keynote rogerapac

Upload: saratkm

Post on 07-Apr-2018

228 views

Category:

Documents


0 download

TRANSCRIPT

  • 8/6/2019 Keynote RogerAPAC

    1/45

    AligningAligningBusiness and ITBusiness and IT

    ArchitecturesArchitectures

    Roger Roberts McKinsey & CompanyRoger Roberts McKinsey & Company

    [email protected][email protected]

    February 23, 2005February 23, 2005

    Microsoft Asia Pacific Regional Architect ForumMicrosoft Asia Pacific Regional Architect Forum

  • 8/6/2019 Keynote RogerAPAC

    2/45

    2

    Unit of measure

    * Footnote

    Source: Source

    Aligning Business and IT ArchitecturesAligning Business and IT Architectures

    Forces at Work Reshaping BusinessArchitectures

    The Challenge and Opportunity for IT

    The Central Role of Business Domains

    Aligning IT Architecture Management with the

    Changing Business Context

    Moving from Planning to Execution

  • 8/6/2019 Keynote RogerAPAC

    3/45

    3

    Unit of measure

    * Footnote

    Source: Source

    Structure

    What are the scope, scale and boundaries of

    the enterprise?

    Strategic Capabilities

    How does it deploys resources people,

    intellectual property and tangible/intangible

    assets to fulfill its aspirations

    Source: McKinsey & Co.

    Pressure for more rapid change in business architecture

    is rising fast in almost every industry

    What do we mean by business architecture?What do we mean by business architecture?

  • 8/6/2019 Keynote RogerAPAC

    4/454

    Unit of measure

    * Footnote

    Source: SourceSource: McKinsey & Company

    McKinsey colleagues

    around the world haveidentified a wide range of

    trends that ultimately are

    reshaping business

    architectures

    2

    1

    3

    4

    Changing nature of work

    production to interaction

    Creative Destruction

    Emergence of Global Process

    Architectures

    Unbundling the Corporation

    Forces at work reshaping businessForces at work reshaping business

    architecturesarchitectures

  • 8/6/2019 Keynote RogerAPAC

    5/455

    Unit of measure

    * Footnote

    Source: Source

    73

    59

    38

    24

    10

    11

    13

    14

    6

    7

    10

    14

    6

    6

    7

    13

    2

    10

    11 15

    2 3

    8 9

    1

    3 12 7

    1 1

    4

    Interaction-

    intensive

    workers

    Percent of total US labor costsPercent of total US labor costs

    1900 1930 1960 2000

    Data manipulators

    Analytic knowledgeworkers

    Coordinators

    Data harvesters andcommunicators

    Caregivers

    Doers

    Strategists

    Interpersonalknowledgeworkers

    Source: US Bureau of Labor Standards data; McKinsey Global Institute analysis

    Over 60%

    of the

    economy

    and stillgrowing

    1.Interaction work takes over1.Interaction work takes over

  • 8/6/2019 Keynote RogerAPAC

    6/456

    Unit of measure

    * Footnote

    Source: Source

    Interactions

    Searchcoordination,

    monitoring

    Direct,physicallabor/

    Individual

    analyticwork

    Percent of time

    Source: McKinsey Global Institute analysis

    Inter-personal

    know-ledgeworkers

    StrategistsAnalyticknow-

    ledgeworkers

    Datamanipul-

    ators

    Care-givers

    Dataharveste

    rs andcommun-icators

    Coordina-tors

    Doers

    Interaction costsas share ofoverall economyare increasing ascomposition oflabor force

    changes

    These interactioncosts are fallingas technologyand access to itbecome morepervasive

    15 19

    37 42

    6877 78 78

    85 81

    63 58

    3223 22 22

    Labor costs are increasinglyLabor costs are increasingly

    dominated by interaction costsdominated by interaction costs

  • 8/6/2019 Keynote RogerAPAC

    7/457

    Unit of measure

    * Footnote

    Source: Source

    % of total labor costs

    GermanyU.S.

