Abstract
If you have been involved in an Agile transformation, you have likely seen the struggle to implement Cadence and Sync. This ability to deliver in Cadence and Sync means that usable Features can be deployed within Value Streams and ultimately across Value Streams. Without Cadence and Sync, Alignment through short feedback loops will halt. And without the short feedback loops, the dream of Business Agility flies out the window.
A huge obstacle to reaching the Alignment is the legacy structure including supporting systems. Especially in large organizations that produce complex products, the development of supporting systems is a challenge. Regardless of well you succeed in Agile abilities, the tale of legacy is far too long to be organized around value with effective Development Value streams that can execute in cadence and sync.
While the whole world is talking about Digitalization and the Fourth Industrial Revolution where Value Networks have an entirely different shape and scope.
An Enterprise Macro Structure is overlaying business ideas and the formation of business units and their interfaces to external parties.
A strategic obstacle is the long tail of legacy systems and outdated structures
An Enterprise’s foundational structure, Macro Structure, is the strategic prerequisite that controls the workings of an organization. form Business Models, Value Streams, and other fundamentals needed to develop and operate a business.
This article will touch on typical challenges when transforming a business and how Enterprise Jet Streams can reduce the complexity of a legacy structure to enable success in the new digital era. I will show how well-known architectural patterns can be used at the highest management level.
The solution to a very complex enterprise setup cannot be to work harder on defining value streams and continue to accelerate the Product Development flow. Instead, a macro-level view on value streams and the formation of modularized business entities can clarify business targets and create far 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.
Background
Large organizations that produce complex cyber-physical systems have, like all other organizations, a need to transform their ways of working. Typical industries where development speed and quality are essential are automotive, aircraft, aerospace, and defense. New competitors with less legacy are just around the corner to introduce entirely new services. The all too well-known disruptive pattern will play faster in the digital age.
In order to grasp the challenges, leaders and change agents need to recognize the operational systems and structures that enable organizations to perform. Especially companies with long-lived consumer products have a substantial legacy.
Under the hood of these large organizations, there are a large number of systems that are needed to control the entire operational value stream which typically consists of the supply chain, production, development, finance, sales, distribution, and aftermarket. All tighs together in a product structure which is the backbone for making it all work.
To unleash innovation and get a new product out the door, it is not just the product development in itself that needs to become faster and more reliable. It is also the long long tail of supporting systems that must be upgraded. But, there is no time to investigate what operative structures are needed nor how the supporting systems should work. The focus needs to be on exploring what customers want.
When speaking about enterprise modularity it seems at it is something owned by IT
Modularized architecture is not something that solely belongs to IT, it is as important for Business Architecture.
The figure below shows the high-level structure of two businesses where the flow of value a forced to take very different routes. In both alternatives, there are Operational Value Streams (OVS), Development Value Streams (DVS), and the Supporting Systems and Products needed for development and operations.
It requires skills in Business Architecure, mandate to make strategic decisions and the guts to do it.
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.
The power needed to rebuild fundamental organizational structures belongs to the highest level of decision-making. The board is usually determined to form new business entities to engage in organizational 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 strategic authority and reshape business structures.
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 right decision level
The power needed to rebuild fundamental organizational structures belongs to the highest level of decision-making. Determination to form new business entities is often for the board to engage in organizational 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 strategic authority for the C-level and to reshape business structures.
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 very 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, as well as 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 much interdependent and are 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 is maybe the clearest example where there are 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.
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
Summary
References
https://www.pega.com/insights/articles/applying-microservices-principles-your-business-architecture
https://en.wikipedia.org/wiki/Organizational_architecture
https://en.wikipedia.org/wiki/Federated_architecture
Old
Large organizations that produce complex products, naturally have the biggest challenges. Over time, their supporting systems that enable operations have become a legacy that heavily interferes with Business Agility. Regardless of excellency in transforming into Lean-Agile development, the burden of the legacy structure is a strategic obstacle that inhibits execution in cadence and synchronization. Thus, removing the benefits of enabling short feedback cycles as the underlying idea in Lean and Agile.
The enterprises that have been around for a while, normally have plenty of legacies, both technical and structural. The legacy is hindering 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.
At most companies, IT support for business processes has been cobbled together in a series of unrelated IT projects. Some projects build application silos; others link them together. The result is a highly inflexible IT architecture. Most IT and business executives agree that a more modular architecture—where IT-enabled business processes are plug-and-play components that can be used to meet changing business demands—provides far more capability for companies to grow rapidly and profitably. But inflexible legacy systems and processes are impeding progress in building modular IT and business capabilities. Firms wanting to move toward a modular enterprise architecture face a multi-year evolutionary process.2 Building modular capabilities is a gradual process and is often slowed down by the tendency to invest in immediate business needs rather than long-term capabilities. As a consequence, few companies have achieved a modular IT and business environment.
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