1. Booz & Company
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Performance-Driven Architecture
A strategy-led approach to focus and align an organisation’s architecture
capabilities to create business value
Canberra, August 2010 Perspective
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This document outlines a strategy-led approach to focus and align
an organisation’s architecture capabilities to create business value
Document Overview
For years, many companies have experienced a problematic tension between their IT departments and
business units - one approach to close the distance is the discipline called ‘architecture’ which can be
described as the logical framework and design that establishes the links between strategy and
organisational structures, business processes, information and underlying technologies
Background
Strategy by
Design
Our Global
Study
Linking Maturity
& Value
Performance-
driven
Architecture
Whilst organisations have been heavily investing in architecture over several years and many consider it
core to their strategic advantage, senior business & IT executives still question the value it actually delivers.
Many also question the role of an architecture capability within an organisation in terms of its accountability
across the enterprise, domain and solution levels
To this end, Booz & Co. recently completed a global study by surveying executives across a mix of financial
services and government organisations to determine how much value architecture can contribute to the
business and to understand the key challenges and best practices adopted by mature organisations
The results of the study are revealing - the amount of value realised through architecture was clearly linked
to the organisation’s architecture maturity level, however, many organisations struggle to manage their
performance. This was particularly evident in terms of measuring and communicating to the business, the
effectiveness of their architecting capabilities and the impact of their design decisions
To address these challenges, Booz & Co. have developed a comprehensive framework aimed at enabling a
strategy-led approach to focus and align an organisation’s architecture capabilities and demonstrably create
business value including revenue generation, customer intimacy, reduced costs, increased agility, reduced
risks and lower complexity
Note: These are the highlights of a recent Booz & Company viewpoint, released in June 2009; For more information, see http://www.booz.com/media/file/Enterprise_Architecture.pdf
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Organisations have been investing in architecture to address key
challenges in the current economic environment
Optimisation of operations & infrastructure
1
Customer intimacy & speed to market
2
Changes to business models
3
Increased focus on risk & compliance
4
Core systems replacement
5
Challenges & Themes (1) Description
Cost pressures and across-the-board budget cuts forcing organisations to
do ‘more-with-less’ including leverage and re-use of existing assets
Optimisation of operations and infrastructure including standardisation,
consolidation and integrated portfolio planning between business & IT
Achievement of integrated customer services & products across multiple
delivery channels with a strong focus on meeting customer’s preferences
Increased agility / speed to market with customer service and new products
Changes to industry structures and consolidation of market following
mergers and acquisitions
Evolution and readjustment to develop new business models and
emergence of new value chains
Increased focus on corporate governance and enterprise risk management
New regulatory and legislative requirements will increase role of compliance
and interactions with key regulatory bodies
Many organisation’s driving major transformation programs to upgrade or
replace their core business platforms
New platforms will drive changes in business processes, systems and
structures including the broader IT operating model required to support them
(1) Sourced from Senior Business Executives & CIO interviews with over 60 Financial Services & Government organisations in Australia, US, Middle East. UK & GSA
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However, architecture remains a fuzzy concept in modern corporate
strategic planning - no common industry definition exists
The process of translating business vision and strategy into effective enterprise change by creating, communicating
and improving the key principles and models that describe the enterprise’s future state and enable its evolution
Source: MIT Sloan Information Systems Research Centre, Wikipedia, The Open Group, Gartner, ANSI/IEEE
A complete collection of artifacts to describe the logical organization of business strategies, metrics, business
capabilities, business processes, information resources, business systems, and networking infrastructure within the
enterprise.
The structure of a business, or the documents and diagrams that describe that structure; the business methods that
seek to understand and document that structure; a business team that uses EA methods to produce architectural
descriptions of the structure of an enterprise
The organising logic for business processes and IT infrastructure reflecting the integration and standardization
requirements of the firm’s operating model
Definitions of Architecture
Architecture is the fundamental organisation of a system embodied in its components, their relationships to each
other and to the environment, and the principles guiding its design and evolution
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We see architecture as a key strategy to bridge the business-IT
divide and address the key challenges facing organisation’s today
Source: Booz & Company
Results (for business and customer)
Business Vision and Strategies
(*) Note: Example business processes. Not exhaustive.
