution, business architects put the appropriate repeatable processes in place. The specific organization problems the business architects increase operational effectiveness by assessing the root-causes. The analysis outlays the scope, opportunities, and risks with its resolution.
Leveraging business architecture supports the following:
- Define a new market opportunity
- Enable legacy modernization
- Investment planning and roadmaps
- New product offerings in a marketplace
- Globalization
- IT outsourcing
- Supply chain optimizations
- Regulatory and legal compliance
- LOB restructuring
- During a merger or acquisition integrate capabilities, processes, people, technology and culture
- Transform a large enterprise to a customer-centric model
- Make a decision that significantly guides a government program
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Let's take a look at the differences:
- Business architect: A role within enterprises (business or government) that is focused on collating data on the strategic positioning of a domain including LOB, BU, department, or team and creating a big picture of the capability and its gaps that may impede that area from reaching its full potential.
- Business analyst: A role either within an IT department of an enterprise or within a non-IT team but as a key SPOC with an IT department. This role is focused on analyzing the root cause of a business problem and developing the business requirements to address that problem.
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Business architecture enables processes supporting corporate goals and establishes the cost of IT. The need for business architecture for growing complexity of organizations is supporting transitioning through activities such as mergers and acquisitions and adherence to regulatory actions. This results in enterprises becoming stronger, efficient, effective and agile. This is the value that business architecture brings to the table.
Business architecture is important to assist in dealing with issues around governance, risk, and compliance. The capability to be able to trace and audit in the organization is crucial. Ultimately, a good business architecture facilitates smart decision making.
It enables your organization to use knowledge effectively in order to react to revenue generation, cost cutting, customer experience, and so on, and will allow you to respond to emerging opportunities.
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Technology Centric Architecture |
Business Centric Architecture | |
|
Focus |
Technology Standards and Portfolios
Architecture Patters and Governance
Application & Data Architecture |
Business Strategies
Business Capabilities, Operating Models and Value Chains
Business process and Business Services
Business Governance |
|
Tools |
Technical Maps, Patterns |
Value Chains, strategy maps, value streams, business maps |
|
Architects Skills |
Technologist
SME for application and infrastructure |
Business Advisors
SMEs for Business Architects |
Table 3:Business versus Technology centric architect
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BPM interlinks key activities of business architecture. This establishes a strong connection between business architecture and BPM. BPM is a technique that enables business architecture and provides the mechanism to rationalize IT systems, and optimize processes. BPM implements the well-known principle of you can't improve what you can't measure. Documenting the current state processes using BPM allows you to identify:
- Domains where functions are performed efficiently and where processes are unclear
- An existing repeatable process, but is dangling or has no parent
- Gaps in the competency skills which could be solved by staffing or training
The core competency of a business architect is to analyze the business changes to make it operate better; BPM is, therefore, a key competency too. BPM will provide documentation of core processes and will result in pragmatic improvements by the owners of these processes.
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The Porter's value chain is a good starting point for identifying the key business activities/ processes in an organization. Reference architectures like NGOSS also provide the business architecture components and are a good starting point. Some of the reference architecture/frameworks are, for example, Energetics in oil and gas, DoDAF in defense, BIAN in banking, ACORD in insurance
Figure 21: Porter's value chain
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Michael Porter suggested that an enterprise consists of two main categories of activities:
- Primary activities: For example, the operational processes delivering the product, services, sales, inbound logistics, outbound logistics and operations
- Support activities: For example, HR, finance, administration, and so on
The development activities are a category in itself as a chunk of them, such as business development, strategy, R&D, new products, or capabilities development and they ensure the competitive advantage for organizations. More activities are outsourced and even operations, a core activity once, is outsourced these days. The part that typically remains with the organization is a capability newly added to the operating model, the governance capability, which coordinates all other activities.
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Modeling tools:
- IT disciplines: Software Development Life Cycle (SDLC), including an understanding of various SDLC methodologies such as agile, waterfall, scrum, spiral, RUP, and their appropriate benefits.
- Modeling tools: Unified Modeling Language (UML), business process modeling, data modeling
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