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The complexity dilemma in organizational design is the same as in IT systems design, and IT architects have since long mastered the various patterns that prevent complex systems from collapsing. This article will touch on typical challenges when transforming a business and how Enterprise Modularization Modularity can reduce the complexity of legacy structure to enable success in the new digital era. Executives need to must take advantage of well-known architectural patterns and enforce forms relevant to the Digital Age.
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"Organizations that manage IT delivery as projects instead of products are using use managerial principles from two ages ago and cannot expect those approaches to be adequate for succeeding in this one. Visionary organizations are creating and managing their Value Stream Networks and product portfolios to leapfrog their competition in the Age of Software."
― Mik Kersten, Project to Product: How to Survive and Thrive in the Age of Digital Disruption with the Flow Framework
The long tale of legacy
Naturally, large organizations that produce complex products Organizations producing long-lived consumer products, typically cars, have the most significant challenges. Under the hood of these organizations, there are many systems to a vast number of systems support the operational value streams. All tighs together in a product structure which is the backbone for making it all work in operations. The designs have been built around working culture and the main idea of the consumer offering. After a few years in business, most organizations have a long tale of legacy systems that generally will be around for decades.
The backbone of the supporting systems is a product structure that carries information through the supply chain, production, development, finance, sales, distribution, and aftermarket. Especially companies with long-lived consumer products have a substantial legacy of supporting systems.The most prevalent supporting system is the ERP system needed in all organizations. On top of the built-in To exemplify, imagine a consumer business that has:
Retail and service shops worldwide
100 product variants
30,000 physical parts
One thousand suppliers and five factories worldwide
A consumer base of two million people and 300,000 organizations
100 critical integrated supporting systems, some behind the times
a Product that contains one million lines of program code distributed in 30 embedded computers
a market that expects product support for at least ten years
emerging digital services which are forecasted to be the future cash cow
a hurried need for a new subscription-based service and pricing structure
All these and much more need to be addressed when developing and maintaining the supporting systems.
The most prevalent supporting system is the ERP system needed in all organizations. On top of the built-in functionality, an ERP system can have numerous system integrations and adaptions associated with internal working procedures. Maintaining, developing, and sometimes replacing an ERP system can consume a lot of effort with internal and external resources. How long time does it to adapt the ERP to a new business model in your organization?
The image below shows the generic Value Creation Structure Besides the ERP, many more systems consume resources to purchase, install, develop and maintain. The image below shows the generic Value Creation Structure of any product-developing organization. The model is a summary of Value Streams and Systems. The latter in yellow is divided in
The Product; usually is a wide range of systems facing the customer. New products are continuously presented in the competing market simultaneously as existing products need to must be maintained.
The internal Product Development platform is closely connected to the Product and is sometimes maintained by the same people as in the Product Development Value Stream.
All other Other supporting systems for development and operations construct the long tail of legacy that occasionally gets disconnected from the Product.
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When All levels of the Value Creation Structure must be considered when governing an organization that develops end-user products, all levels of the Value Creation Structure must be considered. The crucial connection between Product Development Value Streams and Supporting Development Value Streams is challenging to manage and often not understood.
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Companies generally understand the urgency to have a structure including support systems up to speed. The big question is: "How can we know how our the future support systems should work when it the future product is unknown what the future products look like??" And they start to investigate what future infrastructure they need. Meanwhile, the market is adapting faster and faster.
Many companies do invest in transforming how their infrastructure is maintained and developed. Many success stories show how Lean, Agile, and DevOps have reduced lead time, increased quality, and other business benefits. Regardless of how well you succeed in improving improve system development, the tale of legacy is, in most cases, far too long to manage a Value Stream Network and achieve Business Agility.
Cadence and Sync are key to alignment
If you have been involved in an Agile transformation, you have likely seen the struggle to deliver working Features within a short period. It can be hard enough for an Agile Release Train to finalize Features within a Program Increment. But, in a sizeable Lean-Agile organization, the ability to quickly deliver working Features across several domains in multiple Release Trains is needed to accomplish Cadence and Sync.
To develop a Feature, the There is always an end-to-end flow starting when developing a Feature. The flow starts at a trigger and ending with to delivery, where value may be ends when a value is utilized. There may be islands in the flow where mature Agile teams do an excellent job. But as long as the when teams cannot observe and influence the entire end-to-end flow, teams they will lose the context of for their delivery . Cadence and Sync is the way and cannot learn from the market. With just local optimization, any company-wide transformation will fail.