(Enterprise) Business Processes *
Strategy planning
Sales and marketing
Customer services
Product processing
Account management
Payment processing
Financial management
Portfolio management
Regulatory reporting
Structure
Roles and responsibilities
Skills / competencies
Performance management
Organisation Information Technology
Data architecture and
management
Business information
Customer data
Application services
Product platforms
Integration layers
Infrastructure
Extended Enterprise
Associations Third party service providers External systems
Alignment
Standards
Integration
Key Components of Architecture
Services
Requirements
Our Architecture Definition
Provides an end-to-end holistic view
of the capabilities within an
organisation at the enterprise,
domain and solution levels and
supports the decision-making
process needed to continuously
improve and transform the business
Serves as a guiding reference and a
communication bridge connecting
business operations with IT
The blueprint and the road map for
the development and management of
two views: the existing enterprise,
and the enterprise of the future as it
is envisioned to achieve its business
goals
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Organisations typically focus their architecture efforts across 3
distinct levels: Enterprise, Domain and Solution
Source: Booz & Company IC
Architecture operates across breadth of
organisation (i.e. multiple lines of business)
and is aligned to the corporate strategy and
outcomes
Capability Scope Description
Architecture relevant to specific business
unit(s) or operating models within an
organisation
Also referred to as segment architecture and
is aligned to business strategy & outcomes
Architecture supports detailed design and
technology implementation relevant to support
specific projects or capability outcomes
Enterprise
Domain
Solution
Continuum Level
Architecture Capability Continuum
Low
High
Level of Detail
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Our recent global study re-enforces the benefits of architecture
through the compelling link of architecture maturity and value
Architecture Maturity & Value
Over 60% surveyed mature
organisation’s realise all 4
sources of value through
architecture
Organisations that report little or
no value through their
architecture capabilities are all
within the ‘Emerging’ maturity
level
Agility is the most challenging
source of value through
architecture and is ultimately the
product of realised reduced
complexity & innovation to
enhance the speed to market for
new products & services
Link between Architecture Maturity & Value
Results of Booz & Company Global Study
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The drive business value, organisations should focus on three key
value drivers across both architecting and architecture disciplines
To drive business value, organisations should focus on maturing
three key value drivers1: 1). Strategic Alignment, 2). Competency &
3). Performance
Value Drivers
Architecture
Architecture refers to the actual
products, artifacts & decisions
created by the architecting
capability within the organisation
Architecting
Architecting refers to the
effectiveness and role of the
architecture function within an
organisation operating at the
enterprise, domain and solution
levels
Maturity Elements
Strategic Alignment
Process
Competency
Performance
Organisation
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Our research highlights many organisations face challenges in
maximising the performance of their architecture capabilities
Operationalised
architecture
function
Organisation’s have significant
investment in architecture (people,
process and tools) but outputs are
often limited to the definition of
theoretical end states and are
contained within an “Ivory Tower”
Fully operationalise the architecture
function by maintaining role in
strategic planning whilst also informing
day-to-day operations and technology
investment decisions within the
business and projects
Measured
outcomes
Emphasis on the architecture function
being a necessary evil and input to
either co-design, governance and/or
compliance processes
Formalise accountability through the
definition of metrics and targets.
