The history of IT and tech has been characterized by evolving design, from the 1950s’ centralized mainframe to the modern systems driving the application programming interface (API)-based economy. Today, with increasingly smaller pieces of technology and more standards-based interactions that reduce or remove human interaction, organizations are finding that long-term success hinges on a business structure and IT systems that are adaptive by intention and by design – it cannot be achieved any other way.
The modern tech footprint centers on applications and enabling technology without regard to whether computing assets are in the cloud or on premise. These building blocks of IT either seamlessly fit together and allow the organization to adapt, share data and integrate with internal and external systems, or they don’t. There is no middle ground. There simply is no room for organizations to consume excessive amounts of human and financial resources to maintain systems that are complex, fragile and difficult to integrate.
This footprint bears little resemblance to IT before the 2000s, when enterprises developed their IT architectures in an ad hoc process focused on solving a single, specific problem. The piece-by-piece approach to developing IT solutions has left a legacy of complex systems and an unsustainable cost of ownership. This approach has yielded an ad hoc architecture that is difficult to change and unresponsive to evolving business needs, and organizations are finding it impossible to achieve the level of integration in systems, business and data needed to drive the next 15 to 20 years of competitive success.
The evolution has fundamentally altered how businesses use technology and what their expectations of IT are. Organizations are increasingly moving from the use of physical data centers to the virtual data centers that reside in the cloud, delivering asset-free computing that is more adaptable, with a significantly lower cost of ownership. The introduction of the API economy allows business enterprises to extend their operations through system-to-system interactions: APIs in use by FedEx and UPS allow retailers to integrate with the shippers directly from their shopping carts, and Apple’s App Store APIs allow members of its Affiliate Program to search the store and earn revenue from purchases generated from clicks on their sites. Google Maps’ API has similarly expanded its reach by enabling websites to embed maps into their pages. With 2.8x growth year-over-year1, these interactions are driving how enterprise applications are developed.
In today’s business environment, demand for new services and capabilities is changing more quickly than ever before, and shifts in business models and evolving technology are changing the landscape across industries. With the steep increase of data accessible to the corporation, organizations are creating extended enterprises by integrating their operations across systems and environments. Internally, automation and orchestrated interactions replace complicated and less structured activities, and externally, companies are increasingly collaborating through more open and interconnected business models.
With such rapid digital transformation underway, optimizing the tech footprint requires an intentional design, not at ad hoc one. At its heart, the technology needs to enable business functions and allow the organization to roll out new capabilities as quickly as possible. The core computing platform, the infrastructure, becomes an undifferentiated utility, and applications are decomposed into component building blocks that are easily configurable into new solutions for the enterprise. This can’t be accomplished unless the architecture is designed intentionally.
The pathway to intentional design requires parallel considerations:
• Investment portfolio decision-making. A thoughtful investment strategy allows you to know what your architecture is, what you want to have control over and how it drives costs. Any significant architecture transformation requires a multi-year perspective on how it is funded, sustained and executed. It also requires the ability to deliver in-year returns and continuous change. With intentional design, projects are funded to achieve an outcome, whether it be driving the business in a new direction or transforming the tech portfolio in order to effect change.
• The application of controls over the types of technology capabilities you bring into the organization. When the IT footprint is designed intentionally, the complexity of the application portfolio is intrinsically linked to the complexity of the business. The IT architecture is specifically designed to enable the business architecture by building the minimum viable product that delivers a specific and reusable business service. It allows you to adapt to an evolving business environment and an evolving technology set, as Airbnb did: The company’s founders realized that platform technology made it feasible to craft an entirely new business model that would challenge the traditional economics of the hotel business.
Case Study: A Different Approach to Governing
One of the nation’s largest financial institutions came to North Highland to assist in developing a corporate wide IT strategy to address issues raised in regulatory reviews, improve the safety and soundness of computing platforms, increase the speed to market for developing new solutions, update aging technology platforms, and improve financial resource allocations across the enterprise. Each of these challenges were important in their own right, but a different approach to governing the application of financial and human capital was needed.
North Highland leveraged its deep expertise in information technology, IT management and delivery processes and the financial services industry to help the client develop a new strategic framework, operating model, and governance framework that for the first time would move critical strategic technology decision making and delivery functions from individual lines of business to the enterprise level. Our approach included senior executive interviews, industry research, analyzing business challenges and opportunities and the IT-related enablers or roadblocks that would need to be addressed in a future-state Target Operating Model (TOM).
Through this work, a new TOM emerged that would support this Fortune 50 financial services organization strategy to become a digital leader in the industry. North Highland led the development of the client’s strategy and roadmap of initiatives to achieve it, including:
• Re-platform or retire aging systems
• Adopt technology strategies that would improve resiliency, reliability, adaptability and safety
• Consolidate and centralize key enterprise services to improve quality, cost and reusability
• Define new operating disciplines and practices for managing and governing the funding of IT initiatives
• Enhance a culture of one team dedicated to the service of enterprise business stakeholders
North Highland helped the client prioritize these initiatives as part of an implementation roadmap, supported by a flexible investment governance framework to ensure alignment with corporate strategic pillars.
Sustaining transformation in your tech portfolio includes four components:
1. Strategy: Drive in-year return on investment. Design an approach to identify and demonstrate success early on and build from it.
2. Discovery: Focus on measurable value. Determine metrics – both qualitative and quantitative – to show what you’re getting from your efforts.
3. Delivery: Agile approach to execution. Assess, hypothesize and pilot quickly so that you can begin executing against performance opportunities in the shortest time possible.
4. Operations: Drive sustainable results. A collaborative process ensures that the entire organization is “bought in” and an ongoing feedback loop is in place so that good results stick.
No one can predict the future. Being future-proof is possible only by building capabilities designed to be adaptable and responsive to change. Intentionally defining and governing your enterprise architecture as such will allow you to build technology capabilities that will drive results well into the future.