The need for transforming your business by leveraging digital technologies to survive and thrive in the increasingly digitalizing world has been established beyond any doubt. However, organizations have taken a wildly varied approach for digital transformation with equally mixed outcomes. This journey has been significantly harder for organizations that came with legacy and requirements of scale. In view of this, it should be said that while it is common to set sights on end outcomes, it is equally important to build and implement the correct plan to reach those goals.
Where digital transformation is concerned, it is critical to rethink the different ways of working with digital technology. When we say ways of working, we are referring to exactly how the business is conducted and how technology solutions are developed for the aforementioned businesses to maximize the outcomes. Business architecture and agile methodology are key organizational tenets for digital transformation.
Business architecture helps leaders decode the ways of working for core businesses, while agile practices and agile methodologies help in delivering the requisite technology solutions in a fast and efficient manner. Aligning business architecture practices to agile delivery models helps deliver better business outcomes and better control throughout the transformation journey.
Building Agile Business Architectures
Business architecture: Any transformation would require not just conceptualizing the digital strategy but also translating that strategy into initiatives, a roadmap, and execution. A skilled mountaineer can have a great vision to scale the peak and get going without much focus on gear or with the right tools. However, the latter would ensure a greater probability of success.
Similarly, a structured business architecture method is like a toolkit that can help enterprises work through the digital strategy to the execution journey.
Infusing with Agile: Some organizations tend to get caught up in modelling the enterprise. Instead a purpose-driven iterative approach based on expected outcomes can help reduce cost and churn. Developing business models iteratively with agile methodologies for fidelity helps develop the right level of business solutions. This is best done by aligning with an enterprise agile model like SAFE.
For example, a customer tried modeling all their business processes, data, and applications prior to starting a large transformation program. However, this effort became a spiraling program that was dragging on and losing sight of the actual transformation. Reviewing the existing process and switching to an objective-driven and iterative blueprinting helped refocus on the transformation from the modeling.
The figure below provides an end-to-end view of business architecture from portfolio planning to execution:
Portfolio-level View of The Transformation Exercise
One of the key questions transformation leaders face initially is around “what do we want to be” and “what do we need to do or change to achieve that state”.
Enterprise-level analysis is required to identify the initiatives required for delivering transformations strategy and outcomes. To do this effectively, a collective view of the enterprise’s current state capabilities, value streams, and customer experience with line of sight to the goals is the key. With a collective view, we can identify the key initiatives (also known as EPICs in SAFE) to meet the goals. As business environments internally and externally keep changing, this cannot be a onetime effort but is best done iteratively with longer cycles.
Goals and KPIs: Goals and objectives need to be set with an enterprise and market context. For example, a retail store while planning to expand in new geography needs to think about its online market as well and develop solutions accordingly. Ensuring the goals and objectives are SMART (Specific, Measurable, Achievable, Relevant, and Time-bound) will help with the ease of managing them and achieve the outcomes. While defining the goals properly is the key, it is essential to ensure they are tightly linked to the capabilities and measured.
Business capability models provide the start and a good capability map provides a view of what the business does. However, the maturity of each capability can vary. Capabilities can be assessed with different perspectives depending on the transformation goals and developed as a reference heat map. These heat maps would provide a mechanism to assess the impact and gaps in capability to enable the business transformation. While these provide a very good across-the-board view of what the enterprise does, they don’t necessarily provide insights on how it does, and we can leverage value streams for that.
Plotting Capabilities in a 2 x 2 Fenix mapping, as in the warehouse capabilities example above, can provide us with different treatment plans for different capabilities and systems. In the above example, warehouse automation is a differentiating capability on the bottom right corner that could be transformed using AGVs and AI. Whereas asset management may not be highly differentiating for all warehouses and may not require high efforts on innovation or transformation.
Value streams provide a great way to understand the value generated or impeded for a customer through a set of actions by the organization. These are also known as high-level cross-functional business processes. Some examples can be: order to cash, procure to pay, hire to retire, and others.
SAFE recommends the value stream model for developing solutions and refers to them as development value streams.
Personas and Journey Maps are proven tools to understand the key stakeholders including customers and their experience in interacting with the enterprise’s processes and systems.
Program-level view– Processes, Innovation, and Solutions
Once we get a broad view of the initiatives needed to deliver the business strategy, we can pick the capabilities in focus and analyze the connected processes to redefine the target state process. This problem solving can be done in various ways depending on the goals and insights developed through the portfolio exercise. It would be a combination of process, technology, and experience. These can be done in parallel across different value streams and again iteratively by leveraging Kanban or scrum models.
Process: Leveraging the cross-functional view through value streams, we can dig deeper to understand and re-define processes. Based on the capabilities analyzed and mapped in Fenix, we can decide to redesign the process through innovation, optimization, or automation. These can be done iteratively and aligned with SAFE and this could be at 3-month program increments.
Innovation: Not all business capabilities and processes in an enterprise require innovation as it involves time and money with variable returns. This could be solved using a differentiated approach. For capabilities plotted on the innovate and scale quadrants, we can leverage various methods including design thinking to drive innovation.
While we don’t need to constrain idea generation, we can evaluate feasibility and viability differently for different quadrants in Fenix. For e.g. the online fulfilment capability in the innovation quadrant can extensively utilize AI- and ML-driven solutions for increasing impact. And a pick-and-pack capability in a warehouse can possibly utilize automation to drive efficiency and scale. When this is done iteratively, business impact and failures can be identified sooner and corrected.
Features and Stories: It is critical to breakdown EPICs identified in Portfolio analysis into features and user stories for solution development. However, if there are no guard rails in place, the features can end up being different or point-specific. The outcome of the Portfolio analysis effort including value stream and capability heat maps, goal tree, Epics, and Solution principles could be used as the guard rail to detail the features and acceptance criteria. By closely aligning each feature with a business process, it would provide a mechanism to identify the business impact and also help in defining the target state user stories.
Enabling the feature teams
Minimum viable product (MVP)
These are minimum functionalities that could be delivered that would provide value for the customer/user. The best way to define an MVP would be to leverage the value streams and identify the relevant minimum features and stories that can be packaged together across the value stream.
Further iterations over the MVP would lead to delivering complete and evolving product.
Measure the right efforts
As we traverse through the Portfolio and program iterations delivering the features and functionalities, it is essential to measure the efforts. The critical aspect would be to not just measure the outcomes but measure the right effort to the right outcomes as well. This can be done by defining the hypothesis tied to an MVP and each subsequent iteration and measuring them.
For example, if the MVP or release was about increasing user satisfaction by introducing features to reduce overall time taken, the hypothesis here is that user effort reduction would increase customer satisfaction. So, we need to measure the effort reduced and corresponding satisfaction scores.
Enabling the product owner
In the program phase, business architects collaborate with product owners and provide them the foundational architecture required to build the product. The features and stories are jointly defined by the product owner and business architects.
The product owner also provides the feedback from the sprint cycles on any of the stories and features to the business architect and would help redefine the feature and story.
While many organizations have set out into the ocean with their sights set on holistic digital transformation, some are in the journey with fancy boats while others are in with simple boats but which have strong people and the right sails. Some have reached new shores, and some are tirelessly striving, whatever may be the path chosen, the best ships would be those that have the right toolkit and deploy the best people and methods throughout the journey.
While digital transformation might be a complex journey in new oceans, adapting business architecture combined with agile methodologies will help navigate it with better control and lead to better outcomes by reaching the right shores.