Measure value attributed through
architecture and communicate the
realisation of the target state over time
Integration
across domains
Conflicting strategies and tension
between the enterprise and business
driven “solutions”. Architectural
integrity often loses and increased
complexity is the outcome
Integrate function across domains -
enterprise, domain and solution
architecture functions integrated at a
design, governance and
organisational level. Architecture
function taking the lead in pragramatic
trade-offs between specific business
demands and enterprise alignment
Challenge Optimal End State
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To address these challenges, the Booz & Co. Performance Driven
Architecture Framework can be used to manage performance…
Business
Value
Booz & Company Performance Driven Architecture Framework
… and developing integrated core capabilities
spanning people, process, governance & technology
Unlock and deliver
business value…
… by applying an
operational lifecycle …
Discipline
Capability
Continuum Level
LifecycleBusiness Value
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… by providing the capabilities necessary to align architectural
efforts within an organisation and unlock business value
Overview
Delivers a robust and transparent framework
to effectively manage the performance of
architecture at all levels: Enterprise, Domain
and Solution
Aligns to the typical operational lifecycle of
capability development within an organisation
and provides an integrated view of core
capabilities required to manage performance
spanning people, process, governance &
technology
Formalises the accountability of the
architecture capability and provides the basis
reduce risk and increase business value
associated with architectural decisions and
strategy
Booz & Co. Performance Driven Architecture Framework
Business
Value
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The framework outlines a capability toolkit and sample outputs to
assist architecture practitioners across the performance lifecycle
Performance Driven Architecture Capability Toolkit
ObjectivesOurApproach
Example
Outputs
BenefitsDelivered
Post project reviews
Annual architecture
maturity assessment
Scenario-based reviews
and before-and-after
impact assessments of
key design decisions
Monthly or Quarterly
Architecture Heartbeat
Report (underpinned by a
balanced scorecard
performance
management framework)
Data collection processes
& tools
Proxy data based on
industry-specific
benchmarks and best
practices
Balanced Scorecard
Framework
Business Benefits
Realisation Plan
Architecture
Performance & Value
Metrics / KPIs
Corporate & Business
Strategy
Value Chain
Strategy Map
Implement a capability
that will drive continuous
improvement of
architecture by providing
the mechanisms to
manage change and track
the results delivered
Implement a performance
management framework
that provides clear
visibility & transparency of
the performance / value
delivered through
architecture
Ensure mechanisms are
used to capture / collect
metric data in an effective
efficient manner providing
the information necessary
to facilitate performance
management
Determine how the
realisation of business
objectives and value
within the organisation
will be measured in both
qualitative and
quantitative terms
Identify strategic business
objectives across the
organisation including
those within individual
business units
Embed the concept of
continuous improvement
across the architecture
continuum by develop
revised measures and
stretch targets each year
Establish a governance
model to communicate
performance across the
continuum using agreed
communication methods
tailored to stakeholders
needs
Develop a data collection
approach within projects,
operations & forums to
measure performance
across the lifecycle and
architecture continuum
Highlight data quality &
availability constraints
Define and align
measures across the
enterprise, domain and
solution levels
Utilise lead and lag
measures that address
architecting and
architecture disciplines
Map alignment between
the business units and the
corporate strategy
Identify key value drivers
Highlight any trade-offs
and prioritise business
objectives
Enables remedial actions
and key decisions to be
taken on a timely basis
Measures value delivered
from changes made
Enables understanding of
architecture impact on
business outcomes
Fosters accountability and
senior leadership to
achieve outcomes
Reinforces cultural
changes required to
manage / improve
performance across the
architecture function
Measures effectiveness of
decisions made
Enables early
identification of root
causes and potential flow-
on effects which may
impact performance and
objectives
Highlights constraints and
availability of data to
manage performance
Alignment across
architecture levels linked
to business objectives
Accountability and
transparency of
performance - agnostic
of organisation
structures and business
unit constructs
Ensures a “top-down” and
enterprise approach to
performance
Fosters alignment across