    5146 32

    12

    8

    India

    19

    42

    60

    30

    Directphysical

    labor

    Analytic work

    Interactions -SearchCoordinationMonitoring

    Interaction

    costs are

    falling globally

    Building

    software is

    more like

    making a

    movie than

    running a

    factory

    Source: McKinsey Global Institute analysis

    Interactions are a pervasive feature ofInteractions are a pervasive feature of

    all modern economiesall modern economies

  • 8/6/2019 Keynote RogerAPAC

    8/458

    Unit of measure

    * Footnote

    Source: Source

    Key Messages

    Falling interaction costs createnew degrees of freedom for

    structuring business

    architectures as organizations

    become more networked

    Three broad kinds of businesseswill emerge

    Customer relationship Product innovation Infrastructure

    Leaders must look hard at whatbusiness theyre really in?

    Source: McKinsey & Company

    2. Unbundling the Corporation2. Unbundling the Corporation

  • 8/6/2019 Keynote RogerAPAC

    9/459

    Unit of measure

    * Footnote

    Source: Source

    Coases law

    A company tends to

    expand until the cost of

    organizing an extra

    transaction within the

    organization equals thecost of carrying out the

    same transaction on the

    open market

    Organization costs

    are a growth barrier

    Execute

    transactions

    internally only if

    value captured is

    greater than value

    network would

    have created for

    customers and the

    enterprise

    Metcalfes law

    The value of a network

    goes up as the square

    of the number of new

    nodes (participants) in

    the network

    Network value is

    exponential

    Source: McKinsey & Company

    Networked organizations shift the boundaryNetworked organizations shift the boundary

    between internal & externalbetween internal & external

  • 8/6/2019 Keynote RogerAPAC

    10/4510

    Unit of measure

    * Footnote

    Source: Source

    Often webs

    build around

    more formal

    networks

    (e.g., tier 2 or3 suppliers to

    a HK-based

    apparel

    manufacturer

    for European

    brands)

    A network is a set of relationships that builds onexplicitagreement to a set of standards

    The set of relationships creates a gated community

    Network growth can be controlled by selecting andevaluating relationships

    Network value creation can be managed

    The necessity of explicit agreements slows growthdown to manageable levels

    Formal

    networks

    Gated, controlled

    A web is a set of informal relationships that builds onimplicitagreement to a set of standards

    The set ofinformal relationships develops organically Webs require publication of the relevant standards

    Web growth cannot be controlled and therefore valuecreation can not be managed traditionally

    Web growth is faster than network growth

    Informal

    webs

    Organic, unbounded

    Source: McKinsey & Co.

    Explicit agreement around standards makeExplicit agreement around standards make

    formal networks manageableformal networks manageable

  • 8/6/2019 Keynote RogerAPAC

    11/4511

    Unit of measure

    * Footnote

    Source: Source

    Tendency to collaborate

    Insurance

    Chemicals,

    steel, paper

    Television

    News/ information

    Electronic banking

    Actual value of

    a standard

    Health care

    Credit cards

    PCs

    Online services/

    Internet technology

    Desirability of

    the standard

    Positivefeedback loops

    for network

    growth

    Ability to un-bundle the value chain Potential value to be extracted Value-sharing architecture

    Automobiles

    ASSESSMENT

    Retail banking Brokerage

    Alreadyexperiencing

    network effects

    Source: McKinsey & Co.

    Petroleum

    So far few industries have fully leveraged theSo far few industries have fully leveraged the

    benefits of external network configurationsbenefits of external network configurations

  • 8/6/2019 Keynote RogerAPAC

    12/4512

    Unit of measure

    * Footnote

    Source: Source

    Implied lifetime in S&P 500 based on company exits

    90

    45

    30

    22

    15

    1935 1955 1975 1995 2005E

    Its getting tougher to

    survive

    Half of all companies in

    S&P 500 today are likely to

    be gone by 2020

    Pace of change is

    accelerating

    Over long time periods,

    even the survivors tend to

    under-perform broadermarkets

    Source: McKinsey & Co.

    3. Creative Destruction is shortening the3. Creative Destruction is shortening the

    lifespan of corporate entitieslifespan of corporate entities

  • 8/6/2019 Keynote RogerAPAC

    13/4513

    Unit of measure

    * Footnote

    Source: Source

    Create OperateTrade/

    Destroy

    Markets

    Primary focus is to create,

    exchange, and destroy assets

    Companies

    Primary focus is to operate assets

    Source: McKinsey & Co.

