System architecture is the structural design of systems. After defining a new, integrated global operating model for sales and distribution, the supply chain, product-life-cycle management, and postsales service, the company implemented it with a streamlined IT architecture. The investment-banking division, for instance, saw itself as having little in common with other units in its core activities, such as securities settlement and online transactions, even though underlying capabilities turned out to be similar across the business. It must also access credit, deposit, and payment data to calibrate margins, set pricing, and fulfill its reporting obligations. People create and sustain change. The third and most ambitious phase of architectural transformation is about making these bold changes. That operational reality is especially evident for applications software and the business processes it supports. When companies look solely to the IT function to find savings, the results are often limited. 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. In all, the effort is on track to provide a return on investment of more than 50 percent, a reduction in time to market of at least 30 percent, and additional organizational benefits, including better alignment between business and IT. Determined to correct the problem, the IT team put aside the small print and binders and turned to simplified graphics that highlighted key management questions. Learn about the day-to-day activities of an architecture firm owner, the typical target market, growth potential, startup costs, legal considerations, and more! Flip the odds. 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. In many companies, the great diversity of technologies—including programming languages, operating systems, and integration tools—creates tremendous inefficiencies. Enforce out-of-the-box solutions. The product-management department, for instance, must be able to examine account information on an integrated basis to see how well a given product is being received in different geographies and customer segments. Enterprise architecture management (EAM) is a framework for managing IT architecture that strives to align the needs of both IT and the business. In the best cases, companies codify it in a compendium—a blue book—that details the workings of the six layers, as well as the processes, roles, and responsibilities for managing the whole. Such firms typically hire architects along with support staff who help the architects do their jobs, and they may be part of a larger company which handles many aspects of the design and construction process, from contracting to interior decorating. There is great pressure on the technology segment, which is usually not perceived as strategic. Consolidating these systems at the corporate level can bring substantial savings and make processes simpler and more efficient. Developing and enforcing these guidelines helps companies to create a consistent and standardized infrastructure and to minimize unnecessary complexity, duplication, and costs (Exhibit 2). Decommission little- or never-used applications. Too many projects adopt customization as a first rather than last option. The team should include all key stakeholder groups, with representatives at a sufficiently high level to make strategic decisions on their behalf. In the interest of minimizing disruption and maximizing benefits, we suggest a three-phase approach, beginning with the easier changes and working gradually toward more substantial ones (Exhibit 3). Greater flexibility, faster times to market, and more efficient and effective business processes will outlast the downturn. 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. ARM Architecture or Ashton Raggatt McDougall is an architectural firm with offices in Melbourne, Sydney, and Adelaide, Australia.The firm was founded in 1988 and has completed internationally renowned design work. 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. As demand for custom application development spiraled, so did complexity. having been experimenting with digital fabrication for a while now, d*haus company wanted to test and incorporate automated CNC construction ideas in this project. 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. A serious review of the existing project portfolio will probably uncover a number of opportunities to reuse existing solutions and build a common repository of services and solutions. Too few business processes were in compliance with company standards. Most companies have a global business, but far fewer have developed a truly global IT operating model that supports the corporate strategy. As a first step in the reform campaign, the IT department mapped the bank’s current state, charting the jumble of platforms, hardware, software, and network applications in use at the time. Use minimal essential Most companies have an IT architecture, but few control it. tab. At one large consumer products company, for example, such a joint initiative to combine, consolidate, and rationalize disparate IT systems across business units led to a drastic reduction in the size of the IT staff (by more than 50 percent in the application-management area) and inventories of spare parts, increased leverage in negotiating discounts with suppliers, and the faster completion of new IT initiatives. When business managers participate in the review, CIOs can determine how many licenses are truly necessary, retire those that aren’t, and then negotiate deeper discounts by consolidating licenses. The rest—core functions such as settlements, payments, and central IT—were shareable. An inventory of licenses should uncover idle, underused, and even incorrect ones. 