Business Architecture reveals how an organization is structured and can clearly demonstrate how elements such as capabilities, processes, organization and information fit together. The relationships among the elements dictate and specify what the organization does, and what it needs to do to meet its common goals.
Business architecture is defined as "a blueprint of the enterprise that provides a common understanding of the organization and is used to align strategic objectives and tactical demands. Business architecture is the bridge between the enterprise business model and enterprise strategy on one side, and the business functionality of the enterprise on the other side.
The Concept of Business Architecture
As shown in Figure below – Business Architecture Concept Diagram, the business architecture includes: mission, markets, portfolio, talent, operations, business management and is interconnected with and interdependent on the: enterprise architecture, process architecture, information architecture, IT architecture, system offering architecture, service offering architecture
source: Standard Business
Business Architecture Principles
Business architecture is based on a core set of principles that guide the understanding and use of business architecture to solve business problems. 1. Business architecture is about the business: Many business efforts lead to an IT execution as part of solutions architecture, but business architecture cannot be focused on IT execution. When business architecture is focused on IT, it often becomes intertwined with technology and loses its business focus. Once this starts to happen, business people lose interest and do not take ownership of the business architecture. 2. Business architecture is not prescriptive: There are no two organizations or business situations that are exactly alike. This means that the same business architecture deliverables and techniques cannot be employed in every situation. If you are looking for a cookbook that explains how to solve every problem the same way, business architecture is not for you. 3. Business architecture is iterative: Business architecture is not a waterfall approach. Each iteration provides more insight into a business problem, and the potential solutions for addressing it become progressively more detailed over time. As a result, with business architecture, one does not need to know everything about everything to move ideas forward, but just enough to make the next decision. 4. Business architecture is reusable: Business architecture is not a one-time analysis of a business environment. Rather it provides a foundation for future analysis and decision-making. Unless an organization has fundamentally changed (e.g. through acquisition), the existing business architecture description and deliverables should be used as the starting point for future efforts. 5. Business architecture is not only about the deliverables: The deliverables that are created and how they are delivered is of critical importance, but don’t focus only on the generation of a specific deliverable and forget about the process of business architecture. When business architecture becomes only about developing deliverables, it loses its power and creativity. Remember the reason you are doing business architecture: to drive consensus, bring people together, achieve clarity, and solve problems.
Business Architecture Model
The diagram below is an example of what a conceptual business model might look like. As can be seen, focus is on the major activities of the business and the groups of people that play a role in running it.
Business Architecture Framework
Basic business architecture concepts and the ability to visualize this information in a variety of ways is only part of the business architecture story. Organizing this information in useful ways and being able to relate and combine these concepts requires a foundational framework, shown in figure below. The framework concept does not impose prescriptive or restrictive concepts into the practice of business architecture. Rather, the framework provides a foundation that organizations can build upon and customize based on unique business architecture requirements, driven by real world challenges.
There are three important components within the business architecture framework: business blueprints, business architecture scenarios, and the business architecture knowledgebase.
- Business blueprints deliver business transparency that enables and streamlines business transformation across business units, capabilities, and stakeholders. The degree of transparency delivered by these blueprints rarely exists in many organizations today. As a result, many planning sessions miss essential understanding of how to maximize solution related investments while ensuring that one business unit’s success does not create problems for the enterprise as a whole. For example, consider the company that was creating multiple, competing enrollment solutions for the same customer base across multiple product lines. Each project could have succeeded in principle, yet created more complexity and dissatisfaction across the customer base. Business architecture provides the transparency to discover these issues in advance, before money and good will are squandered.
- The framework also incorporates the concept of business architecture scenarios, which provide business transparency on specific business initiatives. Business architecture is applied differently based on the type of scenario at hand. For example, a business team involved in a merger and acquisition would require different information than another team considering how to stem customer attrition. Applying business architecture through various business scenarios, thereby leveraging blueprint views derived from the business architecture knowledgebase, enables business teams to create and deploy a wide variety of transformation roadmaps. Because this approach is based on a common view of the business across business units, it enables improved executive sponsorship and more sustainable funding structures.
