Enterprise Architecture Strategy: Strategic Plan for Change
- Key of Strategy: Outcome and Action
- What is Enterprise Strategy?
- What is Departmental Strategy?
- What is an Initiative Strategy?
- What is Strategic Architecture?
- Knowledge Created in TOGAF ADM Phases
- Finding the Target
- Finding the Gap
- Enterprise Architecture Strategy Techniques
What is Strategy?
What is Strategy? Strategy is action. Strategy is the actions you will take and the changes you will make to reach your goals.
A strategy starts by identifying what you will do. It must also identify what you will not do. Even if it only identifies what you will not do by implication.
A strategy is not a target. Nor an outcome. Strategy is work. The actions you will take to reach an objective.
There is a burgeoning industry talking about strategy. Yet, we simplify strategy to 'the actions you will take and the changes you will make to reach your objective.'
Developing a strategy is not an exercise in fantasy. Imagining the simple work that will reach a lofty goal. Developing a strategy requires making deliberate choices. Hard choices. Identify what will not be done. Clarify what scarce resources will be allocated.
The concept of strategy has broad application. However, we reserve the term for an entire organization. Or department. Or a significant initiative.
Developing stratgey requires identifying the goal and making the hard choices. Hard choices about what isn't the goal. Hard choices about the scarce resources that will not be used elsewhere.
Key of Strategy: Outcome and Action
The OMG's business motivation model can be simplified to explain strategy. The BMM links Ends and Means. Outcome and Action.
It starts with the Outcome. Or in enterprise architecture terms, what is the target?
The strategy is tied to the means or the course of action. What actions will you take to realize your end-state?
Outcome and action, two simple concepts, underpin all discussions of strategy.
It does not matter if you are talking about a blue ocean strategy, digital transformation strategy, cloud strategy, or product strategy. What are the actions you will rely on to get you to the outcome?
Normally, we only talk about a business strategy, departmental strategy or initiative strategy. Everything else gets a plan.
What is Enterprise Strategy?
The picture above is the Hambrick Strategy Diamond. It is an excellent reference model for an enterprise strategy.
When talking about enterprise strategy, the Hambrick Strategy Diamond identifies five key parts. These simplify the concept of action.
A complete business strategy must define staging, differentiation, arenas, vehicles, and economic logic.
You notice Hambrick is silent on the objective or goal. The objective is a given. Everything in the Strategy Diamond is action.
Five key parts of enterprise strategy:
Staging - What is the pace of action? What are the sequences?
Vehicles - What change programs will be harnessed to deliver the objectives?
Arenas tell us where we will, and will not engage.
Differentiation provides the scorecard. How do we know we are succeeding?
Hambrick's Strategy Diamond grounds the action for enterprise strategy. Effective implementation governance requires clear direction from Staging, Arenas, Differentiation, and Vehicles. Direction is some mixture of performance expectations, constraints, and risk appetite.
It is that simple - enterprise actions that lead towards an enterprise goal.
If your company is trying to launch new products to grow revenue, you have goals and approach. More revenue is the goal. New products are the course of action.
If you need help to map out corporate goals and objectives, we reach for a Deloitte Value Map. The top level nets down to:
- Increasing Revenue
- Expanding Operating Margin (Lowering Cost)
- Using Less Capital (Asset Efficiency)
- Improve Market Expectations
The next level has more detail. For example, will the revenue come from new products, new markets, new customers, greater market share or higher prices?
What is an action, or an outcome, is not absolute. You can use new products to reach a revenue goal, or consider new products as the outcome. Especially as we transition from enterprise strategy to departmental strategy and initiative strategy.
What is Departmental Strategy?
Departmental strategy is more focused than enterprise strategy. This details a department's actions to fulfill its top-level goals. A departmental goal can often be an enterprise's course of action.
When talking about enterprise strategy, the Hambrick Strategy Diamond identifies five key parts. These simplify the concept of action.
A complete enterprise strategy should include staging, differentiation, arenas, vehicles, and economic logic. A departmental strategy may skip arenas and differentiation. Knowing staging and vehicles remain very useful.
Implementation governance requires clear performance expectations, constraints, and risk appetite.
The two pictures below bring together two aspects of departmental strategy.
On the right, keep in mind that the direction to decision to execution cascade down an organization. Higher-level direction turns into the next level decision. Cascading direction is a foundation of architecture governance.
On the left, keep in mind that departments as similar to SABSA domains. Department-wide performance expectations, constraints, and risk appetite inform all strategic planning.
What is an Initiative Strategy?
Initiative strategy has a chicken & egg issue. Which comes first the initiative or the initiative strategy?
At a minimum, the initiative will have some performance expectation, constraints and risk appetite. One way to consider an initiative is a temporary department. It fits into the organization and is constrained by what it expected to do inside the organization.