Cadence and Sync is the way to create alignment through short feedback loops that provide the necessary learning. Without fast and frequent feedback, the dream of Business Agility flies out the window.
The following image demonstrates a typical mature scenario where the development of the Product, including the development platform, has reached Cadence and Sync. Each bar represents an end-to-end development cycle that provides a feedback loop. The Supporting Systems are still scattered in different development models and are far from reaching any Cadance and Sync.
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You may think that the Supporting Systems is a platform with a well-defined interface that does not need to be in Sync with Product Development. Then imagine a consumer product that has:
retail and service shops worldwide,
100 variants,
30,000 physical parts,
One thousand suppliers and five factories.
one million lines of code in distributed in 30 embedded computers,
emerging digital services,
100 critical integrated supporting systems,
a hurried need for a new product and pricing structure.
Does your organization have an overview of what systems need to be developed in Cadence and Sync to benefit from full feedback in your Value Stream Network?
Modularization
Modularization is not a new invention, nor is it unknown. It is
Does your organization have an overview of what systems need to be developed in Cadence and Sync to benefit from full feedback in your Value Stream Network?
Why is the concept of Modularity not utilized more?
Modularity is a fundamental concept in nature as well in business. Modularity reduces complexity by clarifying purposes, interfaces, and responsibilities. A modular description makes it possible to understand one single entity in-depth without detailing the whole system. While Modularity is intuitive for a human brain, conscious utilization is surprisingly low.
IT architects are on top of the Modularity concept, which is also widespread in Product Management. But when moving into Business Architecture, Modularity is hardly mentioned in industry-standard frameworks and organization charts. Instead, the focus is on processes and functional silos.
The concept of Modularity is a prerequisite for making it all work in many industries, like the automotive business with its large clusters of component suppliers.
An improved Product Development Flow in a large complex organization can not only be based on reshaping the organization and within the existing company.
The solution for an improved Product Development Flow in a very enterprise setup cannot only be to work harder on defining Value Streams and improve ways of working.
The problem with a complex monolith organization is, in principle, the same as system architecture.
When speaking about enterprise modularity, it seems as if it is something owned by IT.
Modularized architecture is not something that solely belongs to IT, it is as important for Business Architecture.
Instead, a macro-level view of Value Streams and Modularized Business Entities can clarify business structures and create better options for a successful Lean enterprise.
Modularization with viable business interfaces will reduce the complexity and remove the limitations any system ultimately will reach. The strategic forming of new business entities requires decisions on the highest level of authority and must be supported by business architecture competency.
The figure below shows the high-level structure of two businesses where the flow of value a forced to take very different routes. There are Operational Value Streams (OVS), Development Value Streams (DVS), and the Supporting Systems and Products needed for development and operations in both alternatives.
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Any business is built on Operational Value Streams (OVS), Development Value Streams (DVS), and the Supporting Systems and Products needed for development and operations.
Executives on enterprise-level and below continuously put a lot of effort into improvement programs. Consultants are hired, change initiatives are launched, the staff is trained, and much more is done.
and making sure structures are flexible and may be adapted afterward.
Succeed with the projects that are always the top decisions and
Regardless of Agile team performance, the Development Value Streams are too long and too far away from where the customer actions are.
The uncertainty of features of a system that can support the development and execution of a business with complex products is high and no one knows how to specify the systems.
By taking a high-level view of value streams in a typical automotive business we can explore the challenges in business architecture.
The human side of Modularization
Managers want to be a part of an organization that faces a new market. Where the money is
The role is to serve not to rule the customer-facing
Monolith enterprise with Value Streams & Systems
The concept of value streams can help to understand how an enterprise operates.
An enterprise in the automotive market has operational Value Streams much the same as any product-oriented business. However, the Product is complex with eager competitors, a global market, long life, demanding customers, regulations, and more.
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Therefore, the systems supporting the operational systems are also very complex and integrated with internal and external systems and the car, which in itself is the most important system.
The development of the car and the supporting systems are two separate value streams with different characteristics. Nevertheless, the Value streams are very interdependent and steered towards the same objectives.
Selling new digital services in completely different channels and business models than in the past requires supporting systems with other structures and flexibility than in the past.
