Effective Strategy Execution with Capability-Based Planning, Enterprise Architecture and Portfolio Management
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This document outlines the challenges of executing business strategy and presents capability-based planning, enterprise architecture, and enterprise portfolio management as solutions for bridging the gap. It emphasizes the importance of aligning strategies with projects and managing investments based on business value, supported by ArchiMate models. The integration of these elements is described as essential for achieving coherent change and successful business transformation.
Effective Strategy Execution with Capability-Based Planning, Enterprise Architecture and Portfolio Management
- 1. © Effective Strategy Execution with Capability-Based Planning, Enterprise Architecture and Portfolio Management Iver Band The Open Group Conference, Baltimore, July 22, 2015
- 3. 33 © 2015 Cambia Health Solutions, Inc. Iver Band • Enterprise Architect at Cambia Health Solutions • Chief architect for external web and mobile presence • Business architect for Digital Solutions organization • Vice Chair, Open Group ArchiMate Forum • Co-Chair and Co-Founder, Oregon Enterprise Architects • TOGAF and ArchiMate certified, CISSP, Certified Information Professional, AHIP Certified IT Professional [email protected] http://www.linkedin.com/in/iverpdx http://www.cambiahealth.com/ http://www.twitter.com/iverband
- 4. 44 About Cambia 22 companies and growing © 2015 Cambia Health Solutions, Inc. A tax-paying nonprofit headquartered in the Pacific Northwest Nationally recognized: Top 100 Healthiest Workplaces 5,300 employees in 30 states 100 million people touched nationwide
- 5. 55 © 2015 Cambia Health Solutions, Inc.
- 6. 66 Cambia Health Solutions © 2015 Cambia Health Solutions, Inc. Senior Services Health Insurance Retail Enablement Provider Enablement
- 7. 7 About BiZZdesign Scientific DNA founded in 2000 as a spin-off from a Dutch research institute known for the ArchiMate standard Passionate People over 80% with advanced degrees and over 10% with doctorates, sharing knowledge, open innovation Focused on Solutions leading digital enterprises through business transformation empowerment Hundreds of Customers on 6 continents across all industries Global, Fast Growing Company with a direct presence in more than 10 countries Worldwide Partner Network leading global consultancies, boutique consultancies and resellers
- 9. © Summary 9 • The difficulty of strategy execution should not be underestimated • Capability-based planning helps make strategy concrete • Enterprise architecture closes the remainder of this gap, and ensures alignment and coherence • Enterprise portfolio management allows managing large enterprise landscapes based on business value • ArchiMate models tie it all together, providing a clear line of sight from strategy definition to realization • Powerful tool support makes this a strong combination!
- 10. © The Challenge • The Digital Enterprise requires major business change • Many disciplines are involved in these transformations, but a lack of coherence compromises their success • The speed of change makes strategy implementation even more difficult • Few organizations have a systematic and reliable way of translating a business strategy into action • They invest in many assets and change initiatives, but find it difficult to decide on their value and priority 10
- 11. © TWO BIZZDESIGN CLIENT CASES AS EXAMPLES 11
- 12. © Anonymized Client Cases Used “ArchiPharma”: • Large international pharmaceutical organization • Geographically dispersed locations • Result of many mergers and take-overs • Want to be world-leading provider of pharmaceuticals “ArchiSuranceBank”: • Medium-sized financial (both banking and insurance) • Also the result of mergers and take-overs • Rationalizing the insurance landscape as precursor to separating banking and insurance businesses 12
- 13. © Similar Necessity for Change in Both Cases • External – Large and upcoming competitors – Strict and changing regulations • Internal – Enormous legacy application landscape – Heterogeneous processes, products, databases, ... – Cost pressure How to perform a strategic transformation on this scale? 13
- 14. © Transformation Challenges • Need to – Do strategic planning – Get from planning to execution – Monitor execution – Be able to quickly adapt planning – Keep the IS landscape up and running during transformation Requires collaboration between many disciplines And sharing & integrating information to support this transformation 14
- 15. © Connecting Strategy and Execution ArchiPharma’s starting point: • Business capability map – Identify key business capabilities based on strategy – Decompose each key business capability • Project and program portfolio – Define programs that realize desired capability increments – Decompose programs into projects 12 key capabilities, 200+ programs & 5000+ projects Strategic management 15 Project portfolio management
- 16. © Gap Between Strategy and Projects • Many project deliverables are not aligned with the strategy • Projects with similar deliverables • Projects with contradicting deliverables • Programs with a solution unrelated to the strategy • Strategy parts not reflected in any program • Unclear what the effect is of application rationalization How to manage this large transformation? Project portfolio management Strategic management 16