    Just surviving is difficult - and

    getting more so

    Survivors generally underperformattackers in their industry theylose the attackers advantage They do not create enough

    They do not trade/destroy enough

    Markets are better at creating,trading, and destroying thansurvivors

    Implication is that willingness tounbundle and reshape businessarchitectures is critical to survival

    Why do survivors under performWhy do survivors under perform

    markets?markets?

  • 8/6/2019 Keynote RogerAPAC

    14/45

    14

    Unit of measure

    * Footnote

    Source: Source

    Continuous cycle of creating and

    destroying

    Prerequisite: State-of-the-art

    development & operations capabilities

    Create OperateTrade/

    destroy

    TomorrowFocus on development &

    operations

    Today

    Create OperateTrade/

    destroy

    Source: McKinsey & Co.

    Sustained leadership demands anSustained leadership demands an

    integrated create-operate-trade mindsetintegrated create-operate-trade mindset

  • 8/6/2019 Keynote RogerAPAC

    15/45

    15

    Unit of measure

    * Footnote

    Source: Source

    Traditional process model

    Offshore

    (e.g.,

    Asia)

    Near-shore

    (e.g.,

    Eastern

    Europe)

    Onshore

    R&D

    Logistics

    S&MHR

    REM/FM

    Corporate

    center

    Finance

    Manufacturing

    Shoring

    Sourcing

    Make Partner Buy

    Size indicates number of FTEs

    Focus on onshore optimization

    Manufacturing

    Sourcing

    Make Partner Buy

    Logistics

    REM/FM

    HR

    S&M

    LogisticsR&D

    Corporatecenter

    IT

    Finance

    R&D

    Target process model

    IT

    Shoring

    IT

    IT

    Source: McKinsey & Co. (disguised client engagement example)

    Cost reduction EUR 500 million p.a. Implementation time 3 years

    AutomationOptimizationRedesignRightshoringRightsourcing

    Performance leaders fundamentally optimize theirPerformance leaders fundamentally optimize their

    operations across all processesoperations across all processes

  • 8/6/2019 Keynote RogerAPAC

    16/45

    16

    Unit of measure

    * Footnote

    Source: Source

    More flexibility in IT architecture required

    to meet disruptive threats

    Decreasing business margins require

    reshaping of process sourcing strategy

    It is not the strongest

    of the species that

    survive, nor the most

    intelligent, but the onemost responsive to

    change

    Charles Darwin

    It is not the strongest

    of the species that

    survive, nor the most

    intelligent, but the onemost responsive to

    change

    Charles Darwin

    IT must ride the price/performance

    curve just to maintain pace

    New IT architecture models with a new

    level of flexibility and efficiency offer hope

    Sustaining global growth requirestechnology leadership

    Source: McKinsey & Co.

    Macroeconomic trends force companies toMacroeconomic trends force companies to

    rethink their IT strategyrethink their IT strategy

  • 8/6/2019 Keynote RogerAPAC

    17/45

    17

    Unit of measure

    * Footnote

    Source: Source

    UPS strategic IT-enabledcapabilities

    New services and network optimizationbased on global track-and-trace

    One face to the customersupported bycustomer automation system

    Dynamic capacity optimization byoverarching order management

    Cross-divisional business integrationbuilt on common data

    Enhanced solutions business throughintegration with customer systems

    Ware-

    house

    mgmt.

    Ware-

    house

    mgmt.

    Customer

    automation

    Customer

    automation

    Order

    management

    Order

    management

    Supplychain

    manage-

    ment

    Supplychain

    manage-

    ment

    Professional

    services

    Professional

    services

    FinancialservicesFinancialservices

    Sys-

    tem

    inte-gra-

    tion

    Sys-

    tem

    inte-gra-

    tion

    Source: McKinsey & Co.

    Technology enabled UPS to turn packageTechnology enabled UPS to turn package

    delivery into a global information businessdelivery into a global information business

  • 8/6/2019 Keynote RogerAPAC

    18/45

    18

    Unit of measure

    * Footnote

    Source: Source

    Romania

    China

    Japan

    India

    Fiji

    New Zealand

    AustraliaSpain

    UnitedKingdom

    Ireland

    France

    Portugal

    USA

    Mexico

    Egypt

    Hungary

    SouthAfrica

    Switzerland

    Greece

    Sweden

    Albania

    Germany

    Malta

    Netherlands

    Italy

    Belgium

    Kenya

    Poland

    offer global solutions for corporate customersuse low cost call centers for customer serviceoffer advanced mobile products globally

    Global brand

    Global reach

    Global customerbase - 135 million

    Global skill pool

    Technology leadership

    enables Vodafone to

    Source: McKinsey & Co.