In one monolith enterprise, the lead time for creating the required new structures is far too long compared to what speed of the market.
Modularized business models
We have seen this happen in many industries before. Telecom may be the clearest example of infrastructure providers, operators, and then Google and Apple at the top. Also, the automotive business has modularization in its blood and the industry is based on component suppliers that work for a multitude of brands. But will the brand owners be able to take the next leap to the top of the value pyramid, or will they become a commodity?
Modularized enterprise with Value Streams & Systems
To modularize a large business and work with a well-defined interface between the basic Product and the customer-facing digital services would create many advantages.
The base component may develop a container interface to make it possible for the satellite component to deploy and execute code inside the car. Just as cloud computing, where servers provide containers.
Services based on the in-car purchases will drive new revenue streams and partnerships.
The classic architectural principle of low coupling and high cohesion can be used for driving organizational design.
Conway's law is another applicable guide for understanding how the organization and products should be set up.
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Besides the chain of events in a system, the dimension of Modularity is vital to understanding the relations, purpose, and responsibilities of systems thinking
https://en.wikipedia.org/wiki/Systems_theory
Standardized products are a fundamental business driver and enable many suppliers to compete to deliver one or more modules more cheaply and quickly.
Because standardized interfaces exist, different companies can provide products for each system piece.
https://en.wikipedia.org/wiki/Conway%27s_law
Product Modularity Theory has been around for ages, and if it’s done right, it is a mirror of organizational architecture.
Unfortunately and surprisingly, Modularity is not a top-of-mind guide to organizational design. Executives seem to be more eager to create functional responsibility than modular responsibility. Nor is taking into account consultants scaled agile ect
The problem with a complex monolith organization is, in principle, the same as system architecture.
When speaking about enterprise modularity, it seems like something owned by IT.
Modularized architecture is not something that solely belongs to IT; it is as essential for Business Architecture.
...
When modules are done right, ready-made, and reusable, they shorten Value Streams and enable cadence and Sync.
The solution for an improved Product Development Flow in the same enterprise setup cannot only be to work harder on defining Value Streams and improve ways of working.
An improved Product Development Flow in a large complex organization can not only be based on reshaping the organization and within the existing company.
Instead, a macro-level view of Value Streams and Modularized Business Entities can clarify business structures and create better options for a successful Lean enterprise.
Modularity with viable business interfaces will reduce the complexity and remove the limitations any system ultimately will reach. The strategic forming of new business entities requires decisions on the highest level of authority and must be supported by business architecture competency.
The figure below shows the high-level structure of two businesses where the flow of value a forced to take very different routes. Operational Value Streams (OVS), Development Value Streams (DVS), and the Supporting Systems and Products needed for development and operations in both alternatives.
...
Any business is built on Operational Value Streams (OVS), Development Value Streams (DVS), and the Supporting Systems and Products needed for development and operations.
Executives on enterprise-level and below continuously put a lot of effort into improvement programs. Consultants are hired, change initiatives are launched, the staff is trained, and much more is done.
and making sure structures are flexible and may be adapted afterward.
Succeed with the projects that are always the top decisions and
Regardless of Agile team performance, the Development Value Streams are too long and far from where the customer actions are.
The uncertainty of features of a system that can support the development and execution of a business with complex products is high, and no one knows how to specify the systems.
By taking a high-level view of value streams in a typical automotive business, we can explore the challenges in business architecture.
The human side of Modularity
The obvious fracture plane is to split the business monolith into the consumer-facing service business and the legacy component.
...
Managers want to be a part of an organization that faces a new market. Where the money is
The role is to serve, not to rule the customer-facing
Monolith enterprise with Value Streams & Systems
The concept of value streams can help to understand how an enterprise operates.
An enterprise in the automotive market has operational Value Streams much the same as any product-oriented business. However, the Product is complex with eager competitors, a global market, long life, demanding customers, regulations, and more.
...
Therefore, the systems supporting the operational systems are also very complex and integrated with internal and external systems and the car, which in itself is the most important system.
The development of the car and the supporting systems are two separate value streams with different characteristics. Nevertheless, the Value streams are interdependent and steered towards the same objectives.
Selling new digital services in completely different channels and business models than in the past requires supporting systems with other structures and flexibility than in the past.
In one monolith enterprise, the lead time for creating the required new structures is far too long compared to what speed of the market.
...
