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The Business Forum Journal

IT ARCHITECTURE - FOR SMALL & MID-SIZED ORGANIZATIONS

By Steve Huhta

Why IT Architecture?

Information Technology (IT) architecture is an important tool for small and medium-size businesses in their response to new business pressures. Such pressures arise from a variety of sources and may vary from rapidly changing technology to increasing global competition. The manner in which an organization responds to external pressures determines if they become business opportunities or threats. Small and medium-size companies face the additional challenge of needing to respond to such pressures with limited resources. Whatever the case, these pressures often result in new business trends and strain enterprise resources. Consider, for example, how the increase in global competition affects customers’ choices - customers expect better quality, value, and service from both large and small enterprises while being hesitant to pay more. These same pressures lead to changes that ultimately result in new business trends.

An organization’s ability to quickly respond to new business pressures determines if it’s an opportunity or a threat. Quick response requires agility. Moreover, changing trends require organizations implement and maintain flexible and adaptable decision-making processes. Such “agile” decision-making occurs with the availability of good business information. A case in point, customer demographic information co-exists with the technological ability to gather, organize, and analyze the information.

The ability to have quick access to business information, organize analysis, and respond rapidly all hinge on a well-formulated Information Technology (IT) architecture. An optimum architecture supports flexibility, adaptability, economy, and quality.

To better understand IT architecture and its, role, five topics are discussed:

What (exactly) is architecture?

What is enterprise architecture?

What is IT Architecture?

What is the value of IT architecture?

Why is IT architecture needed now?

What is Architecture?

    An architecture definition in the business arena is :

Architecture is a set of disciplines, practices and structured processes that direct and enable swift, business-focused decision-making. Architecture facilitates change while managing risk, reducing complexity, and allowing organizational flexibility.

               To better understand this definition and to illustrates architecture’s basic tenets, let’s use as an analogy the architecture of buildings. As far as basic components, architecture has three:

Architecture is a set of orderly practices. These practices lead to a “product” - which in this illustration is a home, church, museum, or some other sort of building. Orderly practices speed building design by guiding the architect through an established and tested decision-making process.

Architectural is a series of standards, rules, and budgets. These elements both simplify and restrict the decisions made during the design of a building. For instance, a building’s architect can draw upon a standard set of lumber, door, and window sizes. Likewise, the building’s form is also defined by zoning rules, fire safety codes, environmental laws, and so forth. Next, the budget will influence size, materials used, and complexity. The more simplified the decision-making process, the faster decisions can be made. Architecture decisions on what technology to use will affect the form of the building. For example, reinforced concrete results in a different building architecture than lumber; even if the two buildings fill the same function.

Architecture is a collaborative effort. Although a single individual may design a building, this individual does not constitute the complete expertise leading to the design. For example, someone else earlier analyzed construction materials to determine strength characteristics. Similarly, many other individuals created and documented the zoning regulations, fire codes, and environmental laws. Most importantly, the building architect bases the design on customer requirements. Unless the design meets the needs of the customer - typically the person or organization that will use the “product” - the architect has fallen short.

Architecture then is more than the end “product.” When applied to a business enterprise, architecture provides a holistic view of all the key components comprising an organization and how these components interact. In other words, architecture encompasses more than just the building. Indeed, it is even more than the blueprints used to construct the building. Rather, architecture is the set of end-to-end disciplines, practices, rules, and standards that speed, guide, and simplify building design decision-making via an orderly process.

Architecture provides many benefits. Continuing the previous analogy, architecture’s major benefits include:

Standards and rules reduce risk by providing the reuse of knowledge. Specifically, building designers base design decisions on the earlier work and experiences of many other architects. By leveraging these earlier experiences, the “product” is conceived more quickly with less likelihood of problems and mistakes. Reduced risk also frees the building architect to try new and different building designs.

When well designed, the “product” has the flexibility to change and can thus outlast it original use. A well-conceived building is designed to be “ahead of its time.” As needs change over time, the building has the flexibility to evolve and meet those new needs.

Keep in mind, architecture also evolves over time. Just as the forces contributing to business pressure on an organization change, so must architecture also change. Consequently, architecture can not be viewed as a one-time event. Rather, it must be seen as an iterative approach.

What is Enterprise Architecture?

Enterprise Architecture is a business-focused architecture that looks at the enterprise as a whole. Enterprise architecture is a “big picture” definition of an enterprise’s primary elements. These include:

business processes.

systems,

technology.

information flows, and

business strategies.

Additionally, enterprise architecture describes the impact these elements have on the organization’s functions and business operation. Figure 1 below illustrates the elements of enterprise architecture.

Whether large or small, all organizations have an enterprise architecture. Not only that, many enterprise architecture elements are the same irrespective of an organizational size - the only difference is the scope and focus of the components. For instance, all businesses have some sort of process for payroll and customer service. Likewise, all businesses manage information, execute strategies, and comply with government regulations. Finally, practically all organizations rely in one way or another on technology - whether it is a telephone, a copier, a fax machine, a computer, or some other device. Again, while such enterprises architecture elements may be common between business their scope and focus varies greatly depending on company size.