    Sustaining global growth requiresSustaining global growth requires

    technology leadership: Example - Vodafonetechnology leadership: Example - Vodafone

    http://www.vodafone.com/http://www.vodafone.com/
  • 8/6/2019 Keynote RogerAPAC

    19/45

    19

    Unit of measure

    * Footnote

    Source: Source

    Forces at Work Reshaping BusinessArchitectures

    The Challenge and Opportunity for IT

    The Central Role of Business Domains

    Aligning IT Architecture Management with the

    Changing Business Context

    Moving from Planning to Execution

    Aligning Business and IT ArchitecturesAligning Business and IT Architectures

  • 8/6/2019 Keynote RogerAPAC

    20/45

    20

    Unit of measure

    * FootnoteSource: Source

    USD 1 bnMajor applications*

    Central functions HR Finance/controlling Purchasing Other

    Back-office Product development Underwriting Policy administration Claims/benefits Other

    IT infrastructure

    dominates

    Data center Storage

    Network Telecoms PCs/mobile

    devices

    ILLUSTRATIVE

    Front-office Sales force automation CRM Call center Internet Other

    * Disguised insurance industry exampleSource: McKinsey & Co.

    75

    225

    50

    650

    Only a smallfraction of app

    spend delivers

    new

    differentiating

    capabilities

    After recent cost cutting much IT spendingAfter recent cost cutting much IT spending

    goes into infrastructuregoes into infrastructure

  • 8/6/2019 Keynote RogerAPAC

    21/45

    21

    Unit of measure

    * FootnoteSource: Source

    Current paradigm

    Business flexibility

    Infra-

    structure-

    centric

    architecture

    IT

    efficie

    ncy

    Application-centric

    architecture

    Past IT architectures were bound bytrade-off between increasing

    business flexibility and reducing IT

    cost/increasing process commonality

    Every new app brought its own

    infrastructure along

    2004

    2000IT

    efficie

    ncy

    New paradigm

    Business flexibility

    Application-centric architecture

    New

    architectureparadigm

    Future IT architecture mustprovide both an increase in

    business flexibility and a decrease

    in IT cost

    Decoupling of apps and

    infrastructure

    Source: McKinsey & Co.

    What definesthe the new

    architecture

    paradigm?

    Technology capabilities and a new architectureTechnology capabilities and a new architecture

    model offer hope to shift this mixmodel offer hope to shift this mix

    R f IT i h b i

  • 8/6/2019 Keynote RogerAPAC

    22/45

    22

    Unit of measure

    * FootnoteSource: Source

    IT project budget

    Percent

    Budget reallocation from "Run the

    Company" to "Change the

    Company" by

    refocusing on projects that drive

    metrics that matter

    establishing clear architecture

    governance linked to business

    initiative portfolio

    focusing on target platforms

    retiring redundant applications

    stopping messy projects early

    ~ 10

    ~ 90

    65

    35

    Today Target

    "Grow"

    "Shrink"Run the

    company

    Change the

    company

    Source: McKinsey & Co.

    Refocus IT on renewing the business systemRefocus IT on renewing the business system

    M t d h i t fM t d h i t f

  • 8/6/2019 Keynote RogerAPAC

    23/45

    23

    Unit of measure

    * FootnoteSource: Source

    2004+

    Infrastructure-centric

    architecture

    Application-centric

    architecture

    Regain

    infrastructure

    manageability

    Begin to unleash

    the potential of

    service-oriented

    architectures for

    business and IT

    Early 1990's

    Today

    Managing the full stack

    Applying service orientationto the full stack

    Coherently revamping

    applicationsand infrastructure

    Infrastructure operated like anutility

    Application services

    Infrastructure services

    Profession-

    alized ADprocess

    Utility

    operations

    Source: McKinsey & Co.