Developing initiative strategy follows the Business Leader’s Guide to AI's process for maximizing investment value.
Initiatives have the four parts of a value calculation:
- expected benefit
- uncertainty surrounding benefit
- work to deliver the benefit
- uncertainty surrounding work
We do not use a Hambrick Strategy Diamond for Initiative Strategy. Often an initiative is a Stage or Vehicle in an enterprise strategy or departmental strategy.
The starting point is the question you are being asked. AI Strategy, Cloud Strategy, and Digital Product Strategy all have a starting point. They all have a stakeholder looking for guidance.
What Strategic Architecture?
Strategic Architecture provides an organizing framework for day-to-day operations and change activity. Each strategy will be a change initiative.
The strategic architecture is used to provide the starting point for developing a strategy. As will all dynamic planning we should not treat the strategic architecture as requirements, rather the development of the strategy may call into question the strategic architecture.
Developing a strategy improves our understanding of potential benefits, work, and risk. The new knowledge may change the expected value and lead to updates to the strategic architecture.
What is Architecture supporting Strategy Use Case?
The enterprise architecture use case supporting strategy is focused on action. Strategic architecture identifies change initiatives and supporting portfolios that reach a strategic target. Enterprise architecture governs these initiatives and portfolios. Governance is based on direction - performance expectation, constraint and risk appetite.
By supporting strategy through a well-planned architecture, enterprises can ensure that their technological investments and resources are in sync with long-term objectives.
A key deliverable will be a dynamic architecture roadmap.
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Developing Strategy (Outcome)
Developing enterprise architecture for strategy starts with the outcome. The differences between your current state and the target are the gaps that need to be filled.
The Practitioner's Guide chapter "Walk Through Architecture to Support Strategy" outlines adapting the TOGAF Architecture Development Method.
The top level activity is:
- Understand Context
- Perform Assessment and Analysis
- Define Approach to Target State
- Finalize Architecture Vision/Target State
The strategy is developed in 'Define Approach to Target State.'
The diagram to the right maps the standard decision cycle and the two architecture governance processes to developing enterprise architecture for strategy. the target architecture checklist is used in Develop. The Governance section uses the implementation governance checklist to review Portfolio Architecture.
Understand the Current Context
Strategy development is based on your current context. You need an accurate understanding of your starting point to know what to do. Without knowing where you start from no action will reach your target.
Start with the basics:
- how your organization generates value
- in-flight improvement portfolios and their success
Use an operating model to understand how your organization is structured to generate value.
Look at the applicable improvement portfolios. Pull out the goals and objectives, and approach for any portfolio. Then look at their current success.
You are going to need to test the validity of the goals and the acceptance of the approach. They were valid. You need to know if they are still valid.
When testing improvement initiatives, test stated goals and objectives.
Then look at your environment:
- crisis
- competitive analysis
- environmental analysis
You are looking for whether the foundation of prior analysis remains valid. If the ecosystem is the same you can consume prior analysis. If not, you need to redo the analysis.
Knowledge Created in TOGAF ADM Phases
| Major Activity to Develop Strategy | TOGAF ADM Phases Executed |
| Understand Context | Partial Strategy Level TOGAF ADM Phase H
Partial Strategy level Phase A
|
| Perform Assessment and Analysis | Partial Strategy Level Phases B, C, and D:
Partial Capability Level Phases B, C, and D
Partial Strategic Level Phase G
|
| Define Approach to Target State | Partial Strategy Level Phases B, C, and D
Partial Strategy Level Phase A
Partial Strategy Level Phase E
Partial Strategic Level Phase G
|
| Finalize Architecture Vision/Target State | Partial Strategy Level Phase F
|
Table 5: ADM Phases and Architecture to Support Strategy from Practitioner's Guide
Get and Create Directions
We stress the importance of architecture governance. Both receiving directions from up the chain and and providing directions down the chain.
You are looking for three things:
- Performance Expectations
- Constraints
- Risk Appetite
These three things are part of the basics of architecture governance. You need to know what is expected, where you have constraints, and how much uncertainty is acceptable.
Enterprise Architecture for Strategy plays a critical role in cascading the outlines the the enterprise architecture. Cascading from an enterprise to departments. Cascading from th eorganization to diffrent iniitiatives.
Finding the Target
We separate finding the target, the gap and the approach to simplify discussion. You never do this. All are tied into Assessment and Analysis.
Hard Choices about Target Architecture Value
Selecting a target requires making hard choices about value. Hard choices about what benefit you require for what change. Hard choices about what changes you will make.
Every candidate target can deliver a benefit. Hard choices require assessing potential benefit, anticipated effort and risk. Uncertainty adjusts the potential benefit and effort. Risk appetite defines how much uncertainty you will accept.
You must use the enterprise architecture techniques of architecture alternatives and views. Delve into risk architecture.
