Lecture 1: Managing Architecture in the

Platformed Organization
Five Current Business Trends

Five trends are shaping the modern business

environment
Globalization
Rise of the Platform Economy
Emergence of the Social Firm
Transformation of the Business Enterprise
Exponential changes in technology

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Trend 1: Globalization

The modern business era has been marked by

free-trade globalization
Global marketplace
The entire world has become the marketplace
Technology allows companies and individuals to work and
source goods and services globally
Global workgroups
Technology enables global collaboration in far flung
teams
No longer tied to geographical location or time zones
this is a true 24 hour firm

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Linking Technology and Globalization

What we see is that globalization was driven by

technology
Over the past fifty years, we have seen
technology move us from a domestic to a
global economy
The flattening effects of technology are the
impetus behind this change

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The Impact of Globalization

De-capitalization
Tangible items, such as capital, equipment and
buildings were the tenets of power in the industrial
age
Today = power of intangibles such as ideas and
knowledge are more important for competitive
advantage
Firms of today are driven by the need to manage
creativity and innovation and collaborate across country
boundaries

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Trend 2: Rise of the Platformed Economy

The global economy has shifted from a product to a

knowledge- and information-based economies
New products and services have evolved due to the emerging
economy
On the verge of another shift towards a platformed economy
Knowledge: a central productive and strategic asset
Competition increasingly shifting towards hyper-competition
Shorter product life
Turbulent environment
Limited employee knowledge base
Mobility increases cross-border innovation

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IT and the Global Economy

Industrial Economy: IT used to perform existing

information work more quickly and efficiently
Information Economy: IT used to manage work
better
Digital Revolution: IT makes pervasive changes
in the structure and operation of the economy
Platform Revolution: IT enables network-based
strategies

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 Industrial vs. Digital Revolution
Industrial Economy Platform Revolution

Growth Internal economies of scale and scope Shared economies of scale and scope

Strategic Approach Proprietary Networked

Technology investment Production Knowledge

Operational focus Standardization of work; job specialization; Collaboration and innovation

efficiency of work force

External partnerships Not valued Outsourcing and value networks

Management structure Hierarchical coordination and supervision Networked and matrix coordinating and
supervision

Focus of competition Domestic economy Global economy

Length of time to achieve market edge Decades Uncertain

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The Digital Revolution as a Platformed
Economy

Old View
Economies of scale and scope achieved by a market
participant
Little integration with players of marketplace
New view
Network economies of scale and scope achieved
when a community of firms work together
Tight integration with players of marketplace

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Network-Based Strategy

Foundations: Metcalfe's law

The value of a telecommunications network is
proportional to the square of the number of
connected users of the system (n2)
Application to strategy
The value of a value web is proportional to the
square of the number of connected organizations
In practice, network based strategy aids smaller
firms disproportionately

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Trend 3: Emergence of the Social Firm

IT has enabled a tremendous transformation of

the firm
The early transformation was upon making the
firm more digital
Digitally enabled relationships with customers,
suppliers, and employees
Digitally enabled business processes
Digitally enabled sensing and responding to
environmental changes

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From Digital to Social
Firms are now moving from being digital to more social
Leveraging social networks to monitor their environment in
real time, sense, and respond
Social firm: Organization where nearly all significant
business processes enables a partnership with
customers, suppliers, and employees that goes beyond
traditional organizational boundaries
The social firm breaks down the barriers between
customer and organization and enables the customer to
help shape firm strategy
This transformation is just beginning, but represents the
next big shift in enterprise thinking

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Trend 4: Transformation of the Business
Enterprise
Flattening
Hierarchical structures cannot cope with rapid change
Communications up and down the chain of command takes too much
time for todays environment
Decentralization
Flexibility
Location independence
Low transaction and coordination costs
Empowerment
Collaborative work and teamwork
IT enables team-based organizational structures by
facilitating rapid and far-flung communication

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Trend 4: Transformation of the Business
Enterprise Historical Context
Late 1930s, firms categorized the different activities of the
firm in to the POSDCORB framework
Planning
Organizing
Staffing
Directing
Coordinating
Reporting
Budgeting
This lead to organizations creating departments
Broke complex tasks into smaller manageable tasks that could be
assigned to a group of people who could then be held
responsible.

