Many business and technology executives are talking about the need for their organizations to launch enterprise architecture digital transformations – 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. As a result of the complexity and urgency of digital transformation initiatives, such planning has become even more crucial. Enterprise architecture digital transformation connects these complex technologies with business context to drive desired outcomes for the business.
Read on to learn how to raise the profile of your digital transformation efforts and reap the benefits of pairing smarter strategy with advancing technology.
What Does Digital Transformation Mean?
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
Digital transformation enables organizations to respond to market changes more quickly and be as nimble and dynamic as possible. It has become a competitive necessity in many industries, such as financial services.
By leveraging cloud offerings such as Software-as-a-Service (SaaS) and deploying AI and RPA, companies can operate at a fast rate of change. For enterprise architects and leaders in the Enterprise Project Management Office (EPMO), enterprise architecture digital transformation changes everything because many projects need to move at a much faster pace.
McKinsey Digital Transformation Report
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 ten respondents said their organizations had undertaken transformation efforts in the past five years. Years of research on digital 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.
Another McKinsey report highlights the dangers of undertaking digital transformation without the guidance of an enterprise architect, noting that point-to-point connections can rise almost 50%. At the same time, documentation simultaneously deteriorates — but when enterprise architects are involved in the process, the outcomes improve significantly.
Digital Transformation and Enterprise Architecture
Enterprise architecture is concerned with the structure and behavior of any organizational unit within a business and encompasses design, analytics, planning, and implementation. It borrows the principles and practices of architecture to improve business models across industries and guide them through effective changes.
Because it relies heavily on data to develop best practices to identify and execute improvements, enterprise architecture is closely aligned with information technology. Thus, enterprise architecture digital transformation is the next natural step forward, combining time-tested strategic principles with emerging technology.
With their broad spectrum of skills, cross-functional enterprise architecture teams are well positioned to drive organization-wide digital transformation.
They constantly evaluate the “current state” of the business, with its various strengths and weaknesses, against an envisioned “future state” that’s evolved to the next level. Addressing the gaps between current and future states empowers them to recommend and implement transformational upgrades to the business.
Fundamentally, enterprise architecture introduces holistic, far-reaching improvements that benefit the entire organization in some capacity. Thus, starting a digital transformation on an enterprise architecture level and investing in tools to make it more effective is a rising tide that lifts all boats — and it paves the way for digital transformation in other areas of the business, too.
Technology Roadmaps in Enterprise Architecture Digital Transformation
Within the context of strategic planning, it’s important to remember that digital transformation goes beyond funding, people, and operating models 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 derail projects and even 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 needed to change the operating model, map business capabilities, and align technology to the organization’s strategic goals.
Enterprise architecture roadmap example
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. The architect might suggest using microservices if a company wants to make applications easier to understand, develop, test, and release.
Working closely with PMOs, the CIO, business leaders, and other stakeholders, architects can help organizations establish technology portfolio planning. This alignment enables enterprises to assess, identify, and optimize the technology and applications 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 enterprise architecture digital transformation goals.
Why build technology roadmaps for digital transformation?
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 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 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, 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 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 enterprise architecture digital transformation, strategic planning and IT strategy must go hand in hand. Organizations can drive the business outcomes they want by linking technology investments with corporate goals and 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 total value that every initiative will provide in achieving a particular business goal.
Enterprise Architecture Case Study Examples
Companies in various industries are demonstrating how using technology roadmaps via strategic planning and project portfolio management tools can help make enterprise architecture digital transformation projects and technology investments successful.
Roadmapping for customer connection
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 solution 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 vital 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.
Better decision-making with strategic portfolio management
A financial services firm wanted its enterprise architecture digital transformation to enable better technology decision-making at every level of the organization. But without a consolidated view of data, it wasn’t easy to understand if investments in applications and systems to support the business were the right ones.
Such decisions were based more on opinions than facts. 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 sure 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 an enterprise architecture solution 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 could be analyzed.
The solution provides a view of the company’s business capabilities, 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 digital transformation allows the company to ensure quality and confidence in the business.
The enterprise architecture solution gives the company a trustworthy database and a way to report on the resilience position across several 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 consolidated 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
An integrated platform for birds-eye transparency
A manufacturer of various vehicles and engines wanted to manage its portfolio of investments better.
Managing cross-portfolio dependencies with a large organization with many different business units was nearly impossible. The company wanted enterprise architecture digital transformation to enhance how it managed its portfolios across the enterprise while ensuring better data quality and accuracy 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 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 the 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 the following:
- a shared 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
Digital Transformation Drives Strategic Execution
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 a clear vision and strategy to shape the execution, enterprise architecture digital 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. Deloitte says that a sound strategy is a foundation for a range of enterprise-wide investment decisions, resource allocations, and performance expectations. 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.
Enterprise Architecture Looks to the Future
Enterprise architecture and digital transformation belong together. You could try to implement one without the other, but together they can drive collaboration, adaptability, and resilience at speed. Learn more about how to leverage top-tier technology to unleash organizational change and integrate best practices for navigating uncertain times.