    Move toward comprehensive management ofMove toward comprehensive management of

    applications, application delivery & infrastructureapplications, application delivery & infrastructure

    M i Th F ll St kM i Th F ll St k d d td d t

  • 8/6/2019 Keynote RogerAPAC

    24/45

    24

    Unit of measure

    * FootnoteSource: Source

    Reusable business

    logic

    Business service

    specifications Business data schema Business domain

    architecture governance

    A

    Desktop infrastructure Server infrastructure Network and Telco

    infrastructure

    Storage infrastructure

    Elements

    Applications/core business

    logic

    App/data service

    plumbing

    Virtualized physical

    infrastructure

    Integration backbone Run-time platform

    Data management Portal services

    Resource pooling Resource provisioning

    and connectivity

    Service-levelmanagement

    B

    C

    The twoservice layers

    fully decouple

    applications

    from physical

    infrastructure

    Application

    services

    Infrastructure

    services

    Commoditized

    hardware

    D

    Physical

    infrastructure

    Source: McKinsey & Co.

    Managing The Full StackManaging The Full Stack depends on twodepends on two

    distinct service layersdistinct service layers

    SOA h ffi i & fl ibilit t dSOA h ffi i & fl ibilit t d

  • 8/6/2019 Keynote RogerAPAC

    25/45

    25

    Unit of measure

    * FootnoteSource: Source

    ITefficie

    ncy

    Business flexibility

    Best practice:standardized

    business processes

    (e.g., financial

    controlling)

    Next practice:innovative, frequently

    changing processes

    Service-oriented

    architecture

    Today's

    architecture

    Today's

    position

    Service-oriented architecturescreate value by allowing

    enterprises to pursue Best

    Practice and Next Practice

    simultaneously in different parts

    of their business architectures

    Higher efficiency forcommoditized business

    processes

    Higher flexibility forinnovative, frequently

    changing processes

    Source: McKinsey & Co.

    SOA pushes efficiency & flexibility towardSOA pushes efficiency & flexibility toward

    the next frontierthe next frontier

    Ali i B i d IT A hit tAli i B i d IT A hit t

  • 8/6/2019 Keynote RogerAPAC

    26/45

    26

    Unit of measure

    * FootnoteSource: Source

    Forces at Work Reshaping BusinessArchitectures

    The Challenge and Opportunity for IT

    The Central Role of Business Domains

    Aligning IT Architecture Management with the

    Changing Business Context

    Moving from Planning to Execution

    Aligning Business and IT ArchitecturesAligning Business and IT Architectures

    Business domains are key to managingBusiness domains are key to managing

  • 8/6/2019 Keynote RogerAPAC

    27/45

    27

    Unit of measure

    * FootnoteSource: Source

    Business view

    Technology view

    Domains ofcoherentfunctionality andinformation

    Services asstable businessrelationships

    Business/

    IT architecture:domains/services

    Strategic

    aspirations Business

    plan

    Businessinitiatives

    Executionmodel

    Business strategy

    Business

    processes Business

    relationships

    Businessrules

    Processes

    Hardware,

    storage, OS,networkinfrastructure

    Middleware,databases,

    Systemsmanagement

    Technology

    Application

    programs andmodules

    Informationdeliveryportals

    Data model &query tools

    Applications

    Source: McKinsey & Co.

    Business domains are key to managingBusiness domains are key to managing

    application and data servicesapplication and data services

    B i d i hi h l lB i d i hi h l l

  • 8/6/2019 Keynote RogerAPAC

    28/45

    28

    Unit of measure

    * FootnoteSource: Source

    UseUse

    ServeServe

    Receive

    information

    Receive

    information

    Provide

    information

    Provide

    information

    Calculate profitabilityCalculate profitability

    DefineDefine

    BuyBuy

    Offered toOffered to

    HistoryHistory

    ChannelsChannels

    RelationshipRelationship PlanningPlanning

    ProductsProducts

    ProductionProductionCustomersCustomers DeliverDeliver

    MANUFACTURINGEXAMPLE

    Source: McKinsey & Co.

