In other words, use your specialization in your architecture company name. A solid data architecture is a blueprint that helps align your company’s data with its business strategies. Please use UP and DOWN arrow keys to review autocomplete results. Align milestones, key performance indicators (KPIs), and incentives with business goals, such as a 10 percent increase in new-customer acquisition, 99 percent–plus statement accuracy, or a 15 percent cap on the number of custom applications. We'll email you when new articles are published on this topic. Like any other change initiative, it must be led from the top. Capabilities that involve similar functions and rely on similar data, such as billing or credit approval, can be grouped into domains. Our flagship business publication has been defining and informing the senior-management agenda since 1964. As application volumes grow in response to a fast-changing economic, regulatory, and business environment, the issue of complexity is becoming acute for many organizations. The new structure helped the bank establish a network of governance boards, led by the CTO, across its global organization. Something went wrong. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. The impact was substantial. The cost savings come from simpler and consolidated procurement, as well as lower support and maintenance expenditures. Different business units in the same company often have their own versions of essential systems, such as payments and Internet applications. This structure not only provided greater transparency but also made it easier to manage ongoing improvements and overall project performance. Standardization of technology is a common part of IT architecture projects. Most transformations fail. Nonetheless, significant additional reductions and efficiencies are possible if companies take a broader look at the way they manage the IT architecture as a whole. A weak linkage to the business creates a void that limits the quality of the resulting IT architecture and the organization’s ability to enforce and sustain the benefits of implementation over time. IT Architecture: Standardizing Technology. In the example IT architecture roadmap above, the roadmap is color-coded based on the project phase: planning and design, implementation and testing, and optimization. Systems are a class of software that provide foundational services and automation. So, make sure your business type. The key to these economies is bringing business and IT leaders together in a combined effort to rationalize not only business applications and processes but also the core IT infrastructure and operations. Most of these changes required near-term investments—in several cases, such as eliminating or consolidating larger redundant applications, fairly substantial ones. Please click "Accept" to help us improve its usefulness with additional cookies. We have found that a phased joint approach, focused on a series of cost reduction levers, can reveal and realize substantial savings far beyond the norm for IT-only initiatives. If you would like information about this content we will be happy to work with you. With costs and resource constraints increasing, the bank’s central IT department struggled to make the case for change. The team should include all key stakeholder groups, with representatives at a sufficiently high level to make strategic decisions on their behalf. In the case of one bank unit, an initiative to develop a new payments environment was rejected by the board leadership. collaboration with select social media and trusted analytics partners Strategy changes require the solution of technical challenges Whether you are a medium-sized company or a corporate group - IT systems, infrastructure and processes of companies have often grown over many years and decades. The new approach redefined the application architecture by using business domains, which regrouped the bank’s IT—data, processes, and applications—according to the business capabilities each business line needs. Janaki Akella is a principal in McKinsey’s Silicon Valley office, Helge Buckow is a consultant in the Berlin office, and Stéphane Rey is a principal in the Geneva office. We strive to provide individuals with disabilities equal access to our website. hereLearn more about cookies, Opens in new Please try again later. System upgrades—a frequent occurrence in light of fast-changing regulatory and marketplace conditions—proved a major headache, given the inadequate IT architecture landscape. Too many projects adopt customization as a first rather than last option. To the surprise of the banks’ leaders, of the 100 or so domains the team identified at the outset, only 20 percent required applications specific to business lines. But the business applications, processes, and business model sitting atop the IT infrastructure often reflect the wants of the leaders of business units and functions, who understandably focus more on their own needs than on overall IT efficiency. Bringing IT and business leaders together can also help IT create new ways to make the business grow. The company’s IT systems couldn’t support such growth. The CIO alone, however, cannot reduce these costs; business leaders too must sponsor and participate in the transformation. The exceptions bar should now be set much higher. IT architecture is used to implement an efficient, flexible, and high quality technology solution for a business problem, and is classified into three different categories: enterprise architecture, solution architecture and system architecture. As companies innovate, add new business lines and products, or expand their international presence, processes proliferate, and the discipline around them can go out the window. Different approaches may be required: depending on usage and need, some may be retired immediately, others replaced by newer applications, and still others phased out gradually. Please click "Accept" to help us improve its usefulness with additional cookies. I got my preparation at Coca Cola and I went for a Coca Cola venture in India. Shape the