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Enterprise Architecture first, then Digital

Updated: Nov 28, 2022

Knowing and being in control of the elements of the Enterprise Architecture is necessary for significant Continuous Improvements.


measurements

We will talk about Continuous Improvement, explaining how knowledge and proper synchronization of business elements in a holistic view of the Enterprise Architecture are necessary for successful implementation. It can start even with a piece of paper to define it: digital can come to our aid to map processes faster and to keep track of their status and relationships over time.

Our considerations are based on the insights offered by two management giants such as E.W. Deming and E.M. Goldratt.

In short:

Knowing the system, identify its constraint(s) and relationships between it and the different elements to effectively improve it, leveraging a booster to increase overall performance by focusing interventions and resources
 

The elements of the Enterprise Architecture

We will exploit parallelism with the world of sport to introduce the elements of Enterprise Architecture and their relationships: an ambitious football team.

If we agree that a football team is an organization, it will not be difficult to accept to extend the conclusions to any business organization (apart from salaries, perhaps).

Let's start.

At the top of the hierarchy of the Enterprise Architecture elements, we find the Goal, Strategy, and Tactics. They define the "raison d'être" of the organization and the actions to achieve the Goal: The "What For" and the "How To."

The team's strategy is "We always want to be at the highest levels of international competitions, winning at least one cup every three years."

Declaring a strategy is not enough to make it come true: we must implement it. To this purpose, we must develop tactics, that is, the set of plans and actions that allow the organization to achieve its Goal, respecting conditions of necessity and sufficiency.

Let's say that the first necessary condition to win an international competition is to make one more Goal than the opponent in all matches, including the final match.

On top of focusing on the present competition, to remain constantly at a high level, medium-long-term tactics are also needed to look at the sustainability of results over time.

To define a coherent and comprehensive set of necessary and sufficient actions, a Strategy & Tactics Tree will help to visualize causal relationships. Strategy & Tactics Tree is a powerful strategic planning tool designed by the Theory of Constraints. An example of a Strategy and Tactics tree might look like this.

Strategy & Tactics Tree
Strategy & Tactics Tree

Are these tactics enough to achieve the Goal? They are not: we need to go much deeper, defining intermediate objectives and more tactics until we get to a level where we define Operational Tactics.

To the operational tactics, we can link another element of the system architecture: the processes.

Returning for a moment within the walls of an industrial company, an example of Operational Tactics is the production operating model (e.g., MTO or MTS) and the Operational model for the Supply Chain execution.

The processes define how to implement the actions necessary to carry out the chosen operational tactics. How should the team attack? How should it defend? It is the processes that define how to execute a particular tactic. Returning to an industrial company: when do I issue a replenishment order? According to what pr cess?

We know that drawing a process on the coach's blackboard is not sufficient to run it. Many other fundament l elements of architecture come into the picture.

  • People (the players) and their roles (forwards, midfielders and defenders)

  • Individual skills and team capabilities

  • Operating procedures

For example, the skills of the available players determine which operational tactics we can or cannot perform, depending on the context: today, the best striker is injured, and we have to change the tactic because we are forced to field a "little guy" and play a different attack strategy.

Capabilities are also critical: for example, a distinctive ability could be a particular attack strategy pursued with the support of midfielders, exploiting the mix of skills available.

The procedures shall indicate the tasks in detail. They show players how to position themselves at certain game stages, for example, in the execution of a corner kick.

We see that the elements at stake are starting to be many. To complete the picture, we leave our team for a moment and return within the walls of an industrial company to get a complete view of the elements of the Enterprise Architecture.

Enterprise Architecture Elements
Enterprise Architecture Elements

If we add the different layers consisting of the number of occurrences for each element, we can guess the complexity of relationships and architecture.

Enterprise Architecture Complexity
Enterprise Architecture Complexity
 

We don't necessarily have to surrender to complexity

Any system, no matter how complex it may seem to describe it, due to the number of elements and relationships, actually has a certain Inherent Simplicity, because its performance is always defined by a few variables, which are the System's Constraints.

Although our instincts push us to give a negative connotation to constraints, their existence is, in fact, good news. Any system always has a limited number of "neuralgic hubs" that define the "traffic of operations" within the network of relationships.