    Business domains a high-levelBusiness domains a high-level

    exampleexample

    B i d i d iBusiness domains are mapped using

  • 8/6/2019 Keynote RogerAPAC

    29/45

    29

    Unit of measure

    * FootnoteSource: Source

    Typical design criteria

    Enable end-to-end support along core business processes (e.g.,customer acquisition)

    Support differentiated performance need (e.g., flexibility vs.reliability)

    Grouping domains

    along logical

    functionality and

    business purpose

    Prioritization of new capabilities needs to

    Provide required performance without inhibiting performanceof existing capabilities Fit logically with existing capabilities Address IT and business trade-offs

    allowing support of

    foreseeable business

    challenges

    Potential opportunity for future outsourcing needs to be ensuredby e.g.,

    Grouping capabilities eligible for sharing/outsourcing together

    and enabling

    potential carve-outs

    Enable simplification of application rationalization and interfacecleanup by Carving out most critical capabilities which are buried under

    complex IT architecture Designating a clear owner in the organization to enforce

    cleanup

    while reflecting

    current IT starting

    point

    Rationale

    Source: McKinsey & Co.

    Business domains are mapped usingBusiness domains are mapped using

    several design criteriaseveral design criteria

  • 8/6/2019 Keynote RogerAPAC

    30/45

    Key enterprise architect role manage aKey enterprise architect role manage a

  • 8/6/2019 Keynote RogerAPAC

    31/45

    31

    Unit of measure

    * FootnoteSource: Source

    Time

    Opportunity lies in

    IT efficiencyTab l e S t akesTab l e S t akes

    Basic capa-

    bilities that

    represent theprice to play

    Opportunity is impact on

    todays business

    performance

    Pe rform anc ePe rform anc e

    Capabi-

    lities that

    help you

    win today

    Adoption

    Phases of technology adoption

    Innovat ionInnovat ion

    Capabilities

    that could

    change the

    game

    Opportunity is potentially strategic for

    tomorrows business

    i.e. in creating option value

    Managefor

    efficiency

    Leveragetechnology for

    competitiveadvantage

    Objectiv e

    s

    Source: McKinsey & Co.

    Key enterprise architect role - manage aKey enterprise architect role - manage a

    portfolio within and across domainsportfolio within and across domains

    Aligning Business and IT ArchitecturesAligning Business and IT Architectures

  • 8/6/2019 Keynote RogerAPAC

    32/45

    32

    Unit of measure

    * FootnoteSource: Source

    Forces at Work Reshaping Business

    Architectures

    The Challenge and Opportunity for IT

    The Central Role of Business Domains

    Aligning IT Architecture Management with the

    Changing Business Context

    Moving from Planning to Execution

    Aligning Business and IT ArchitecturesAligning Business and IT Architectures

    Vision roadmap and governance are keyVision roadmap and governance are key

  • 8/6/2019 Keynote RogerAPAC

    33/45

    33

    Unit of measure

    * FootnoteSource: SourceSource: McKinsey & Co.

    IT Architecture Governance

    IT Architecture Vision / Principles

    IT Architecture Roadmap

    IT Architecture

    Management

    Target architecture blueprint

    IT architecture standards

    Mission

    Structure, role and responsibilities

    Processes and tools

    Skills

    Performance management

    Architecture inventory

    Projects sequenced in a managed evolution approach

    IT architecturemanagement consists of the vision, governance structure and

    processes, androad map that guide the sourcing and deployment ofIT assets

    To enable greater productivity for todays business To support business evolution

    Vision, roadmap and governance are keyVision, roadmap and governance are key

    elements of IT architecture managementelements of IT architecture management

    City planning principles for IT architectureCity planning principles for IT architecture

  • 8/6/2019 Keynote RogerAPAC

    34/45

    34

    Unit of measure

    * FootnoteSource: SourceSource: McKinsey & Co.

    1.1. Create modular zonesCreate modular zones::

    Follow a long-term city planFollow a long-term city plan

    that defines the keythat defines the key

    components of the city,components of the city,

    such as residential,such as residential,

    industrial, and natureindustrial, and nature

    preservespreserves

    2.2. Reuse and integrateReuse and integrate

    assetsassets::

    Exploit the assets andExploit the assets and

    functionality that existsfunctionality that exists

    already in the city andalready in the city and

    create connectivitycreate connectivity

    3.3. EvolveEvolve::

    Manage change byManage change by

    evolving the city step-evolving the city step-

    by-step; revolutionize onlyby-step; revolutionize only

    where necessarywhere necessary

    4.4. Federal GovernanceFederal Governance::

    Have a central zoningHave a central zoning

    board, but allow localboard, but allow local

    decisions in different zonesdecisions in different zones

    City planning principles Target IT architecture blueprint

    Domain Domain Domain

    DomainDomain

    Integration backbone

    City planning principles for IT architectureCity planning principles for IT architecture

