During the past few years research firms have advocated the value and importance of a Business Architecture, and many companies have started building their own. The Business Architecture is found in just about every Enterprise Architecture (EA) framework and one of its many objectives is to better align IT with the business. In June 2006 the first Business Architecture event was successfully hosted by the BPMInstitute and BrainStorm Group in San Francisco. So with this growing interest in an architecture of the business, “What is the foundation of the Business Architecture that these companies are building?”
Usually, companies start with a hierarchical business function/process model. This model consists of two groups. The first is a primary functional grouping, which directly relates to the business of the Enterprise (e.g. Sales) and the second is supporting, which enables the primary functionality (e.g. Finance). Each functional group contains several unique business processes (e.g. in Sales you have Order Entry and in Finance you have Accounts Receivable). This model is sometimes useful for describing the enterprise because the functions remain generally constant. The business may change its organizational structure and its processes, but the basic functions remain relatively more stable.
Sometimes the hierarchical business function/process model is viewed as a set of organized processes that are not necessarily integrated, but merely catalogued. Generally speaking, ownership is easily associated with functional departments and organizations. Viewed independently, these processes do not satisfy a customer need. One must integrate the processes into a cross-functional capability in order to satisfy a customer need. Since IT is usually aligned with functional departments and organizations and not the cross-functional capability, aligning IT with customer needs becomes even tougher. Perhaps this may explain some of the business/IT alignment problems.
In many cases, some enhanced version of the business function/process model is produced to illustrate the cross-function capabilities of the enterprise. Industry forums and frameworks have similar representations, such as the Value Chain Operations Reference (VCOR) model, the Supply Chain Operations Reference (SCOR) model and the Enhanced Telecom Operations Map (eTOM). They too, include far more than functions, including cross-functional processes with far better connectivity and integration capabilities.
While the business function/process type of model may be a comfortable way to start the building of an architecture of the business, it has its shortcomings. In order to deliver products and services in an effective and efficient manner, one must fully understand the multi dimensional nature of the enterprise. The delivery, end result or outcome of a product or service is critically important to the customer. In order to better meet and exceed customer expectations, one must have more than a functional model of the enterprise. The foundation of your Business Architecture must include four dimensions; the first considers the familiar functional activities within the departments, the second the cross-functional activities within the company, the third the customer and supplier activities, and the fourth the time sensitive activities such as “time to market.” These four dimensions provide you with a customer centric and holistic view of the enterprise, and better enable business/IT alignment with its strategic goals and objectives as well.
You can not represent this four dimensional model with any type of variation of the business function/process model. Attempting to “snap together” pieces from this model is an ad hoc approach at best. However, formalizing this approach and managing the multi dimensional cross-functional capability of the enterprise deserves some serious thought. You can achieve this with a value stream, an end-to-end collection of activities that creates a result for a customer. It has a clear goal: to satisfy or to delight the customer. James Martin defined value streams in his book The Great Transition.
Basing the foundation of your Business Architecture on value streams rather than functions is the solution. The customer sees the result of a value stream, not of a function. This does not require a corporate reorganization, but it does require everyone to view the enterprise in terms of its products, services, results and outcomes, and in its four dimensions. Viewed in terms of only functions, strategic objectives are obscured or may appear in conflict. When strategic objectives are tied to value streams and measured accordingly, an accurate assessment of the delivery of products and services is realized. The next step is then integrating the value streams, designing them to co-evolve into a more effective and efficient enterprise level result or outcome.
You very well may begin with a Business Architecture founded on functional views. However, you will ultimately evolve to the use of value streams as the foundation of your Business Architecture. With this multi dimensional view of the enterprise, you will gain the insight necessary to achieve business/IT alignment, performance improvements and a competitive advantage.