Let's think: how many days (maybe years) of strikes at any local European Airport are needed to create the same impact on the air transport system that one hour of a strike at Frankfurt airport will cause? Maybe even never.

This example clarifies many things: first, it is not necessary to control every single element of the system, but it is sufficient to focus on the neuralgic hubs, the constraints, and the interactions with them.

And second, it should teach another precious insight for business controllers.

An hour lost to a constraint costs as much as the entire operating expenses of the company for the lost fraction of time. An hour lost to a non-constraint is just a mirage. (E. Goldratt.)
 

The side effects of lack of synchronization

Is it enough to have so many champions to win the Champions League? An Italian striped te am's investment in a world-famous player proved insufficient.

Is it enough that all players always perform at their best skills? If every player started to do "rabona" or "paso doble" at every moment of the game, we would probably see a show of tightrope-walkers performances, but not a football game, and probably our favorite team would lose 8-0.

Is it enough to enter the field solely to do our best? What could reasonably happen if the only directive received from the coach was: "I want to see you come out sweaty and cramped; I want to see you running for 90 minutes without ever giving up an inch"? No other tactical or operational indications. 4-0 for the opponent

And what about a team that enters the stage every Sunday without a clear indication of the strategic objective? Do we want the Champions League or the FA Cup? It is essential to know it because the coach has to decide how much to use its protective capacity (the bench).

The performance management system is another equally important element: how players get rewarded influences their behavior. Let's imagine that the metric of bonuses given to players is exclusively a function of the goals scored. We will probably find too many players in attack and less motivated to pass the ball to the best-placed teammate to score.

And what if the organization does not support the academy with a robust network of talent scouts and coaches? How can the organization forge the new champions of tomorrow in-house? The organization will likely have to shell out a lot of money in the future to buy the future top players from other teams.

These examples clarified the importance of synchronization among the elements of the Enterprise Architecture. When synchronization breaks, the system's performance deteriorates quickly, and several negative ramifications ensue. We can classify the negative branches into three macro phenomena:

  • Unsatisfactory financial results, not commensurate with efforts made.

  • Inadequate operating results, with symptoms ranging from a high number of expediting, failure to keep promises made to customers, and dissatisfied customers, to high "churn rates."

  • It deteriorated the organizational climate, with symptoms ranging from dissatisfaction to latent frustration to high turnover situations.

Enterprise Architecture and Continuous Improvement

This long introduction helped to understand the system's elements and their relationships. Now we get to the heart of the problem.

When things start to go wrong, that's when typically the "we must improve paranoia" starts to kick in. But improve what and where?

When we look at sports results alone, the coach is always the first to pay the consequences in case of performance is not aligned with expectations. In football, where we talk about "season" and capacity is "fixed" (apart from the interlude of the repair market), a change of coach may seem to be the only short-term solution that may perhaps straighten out the course of the season. Still, it is hardly the solution that eliminates all ills (unless the ultimate cause of the poor results was the absence of tactics, processes, and directives other than asking the players to run and sweat....)

Dealing with more complex contexts, such as companies, it may seem harder to identify the correct actions for improvement, as we have to deal with many more interdependencies among the elements of the system.

When managers are asked to improve the situation, what typically happens are two approaches:

  • Be tempted to launch too many improvement initiatives driven by a desire to improve everything that can be improved, with a local focus. The result is to enter an "Improvement Jungle," into which one enters but from which one does not know if and where one will exit.

  • The risk of being driven only by urgencies, acting only on symptoms without simply searching for the root cause causing the undesirable effects (fire-fighting).

A key benefit of having the Enterprise Architecture elements in control is knowledge. An Enterprise Architecture in control enables understanding of the system's constraints, hubs, and how they interact, helping to channel the (finite) resources of the enterprise to improve what needs to be improved, avoiding entering the jungle of initiatives and fire-fighting approaches.

Improvement approaches
Improvement approaches

Now let's add some technology. Shake all and serve the Digital Enterprise Architecture

Having knowledge and setting the Enterprise Architecture in control requires some effort, which is worthwhile. It is undoubtedly not adequate to keep our architecture in some folder in the shared enterprise directory, as it becomes unusable and is only likely to gather some dust.

