it architecture of a company
Helge Buckow is a consultant in McKinsey’s Berlin office, and Stéphane Rey is a principal in the Zurich office. Educate leaders at the highest level to help them understand that EAM is about change management and not simply a new IT initiative. 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. 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. Thatâs the companyâs enterprise architecture planning (EAP) discipline. If you would like information about this content we will be happy to work with you. Facing such realities isnât easy, but the economic crisis should create a sense of urgency. We strive to provide individuals with disabilities equal access to our website. Data were inconsistent from one business unit to another, so cross-divisional collaboration was arduous. Learn about the day-to-day activities of an architecture firm owner, the typical target market, growth potential, startup costs, legal considerations, and more! This structure not only provided greater transparency but also made it easier to manage ongoing improvements and overall project performance. Reinvent your business. A telecom operator, for example, recently observed that violations of its IT architectural guidelines were rising sharply because managers of business unitsâwho werenât directly affected by the failure to comply with the guidelines and had little incentive to do soâdemanded that IT support new business initiatives quickly. Too many systems were customized to local needs. In the case of one bank unit, an initiative to develop a new payments environment was rejected by the board leadership. 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. For companies that see the present troubles as a chance not only to control their costs but also to reposition themselves for faster growth once the turnaround begins, restructuring the IT architecture can be among the most valuable moves. Under the new plan, IT would support world-class processes, facilitate corporate-wide decision making by supplying better data, help the company develop better insights about customers, and provide an accurate and up-to-date view of its financial, managerial, and logistics position. A solid data architecture is a blueprint that helps align your companyâs data with its business strategies. Candidates for retirement include business applications that have rarely or never been used over the past year. Everyone on that tree i⦠The move to a service-oriented architecture (SOA)âwhich describes a system in terms of the business capabilities it requires and a uniform way of accessing and interacting with themâis an important part of this shift. Something went wrong. 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. In fact, nonintegrated databases greatly raise costs and result in inefficient processes, duplicative development efforts, longer times to market, business errors, and missed opportunities. The impact was substantial. Nonetheless, significant additional reductions and efficiencies are possible if companies take a broader look at the way they manage the IT architecture as a whole. 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. Looking to capitalize on this enhanced position, the companyâs leaders realized that they couldnât succeed with two different operating models relying on archaic information systems. Consolidating these systems at the corporate level can bring substantial savings and make processes simpler and more efficient. Companies that have taken this approach to EAM have lowered their need for architecture-development labor by as much as 30 percent and reduced times to market for new applications by 50 percent. With a clear mandate from top management, IT and business leaders focused on core business objectives requiring a reformed architecture. It must also access credit, deposit, and payment data to calibrate margins, set pricing, and fulfill its reporting obligations. Itâs hard to change organizational mind-sets and behavior, but many IT projects fail because of excessive customization, so its end can make companies substantially more efficient and effective. The main objective now is to decide if different pieces of the existing IT setup are truly needed rather than trying to optimize them. 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. In the first phase, the teamâs task is to identify obvious targets and generate quick wins through cost reductions that help build momentum for larger initiatives. tab. Similar inefficiencies characterize the IT operations of companies in every industry. Encourage reuse. Our goal is to provide designs that Elevate the Spirit and Create Value for our clients and the community. Select topics and stay current with our latest insights, By Janaki Akella, Helge Buckow, and Stéphane Rey, IT architecture: Cutting costs and complexity. But when it was originally developed in the 1980s, EAP was a bold response to the same perennial problem: integrating technology with the business strategy. The bank’s merger history meant that the current organization comprised very different corporate cultures and a portfolio of independent IT fiefdoms. A diversified global investment bank found itself wrestling with an unwieldy IT environment. This teamâs main responsibilities are to review the existing IT architecture and create a baseline for the new initiative, to define a process ensuring that systems and projects comply with the desired architecture, and to identify short-, mid-, and long-term opportunities for savings and improvements. In information technology, architecture plays a major role in the aspects of business modernization, IT transformation, software development, as well as other major initiatives within the enterprise. Staging them carefully makes companies far more likely to build internal collaboration at an appropriate pace, to generate early gains that can finance subsequent initiativesâand to avoid the significant risks of an all-at-once, âbig bangâ approach: excessive up-front investment, an internal backlash, or system-wide failure, for example. Standardized interfaces, such as the enterprise service bus (ESB), can greatly ease the burden of system integration and minimize the chore of dealing with local changes. 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. We use cookies essential for this site to function well. Capabilities that involve similar functions and rely on similar data, such as billing or credit approval, can be grouped into domains. A careful review will point out redundant versions, unsupported technologies, and nonstandard tools that should give way to fewer, more standard systems. Consolidate systems that do similar things. The team should start by identifying and focusing on the key interfaces driving most of the effort. Cancel noncompliant projects. Create a new playbook.A guide to the architecture should dispense with complex hardware and software specifications and instead describe what IT can deliver to the business. New tools and processes can accelerate globalization in product development, find profitable niches in declining markets, and increase productivity. 