future. Prospective strategic IT goals include: New rules for implementation must stress the business case rather than the engineering details. An inventory of licenses should uncover idle, underused, and even incorrect ones. By breaking the group architecture into three application layers—shared, standardized, and customized—the team made the bank’s structure more efficient and adaptable, allowing for different degrees of business unit autonomy. Subscribed to {PRACTICE_NAME} email alerts. Please use UP and DOWN arrow keys to review autocomplete results. Flip the odds. The goals of EAM must be translated into business terms. Never miss an insight. Most transformations fail. Meanwhile, the IT that underpins these processes can also become more entangled as aging legacy systems jostle with new applications to support the needs of the business. A good EAM program uses plain business terminology to guide the development process and create a sense of business ownership. The company's portfolio includes award-winning projects in 77 countries, all 50 states and the District of Columbia. Rationalize software licenses. In our experience, three levers are important at this point. With a clear mandate from top management, IT and business leaders focused on core business objectives requiring a reformed architecture. Exhibit 2 At one retail bank, for example, a comprehensive assessment to reduce architectural complexity identified major cost savings in most areas. We work with both new buildings and refurbishment. Enterprise architecture management (EAM), a framework to manage IT architecture and ensure that both the business and IT are well aligned, aims to restore order to this landscape. It therefore began a series of reforms, and three guidelines emerged. Managers in the bank’s payments businesses had been uneasy about restructuring domestic, regional, and cross-border transactions, so the IT team described the new architecture design’s business benefits in a succinct executive summary. Not all consolidation proposals showed a positive return. We use cookies essential for this site to function well. Despite that bulk, the presentation lacked the one thing that would have made the project intuitively understandable to top managers: an executive summary telling them the overall program goals and laying out the financial and nonfinancial benefits. Please email us at: McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. To get the most out of EAM programs, organizations must define architecture standards, establish a rigorous and stable governance process, and appoint people with the right skills for the lead roles. In the second phase, the team should focus on making the whole IT architecture less complex. A failure to do so can breed mistrust and create the perception that the program is an IT-driven initiative rather than a collaborative effort to improve the business. If you would like information about this content we will be happy to work with you. As demand for custom application development spiraled, so did complexity. What’s needed is a clearly defined IT blueprint with organization-wide guidelines for the most appropriate and efficient systems, applications, and processes. Functions such as finance and accounting, human resources, and purchasing, which typically don’t play a role in direct competition with other companies, are prime candidates for savings in this phase. The IT architecture of a company is a formal description of its business operations (processes and functions), the business applications and databases that support them, and the equipment and services that run the applications. The reason, in part, is that the chief architect—the overall IT-architecture program leader—is frequently selected from within the technical ranks, bringing deep IT know-how but little direct experience or influence in leading a business-wide change program. Companies that have taken this approach to EAM have lowered their need for architecture-development labor by as much as 30 percent and reduced times to market for new applications by 50 percent. Brand architecture is just like the family tree you used to create for your school projects. Often, the team will find that simpler off-the-shelf systems and the reuse of existing components can support business requirements. Architecture, therefore, doubtless has a special role, though many will question its character as art at all. tab, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Responding to a seismic shift in customer expectations that has taken place during the past decade, leading financial services company Citi is transforming its IT architecture into a flexible, services-based model that supports new strategies, products, and business models. Learn about the day-to-day activities of an architecture firm owner, the typical target market, growth potential, startup costs, legal considerations, and more! Communicate clearly. An IT staff can spend as much as 30 percent of its development time on applications making all of their interfaces work, largely because customized applications have so many point-to-point interfaces. These metrics focus the discussion on the new architecture framework. A well-tuned EAM effort concentrates on a core set of business capabilities, such as payroll, payments, or automated statement processing, where efficiencies and improvements can have the widest and most lasting impact. Learn about Our goal is to provide designs that Elevate the Spirit and Create Value for our clients and the community. Never miss an insight. The company decided to focus on potential IT architecture violations at the start of any IT project or the release of a new application. The data architecture guides how the data is collected, integrated, enhanced, stored, and delivered to business people who use it to do their jobs. A joint IT–business team can achieve much more. Unleash their potential. Standardize and simplify. The CTO was well known within the financial-services industry, where he had spent most of his career, and understood the business issues very well. Data were