- 17. © Strategy, Architecture, and Portfolio Management 17 Strategy management Enterprise architecture Portfolio management Aim Analyze & Design Realize Coordinated approach
- 18. © ArchiMate Models to Connect Strategy, Architecture and Portfolio Management 18 Strategy management Enterprise architecture Portfolio management Realize Aim Analyze & Design
- 19. © Relating Strategy & Capabilities to Target Architecture & Change Programs 19 Business Goals Capabilities Architecture Plateaus Change Programs
- 20. © Bringing Enterprise Architecture to the Next Level • With a mature enterprise architecture you are ready for the next level: – How do I use my architecture to realize strategy, make investment decisions, support management decisions, etc.? – How do I gain control of the large asset and project landscapes that I need to manage? – How do I move away from a narrow focus on implementation towards designing and supporting business change? Make your enterprise architecture actionable Move towards designing the future of your organization 20
- 21. © Enterprise Architecture in Context Enterprise Architecture 21
- 22. © EA as Knowledge Hub for Coherence Enterprise Portfolio Management Strategy Capability-Based Planning Process, Rule & Data Management Governance, Risk & Compliance Development, Delivery & Improvement Program & Project Management Enterprise Architecture Service Management 22
- 23. © STRATEGY 23
- 24. © Determining Your Business Goals First you need to know what your goals are: • Business Strategy: What is the course of your organization? • Stakeholder and Driver Analysis: Who are involved and what are their needs? • Business Models: Where to play and how to win? 24
- 25. © Stakeholder and Driver Analysis • Where do decisions on investments take place? – For example, is there a Program or Portfolio Board consisting of senior management, or busines line management with their own budget? • How do interests of stakeholders influence each other? – Can investments be targeted wisely for different interests that support the same goal? – How can we prevent wasting funds by investing in conflicting interests? 25
- 26. © Business Strategy • Align your organization’s investments, operating model, architecture and processes with its strategy! • Use models for traceability from strategic goals to realization, and vice versa 26
- 27. © Stakeholder and Driver Analysis 27
- 28. © Business Models • Business Model Canvas gives a useful overview of your strategy • Good starting point for deciding on investments 28
- 29. © Modeling Strategy in More Detail in ArchiMate 29
- 31. © Business Capabilities • A business capability is something an enterprise does or can do, given the various resources it possesses – Which capabilities do you need for your strategy, business model and operating model? – What are the required capability levels? – What are the necessary resources? – How do plan the evolution of your enterprise? • Input for investment decisions: portfolio management • Helps you plan and manage programs & projects 31
- 32. © Defining Business Capabilities • They are owned by the business and named and defined in business terms • They are unique and stable • They may be composite, consisting of sub-capabilities • They can be organized in a business capability map • Their maturity can be assessed cross different dimensions • This will be supported in the next ArchiMate version 32
- 34. © Capability Assessment in Different Dimensions Analysis and planning of capabilities using an ArchiMate model and various metrics 34
- 37. © Why Portfolio Management? • Decisions are needed on many different investments – Both in assets such as applications and in changes, such as projects • A structured overview is needed, grouping these investments in categories known as portfolios, such as – Innovation, New Product Introduction, Going Concern • Pre-allocating investments to these portfolios based on business value supports a balanced capital allocation – Avoids problems such as as the “innovation squeeze”, an ever- growing maintenance budget that eats up other investments 38
- 38. © What is Enterprise Portfolio Management (EPM)? • Enterprise portfolio management manages the entire enterprise landscape (projects, assets, services, capabilities, etc.) in portfolios – Group things of the same type based on some criteria – Manage groups as a whole – Provide enterprise-wide overview – Support analyses and comparisons – Promote consistent and informed decision-making at all levels • Manage on business value, not only on costs 39 Retirement Back office Front office Critical
- 39. © Gartner on IT Portfolio Management “The challenge is to provide the integration of individual portfolios (projects, assets and IT services) to present a holistic story regarding the true state of the IT portfolio. Integrating these views enables IT leaders to see the cost, effort, technical complexity, feasibility and interrelated effects of a proposed IT change or initiative.”* And there is more than just IT! 40*Gartner, Magic Quadrant for Integrated IT Portfolio Analysis Applications, 2013
- 40. © How Are Asset and Project Portfolios Related? • Program and project portfolio management – Manage and monitor project portfolios – Manage asset change through roadmaps • Asset portfolio management – Manage and monitor asset portfolios modeled in architecture – Basis for defining change projects 41 Project portfolio Asset portfolio Projects Roadmaps