    Pivot IT architecture management aroundPivot IT architecture management around

  • 8/6/2019 Keynote RogerAPAC

    35/45

    35

    Unit of measure

    * FootnoteSource: Source

    Key roles and accountabilities

    Business Sponsor

    Defining metrics that matter Driving value capture initiatives

    Business Domain Architect

    Demand assessment Service prioritization Complexity reduction

    Service Portfolio Manager

    Delivery of service levels to

    promise inside and outside thedomain

    AD program management Data quality & integrity

    Business domains become theprimary axis for

    Definition of key business metrics

    Management and funding of

    application project portfolio

    Stewardship of master data

    Definition of services anddocumentation of services

    Delivery and service levelmanagement

    Organizing application development

    Source: McKinsey & Co.

    Pivot IT architecture management aroundPivot IT architecture management around

    business domainsbusiness domains

    Moving from projects to domain-basedMoving from projects to domain-based

  • 8/6/2019 Keynote RogerAPAC

    36/45

    36

    Unit of measure

    * FootnoteSource: SourceSource: McKinsey and Company

    FromProcess-driven project model

    Few big programs with big budgets

    Aimed at wiring in new processes

    ROI at the project level

    Projects drag along and fundinfrastructure

    Business needs change by the timeproject is delivered

    Ruthlessly managed to the criticalpath

    Heroes deliver bigger projects

    on time/on budget

    ToDomain-driven portfolio model

    Many, much smaller projects

    Aimed at building in future flexibility

    ROI primarily at the portfolio level

    Infrastructure investment based oncapacity planning for key resources

    Project duration shorter than theclock speed of the business

    Leaders motivated to delivercapability for the present & future

    Heroes maximize effort vs.

    metrics that matter while keeping

    complexity in check

    Moving from projects to domain-basedMoving from projects to domain-based

    service portfoliosservice portfolios

    U it fAligning Business and IT ArchitecturesAligning Business and IT Architectures

  • 8/6/2019 Keynote RogerAPAC

    37/45

    37

    Unit of measure

    * FootnoteSource: Source

    Forces at Work Reshaping Business

    Architectures

    The Challenge and Opportunity for IT

    The Central Role of Business Domains

    Aligning IT Architecture Management with the

    Changing Business Context

    Moving from Planning to Execution

    Aligning Business and IT ArchitecturesAligning Business and IT Architectures

    U it fAgenda for actionAgenda for action

  • 8/6/2019 Keynote RogerAPAC

    38/45

    38

    Unit of measure

    * FootnoteSource: Source

    Create theCreate theconditions forconditions for

    successsuccess

    Think bigThink big

    Start smallStart small

    Agenda for actionAgenda for action

    Unit of measureThinking big: HR example unbundling capabilities in aThinking big: HR example unbundling capabilities in a

  • 8/6/2019 Keynote RogerAPAC

    39/45

    39

    Unit of measure

    * FootnoteSource: Source

    Traditional

    bundled HRactivities

    Typical issues in HR Overlapping global, regional,

    and local responsibilities

    Unclear division of laborbetween central HR and BU HR

    Mix of repetitive processes,projects and roles

    Strategic HR

    leadership Management

    (self-)services

    e.g., Project staffing Personnel

    evaluation

    Employee self

    servicee.g.,

    Online personal datamanagement (e.g.,

    address change,benefits)

    Information delivery ERM capabilities

    3rd party BPO&O

    providers

    Transactionalactivities (e.g., payroll

    Process activities(e.g., exportmanagement

    Shared services

    Utility services

    Servicefactory

    operations

    Captive globaldelivery model

    Source: McKinsey & Co.