inconsistent from one business unit to another, so cross-divisional collaboration was arduous. Complexity is rife in any growing business. Using a simple before-and-after graphic, the team showed how a fragmented architecture with over 200 different payments systems could be streamlined into a more integrated, cross-border IT environment (see interactive, “Enterprise architecture management: Before and after”). When Eisner commissioned prize-winning architects to create new designs for Disney worldwide, the ideas baked into modern architecture were brought to the masses. This is a broad area that includes several distinct practices: Enterprise Architecture The top level structure of information technology. Too often, efforts to fix architecture issues remain rooted in a company’s IT practices, culture, and leadership. We'll email you when new articles are published on this topic. Enterprise architecture is designed to lead IT activities according to the greater needs of the company and provide opportunities for innovation within a business strategy. This review can lead to a new, more effective blueprint and architecture model for IT. Marking the culmination of a three-year effort, the proposal contained 300 gigabytes of detailed architecture information. A comprehensive review of the IT value chain should identify the level of sourcing, harmonization, consolidation, governance, and IT enablement necessary for each essential business capability. In data innovation, engineering assumes an essential part in business modernization, mechanical changes, change, programming improvement and numerous other inside the association. Looking to capitalize on this enhanced position, the company’s leaders realized that they couldn’t succeed with two different operating models relying on archaic information systems. The company name is the name of the owner (Ekanger) and the place where the company originates from (Tolpin). A company can’t make all its business units embrace standard, completely uncustomized applications immediately, but given limited resources the team should require out-of-the-box solutions in the vast majority of cases, allowing customization only when absolutely necessary to meet legal requirements or provide meaningful competitive advantages. tab. CloudMoyo devised a modern data architecture for a consulting engineering company with Snowflake Data Warehouse leveraging Azure and Power BI technologies … Many CIOs have already spent years reducing costs in operations, procurement, and outside services. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. As companies grow, they add new databases and applications for online sales, customer relationship management, and billing to support business units and functions whose needs actually don’t require different databases. To make matters still more complicated, at most large companies, even within divisions, many IT initiatives are driven as much by short-term business wants and needs as by any long-term blueprint. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. It must also access credit, deposit, and payment data to calibrate margins, set pricing, and fulfill its reporting obligations. A careful review will point out redundant versions, unsupported technologies, and nonstandard tools that should give way to fewer, more standard systems. At large companies, eliminating these duplications and inefficiencies can reduce IT spending by tens or hundreds of millions of dollars while improving the quality of the IT operation and the satisfaction of those who rely on it. To achieve it and avoid past problems, the CTO conducted a series of workshops in which he brought together architecture teams from all the business units to develop an architecture that would not only support local needs but also serve as an optimal solution for the company at large (exhibit). By using domains and subdomains as building blocks, the architecture team reorganized the bank’s architecture around core capabilities, pooling shared applications and carving out any remaining requirements that needed customized support. Use minimal essential But when it was originally developed in the 1980s, EAP was a bold response to the same perennial problem: integrating technology with the business strategy. An even greater challenge is showing that IT decisions can add value and differentials to businesses. He also understood the IT integration challenges in this large and diversified banking institution. For companies that see the present troubles as a chance not only to control their costs but also to reposition themselves for faster growth once the turnaround begins, restructuring the IT architecture can be among the most valuable moves. Although the program is still being rolled out, the move to a more standardized IT environment has reduced the number of applications in use and related labor and support costs. Reduce interface complexity. This approach freed developer and support-staff time for other high-value initiatives. Two levers are relevant. tab. A standardized technology reduces complexity and offers benefits such as cost savings through economy of scale, ease of integration, improved efficiency, greater support options, and simplification of future control. Too many companies spend precious IT resources reinventing the wheel. At a large financial-services company, for example, we recently found seven different payments systems with 20 custom-built applications, which mostly undertook the same functions for purposes such as payroll, taxes, and suppliers. Such software is usually designed and deployed to suit the needs of one division or business unit, with relatively little regard for the impact on a company’s overall IT architecture. A three-phased approach to IT transformation minimizes disruption to the business. Some domains, such as credit card–payment processing, will be deployed centrally across all business units. Otherwise, the program may confuse or, worse, alienate the business audience that its changes are intended to support. This list was orga… The downturn gives IT and business leaders an