Many business and technology executives are talking about the need for their organizations to launch digital transformations – and for good reason. But without considering enterprise architecture in strategic planning, these transformation efforts can quickly spiral in the wrong direction or yield far fewer benefits than they might otherwise.
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Strategic planning has always been critical for businesses. The urgency to digitally transform and the complexity of these initiatives has arguably made such planning even more important, however. Enterprise architecture connects these complex technologies with business context to drive desirable business outcomes.
Digital transformation means different things to different organizations. But in general, it encompasses:
- technology trends such as the shift to cloud services
- the adoption of artificial intelligence (AI) and machine learning (ML)
- advanced analytics and big data infrastructure
- the emergence of the Internet of Things (IoT)
- the rise of robotic process automation (RPA)
- other initiatives
Transformation enables organizations to respond to market changes much more quickly, to be as nimble and dynamic as possible. In many industries, such as financial services, it has become a competitive necessity.
By leveraging cloud offerings such as software-as-a-service (SaaS) and deploying AI and RPA, companies can operate at a fast pace of change. For enterprise architects and enterprise project management office leaders (EPMOs), digital transformation changes everything, because many projects need to move at a much faster pace.
Consulting firm McKinsey & Co., in an October 2018 report, notes that as digital technologies dramatically reshape industries, “many companies are pursuing large-scale change efforts to capture the benefits of these trends or simply to keep up with competitors.”
In a global survey on digital transformation by the firm, more than eight in 10 respondents said their organizations have undertaken transformation efforts in the past five years. Years of research on transformations has shown that the success rate for these efforts is consistently low, the firm says, with less than 30 percent succeeding. Even digitally savvy industries such as high technology and telecommunications are struggling.
It’s important to remember within the context of strategic planning that digital transformation goes beyond funding, people, and methods of working to include the roadmaps for adopting the technologies that make transformation possible. If an organization does not effectively and comprehensively address technology needs, it could put the brakes on projects and even on the entire transformation effort.
Given the importance of technology, enterprise architects should be intricately involved in strategic planning efforts for digital transformation. They typically possess valuable knowledge and experience to make the best decisions regarding technology investments and how they fit into the existing enterprise infrastructure.
Enterprise architects do the modeling that is needed to change the operating model, map business capabilities, and align technology to the strategic goals of the organization.
For example, if the goal is to provide faster, broader and less costly access to business applications for users, the architect might recommend a move to the cloud. If a company wants to make applications easier to understand, develop, test, and release, the architect might suggest the use of microservices.
Architects, working closely with PMOs, the CIO, business leaders, and other stakeholders, can help organizations establish technology portfolio planning. This enables enterprises to assess, identify, and optimize the technology and applications that are vital to projects and programs.
Technology planning and roadmapping can help business leaders understand the impact of proposed technology portfolio changes on business capabilities. Business and technology stakeholders can jointly create technology plans that advance the organization’s capabilities and help it to achieve its digital transformation goals.
Roadmaps play a vital role in strategic planning for digital transformation. They enable enterprise architects to analyze business capabilities against strategy, identify impacts, and propose the technology investments an organization needs to make in order to meet its goals.
Cross-functional roadmaps connect the technology investments, outcomes, milestones, and funding needed. With the help of roadmaps, organizations can adapt the strategic plan as conditions change. Enterprise architects can create multiple investment scenarios to evaluate possible alternative approaches in order to achieve particular business objectives and compare by cost, risk, benefits, and resources.
Research firm Gartner Inc. has predicted that for every $1 invested in digital innovation through 2020, organizations will spend another $3 to modernize legacy infrastructure. If companies have an active technology strategy and roadmap in place, they can reduce that cost.
Strategic roadmaps make planning actionable and track its execution throughout the enterprise. They show what an organization needs to achieve in order to meet strategic goals. And by visualizing the work to be done, technology roadmaps can help bridge the communication gap between technology and business leaders.
Because technology is central to digital transformation, strategic planning and IT strategy need to go hand in hand. Organizations can drive the business outcomes they want by linking technology investments with corporate goals, and by creating technology plans that advance strategies and achieve business objectives.
By integrating an analysis of their technology portfolios with strategic planning, companies can achieve business objectives faster. They can avoid non-strategic projects while opting for those projects that deliver a technology portfolio optimized for the business strategy.