    Sourcingcapability

    Processimprovement

    capability

    Advisory

    capability

    Access

    capability

    1

    23

    4

    complex domaincomplex domain

    Unit of measureThinking Big: Resetting priorities across theThinking Big: Resetting priorities across the

  • 8/6/2019 Keynote RogerAPAC

    40/45

    40

    Unit of measure

    * FootnoteSource: SourceSource: McKinsey & Co. (disguised client engagement example)

    -75

    -50

    -25

    0

    25

    50

    75

    -30 -20 -10 0 10 20 30

    Unprofitable growingUnprofitable declining

    Profitable growing Profitable declining

    BU D

    BU H

    BU K

    BU FBU E

    BU G

    BU C

    BU A

    BU B

    Profit (2003 EBITDA proxy)

    Percent

    Growth (2001-03 revenue CAGR)

    Percent

    Client IT Application Development spend

    Index

    Unprofitable

    declining

    B With no ROI

    C

    Current

    A

    With questionable

    ROI

    Strong business

    cases in strong

    businesses

    Opportunitiesto reprioritize

    spending and

    redeploy

    resources onhigher impact

    efforts

    25

    25

    20

    30

    100

    Thinking Big: Resetting priorities across theg g g p

    business portfolio Telco examplebusiness portfolio Telco example

    Unit of measureStarting Small:Starting Small: Defining the domain-based service oriented architectureDefining the domain-based service oriented architecture

  • 8/6/2019 Keynote RogerAPAC

    41/45

    41

    Unit of measure

    * FootnoteSource: Source

    Web service

    START: Identify

    business priorities

    and starting point

    Define business priorities and vision of new

    architecture :

    New channels, new products

    Customer relationship management acrosschannels and products

    Streamlined back-office

    Starting

    position

    New

    architecture

    Starting

    position

    Ensure business /

    IT support by

    building a first

    release

    Select first domain functionality to build into web

    service

    Scope a first release with low risks and strong

    business impact

    Select connectivity a new functionality that isreusable or anticipate an application replacement

    Connec-tivitylayer

    First release

    new

    Roll-out and

    adjust road map

    Extend web service model

    Gradually renovate or replace existing applications by moving

    applications into domains (e.g., printing services, customer

    information, credit applications), including sunset domain

    Joint ownership of domain design and segregation by IT and

    business

    Adjust role and skill

    of IT organization

    Establish architecture board (business and IT) to

    manage web services domains

    Revisit business priorities and road map

    Establish clear SLAs for each domain

    Source: McKinsey & Co.

    Unit of measure

    Migrate via managed evolutionMigrate via managed evolution

  • 8/6/2019 Keynote RogerAPAC

    42/45

    42

    Unit of measure

    * FootnoteSource: Source

    Current Business impact Target

    Curren

    t

    ITeffic

    ien

    cy

    Targe

    t Long lead time to delivery with

    little business impact during

    the interim Solution likely not well aligned

    with business needs

    Unrealistically fastIT response

    required to deliver

    business value Results in

    unsupportablespaghetti IT

    systems

    Architectural

    island 1

    While the typical IT

    path returns little

    short-term

    business impact

    and the typical

    business pathcreates an

    inefficient IT

    architecture,

    stepping stones

    balance business

    impact with

    efficiency

    Typical

    business

    path

    Typical

    IT pathArchitectural

    island 2

    Architectural

    island 3

    Target to-be

    architectureCity-planning

    approach

    Source: McKinsey & Co.

    g gg g

    Unit of measureKey TakeawaysKey Takeaways

  • 8/6/2019 Keynote RogerAPAC

    43/45

    43

    Unit of measure

    * FootnoteSource: SourceSource: McKinsey & Company

    Business architectures are under unprecedented pressures to

    change

    Flexibility to unbundle, decompose, and reshape has strategicvalue

    IT architects must help to enable these changes and the SOA

    model together with emerging technology underpinnings offerhope for success this time around

    Aligning architecture management around business domainsfacilitates the shift in perspective

    But managing domains of services demands fundamentalchanges in the way IT is governed

    Key TakeawaysKey Takeaways

    Unit of measure

  • 8/6/2019 Keynote RogerAPAC

    44/45

    44

    Unit of measure

    * FootnoteSource: Source

    Thanks!Thanks!Roger Roberts Partner, McKinsey and Company

    Business Technology Office

    Palo Alto, CA

    [email protected]

    +1 650-842-5864

    mailto:[email protected]:[email protected]
  • 8/6/2019 Keynote RogerAPAC

    45/45

    2005 Microsoft Corporation. All rights reserved.This presentation is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.