the C-suite on the priorities
of the business as
opposed to managing
performance within
individual business units or
functional silos
1. Align Business
Objectives
3. Capture Data2. Define
Measures
4. Communication
& Reporting
5. Continuous
Improvement
Business
Value
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Our approach draws on insight and expertise from other industries
that specialise in non-IT architecture and design disciplines
Cross-industry Best Practices in Architecture & Design Performance Management
Lend Lease has developed a performance reporting framework to communicate its
performance to shareholders and internal stakeholders. Leading construction firms also
follow a industry-defined ‘Construction Design and Productivity Framework’ which
outlines performance targets and benchmarks for architecture and design including re-
work %, energy efficiency ratings, quality and safety
Construction
GE implemented a centralised ‘digital cockpit’ to feed its balanced scorecard to enable
the aggregation and capture of performance data. This approach includes the
digitisation of performance data from projects, operational and decision-support
repositories to capture business value (i.e. NPV, savings, operational efficiencies)
Manufacturing
As part of its product leadership strategy, Intel defines specific design and innovation
performance measures including product development time: from idea to market. These
are cascaded through a balanced scorecard across the business with a core focus on
information capital (design and manufacturing), internal processes and financials
Semiconductors
Lockheed Martin aligns its 10 functional business units to the corporate strategy through
a Strategy Map and EIS. This approach ensures that business objectives are commonly
understood and aligned horizontally (across similar design capabilities) and vertically
across the organisation’s functions to ensure that ‘strategy is everyone’s business’
Aerospace
Toyota follows 14 foundational management principles which underpin its “Lean
Production”. A key principle for its design function includes ‘becoming a learning
organisation through relentless reflection (Hansei) and continuous improvement
(Kaizen)’. This includes identifying root causes in design systems and processes,
scenario-based solution development, before-and-after comparisons of designs and the
development of stretch improvement metrics to continually improve performance
Automotive
Performance Capability DescriptionIndustry
Examples
Align Business
Objectives
Align Business
Objectives
Define MeasuresDefine Measures
Capture DataCapture Data
Communication &
Reporting
Communication &
Reporting
Continuous
Improvement
Continuous
Improvement
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We recommend a multi-phased approach to drive a typical
‘Performance-driven’ Architecture Project for an organisation
Performance Driven Architecture Into Action: A Typical Project Approach
Led by core team
Embed changes as
part of ongoing
architecture
operating model
Led by core team
and executed by
sub-teams -
leveraging tools
and processes
Led by senior
architecture
management team
Led by senior
architecture
management with
input from CIO /
CTO
Led by senior
architecture
management with
input from sub-
teams
Led by CIO / CTOProcess
Identify capability
improvement
opportunities
Manage capabilities
improvement by
defining changes
required to execute
improvement
recommendations
Capture the
benefits of changes
made
Understand current
key alignment
issues and define
business objectives
Understand and
define key drivers
of architecture
value across the
continuum
Define core team to
manage / execute
Performance Driven
Architecture
process
Implement
communication &
reporting
capabilities to
communicate
performance of
architecture
Establish
governance model
to communicate
performance of the
architecture
function
Note key
constraints
Define agreed and
understood metrics
for measuring
architecture
performance with
key stakeholders
Develop the
mechanisms to
efficiently and
accurately capture /
collect data
Establish sub
teams to assist with
performance
management
Establish
appropriate change
management
capability that will
manage execution
of the identified
improvements
across the
architecture
continuum
Capture baseline
data from defined
data sources
Assess baseline
results to identify
key problem areas
Extrapolating
insights for each of
the levels of
architecture
capability
Assess overall
architecture
function maturity
and drivers of value
Outcomes
Executive Teams
Architecture Teams
Together
Rapid Capability Design and Setup: 4-6 weeks
(Strategy Development)
Baseline Data
Gathering &
Results
Assessment
Define
Continuous
Improvement
Tools &
Processes
Define
Communication &
Reporting
Framework
Define Measures
& Data Collection
Approach
Business
Strategy
Alignment
Ongoing
Capabilities
Development
Continuous Improvement: Ongoing
(Strategy Execution)
A B C D
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Asia
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