- 41. © Common Use Cases for EPM • Application portfolio management • Long-range capability planning • Benefits optimization 43
- 42. © Enterprise Architecture & Portfolio Management • Enterprise architecture: – Modeling as-is and to-be situations – Analysing gaps, giving direction and defining roadmaps for coherent change • Enterprise portfolio management – Quantitative analysis of as-is and to-be situations • Defining metrics on costs, risks, benefits,.. – Prioritization based on business criteria These models and analyses allow coherent, informed decision- making, prioritization, and planning 44
- 43. © Questions to the Audience • How do your enterprise architecture and portfolio management functions cooperate? • What are the challenges you encounter? 45
- 44. © Integrated Portfolio Management Process • Design phase: – Investigate goals and stakeholders, related to business strategy – Define suitable portfolios – Choose valuation criteria • Execution phase: – Collect and score assets or change initiatives – Analyze portfolios – Decide as input to the realization 46 Strategy Portfolios Valuation Design Collection Analysis Decision Execution
- 45. © PORTFOLIOS 47
- 46. © Portfolio Grouping Criteria • Strategic objective • Such as supply chain optimization, outsourcing, increasing market share, cost reduction. • Supported business capabilities • Allocating investments to strategically important capabilities is a good way to implement your business strategy • Product life cycle stage • Such as the ‘cash cows’, ‘dogs’, ‘stars’, and ‘question marks’ of the growth- share matrix • Follow best practices such as • Do not put all your money in your cash cows • Do not over-invest in question marks 48
- 47. © Portfolio Grouping Criteria (cont.) • Customer/market segment • Such as based on competitive position or predicted growth in these markets • Architectural dependencies • Such as applications that use shared data or support the same channels • or business processes that are part of the same value chain • Technology life cycle stage • Experimental, innovative, mature, and legacy technology • Pace layering (Gartner) 49
- 49. © VALUATION 51
- 50. © Valuation Criteria • Cost is often the least complicated to calculate – Elaborate cost models are used by many financial departments to ensure all costs are accounted for – However, estimation of technical projects is often challenging as well, although these challenges can be addressed by a set of best practives • Benefits can be more difficult to determine: assessing future benefits has to deal with a lot of uncertainty – In public sector organizations, societal benefits may be more important than financial revenues 52
- 51. © Valuation Criteria Continued • Architectural fit – Does the asset or project fit within the envisaged architecture? • Development risk – The risk that a project fails to deliver part or all of its value • Strategic importance – For example, replacing a monolithic legacy system with a new, flexible business process management suite may enable various valuable future options, such as being first to market with new products or outsourcing business processes 53
- 52. © Asset Metrics Two common metrics to assess the importance and quality of applications are: • Business value: the extent to which an application supports the business capabilities • Technical value: the technical quality of the application, including its adaptability to changing circumstances These might also partly be derived from the relationships in your architecture, such as those with • Business processes, capabilities and strategy • Technical infrastructure 54 http://www.aslbislfoundation.org/nl/asl/best-practices/cat_view/5-asl-best- practices-nl/8-application-cycle-management
- 53. © Metrics in ArchiMate • A Metric is a specialization of the Driver concept in ArchiMate: a driver that can be measured • The definition of a metric includes information on how the represented property is measured, such as: – the unit of measurement (type of measurement result) – the way of measurement, e.g., manual or automated • Metrics are associated with architecture elements – To measure, for example, the business value of an application – The result of a measurement can be modeled using an Assessment in ArchiMate 55
- 54. © Aggregated Metric Definition • The score of an aggregated metric is determined by its components. For example – The score for the metric “performance” is determined by the “number of incidents”, “user experience” and “SLA compliance”. • Only the lowest-level components are scored; the rest is calculated 56
- 55. © Adding Metrics to Portfolios • Relevant metrics are added to portfolios • Objects in the portfolios are scored against these metrics • Dashboards are used to display metric scores 58
- 57. © Data Collection Questions • Where to get the data that is needed as input for the valuation? Inside, or outside the organization? From people, or systems? • What is the quality of the available data (accuracy, timeliness, etc.)? And what is the quality that is needed? • Which disciplines in the organization need to be involved? What’s in it for them? 61