Find Assumed & Actual Deficiency
TOGAF Phase A tells us we start with a problem. We use architecture models to understand and analyze our problem space. We speed our analysis using reference architectures.
Expect to use the following architecture models:
- Business Model
- Value Chain Model
- Operating Model
- Capability Model
- Digital Product Model
- Infrastructure Service Model
- SABSA Domain Model
- SABSA Risk Model
All these techniques help us understand the source of the deficiency. We are looking for what must change to reach the preferred state. It does not matter if we are told to improve an attribute, like efficiency, or something specific, like a completed digital transformation.
Finding the Gap
The gap is what must change between the current state and the target. Wherever possible, express the target in terms that allow more than one path to closing the deficiency.
Do not just think of architecture alternatives as alternative targets, but also alternative changes.
You need to use views and risk architecture to keep your options open. A strong strategic architecture viewpoint library will help your analysis.
Expect the following architecture concerns:
- Agility: What is the ability of the architecture to adapt to future unanticipated change?
- Change Impact: What is the change impact of the architecture?
- Value
- Alignment: Where does the architecture contribute to strategic priorities? What is the contribution?
- Value Proposition: How does the architecture address a value proposition? Does the architecture create new value propositions? Does the architecture depend on a value proposition?
- Differentiation: How does the architecture address enable differentiation?
- Customer Intimacy: Does the architecture enable delivering products and services the customers want? What is the confidence that the new product or service will be liked by them?
- Risk (Uncertainty)
- Risk to Benefit: What is the uncertainty of delivering or harvesting the expected benefits?
- Confidence: What provides confidence in the benefit, change costs, and uncertainty of the architecture?
- Continuous Operations
- Resilience: What is the architecture's capacity to withstand or recover quickly from difficulties? Where does the architecture have lower resilience?
- Business Continuity: Does the architecture provide the appropriate level of continuity? Where are there limits in business continuity?
- Ecosystem
- Competitive Landscape: How does the architecture address threats and opportunities in the competitive landscape? How does the architecture create new opportunities in the competitive landscape?
- Sustainability
- Social Responsibility: How does the architecture address social responsibility goals & requirements?
- Environment: How does the architecture address environmental goals & requirements?
Pay close attention to the information you need to address these concerns. Pay particular attention to the challenges and architecture modelling best practices.
When developing strategy expect that the Outcome will be less specific than other architecture use cases. After all strategy is about determining the action. We'll come back to finding your action in Enterprise Architecture and Strategy (Action).
Enterprise Architecture Strategy Techniques
What kind of strategy will determine which enterprise architecture strategy techniques, processes and reference architectures you need to use.
| Enterprise Strategy | Departmental Strategy | Initiative Strategy | |
| Techniques | |||
| Scenario Analysis | Critical | Critical | Important |
| Option Analysis | Important | Critical | Helpful |
| Roadmap Type 4: Scenario | Critical | Important | Critical |
| Capability-based Planning | Important | Important | Important |
| Architecture Principles | Important | Important | Important |
| Architecture Alternatives | Important | Critical | Critical |
| Architecture Roadmap | Important | Important | Critical |
| Architecture Views | Important | Important | Important |
| Architecture Processes | |||
| Process to Approve Target Architecture | Critical | Critical | Critical |
| TOGAF Phase A: Vision | Critical | Critical | Important |
| TOGAF Phase E: Opportunities & Solutions | Critical | Critical | Important |
| Reference Models | |||
| Hambrick Strategy Diamond | Important | Helpful | Not Applicable |
| Deloitte Value Map | Helpful | Critical | Helpful |
| Business Motivation Model | Helpful | Helpful | Helpful |
Using the Hambrick Strategy Map
We lean heavily on Hambrick's Strategy diamond to test the strategy.
Hambrick's Diamond isn't perfect. Being able to answer the five questions ensures your strategy is not skipping essentials.
- Where will the strategy be activated (Arenas)?
- How we will win (Differentiators)?
- What change programs will move us (Vehicles)?
- What our pace and sequence of change (Staging)
- How we get our returns (Economic Logic)?
An enterprise architect will often focus on Arenas, Vehicles, Staging, and Economic Logic. We strongly recommend that every enterprise architect improve their understanding of financial management. Architects especially need IT financial management.
Differentiators often take the form of governance directions.
Using the Deloitte Value Map
For private-sector organizations, we will leverage Deloitte's Value Map. The Value Map concisely highlights the options available to drive shareholder value. They net down to:
- Grow Revenue
- Grow Operating Margin (Lower Cost)
- Improve Asset Efficiency
- Improve Expectations
We will use the top-layers of the Enterprise Value Map to ask questions about the deficiency. We will use the lower levels to test for potential opportunities to address the deficiency.
Wherever possible, we leverage existing high-quality analytic tools and techniques. Our value comes from driving to an actionable answer, not inventing an elegant technique. The Deloitte Value Map is an example of our approach.