- Investment Analysis
- Shift to Customer Centric Business Model
- Merger & Acquisition Analysis
- New Product/Service Rollout
- Business Capability Outsourcing
- Supply Chain Streamlining
- Regulatory Compliance
- Change Management
- Operational Cost Reduction
- Joint Venture Deployment
These business architecture scenarios define the collective set of initiatives, programs, and projects that leverage business architecture. One important aspect of every scenario is that of a suggested roadmap for that particular scenario.
- The business architecture knowledgebase is used to store the information about the business, organized in concise ways that are customized to a given organization’s environment. For example, corporations have divisions and departments while governments may use different terminology. How the knowledgebase is organized dictates, in part, how businesses can be viewed. There are generic approaches to knowledgebase structure as well as organization specific approaches. For example, a government agency would have unique organizational structures in comparison to a hospital or shipping company.
Business Architecture Example and Template
The Business Architecture Domain includes:
- Business Strategy. Typically includes the high-level Business Goals and Objectives and a document describing the Target Operating Model.
- Business Services. This describes the products and services an organisation offers and sells to its customers.
- Business Information. This describes the structure of the business information needed by each business processes and information created by business processes. Includes knowledge and meaning.
- Business Processes. This defines the business processes, organisation structure and roles that are required to define and operate an organisation.
- Business Events. This defines the triggering events received by the organisation to which it must respond, and the outgoing notification events that an organisation creates.
- Event Value Chains. This defines the flow and sequence of business processes/activities that are triggered by a business event and resulting in added value.
- Organisation Architecture. This defines the organisation structure, roles and responsibilities that are required in an organisation.
- Business Functions. This defines the functions and capabilities that are required within the organisation
- Organisation Services. This defines the services that are provided by people (as opposed to those provided by applications).
- Capabilities. This defines the functions, behaviors and services that may be provided by the organisation units (internal Actors and Business Roles)
Benefits of Business Architecture
The following are ways in which business architecture creates value.
- Business architecture aligns execution with strategy: Is your organization spending the right amount of effort on strategy realization? How would you know? Strategy diffusion (the loss of fidelity as strategy moves down and across an organization) is the norm rather than the exception. Multiple studies have shown that less (and some say significantly less) than 50% of a company’s employees understand their organization’s strategic intent. They understand their role but they don’t know the best way to apply their skills and resources for optimal value to the organization. Every manager with a budget should clearly understand their organization’s goals and challenges and for those with a large discretionary budget it is an imperative. If you don’t know where you are going, any road will take you there. The way you know where you are going is to have a well-articulated strategy that is clearly illuminated across the organization and managed on a day-to-day basis. When everyone has the same understanding of strategy – not just the goals - activities become synergized and productivity improves dramatically. The whole becomes greater than the sum of its parts.
- Business architecture creates a clear prioritization process for investments: One of the biggest challenges for senior managers is having confidence that the investments their organizations are making are contributing to strategy realization. Money is being spent, everyone is working hard, but will it make a difference? Senior managers often don’t understand the detail workings of their organizations and frankly that isn’t their job. Unfortunately, they are asked to fund projects that are described in excruciating technical detail. Business architects clarify how today’s investments are being expended by translating the more technical aspects of projects into business capability enhancements that can be readily understood by management – and everyone else. They enable future funding prioritization through capability value contribution models and performance assessments that clarify which capability gaps are most important to close.
- Business architecture creates employee engagement: Though rarely talked about in business architecture circles, one of the most important benefits (perhaps THE most important benefit) a well-managed business architecture provides is creating employee engagement. Employee engagement is the emotional commitment an employee has to the organization and its goals. Engaged employees are fully involved in, and enthusiastic about, their work and their company’s goals. They don’t work just for a paycheck or promotion – they actually care about their work and the success of their company. A well designed and executed business architecture creates employee engagement in two ways. First, it creates meaning by connecting every role from the CEO to the janitor to the vision, mission, and goals of the organization. Everyone can see how the work they do contributes to the overall success of the organization. Second, it provides a set of guardrails making it safe and productive for employees to take independent action. When employees act autonomously they feel competent and confident. They are much more invested in the outcome when it is their decisions guiding what they do.