- 58. © Adding Data to the Architecture 62 Architecture Repository Asset inventories Contract information Project plans Presentations Evaluations ArchitecturesCost & revenue data
- 59. © ANALYSIS 63
- 60. © Analysis 64 • Analyses combine metrics in an appropriate visualization – E.g. a bubble chart showing the total cost, benefit, and risk of projects
- 61. © Dashboards • With appropriate tooling, each portfolio view can be summarized on a dashboard as a collection of charts • Tools should allow automatic chart population from portfolio analyses • Select the charts to address stakeholder concerns and learning styles 65
- 63. © Application Landscape with Life Cycle Advice 67
- 64. © Tracking and Archiving • An important aspect is the ability to track the development of these portfolios over time, in terms of their scores against metrics • Appropriate tooling can make snapshots of the current state of a portfolio, including scores and dashboard, and place these on timelines 68
- 65. © DECISION 69
- 66. © Supporting Decision-Making and Planning • Prioritizing and Planning Projects: How do you select and order different change initiatives? • Roadmapping: How can you use ArchiMate models to define roadmaps and plateaus? • Resource Planning: How can you use ArchiMate models to describe the resources necessary to carry out projects and programs? 70
- 67. © Gap Analysis: from Baseline to Target 71
- 68. © Programs and Projects • Programs contain projects, including their relations • Per project, cost, value, risk and status (approved, in progress, etc.) are important • Aggregate program-level metrics can be calculated 72
- 69. © Roadmapping • The ArchiMate Implementation & Migration extension is useful for defining plateaus of your architecture • Don’t plan detailed plateaus too far into the future, especially in complicated or complex situations • Use intermediate plateaus with temporary measures to evaluate alternative transition scenarios with respect to benefits, cost, and risk 73
- 70. © Roadmapping • You can model roadmaps of programs and projects, showing dependencies between projects and putting them on a timeline 74
- 71. © Conversion Roadmap of ArchiSuranceBank 75
- 72. © Application Landscape Evolution Cost reduction 2012 2014 2016 76
- 73. © PUTTING IT ALL TOGETHER 77
- 74. © Strategy on a Page Vision Become the leading provider of pharmaceutical products in the world Capability heat map Business Outcomes • Improved customer experience when administering their insurance • Reduced operational costs from product maintenance • Improved way of billing customers • Increased business agility and adaptability to new regulations • Improved administration of customer information Strategy 2010 – 2020: Product leadership 2015 – 2020: Operational excellence Objectives to address assessment • Improve product offering • Minimize operational costs • Eliminate local variance • Facilitate resource sharing • Improve information sharing Initiatives to realise objectives • Professionalize sales and marketing process • Professionalise product and asset portfolio management • Consolidate applications • Harmonize processes • Centralise information Assessment of current situation • Heterogeneous and complex product offerings • Lack of insight and anticipation on new regulations • Product maintenance is expensive • Non-uniform way of billing customers • Difficult to comply in time with new regulations due to complex landscape • Multiple and inconsistent CRM databases Mission We offer the most innovative pharmaceutical products with a quick and reliable solution Red – needs big improvement; Yellow - needs medium improvement; Green – at desired level Legend Application rationalization Harmonize billing process Homogenize info & data Improve global accessibility Instalment of APM process Product rationalization Professionalize marketing Revision of PPM process
- 75. © Caveat: Organizational Resistance • Knowledge = power: Control of this information gives people influence or power in the organization • Transparency = threat: You may uncover inefficiencies, overspending, quality issues and other problems, and people may fear to be blamed for those • Money = power: Budget allocation is often based on e.g. business units or departments. This is often not the best way to distribute investments, but changing this may create resistance among stakeholders, because they lose control 84
- 76. © Summary • The difficulty of strategy execution should not be underestimated • Capability-based planning helps make strategy concrete • Enterprise architecture closes the remainder of this gap, and ensures alignment and coherence • Enterprise portfolio management allows managing large enterprise landscapes based on business value • ArchiMate models tie it all together, providing a clear line of sight from strategy definition to realization • Powerful tool support makes this a strong combination! 85
- 77. © Questions? Iver Band Enterprise Architect Cambia Health Solutions [email protected] Marc M. Lankhorst BiZZdesign Enterprise Architecture Service Line Manager [email protected] Webinars, blogs, e-books, customer stories, training portfolio, software and more on www.bizzdesign.com Whitepaper From Strategy to Successful Implementation with Enterprise Portfolio Management: http://bit.ly/1E1itkC ArchiMate industry usage poll: http://bit.ly/1P9Os63 86
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