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. Subscribed to {PRACTICE_NAME} email alerts. The data architecture guides how the data is collected, integrated, enhanced, stored, and delivered to business people who use it to do their jobs. The target audience is clients with projects with a sustainable profile. When Eisner commissioned prize-winning architects to create new designs for Disney worldwide, the ideas baked into modern architecture were brought to the masses. Digital upends old models. Candidates for retirement include business applications that have rarely or never been used over the past year. System upgrades—a frequent occurrence in light of fast-changing regulatory and marketplace conditions—proved a major headache, given the inadequate IT architecture landscape. We are problem solvers, and most importantly, skilled listeners. Please email us at: McKinsey_Website_Accessibility@mckinsey.com, Exhibit 3 Our flagship business publication has been defining and informing the senior-management agenda since 1964. our use of cookies, and The following are illustrative examples of system architecture. EAM provides a governance model for IT change. Most transformations fail. And IT rarely matched best industry practices. architecture at that company? The company had just purchased another international business, vaulting the combined entity into the top five in its industry, with more than 20,000 employees and more than $13 billion in annual revenue. From the moment of its handover, architecture is immediately and essentially measured on the grounds of its usability. ARM's founding directors were Stephen Ashton, Howard Raggatt, Ian McDougall. Some domains, such as credit card–payment processing, will be deployed centrally across all business units. Define the mission. Our flagship business publication has been defining and informing the senior-management agenda since 1964. tab, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. We use cookies essential for this site to function well. In our experience, three levers are important at this point. In our experience, the right starting point is a high-level business–IT task force that provides cross-organizational governance and accountability. Each major business line operated more or less autonomously and viewed its IT needs as specialized, even in areas such as HR and finance, where shared-services models are now considered best practice. Please use UP and DOWN arrow keys to review autocomplete results. Prospective strategic IT goals include: This is a broad area that includes several distinct practices: Enterprise Architecture The top level structure of information technology. Using a business-focused architecture reduces complexity and aligns IT with strategic goals. The downturn gives IT and business leaders an important opportunity to collaborate in reducing costs and reshaping the IT architecture for competitive advantage. Use minimal essential hereLearn more about cookies, Opens in new Rationalize software licenses. Helge Buckow is a consultant in McKinsey’s Berlin office, and Stéphane Rey is a principal in the Zurich office. Data were inconsistent from one business unit to another, so cross-divisional collaboration was arduous. The company is developing a unified information system to link all divisions and reviewing with greater discipline all requests for new IT projects. Please click "Accept" to help us improve its usefulness with additional cookies. Many view EAP as a legacy approach. We'll email you when new articles are published on this topic. Shape the future. Learn about 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. 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 A domain-based architecture streamlines the number of applications supported, freeing up human, financial, and system resources. Companies can use a number of levers during this phase. Lead locally. Select topics and stay current with our latest insights, Why business needs should shape IT architecture, Revolutionizing architecture management: A CIO checklist. IT Architecture: Standardizing Technology. The new approach—which involves assessing the overall implications of violations, including their possible additional cost—enables the company to support new business requirements quickly but requires any violations they create to be fixed in a later phase. But finding substantial savings isn’t easy. The goals of EAM must be translated into business terms. The company had gradually created the systems and applications to meet its major needs, and the outcome was a complex, inefficient, and expensive operation. We are a Scandinavian architectural office designing sustainable architecture. Across a global company, the result is often an unwieldy, heterogeneous IT environment where incompatible (and often duplicative) hardware, applications, and processes sprout year by year, in every corner of the organization, in response to specific near-term needs. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. These metrics focus the discussion on the new architecture framework. What’s needed is a clearly defined IT blueprint with organization-wide guidelines for the most appropriate and efficient systems, applications, and processes. In other words, use your specialization in your architecture company name. Encourage reuse. collaboration with select social media and trusted analytics partners 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. cookies, McKinsey_Website_Accessibility@mckinsey.com. Everyone on that tree i… With a comprehensive Enterprise Architecture Management, we support companies in the transformation. Flip the odds. A complete IT architecture has six layers (Exhibit 1). Assess alternate operating models. Select a chief architect or CTO with strong business and technical skills and the requisite budgetary and leadership authority to manage the change process. tab, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. A solid data architecture is a blueprint that helps align your company’s data with its business strategies. Unleash their potential. Consolidate systems that do similar things. Instead, the bank defined the role more broadly, appointing its highly regarded business line CTO, who already had a seat at the table in setting strategy, as well as the budgetary and decision-making authority needed to lead the EAM effort. 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. Second, do some research and make a list of architecture company names. 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. Within the overall product-management domain, subdomains for accounts, credits, payments, and settlements were established to consolidate, house, and manage those programming requirements efficiently. Amid the economic downturn, companies are searching for every opportunity to cut costs. A three-phased approach to IT transformation minimizes disruption to the business. 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. Although the bank had embarked on several separate EAM initiatives, these struggled to gain a footing amid perceptions that they were too IT-driven and bore only limited relevance to overall business requirements.
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