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Trend 4: Transformation of the Business
Enterprise Historical Context
In addition to the horizontal complexity that emerged in
firms, there was also vertical complexity
Organizations divided roles in hierarchical layers from strategic
planning to management control and operation control.
Strategic control
CEOs and Presidents
Long-term strategy
Management control
Tactical issues
Execution of organizational policy
Operational control
Focus on the day-to-day operations of the company.

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Trend 4: Transformation of the Business
Enterprise Historical Context

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 Mintzbergs Organizational Structures
Organizational Type Salient characteristics
Simple form Small, simple
Low formalization
Highly centralized
Unsophisticated technical systems
Machine bureaucracy Perform routine operating tasks Highly differentiated structure
Highly formalized Standardized work processes used for
Relatively centralized decision-making coordination
Automated and integrated technology Operate in stable environments
Regulating, non-automated technical system
Professional Decentralized decision-making
bureaucracy Standardization of skills used for coordination
Highly skilled workers who value autonomy
Nonregulating, nonsophisticated technical system
Divisionalized form Centralized headquarters Standardized outputs of divisions used for
Semiautonomous, loosely joined divisions coordination
Little interdependence or close Divisions are generally machine bureaucracies
coordination among divisions Technical system separated into segments, one
Main goal of headquarters is to for each division
coordinate goals of divisions with that of
its own without sacrificing autonomy
Adhocracy Operates as a cohesive group working Ad hoc project teams
together Low formalization
Mutual coordination and cooperation Decentralized decision-making
Innovative Operate in dynamic environments
Workers are trained experts from Sophisticated and often automated technical
different specialties system (in the administrative adhocracy)

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Divisionalized Organizational Structure

Most common organizational structure

Organization is divided into functions or
departments
Functions perform specialized tasks or activities
Processes cut across functions

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The Divisionalized Structure

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Impact of Divisionalized Structure: the Silo
Effect
The term functional silo syndrome was coined in 1988 by
Phil S. Ensor
Refers to a focus within divisionalized structure on
functional objectives without regard to process objectives
As a result, firms optimize functional goals vs. process
goals
A business process is defined as a sequence of tasks or
activities that produce desired outcomes
Process execution requires communication and
coordination among functions
How is this achieved with the silo effect?

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Trend 4: Transformation of the Business
Enterprise

Firms today are inherently more complex and

need to respond to the pressures of the
environment rapidly
Can still struggle from silo effects and power
distribution within the firm
Firms need a coherent approach to handling
the pressure from the environment and
creating a network based strategy
IT plays a critical role in the process

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Trend 5: Exponential Changes in Technology

The evolution of hardware

1950s 1960s: mainframe based computing
Mainframes supported massive batch processing
Mid 1970s: mid-range based computing
Server size shrank and computing power increased
1980s: Advent of personal computers
A computer on every desktop
1990s: Client-server computing
Client machine user interfaces with Server on the network holding the data and
applications
2000s to current
Shrinking and embedding of technology
Hand-held devices
Wireless thin computing
Wearable computing
Miniaturization of devices

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Trend 5: Exponential Changes in Technology

The evolution of software

In the early days, focused upon programming for mainframes
Custom built software built-in-house
The advent of client server pushed computing on to the desktop,
but there was still a need for custom software
Today, most firms purchase software
Downside more proprietary systems
Pushback for more open source and open systems
Client server computing set the infrastructure in place for systems
that worked across the enterprise
Then, more complexity brought more problems and provided the
motivation for enterprise-wide systems
Today, applications are slowly being moved in to the cloud and on
to mobile devices
However, enterprise systems lag in this development

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Trend 5: Exponential Changes in Technology

The evolution of data

With all of the software and hardware infrastructure,
firms began capturing mountains of data
Stored in huge data warehouses
The current trend is to mine this data and create
predictive analytics using what they have captured in
their corporate ecosystems
The challenges for data today are
Finding the data
Exposing the data to the appropriate stakeholders
Keeping the data secure

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Trend 5: Exponential Changes in Technology

The evolution of communications

Mainframe/early server based computing required
little infrastructure
Client server marked the first transition for
corporate infrastructure
Early communication networks focused upon intra-
company systems and intranets
The internet changed everything and made possible
extra-organizational communication

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Trend 5: Exponential Changes in Technology

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Effect of the Trends

The convergence of these trends means that

firms need to put together an IT-enabled
corporate strategy
The strategy must align how the firm uses IT and
makes IT decisions
Golden rule there is no such thing as an IT
decision just business decisions about IT
The approach for making infrastructure
decisions for a company is the use of Enterprise
Architecture

