EA Principles – January 2013

IntroductionTo survive and be competitive any business must be adaptable. It requires the agility to quickly take advantage of new or changing business opportunities. While the importance of business agility is well understood, achieving it is a difficult and ongoing challenge. To develop and share the same Business Innovation Canvas is a key to success. This is also valid for the EA business. The fundamental resource in EA is the structural capital, focusing on “why, how, what” including all related IT solutions.

When developing the Canvas to innovate the EA business, we use it in the same way as we innovate any other business. The Canvas is a shared language for describing, visualizing, assessing and changing a Business Innovation Model. The Canvas describes the rationale of how a business creates, delivers and captures values. The nine building blocks cover the main areas of a business: customers, offer, infrastructure and financial viability.

Your EA Canvas

In this article we will focus on five of the nine building blocks of special interest when creating the EA Canvas:

  1. Customer Segments
  2. Value Propositions
  3. Channels
  4. Customer Relationships 
  5. Revenue Streams
  6. Key Resources
  7. Key Activities
  8. Key Partnerships
  9. Cost Structure

Your Customer Segments (#1)
The Customer Segments building block defines the different groups of people a business aims to reach and serve. For whom are we creating value? Who are our most important customers? For EA, most of the customers are internal. We sometimes call them stakeholders.

In your EA business you serve customer segments like CEA/top management, business innovators, business process owners, requirement specifiers, IT developers and others. In each customer segment, you may identify the individual customers and treat them individually.

Your Value Propositions (#2)
What value do we deliver to the customer? Which one of our customer´s problems are we helping to solve? Which customer needs are we satisfying? Which value propositions are we offering to each customer segment or to a specific customer?

For example, the value propositions to CEA/top management may include:

  • Fast risk reduction of potential business changes
  • The basis for prioritizing changes
  • Cost reduction of operating business solutions
  • Agility based on stability and common business solutions
  • Knowledge and information about the structural capital

For the business process owners, the value proposition may be:

  • Cost reduction of operating the business solutions
  • Agility based on stability and common business solutions
  • Knowledge and information about the structural capital
  • Standardizing of business processes when desired
  • Plan common solutions to be developed

Focus on your Customer: A specific value proposition may serve one or many customer segments. A specific customer within a customer segment may want to be served a specific value proposition. Alexander Osterwalder has developed his Canvas further to cover this. You start by making assumptions about, for example, your CEO and his pain, gain and the job he is trying to get done. Test your assumptions when meeting your customer. Try to keep the conversation around your value propositions without digging deep into your structural capital and how you model it! See the capital as a means to deliver your customer value and a very critical means!

Get to know your customer to find out which is the value proposition that gives value to him or her.

Your Key Resources (#6)
What key resources does your value proposition require? Maybe a structural capital in good order is necessary to create any of the value propositions you offer your customers or you will fail and the EA effort will fail.

In your EA business, the structural capital is the key resource. It consists mainly of the Canvases (why), the Business Processes (how), the Information resource (what) and the IT solutions.

The value of your structural capital is basically depending on good order. The main factor is that a specific information resource like customer or product is only captured once. To capture the same information many times is costly, creates low quality and delays changes in your business.

This is a very important EA principle to be governed, adding value to your structure, and will keep the structural capital in good order. The average value for the 156 Enterprise Architectures we have studied since 1984 is about 5. That means a customer may be captured 5 times in 5 different IT solutions. Reducing this number adds value to the structural capital and will substantially reduce your operating and maintenance cost to secure the data and information quality and will make your business more agile.

Your Key Activities (#7)
What key activities do our value propositions require? Maybe the ability and competence to develop and keep your structural capital in good order is your most important key activity beside your ability to create value propositions meeting the need of each EA customer.

Most EA value propositions are based on a structural capital in good order. There are a number of key activities critical to develop and keep your capital in good order. The activities to create good models (the canvas, the process models and, maybe most important, your information models) are extremely important. There are also a number of “soft” activities that are key success factors. Establish good relationships with EA customers and share your knowledge with them. To reach fruitful agreements with the program and project leaders on how to create common IT solutions is another key activity.

Your Revenue Streams (#5)
For what value are our customers really willing to pay? Should your EA customers pay anything at all or is the value proposition for free and the EA resource paid by the overall business budget? Does EA have an investment budget and pay for the development of common solutions?

In the EA Canvas, this a difficult building block. My recommendation is that the cost to run EA should be paid from your central budget and not by any customer receiving your value proposition.

Even more difficult is the investment in common solutions. When an IT project is asked to create a common solution adding cost and maybe time to their project, this part of the project may be paid from a central investment budget. Please, study and learn from the car industry when they develop their common Product Master Data, reducing the development time of a new car model from 3 to 5 years by 50%.

Further ReadingsI strongly recommend that you read:

Business Model Generation by Alexander Osterwalder, 2010
IT Savvy – What Top Executives Must Know to Go from Pain to Gain by Peter Weill and Jeanne W. Ross, 2009
Sell Business Results, Not Architecture by Leonard Fehskens, 2012

 
Key Findings and Key Success Factors
Coordinating “Why, How, What”

When cooking you want all your ingredients in good order at a specified quality. As a chef you know all about your cooking process. But what does your customer expect – McDonalds or a Michelin-starred restaurant?

It is very common to focus on either the Canvas, or the business processes or the information resource separately. The real value is only achieved when you are able to combine them. The Canvas adds innovations, the processes add customer value, and the information resource adds stability to your structure. Together they bring your structural capital into good order, making your business agile to meet your customer expectations now and in the future.

This article describes how the Business Innovation Canvas may be used to innovate your Enterprise Architecture toward a more scientific profession.

If you want to take an active part or just follow the future development, just send me an email.

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About Eskil Swende

Eskil is main partner at IRMÊ, a Scandinavian consulting company focusing on Enterprise Architecture and the Innovation Process. He is also a partner at IRM UK, a strategic education company in London that provides seminars and arranges yearly conferences on EA, IA, MDM and BPM. Eskil is President of DAMA Chapter Scandinavia and has developed a global wisdom network of leading experts inside and outside DAMA, inviting them to give presentations and tutorials in Scandinavia. He can be reached at Eskil.Swende@irm.se.

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