Figure 1

Enterprise architecture provides a holistic view of the organization. This view makes possible the ability to both determine how business elements interact, and to understand the value each element contributes to the organization. It is only from the synergy of an organization’s varied elements that the enterprise sustains a competitive advantage. Hence, understanding how business elements interact provides the means to support this organizational synergy. Furthermore, by understanding the value each element contributes to the business, investment decisions can target limited resources - investments that differentiates the enterprise from its competitors and provides the best business value.

Targeting limited resources is important because more and more of today’s investment decision-making relates to the use of technology; in particular, to the investment in computer technology. Computer technology investments should support those enterprise architecture components that either contribute the most business value or differentiate the organization from its competitors. However, the “right” investment decision depends on an organization’s particular situation - a situation described by its enterprise architecture.. For instance, while a business’ payroll process is an integral component within its enterprise architecture, it may provide little, if any, competitive business advantage. Contrast this with a business’ customer service process and strategy. Excellent customer service can both differentiates a business from its competitors and drive increased revenues through repeat sales. The decision whether to invest in payroll or customer service is greatly facilitated by an enterprise architecture.

What is IT Architecture?

As described above, technology is an major enterprise architecture element. For more and more organizations, computers and other information technology has become a major investment. The most important “tool” to link computer technology decision-making and investments with and organization’s business strategy and the appropriate, supporting, business information is an IT architecture.

A well-formulated IT architecture:

Consists of both content and processes

Describes the information and computer technology component of an enterprise architecture

“Future-proofs” technology decisions.

Content and Processes

As with any architecture, IT architecture consists of content and processes. In other words, it incorporates of a set of “nouns and verbs.” Key IT architecture “nouns” includes:

1.    A technology strategy that links technology decisions to business strategy

2.    Published technology-related policies, practices, and methodologies

3.    Defined technology standards

4.    Documented technology overview - i.e., what’s currently in place.

IT architecture also incorporates the processes (or “verbs”) required to support and enable the content mentioned above. These processes include:

1.    Communication - what the IT architecture is and how it provides value

2.    Governance - how the architecture is managed

3.    Renewal - ensuring that the architecture changes as business needs change

4.    Innovation - introducing new technology to build or maintain a competitive advantage.

Describes Technology Components

For many small and medium sized businesses, creating an IT architecture may consist of documenting the technology and related business processes already in place. For other firms, IT architecture provides the opportunity to fill a void when technology processes, procedures, standards do not exist. Whatever the case, IT architecture need not be a complicated tool. Rather, it should provide sufficient guidance to lead and direct technology decision making within the enterprise. Then, over time the IT architecture should evolve to meet changing business needs.

Future-proof Technology Decisions

A properly designed IT architecture helps “future-proof” your expensive technology decisions by ensuring that technology acquisitions are made in association with your organization’s long term business goals and objectives. Trying to align an organization’s IT investments with its business goals without an IT architecture is like trying to build a house without a set of blueprints!

What is the Value of IT Architecture?

There is no intrinsic value to IT architecture and the architecture is not a goal in itself. Rather, IT architecture’s value is totally derived by the business benefits it brings to the enterprise. By understanding its value, better decisions can be made as to the appropriate level of time, money, and people resources to invest in the development, implementation, and maintenance of your IT architecture. Key benefits include:

Better decision making

Improved business operations

Fosters business alignment

Guides business innovation

Better Decision Making

Not only does IT Architecture facilitate better, faster organizational decision-making, it does so while minimizing the associated risks. This in turn makes the enterprise - whether it is large or small - more flexible, adaptable to change, and more maneuverable. Better decisions result because architecture:

1.    Establishes and defines a consistent, agreed-to process for decision-makers to follow - when changing business pressures result in new business drivers, this process can be changed at an enterprise level.

2.    Promotes the reuse of institutional knowledge and technology - lessons learned elsewhere in the enterprise can be leveraged for the benefit of the entire.

3.    Avoids reactive decision-making - business and technology changes can often be anticipated and possible solution scenarios developed beforehand.