Instead, it must become a tool that is easily usable and accessible for fostering flow, facilitating collaboration, and creating knowledge of goals, tactics, processes, roles, and rules. This is the only way to develop and share knowledge that will become a powerful leverage point for understanding where and how to improve the system.

The Digital Enterprise Architecture, supported by appropriate Business Process Management tools, enables the achievement of these goals and simplifies maintenance work over time. The environment is dynamic, things change quickly, and it is necessary to have appropriate tools to keep up with the changes.

 

Using Frameworks and Best Practices as Accelerators

An accelerator for rapidly building a Digital Enterprise Architecture is to leverage pre-developed frameworks taking into consideration various industry best practices

An industry reference is the Supply Chain framework defined by the ASCM (Association for Supply Chain Management) and known as SCOR (Supply Chain Operating Reference), now in its fourteenth edition and renamed SCOR DS (DS = Digital Standard).

The advantage is the availability of a reference model containing all the process and industry best practices to simplify the mapping work and to quickly identify what elements and relationships are missing or need to be improved.

To show the opportunities, we bring you an example of our Digital SCOR developed with our parent company Thinking Solutions, where all elements of the architecture have been mapped and related according to the ASCM SCOR framework.

Digital SCOR Model
Digital SCOR Model
Digital SCOR Model - MTO
Digital SCOR Model - MTO
Digital SCOR Model - Level 3 MTO Processes
Digital SCOR Model - Level 3 MTO Processes
Digital Level 4 process mapping
Digital Level 4 process mapping

A plus of the Digital Enterprise Architecture solution is that links between the system's elements are dynamic, so updates to one part automatically propagate to all other aspects of the system linked to it, simplifying and reducing the effort to maintain the overall architecture.

Moreover, many Level 4 processes can be mapped by resorting to process mining tools, saving considerable time in reproducing the current state.

The benefits should be noticeable. In addition to solving the problem of maintainability of the architecture:

  • greater transparency is deployed in the organization

  • greater dissemination of knowledge

  • standardization of processes and procedures

  • time savings when having to analyze the system to understand where it is worthwhile to intervene to improve it

  • ability to simulate the processes and the impact of improvement initiatives through dynamic process modeling, increasing the ROI of investments and reducing risks

Dynamic Process Modeling
Dynamic Process Modeling

By pairing the Digital Enterprise Architecture with worldwide reference frameworks such as the SCOR DS, the benefits are further magnified:

  • The on-hand availability of the library of best practices incorporated in the SCOR DS (processes, capabilities, skills, metrics, people).

  • Consolidating a standard facilitates business communication, eliminating the "jargon" that is often a significant barrier to communication between functions.

  • Internal and external benchmarking is simplified.

RECAP

In today's VUCA and Hyper-Competition, functional organization charts and "command & control" management models are no longer suitable for representing and managing current complex business models. They are tools of the past. They were sufficient when environments were stable, the market absorbed whatever we had planned to offer, and the product offerings were little differentiated.

In today's complex world, we cannot disregard adequate knowledge of the system, its elements, and their relationships with the system's hubs as pace-makers for generating flow and Throughput.

Having control of the Enterprise Architecture and leveraging digital and BPM is a must to achieve this knowledge, which is necessary to improve the system's performance. While maximizing the ROI.

Technology can facilitate this transition, but we must be aware that it is a necessary but not sufficient condition. It is also a must to change the mindset from the deterministic world of command and control of the past to the systemic world of the complex realities of the present.

 

CONTACT US

With 30+ years of experience in the Theory of Constraints, Lean and Six Sigma, and Supply Chain ASCM and APICS best practices, you will find in Real Throughput a team of consultants with proven expertise and experience to successfully direct your Business Transformation programs.

We are experts in Digital Enterprise Architecture. Contact us for information about our Digital SCOR, the solution presented at the Innovation Labs of the recent ASCM Connect 2022 annual conference by our parent company, Thinking Solutions, and our Co-founder Emanuele Strada. Emanuele is a member of the international team that contributed to developing the new SCOR DS release.

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