Introduction
Enterprise strategic direction plan and governance is the most remunerative consulting area in the market at present. Various consulting management companies and research organizations such as the Butler Group, Forrester Research, and Gartner have on offer numerous analyses on the enterprise strategy plan and governance. A search for this topic on Google will also yield innumerable results. However, these sources do not present the accurate picture. The concepts of strategy and governance have been grossly modified and confined to represent the management, based on the assumption that the board of directors alone has the experience to control the business climate of the enterprise and manage traditional risks. Such a thought confuses cultural transparencies with the leadership qualities it takes to manage an enterprise’s intellectual capital and information. In this week’s issue, we will highlight the concepts of governance and analyze them to reveal their true essence.
Enterprise Strategy
In Issue #15, the term strategy was introduced in the context of business principles and directions. It is a widely accepted fact that the success of an enterprise depends mostly on good strategic planning. However, the term strategy is widely misinterpreted. "The interdisciplinary nature of strategy making and the multi-faceted phenomena that influences the strategic behavior of a company increases the ambiguity of any strategy. Despite nearly a century of teaching the subject and volumes of academic research, there is still considerable disagreement on what precisely a strategy is, and specifically, how to develop a good strategy." [Strategy]. Strategy is a field of practice and involves the implementation of best practices in the concerned business perspective within a particular timeframe. There are many instances where highly successful strategies implemented correctly have still failed. This suggests that both pragmatic knowledge and understanding the thinking process of the system are musts in the formulation and implementation of any successful strategy.
There are various schools of thought offering us advice on ‘why’ and ‘how’ to choose a particular strategy for a successful enterprise equation. Mintberg and Lampel (Reflecting on Strategy Process, Sloan management Review, Page 21-30, Published by Springer, 1999) have reviewed ten schools of thought and their viewpoints on strategy planning, as depicted in Table 1:
Arturo Molina [Enterprise Concepts] visualizes the enterprise concept roadmap as a three-step process:
- Creation of the Business Concept
- Formulation of Strategy
- Definition of an Action Plan
This roadmap is influenced by the concepts of all the ten schools of thought, namely Strengths/Weaknesses Opportunities/Threats (SWOT) analysis, enterprise lifecycle, life history, entity types, enterprise methodology, enterprise views and enterprise modeling concepts, as depicted in Figure 1:
Figure 1: Arturo Molina’s Enterprise Concept Roadmap, based on the Ten Schools of Thought [Strategic Schools]
The success of an enterprise depends highly on the strategic alignment of business and IT domains, organizational and information system process and infrastructure. Henderson and Venkatraman explain the alignment of the strategic and the process layer in an enterprise, as depicted in Figure 2:
Figure 2: The Strategic Alignment Model derived by Henderson and Venkatraman [Strategic Alignment]
The enterprise is a complex adaptive system [Enterprise Genetics: A Complex Adaptive System] and the alignments that stretch horizontally, vertically, and across is necessary in order to cope with the complexities of an enterprise. This type of strategic alignment reveals two important processes in the solution stack of a successful enterprise:
- Strategic process
- Information system process
The latter should guide the direction of the enterprise so the former can be incorporated.
It has been seen in actual enterprise situations that the frameworks available for enterprise architecture lack a framework for strategy, which is vital in building the foundation for a successful enterprise. Brane Kalpic, Krsto Pandza and Peter Bernus have created an important strategy framework, as shown in Figure 3:
Figure 3: Strategy Framework created by Brane Kalpic, Krsto Pandza and Peter Bernus [Strategy Framework]
This strategy framework is a definitive guide towards strategy formulation, analysis, implementation and reformulation lifecycle.
IT Governance
Enterprise Management is an important aspect of any successful enterprise integration program. Enterprise Management comprises six sub-management activities:
- Strategic Management
- Strategic Execution
- Quality Management
- IT Governance
- IT Implementation
- IT Delivery and Support
The relationship shared by these activities is explained in Figure 4:
Figure 4: Enterprise Management Activities
IT governance is defined as "a structure of relationships and processes that direct and control the enterprise in order to achieve the enterprise’s goals by adding value while balancing risk versus return over IT and its processes.” [Control Objectives for Information and related Technology, or COBIT]. IT governance is, therefore, a sub-management activity.
IT governance is one of the most fundamental criteria any enterprise must fulfill to achieve a competitive advantage. It facilitates the execution of the strategy framework, utilizing available competencies. The major driving forces behind IT governance are:
- Creation of strategic identity
- Strategic analysis and identification of new competencies
- Complying with the requirements of internal and external enablers, such as different government regulations
- Increasing information- and privacy-related legislation (compliance)
- Rapid articulation and formulation of the strategy
- Rapid value chain lattice integration
- Definition of action plan
- Strategic alignment across elements of the enterprise
- Measuring the performance of the enterprise integration plan
IT governance is therefore an integral part of the enterprise integration program that facilitates a success formula aligned with best practices to drive a complex adaptive enterprise.