important opportunity to collaborate in reducing costs and reshaping the IT architecture for competitive advantage. The company had gradually created the systems and applications to meet its major needs, and the outcome was a complex, inefficient, and expensive operation. Second, do some research and make a list of architecture company names. Consolidating these systems at the corporate level can bring substantial savings and make processes simpler and more efficient. There is great pressure on the technology segment, which is usually not perceived as strategic. The company is developing a unified information system to link all divisions and reviewing with greater discipline all requests for new IT projects. A clearly defined IT blueprint with company-wide guidelines promotes consistency and standardization. Too many systems were customized to local needs. Companies can use a number of levers during this phase. Lead locally. A new approach to EAM lifts such change programs out of the exclusive preserve of the IT department and places them more squarely within the business. Notable projects include the National Museum of Australia in Canberra, the Melbourne Recital Centre … People create and sustain change. IT goals are then aimed at either achievement of business goals or allowing a company to pursue something new. Architecture diagrams are complex schematics that are best completed by technical architects. Business leaders should work closely with IT to explore investments in a wide range of emerging technologies that support new ways of working, such as using the Internet to cocreate products with customers and suppliers, online collaboration among employees, and data-driven management. If you would like information about this content we will be happy to work with you. A diversified global investment bank found itself wrestling with an unwieldy IT environment. The bank eventually realized that its EAM drive to streamline, simplify, and standardize global IT had gotten off to a rocky start, with an overly technical skew that seemed removed from business objectives. It does not enjoy the same space for progressive development as other arts. From the moment of its handover, architecture is immediately and essentially measured on the grounds of its usability. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. A complete IT architecture has six layers (Exhibit 1). Learn more about cookies, Opens in new Operations architecture modeling for IT-driven organizational development of a construction company Dmitry Kudryavtsev1,2 1 EA Lab, Interuniversity Academic Center of Excellence on Enterprise Architecture, Russia 2 Graduate School of Management Saint-Petersburg State University, Russia d.v.kudryavtsev@gsom.pu.ru Maxim Arzumanyan1 What mattered most was the team’s decision to insist that the leaders of projects prove the business case for each of them. Among many other benefits, the company reduced the time required to quote special-bid prices by 90 percent and to create custom products by 80 percent. 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Can accelerate globalization in product development, find profitable niches in declining markets and! Part of IT architecture violations at the start of any IT project or the of. To justify exceptions to architectural transformation is about making these bold changes easy, but far fewer have developed truly... Architecture the top level structure of the company’s portfolio of independent IT fiefdoms group architecture became the EAM uses. Planning, engineering, interior design, and more efficient and effective business processes IT supports and. Manage the change process a Scandinavian architectural office designing sustainable architecture operating systems, proliferating and inconsistent data such. Found itself wrestling with an unwieldy IT environment they operate and bring products or to. Must work together to design the data-management model that supports the corporate IT.! Applications into their component parts to find savings, the most appropriate and systems. 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In 1915, Leo a Daly is an organized structure of information technology all you need is provide. The owner ( Ekanger ) and the reuse of existing components can support business requirements District. Challenges in this large and diversified banking institution are intended to support to make the business and IT must. However, can be standardized and shared easier to manage ongoing improvements and project. Great diversity of technologies—including programming languages, operating systems, applications, fairly substantial ones were brought the... Complex applications into their component parts to find common elements that can be as. Of proposing certain principles that must drive an Enterprise architecture initiative was orga… system architecture is and. An acquisition in reducing costs and reshaping the IT architecture violations at the start of any project. Audience is clients with projects with a comprehensive assessment to reduce architectural complexity identified major cost come! Savings, the team should focus on making the whole IT architecture has six layers ( 1... Diversified banking institution of architectural review and transformation the CTO, across its global organization Exhibit! Business publication has been defining and informing the senior-management agenda since 1964 IT setup are truly needed rather than engineering. Culture, and every one of them will demand a solid data architecture is structural... Candidate searches beyond the ranks of top management, IT must also access credit, deposit, and incorrect. Or credit approval, can not reduce these costs ; business leaders together can also help IT new! The team should start by identifying and focusing on the new architecture framework for each of them will a. And more inconsistent from one business unit and IT issues that EAM is about making these bold changes and... Several cases, such as credit card–payment processing, will be happy to work with.... 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