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Enterprise Architecture Definitions

The analysis and documentation of an enterprise

in its current and future states from an integrated
strategy, business, and technology perspective
(book)
A discipline for proactively and holistically leading
enterprise responses to disruptive forces by
identifying and analyzing the execution of change
toward desired business vision and outcomes
(Gartner)
A conceptual blueprint that defines the structure
and operation of an organization (Techtarget)

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Historical Evolution of Enterprise
Architecture
Late 1960s
Dewey Walker, IBMs Director of Architecture produced
architecture planning documents that later became known
as Business Systems Planning
1980s
One of Walkers students, John Zachman published
Business Information Control Study in the first edition of
the IBM Systems Journal in 1982.
Became widely recognized as a leader in the field of
enterprise architecture, identified the need to use a logical
construction blueprint (i.e., an architecture) for defining and
controlling the integration of systems and their components
Since Zachman, other frameworks have emerged for EA

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Enterprise Architecture Frameworks

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Commonalities and Differences

Differences
Components
Ease of implementation
Tools
Methods
Practices
Commonalities
Focus upon how to align the technical decisions of IT
with the strategic and operational needs of the firm

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Role of an EA

Creates the critical link between the strategy

and operations of the firm and the technology
used by the company
If implemented, it becomes the overarching,
highest level discipline, and the authoritative
reference for standards and practices
Allows an organization to make rational
decisions about the best practices that need to
be adopted

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Two Components
Enterprise
An organization whose boundary is defined by
commonly-held goals, processes, and resources
An organization contains multiple lines of business
A line of business is a distinct area of activity within an
enterprise
Architecture
A collection of models and information
An architecture has multiple segments
An architectural segment documents how the architecture
supports one or more lines of the business

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Core Elements of Enterprise Architecture

Governance
Planning, decision-making, and oversight processes and groups that will
determine how the EA is developed and maintained
Methodology
Specific steps to establish and maintain an EA program
Framework
Scope of the overall architecture and the type and relationship of the various
sub-architecture levels and threads
Artifacts
Types and methods of documentation to be used in each sub-architecture area
Standards
Business and technology standards for the enterprise in each domain, segment,
and component of the EA
Best Practices
Proven ways to implement prats of the overall architecture or sub-architecture

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EA Framework

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EA Grid

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Goals and Initiatives
For what purpose does the enterprise exist?
Mission statement
What kind of organization does the enterprise intend to be?
Vision statement
What are the primary goals of the enterprise?
Strategic goals
What are the strategic initiatives that will enable the
organization to achieve these goals?
Ongoing or new programs
When will the enterprise know that it has successfully
reached these strategic goals?
Outcome measures

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Products and Services
What are the ongoing activity areas that the enterprise must
support and enable to accomplish the strategic and
operational goals?
What are the specific activities in each line of business?
What are the products that are delivered in each line of
business?
How do we measure the effectiveness and efficiency of the
business processes?
How does each line of business contribute to the strategic
goals?
Do any processes need to be improved as part of the future
architecture?
What are the workforce, standards, and security issues?

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Data and Information

What are the flows of information that will be

required within and between activity areas to
make them successful?
How can the flows of information be standardized
to promote integration?
How will the data underlying the information flows
be formatted, generated, shared, and stored?
How will the data become usable information and
knowledge?

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Systems and Applications
Which IT and other business systems and applications
are needed to generate, share, and store the data,
information, and knowledge that the business services
need?
How can multiple types of IT systems, services,
applications, and databases be made to work together
when needed?
How can confirmation management help to create a
cost-effective and operationally efficient operating
environment?
What are the workforce, standards, and security issues?

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Network and Infrastructure
What type of networks are required to host the IT
systems/applications?
What types of networks are required to transport data,
images, and conversations?
What type of infrastructure is needed to support the
networks?
How can the networks be integrated to create a cost-
effective and operationally efficient hosting and transport
environment?
Will these networks extend beyond the enterprise?
What are the physical space and utility requirements for the
infrastructure?
What are the workforce, standards, and security issues?

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Concluding Thoughts

We now know the importance of EA and have a

high level understanding of the building blocks
of an EA
But how can we use these to align strategy?
We will explore this next
Complete daily reflection exercise now

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