COBIT and IT Governance
Control Objectives for Information and related Technology (COBIT) helps meet the multiple needs of management by bridging the gaps between business risks, control needs, and technical issues. It provides good practices across a domain and process framework and presents activities in a manageable and logical structure. COBIT’s ‘good practices’ refers to a consensus of the experts who help optimize information investments and provide a measure to be judged against when things do go wrong. The 34 control objects introduced by COBIT are listed in Table 2:
These control objects are highly fundamental in contributing to the success of an enterprise. These objects can be easily complied from GERAM recommendations and incorporated as part of the enterprise with the help of the Enterprise Unified Process.
Enterprise Unified Process and Enterprise Strategy: A Roadmap
The Enterprise Unified Process (EUP) is an extension of the concepts and best practices of the Rational Unified Process that has been made to fit the essence of the enterprise. In Issue #19, we introduced the features of the EUP and analyzed its compatibility with GERAM recommendations. Enterprise strategy and governance are no exceptions; they can be introduced within any enterprise as part of the activities of the Enterprise Business Process, as depicted in Figure 5:
Figure 5: The Enterprise Business Modeling Discipline Workflow [Used with permission from Scott W Ambler]
The details of the Model Business Process workflow are depicted in Figure 6:
Figure 6: Details of the Model Business Processes Workflow [Used with permission from Scott W Ambler]
In this phase, Enterprise Business Modelers work closely with different stakeholders to identify strategic requirements that will facilitate the formulation of a successful enterprise strategy. In the Strategic Reuse phase, effective strategies formulated beforehand can be reused across other enterprise programs within the same enterprise or in other partner enterprises. The performance of the Strategic Reuse workflow is shown in Figure 7:
Figure 7: The Workflow of the Strategic Reuse Discipline [Used with permission from Scott W Ambler]
Figure 8: Harvesting Existing Assets [Used with permission from Scott W Ambler]
EUP enhances RUP disciplines with the addition of diversified disciplines such as enterprise business modeling, portfolio management, enterprise architecture, strategic reuse, people management, enterprise administration, software process improvement and operations, and support. At the same time, it introduces a proper enterprise project lifecycle within the enterprise that helps us incorporate all enterprise concepts and management activities under one roof.
Conclusion
Enterprise strategy and governance are two most fundamental concepts in establishing an integrated approach to business and IT. It is important to clearly understand these two concepts, if you are a part of an enterprise success team. In this issue, we have tried to clear the ambiguity that surrounds these misinterpreted concepts. In the next issue, we will introduce the Enterprise Classification framework and Model Driven Enterprise Architecture derivation techniques, in an effort to synergize the best breed of both models and the enterprise world.
References
- [GERAM] GERAM: Generalized Enterprise Reference Architecture and Methodology. Version 1.6.3 . Also in P. Bernus, L. Nemes and G. Schmidt (Eds) Handbook on Enterprise Architecture, Berlin : Springer (2003) pp 22-64: http://www.cit.gu.edu.au/~bernus/taskforce/geram
- [Strategic Alignment] Strategic Alignment: Leveraging information technology for transforming operations by J C Henderson and N Venkatraman, IBM System Journal, Vol 32, No 1, 1993, Page 4-16
- [Strategy Framework] Strategy as a creation of corporate future by Brane Kalpic, Krsto Pandza and Peter Bernus, Chapter 4, P 213-279 in Handbook on Enterprise Architecture, Chapter by Bernus, P., Nemes, L. and G. Schmidt (eds.) , Springer, (2003), ISBN is 3540003436
- [Enterprise Concepts] Developing the enterprise concepts – The business Plan by Arturo Molina, Chapter 9, P 333-369 in Handbook on Enterprise Architecture, Chapter by Bernus, P., Nemes, L. and G. Schmidt (eds.) , Springer, (2003), ISBN is 3540003436
- [EUP concept] Scott W. Ambler, John Nalbone, and Michael Vizdos, published Prentice Hall PTR, ISBN: 0-13-191451-0
- Examining enterprise unified process
- Handbook on Enterprise Architecture, by Bernus, P., Nemes, L. and G. Schmidt (eds.) , Springer, (2003), ISBN is 3540003436
- Enterprise Architecture at Work : Modelling, Communication and Analysis by Marc Lankhorst, Springer, 2005, ISBN: 3540243712
- An architecture for defining the processes of the software and systems life cycles by Terence P. Rout, Software Quality Institute and Peter Bernus, School of Computing and Information Technology, Griffith University Queensland, Australia.
- http://www.agilemodeling.com/essays/mda.htm
- http://www.enterpriseunifiedprocess.com/
- http://www.enterpriseunifiedprocess.com/essays/zachmanFramework.html
- COBIT
- ISO 9001
- ITIL
- EFQM
- Balance Scorecard
- CMM
- CMMI
|