Using the Business Motivation Model
The Business Motivation Model is clearly links Outcome and Action.
It starts with Ends. What do you want to achieve? The model highlights that your target can be described in levels of detail. The BMM uses the terms Goals and Objectives. We use these simply as the top level and second level.
The BMM links closely to developing strategy with Course of Action. What actions will you take to realize what outcome? The the BMM uses the terms Strategy & Tactic. Like explaining outcome in two levels there are two levels of action.
Supporting your analysis the BMM has place for constraints and risk appetite in the concept of Directive.
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Developing Enterprise Architecture for Strategy (Action)
In this article we separated finding the target, the gap and the approach. It helped simply the discussion. However, you should never pick a target then find a path. The risk and effort of the path are critical to determine acceptability of the target.
Finding the Action
Developing enterprise architecture strategy requires you to continually assess two things:
- potential benefit of change
- anticipated effort of change
We highlighted potential benefit and anticipated effort to highlight the role of risk assessment. There is no guarantee that any change will produce a harvestable outcome. There is also no guarantee that the effort estimate will be correct.
Sources of risk include:
- success creating benefit
- ability to harvest the benefit
- the scope of work is complete
- the estimates are accurate
You will always need to be balancing outcomes and approach. Assessing benefit, effort, and risk. The methods to use include:
- architecture alternatives and tradeoff
- implementation strategy
- option analysis
- architecture roadmap (Type 4 Scenario)
- scenario analysis
The entire approach of finding your action comes down to the architecture technique of architecture alternatives and tradeoff. Testing different paths forward.
An implementation strategy is used in TOGAF Phase E to identify the approach taken in a work package. We role the technique up to include larger changes. We keep the basic three types of change:
- Evolutionary
- Revolutionary
- Greenfield
Using Scenario Analysis
Scenario analysis suggests looking forwards and backwards. When developing strategy we tend to look backwards from a plausible future.
Scenario analysis helps us understand what we need to do.
Scenario analysis is most useful developing enterprise strategy and departmental strategy. It readily finds the required change initiatives.
Using Architecture Roadmaps
While all specialized roadmap analysis is helpful in strategy, we lean to Type 4: Scenario. We use the technique to provide visualization of work packages, architecture options, and possible transition states.
Developing an architecture roadmap is most useful fleshing out an initiative strategy. Terms of reference come right out of the roadmap.
Using Option Analysis
Option Analysis is a specific approach to architecture alternatives.
In option analysis we make each option true. Then compare the options using identical criteria.
Portfolios and Change Initiatives
A key deliverable of the enterprise architecture for strategy use case is identifying the change initiatives.
A change initiative has an overlap with Hambrick's concept of vehicles. Although Hambrick also uses the concept when you choose to use inflight initiatives to action a strategy.
Most often a change initaitive will be managed as a portfolio. For example, a digital product portfolio, cloud-migration portfolio, or application modernization portfolio.
A portfolio's terms of reference is to enable implementation governance. Governance is based on direction - performance expectation, constraint and risk appetite.
Every change initiative's terms of reference needs clarity of:
- What it is expected to deliver. Ideally in terms of measurable benefit.
- Anything the initiative must do. Or, must not do. Even the initiative's implementation strategy.
- The risk appetite.
Governing the Execution of Strategy
Enterprise Architecture Strategy enables implementation governance.
Strategy is the preferred course of action to reach an outcome. Strategy provides everything you need to perform implementation governance.
While a strategy is action, it is directed action. Directed to deliver the target.
A good strategy is similar to TOGAF's architecture contract concept. We ensure an architecture contract clearly states:
- Benefits
- Controls
- Architecture Specification
- Implementation Strategy
- Target (Transition)
The latter is important. Few strategies are expected to close all action to reach a target. They usually are focused on an interim, or incomplete, state. When there is a transition we need to stop short.
After all, every minute of work on change past a Transition point is probable waste. When we use transition stages we have a point where value can be harvested.
More importantly your organization can easily change direction. Freedom to change direction while harvesting value is central to enterprise agility.
When governing execution of strategy the implementation governance checklist starts with the critical question - did the implementer reasonably interpretate the architecture. Strategy will leave of leeway for an implementer to interpret.
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Conclusion
Developing enterprise architecture strategy provides guidance to your organization. It states the action your organization will take to reach a goal.
Strategy can be enterprise-wide, focused on a single department, or only address an initiative strategy.
Strategy development is all about choice. Hard choices of what you want to accomplish. Then identifying how you will achieve the goal. The best strategy also identifies what you will not do.
Enterprise architects engaged in the use case of supporting strategy focus on action. Their enterprise architecture identifies change initiatives and supporting portfolio and programs. It helps set an initiative's terms of reference. A key use is to govern the execution of strategy via portfolio and programs.
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