The Guide to Practical and Pragmatic IT Architecture Design

Enterprise Architecture: Business and IT Alignment

One of the discussions in Architecture is how business and IT align and how IT should facilitate and help the business achieve its goals. And what is the role of Enterprise Architecture in this space? This is more a topic of enterprise architecture rather than IT architecture (see explanation here), but I believe it is important to discuss as it touches the heart of how Architecture can help the business.

It is obvious that IT and business go hand in hand and support each other, one in driving the needs to IT and on the other side facilitating and supporting business in not just current requirements but also in opening up new opportunities to collaborate. From a conceptual point of view it looks like this: 

Business and IT alignment

Business and IT alignment - how does it work in practice

But then main questions pop up such as how to enable this model in practice? How does enterprise architecture drive business transformation in your company? And how do you align IT and business through an iterative process throughout your company? 

To understand how enterprise architecture facilitates this role, we need to understand how business and architecture align from an architecture perspective. 

If you take the previous diagram one step further and consider the strategy and architecture under each dimension, you get the following 4 blocks and each supporting each other:

Business and IT alignment cycle

The business defines a business strategy such as an annual growth of 10% in the following 4 years. That strategy needs to be supported by a business architecture, a footprint that shows which business capabilities are required to enable that growth. That can be such as enabling more sales through your digital channels, or acquiring another company. Those activities will require new business functionalities such as digital sales marketing for instance. 

On the other side, these newly identified business capabilities will demand new elements in its IT architecture (such as a new web portal entry) and subsequently requires IT Strategy to add new initiatives to build that portal to enable business growth. And there it closes with IT strategy supporting the business strategy. 

Aligning Business and IT through architecture

Business and IT Alignment

To understand this planning process, you need to deep dive into how enterprise architecture maps each of its architectures and how it aligns them. A double click on the business and IT architecture alignment in a metamodel format would give you the following diagram:

Business IT Model

There are basically three main perspectives:
  1. Business View,
  2. Functional & Application View and
  3. Technology View    
Each view defines its own components and architecture. 

Business Perspective

From a business perspective, there are three layers, starting with business objectives. These objectives define the main company targets in the following 3 to 5 years. Those are typically in how the business is making its money and the ways it sees how they can improve them.

Below that are the business capabilities. Business capabilities are the main components how a business works. For instance a cookies company has a supply chain capability to manufacture the cookies, a market interaction capability to sell them to supermarkets or consumers and financial accounting department to manage cash flow. These main capabilities are similar for most industries, but vary in detail. 

Those capabilities are interlaced through business processes that orchestrate the business flows of activities end-to-end, such as how one consumer buys a product, that gets manufactured, its production is planned and main materials are purchased, and subsequently the company receives its payment. These flows are between business capabilities and link in an integral transversal way of how the company works.

The diagram below shows the components that are in each of these layers. 

Enterprise architecture and Business IT alignment

Functional and Application Perspective

The second view is the functional architecture layer. This layer shows the functionalities that are within the business capabilities and that are the items that interact with the business flows and business processes. These are functionalities that are defined at a level so that they can be built and contained as a function that can be re-used by different business processes. 

It is important to have this view as it facilitates optimizing the business and IT as here is the layer that optimizes Business and IT alignment efficiency. For instance, a payment function can be required in multiple business processes, but has to be built only once so it can be re-used in various flows. That provides a more maintainable and cost-effective application landscape. 

The other layer in this perspective is the one with applications that maps the functionalities to an application, so it can be built and serves its purpose. One application can support multiple functionalities or serve one. Normally it would be inefficient to have one functionality be covered by multiple applications as it may mean that the functionality is too highly, vaguely and too broadly defined that cannot be covered by one or within an application.

Additionally, the functional view includes a list of functional interfaces that interconnects the applications. 

Information is data at functional level. This data also needs to be defined here in terms of main data entities, master and transactional data items and its interrelation. Master data entities are items such as products, materials, clients, where transactional data covers purchase and sales transactions.  

If a large IT platform is used such as a SAP or Oracle suite, an application is defined here as a module and not as the full platform. 

The following diagram shows examples of what each layer can have within its scope:

Enterprise Architecture defines business and it strategy

IT Perspective     

With the business and application layers defined, now it is the turn of IT to fill in the other underlying layers. 

Software components shape the IT platform to support an application. It can be a custom built Java or .Net application, or any other language. Or it could be a SAP or Oracle Suite platform that supports various modules. The software components are the main IT heart of the application and enables the working, development and maintaining the specifically required business functionalities. This layer contains an inventory and a map what software and technical components are required.

The integration platform layer shows the corporate IT platforms that supports integration between the applications such as Enterprise Service Bus, API management layers, ETL etc. It also has an inventory of the technical interfaces between the applications that runs over the integration platform components.

The data layer are the IT components that store and manage the data. They are both structured or non-structured data repositories that hold master and transactional data and on top of this, it has analytical and reporting tools to analyze its data and performance.

The infrastructure and cloud layer is the "iron" of the application and are the servers, PCs, or cloud capability that serves the application. It also includes the network and interconnectivity, wired or wireless.

Enterprise Architecture aligning Business and IT

As you can see from the above, it is clear that enterprise architecture plays a pivotal role in aligning business and IT needs and demands. Here it shows a model and approach that many companies use to align and optimize its business strategy with IT. Once this model is established, it can start analyzing, designing and building the required applications and underlying IT architecture and components.    







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