>Business Technology Trends and Enterprise Architecture

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There are a number of key business technology trends that enterprise architects need to be aware of─McKinsey Quarterly reports these on 26 December 2007.

1) Managing Relationships

  • Distributing co-creation—“The Internet and related technologies give companies radical new ways to harvest the talents of innovators working outside corporate boundaries. Today…companies routinely involve customers, suppliers, small specialist businesses, and independent contractors in the creation of new products. … By distributing innovation through the value chain, companies may reduce their costs and usher new products to market faster by eliminating the bottlenecks that come with total control.” Examples include Linux and Wikipedia
  • Using consumers as innovators—“As the Internet has evolved–an evolution prompted in part by new Web 2.0 technologies–it has become a more widespread platform for interaction, communication, and activism…Companies that involve customers in design, testing, marketing (such as viral marketing), and the after-sales process get better insights into customer needs and behavior and may be able to cut the cost of acquiring customers, engender greater loyalty, and speed up development cycles.”
  • Tapping into a world of talent—“Software and Internet technologies are making it easier and less costly for companies to integrate and manage the work of an expanding number of outsiders [globally], and this development opens up many contracting options for managers of corporate functions…This trend should gather steam in sectors such as software, health care delivery, professional services, and real estate, where companies can easily segment work into discrete tasks for independent contractors and then reaggregate it.”
  • Extracting more value from interactions—“Technology tools that promote tacit interactions, such as wikis, virtual team environments, and videoconferencing, may become no less ubiquitous than computers are now. As companies learn to use these tools, they will develop managerial innovations–smarter and faster ways for individuals and teams to create value through interactions.”

2) Managing capital and assets

  • Expanding the frontiers of automation—“Companies, governments, and other organizations have put in place systems to automate tasks and processes: forecasting and supply chain technologies; systems for enterprise resource planning, customer relationship management, and HR; product and customer databases; and Web sites. Now these systems are becoming interconnected through common standards for exchanging data and representing business processes in bits and bytes. What’s more, this information can be combined in new ways to automate an increasing array of broader activities, from inventory management to customer service…The trick is to strike the right balance between raising margins and making customers happy.”
  • Unbundling production from delivery—“Technology helps companies to utilize fixed assets more efficiently by disaggregating monolithic systems into reusable components, measuring and metering the use of each, and billing for that use in ever smaller increments cost-effectively. Information and communications technologies handle the tracking and metering critical to the new models and make it possible to have effective allocation and capacity-planning systems.”

3) Leveraging information in new ways

  • Putting more science into management—“Just as the Internet and productivity tools extend the reach of and provide leverage to desk-based workers, technology is helping managers exploit ever-greater amounts of data to make smarter decisions and develop the insights that create competitive advantages and new business models. From “ideagoras” (eBay-like marketplaces for ideas) to predictive markets to performance-management approaches, ubiquitous standards-based technologies promote aggregation, processing, and decision making based on the use of growing pools of rich data.”
  • Making businesses from information—“Accumulated pools of data captured in a number of systems within large organizations or pulled together from many points of origin on the Web are the raw material for new information-based business opportunities…[For example,] A retailer using digital cameras to prevent shoplifting could also analyze the shopping patterns and traffic flows of customers through its stores, and could also use these insights to improve its layout or placement of promotional displays.

From a User-centric EA perspective, many of the business technology trends not only ring true, but are in fact essential to the practice of good User-centric EA.

  • First, managing relationships, whether through co-creation with partners, customer involvement, outsourcing, or making interactions more valuable, all point to the “User-centric” aspect of User-centric EA, in which we bring the users, stakeholders, and subject matter experts collaboratively into the EA process to provide them more value from EA information products and governance services, so that the EA is useful and usable to them.
  • Second, in terms of leveraging information “to make smarter decisions,” this is the value proposition of EA—information transparency to enhance decision-making. McKinsey underscores the growing importance of information, such as EA provides as follows: “Given the vast resources going into storing and processing information today, it’s hard to believe that we are only at an early stage in this trend. Yet we are. The quality and quantity of information available to any business will continue to grow explosively as the costs of monitoring and managing processes fall. Leaders should get out ahead of this trend to ensure that information makes organizations more effective, rather than less. Information is often power; broadening access and increasing transparency will inevitably influence organizational politics and power structures.”
  • Third, in better managing capital assets through additional automation, interoperability of systems, and utilizing reusable components, these too are core elements and principles of EA, particularly in terms of applying and implementing technology (automation) to align with business requirements, and developing interoperable systems and using service oriented architecture to deliver reusable component services. This is all about more effective management of our technology base and the development of a farther reaching, stretch target to continue to get more value from technology.

All signs from Mckinsey point to the importance of User-centric EA as the way forward in this field.

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