Modularized business models
We have seen this happen in many industries before. Telecom may be the clearest example of infrastructure providers, operators, and then Google and Apple at the top. Also, the automotive business has Modularity in its blood, and the industry is based on component suppliers that work for many brands. But will the brand owners be able to take the next leap to the top of the value pyramid, or will they become a commodity?
Modularized enterprise with Value Streams & Systems
To modularize a large business and work with a well-defined interface between the basic Product and the customer-facing digital services would create many advantages.
Separate ERP systems that can support different business models
Time to invest in quality rather than rebuilding the structure of legacy systems
Possible to create fast end-to-end customer delivery and feedback
Shorter time to market
Keep structures and make sure there is time for quality enhancements
More choices
Separate decision making
Different drivers
Flexibility
Clear and open dependencies
Goals and strategy
Adaptability
Mer passande architecture
Decentralizing
Grundare hierarchy
Everyone is working closer to the end business case
Smaller "tribes" with collaboration on the right level
Isolate failure
Understand business drivers
Separate compliance responsibility
The right decision level
The power needed to rebuild fundamental organizational structures belongs to the highest decision-making level. Determination to form new business entities is often for the board to The base component may develop a container interface to enable the satellite component to deploy and execute code inside the car. Just as in cloud computing, where servers provide containers.
Services based on the in-car purchases will drive new revenue streams and partnerships.
The classic architectural principle of low coupling and high cohesion can be used for driving organizational design.
Conway’s law is another applicable guide for understanding how the organization and products should be set up.
Advantages of a Modularized enterprise
To modularize a large business and work with a well-defined interface between the basic Product and the customer-facing digital services would create many advantages.
Separate ERP systems that can support different business models
Time to invest in quality rather than rebuilding the structure of legacy systems
Possible to create fast end-to-end customer delivery and feedback
Shorter time to market
Keep structures and make sure there is time for quality enhancements
More choices
Separate decision making
Different drivers
Flexibility
Clear and open dependencies
Goals and strategy
Adaptability
Mer passande architecture
Decentralizing
Grundare hierarchy
Everyone is working closer to the end business case
Smaller “tribes” with collaboration on the right level
Isolate failure
Understand business drivers
Separate compliance responsibility
The right decision level
The power needed to rebuild fundamental organizational structures belongs to the highest decision-making level. Determination to form new business entities is often for the board to engage in corporate design and decide about the business model and principles for operations.
Unfortunately, board members seldom engage in business architecture, nor do they have the expertise to model and explore alternatives. Their alternative is to expand the C-level's level’s strategic authority and reshape business structures.
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Unfortunately, board members seldom engage in business architecture, nor do they have the expertise to model and explore alternatives. Their alternative is to expand the C-level's level’s strategic authority and reshape business structures.
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Coaches are running around helping to coach individuals and teams and facilitate training.
Not saying it's it’s going bad. Many nice things emerge, people are happier, and organizations can measure their progress. But compared to the reachable outcomes, what we celebrate is far from….their progress. But compared to the reachable outcomes, what we celebrate is far from….
Writing atoms
We can see that when delivery gets too complex when management kids a lot of singles that things are not happening with speed in their organization. The solution is often to appoint point new managers for a certain area.
You don’t have to be a rocket scientist to understand that these new areas new responsibility’s is not part of the actual flow it doesn’t delegate power nor knowledge to wear to work gets done it’s creating new silos.
It takes time to establish often the map of these areas he just started up time where stuff is store is but not hired but gathered <something>
any start up time and the new area went formed may not work exactly ask the initially intention since change always happen
Summary
References
https://en.wikipedia.org/wiki/Modularity
https://www.pega.com/insights/articles/applying-microservices-principles-your-business-architecture
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The enterprises that have been around for a while , normally have plenty of legacies, both technical and structural legacies. The legacy is hindering hinders business agility because the systems are not designed for the complex area of digital services.
Enterprise and business architecture frameworks offer little support for the high-level models needed. The frameworks seldom cover strategic relations and interfaces between entities within a corporate group.
An Enterprise's Enterprise’s foundational structure, Macro Structure, is the strategic prerequisite that controls the workings of an organization. form Form Business Models, Value Streams, and other fundamentals needed to develop and operate a business.
Industries like Automotive, Aircraft, Aerospace, Defense, and more have an increasing need to deliver with both speed and quality.
Toolchain measure progress
Compliance is another field ta
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