Faster decision-making primarily occurs through the reuse of organizational knowledge. Rather than “reinventing the wheel” during each new decision-making process, past experiences and decisions are available in the form of documented procedures, methods, standards, and infrastructure. Avoiding or minimizing the learning curve can streamline decisions. Additional drivers of increased speed include:

1.    Focus - technology investments are linked to business needs

2.    Minimal “analysis paralysis” - architecture eliminates the need to “get all the answers” before decisions can be can be made

3.    Simplification - standards reduce the number of available choices.

Resulting decisions have less risk for many the same reasons mentioned above. In particular, risk is greatly reduced in four ways:

1.    A repeatable, agreed-to decision-making process

2.    A holistic, end-to-end enterprise orientation that avoids reactive decisions. This also reduces the number of unique, “one off” decisions

3.    Standards not only simplify, they provide tested, proven solutions

4.    Allowing the enterprise to tap into the intrinsic, institutional knowledge of the organization.

Improved Business Operations

IT architecture moves an organization toward both a broader view of the enterprise and a more centralized management of its IT technology components and infrastructure. Consistent use of the standards, processes, and methodologies resulting from architecture, furnish economies of scale that, if adhered to, can provide significant cost savings. Just a few of these cost savings include:

1.       Lower support costs

2.        Faster problem solving

3.      Faster implementation

4.         Fewer spare parts

5.        Smaller repair and support staff

6.        Less training

7.       Lower operational costs

8.        Automated software distribution

9.        Increased help desk productivity

Architecture strives to create an end-to-end optimization for the enterprise. Instead of achieving optimization at the individual business unit, business process, or technology level, IT architecture seeks to implement technology solutions that benefit enterprise as a whole. For instance, the quick and easy transfer of information among different businesses units, business partners, and IT applications is a fundamental goal of IT architecture. Once accomplished, an organization can leverage this information exchange capability to improve or adapt business operations. Such changes could involve:

1.      Enhanced responsiveness to customer inquires and requests

2.      Better sharing of intellectual capital

3.      Easier outsourcing of business processes

4.      Easier integration of new acquisitions.

Fosters Business Alignment

The explosion of eBusiness, eCommerce, (sometimes it seems like “eEverything”) in today’s Information Economy affects all areas of the enterprise. Changes external and internal to the enterprise create business drivers that force businesses processes to change at increasingly faster rates. In fact, business processes are often changing faster that the policies, procedures, infrastructure, and computer applications that support them can change. Moreover, new business opportunities increasingly rely on computer technology; leading to the convergence of many business and IT goals, strategies, and investments.

As a component of enterprise architecture, IT architecture focuses technology decisions and investments on the needs of the business. Consistent technology decision-making raises the level of interoperability within the enterprise. Correspondingly, the availability and sharing of business information and institutional knowledge increases. Hence, when business processes change within an organization, affected departments and business units, along with their supporting IT investments, can more quickly realign and embrace the change.

Guides Business Innovation

Enterprises require innovation to develop or maintain a competitive advantage. IT architecture supports innovation in three ways. First, it enables the enterprise to achieve the right balance between business effectiveness and efficiency. This balance occurs by the creation of an appropriate set of technology standards. Appropriate standards manage efficiency while at the same time, allowing enough flexibility for individual business units to safely innovate in their pursuit of competitive advantage. Second, by it iterative nature, architecture allows the creation of “just enough” structure and process at any given time to support business needs. Such an architectural approach eliminates the need to “get all the answers” before decisions can be can be made. “Analysis paralysis” is thereby averted while still providing enough guidelines to cultivate innovation. Finally, by linking technology investments to business goals and strategies, proactive technology decisions are possible. The enterprise can anticipate emerging trends and, thus, the resulting business technology requirement even before the actual need arises.

Why is IT Architecture Needed Now?

Every day, the Information Economy’s business environment places more and more pressures upon the enterprise. To help manage these pressures, businesses need IT architecture sooner rather than later. By implementing an IT architecture now, an enterprise can:

       Address increasing complexity

        Ease implementation

Address Increasing Complexity

                Whatever the combination of pressures, the result is the same: business complexity is increasing The sources of these pressures are varied and often seeming to arise from nowhere. They range from the acceleration of technological change to increased and intensified competition. For instance, building and maintaining a qualified IT staff has become difficult due the shortage of trained professionals and the constant requirement to train the staff on changing technology. At the same time, customer expectations are changing as competition increases. Customers expect increased product quality and value, and better customer service.

Ease of Implementation

The longer an organization waits, the more complex the business and technology environments become, and the more difficult it becomes to implement the structure, organization, and processes required by architecture.

Steve Huhta is a Fellow of The Business Forum Institute. He was (until he retired) the Contracts Manager with the Contracts Services Department of the Russell Investment Group. Russell is a global financial services firm with headquarters located in Tacoma Washington. Steve holds a BS in Computer Science (with distinction), Washington State University, an MBA from Pacific Lutheran University, and a Masters Certificate in Commercial Contract Management from George Washington University. Steve's career includes 30+ years of experience in Information Technology across a variety of industries - including aerospace and forest products - and for both large and small companies. His varied experiences include application development, business IT planning, process change and improvement, development and management of customer centric support and help organizations, definition and implementation of IT-focused internship programs, IT asset management, IT innovation planning, IT metrics, IT Architecture, and contract management. Steve also volunteers his time and effort to advise several non-profit organizations during their planning and acquisition of computer technologies.

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