Integrated strategic planning solutions enable organizations to evaluate the strategic importance of a given technology such as a new application or a cloud-based service. The power of a technology management solution is that it allows organizations to look across the constituents and understand the complete value that every initiative will provide against achieving a particular business goal.
Companies in various industries are demonstrating how strategic planning and the use of technology roadmaps via strategic planning and project portfolio management tools can help make digital transformation projects and technology investments successful.
For example, a major coffee chain provider had a strategic goal to increase market share through customer loyalty and aimed to do this by connecting with customers using technology. Part of the strategy was to use artificial intelligence (AI) to predict customer orders.
A key component was deploying a strategic planning tool that enabled the company to use integrated project portfolios to create strategic roadmaps connected to execution and outcomes.
Among the key lessons learned:
- It’s important to have a clearly understood strategic roadmap.
- Product and IT portfolios must be integrated.
- Successful strategic execution requires product, application, service managers, and enterprise architects to be part of the end-to-end process of portfolio management.
- Strategic roadmaps and program management can lead to an agile organization.
A financial services firm wanted its enterprise architecture team to enable better technology decision-making at every level of the organization. But without a consolidated view of data, it was difficult to understand if investments in applications and systems to support the business were the right ones.
Such decisions were based more on opinions than fact. Without the ability to understand the end-to-end customer journey and how technology investments mapped to how the company delivered critical services to its members, it could not be certain that it was mitigating risks and prioritizing investments in those areas. Also, the company couldn’t measure how it was improving its overall resilience position.
The firm deployed a solution for capability and technology management to serve as a “single source of truth” for application portfolio management and technology portfolio management. Key indicators were implemented so the resilience of all assets can be analyzed.
The solution provides a view of the company’s business capabilities and how they link to business processes, and how that links to applications and underlying technologies. It also shows the people and third parties involved. Mapping the enterprise architecture repository in this way allows the company to ensure quality and confidence in the business.
The solution for capability and technology management gives the company a trustworthy database and a way to report on the resilience position across a number of business lines. With data in a central location and analytics to make sense of the data, the company is better positioned to aim investments at the appropriate risks and toward strategic applications and technologies.
Since deploying the solution, the firm has been able to consolidate data from multiple applications across all business units into a single, trusted repository, which provides insight into data and architecture. It has also been able to:
- detect and diminish the risk of resilience threats
- begin to base investment decisions on actual data instead of opinions, to ensure they are addressing the right risks
- establish reporting on resilience position and make improvements that support capabilities and compliance across multiple business lines
A manufacturer of a variety of vehicles and engines wanted to better manage its portfolio of investments.
With a large organization with many different business units, managing cross-portfolio dependencies was nearly impossible. The company wanted to enhance the way it managed its portfolios across the enterprise while ensuring better data quality and accuracy in order to make more informed business decisions.
The company deployed an integrated solution that brought together strategic planning, portfolio balancing, portfolio execution, and application portfolio management. The platform provides a consolidated view of all of projects and organizes them based on how they will be executed in different business areas. This transparency and consolidation of ongoing and planned projects helps the company measure project performance and fine-tune project portfolios.
Projects are prioritized based on funding requirements, projected impact to value, and alignment with the corporate strategy. Plus, decisions are now traceable. Managers can analyze profitability of projects based on different budget scenarios and perform analyses on such things as application run-time costs. The company also plans to use roadmapping capabilities.
Among the benefits of the deployment are:
- a common repository of all projects with complete transparency
- the ability to monitor budgets versus actuals
- consolidation of the portfolio
- an improvement in the quality of reporting with standardization
Strategy Takes Ownership of Disruption
As consulting firm Deloitte has pointed out, it’s not enough to respond to disruption anymore. Business leaders “have to anticipate and own disruption – with the agility and discipline that will help them differentiate and stay ahead.”
Without clear vision and strategy to shape the execution, business transformation initiatives can falter at even the most high-performing companies.
Leaders in business transformation typically have a clearly articulated and well-understood business strategy. Often an organization’s strategic choices, although understood tacitly by senior executives, are poorly translated into downstream implementation choices.
The result of this is the dilution of value. A sound strategy serves as the foundation for a range of enterprise-wide investment decisions, resource allocations, and performance expectations, Deloitte says. It helps shape an executable transformation ambition, or the value that should come from the transformation.
Those organizations that have invested in articulating their strategy can translate strategic goals into a realistic transformation ambition that they can execute. They have a deep understanding of how they will create and deliver value.