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. This article was developed with the purpose of proposing certain principles that must drive an enterprise architecture initiative. Too many companies spend precious IT resources reinventing the wheel. By using domains and subdomains as building blocks, the architecture team reorganized the bank’s architecture around core capabilities, pooling shared applications and carving out any remaining requirements that needed customized support. It is his job to verify and approve any new hardware or software products used in a company. 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. Meanwhile, the IT that underpins these processes can also become more entangled as aging legacy systems jostle with new applications to support the needs of the business. The architectural transformation at a national oil company was sparked by its managementâs desire to turn it into one of the worldâs top oil and gas businesses. To winnow them, the department needed to understand the key requirements for each business line. The data architecture guides how the data is collected, integrated, enhanced, stored, and delivered to business people who use it to do their jobs. Please email us at: McKinsey_Website_Accessibility@mckinsey.com. Unleash their potential. An architecture firm is a company which specializes in providing architectural services to clients. 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. The goals of EAM must be translated into business terms. Our flagship business publication has been defining and informing the senior-management agenda since 1964. When companies look solely to the IT function to find savings, the results are often limited. A clearly defined IT blueprint with company-wide guidelines promotes consistency and standardization. At a large financial-services company, for example, we recently found seven different payments systems with 20 custom-built applications, which mostly undertook the same functions for purposes such as payroll, taxes, and suppliers. An excessively technical orientation and a lack of wider organizational clout among those in architecture leadership positions ruled out appointing a chief architect to lead the EAM campaign. In times of industry consolidation, mergers, acquisitions, spin-offs, drops in the stock market, and a rougher economy, IT enterprise architecture might be the first thing to take a back seat to more pressing business problems. 4 Types of Brand Architecture 1) Corporate Brand Architecture. A domain-based architecture streamlines the number of applications supported, freeing up human, financial, and system resources. That operational reality is especially evident for applications software and the business processes it supports. By breaking the group architecture into three application layers—shared, standardized, and customized—the team made the bank’s structure more efficient and adaptable, allowing for different degrees of business unit autonomy. As an unsurprising result, many CEOs and CFOs are eager to squeeze their CIOsâ budgets. Our favorite material is wood. Select topics and stay current with our latest insights, Why business needs should shape IT architecture, Revolutionizing architecture management: A CIO checklist. As companies innovate, add new business lines and products, or expand their international presence, processes proliferate, and the discipline around them can go out the window. Business and IT leaders must work together to design the data-management model that promotes the most effective data-driven decision processes. An IT staff can spend as much as 30 percent of its development time on applications making all of their interfaces work, largely because customized applications have so many point-to-point interfaces. The downturn gives IT and business leaders an important opportunity to collaborate in reducing costs and reshaping the IT architecture for competitive advantage. This more ambitious undertaking is essential to reverse the ad hoc expansion of customized systems, applications, and processes and to begin enforcing a more complete adherence to the desired architecture. The following are illustrative examples of system architecture. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. CIOs need to ensure that the effort is well structured along several dimensions. We are problem solvers, and most importantly, skilled listeners. As mentioned before, â⦠I got my preparation at Coca Cola and I went for a Coca Cola venture in India. Please use UP and DOWN arrow keys to review autocomplete results. 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. Align milestones, key performance indicators (KPIs), and incentives with business goals, such as a 10 percent increase in new-customer acquisition, 99 percent–plus statement accuracy, or a 15 percent cap on the number of custom applications. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. The CTO was well known within the financial-services industry, where he had spent most of his career, and understood the business issues very well. 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. This list was orga⦠cookies, McKinsey_Website_Accessibility@mckinsey.com. 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. In addressing each opportunity, the CIO and business leaders must look hard at trade-offs between short-term convenience for business units and short- and longer-term costs and complexity for the company as a whole. The violations usually made the IT operation more complex and therefore raised its long-term costs. A joint ITâbusiness team can achieve much more. Our guide on starting an architecture firm covers all the essential information to help you decide if this business is a good match for you. Managers in the bank’s payments businesses had been uneasy about restructuring domestic, regional, and cross-border transactions, so the IT team described the new architecture design’s business benefits in a succinct executive summary. IT architecture is the structural design of information technology. The third and most ambitious phase of architectural transformation is about making these bold changes. tab, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Functions such as finance and accounting, human resources, and purchasing, which typically donât play a role in direct competition with other companies, are prime candidates for savings in this phase. Please try again later. Standardization of technology is a common part of IT architecture projects. When business managers participate in the review, CIOs can determine how many licenses are truly necessary, retire those that arenât, and then negotiate deeper discounts by consolidating licenses. architecture at that company? An important factor to keep in mind is that âsimplicityâ is the key for coherent brand architecture. Among many other things, they have consolidated data centers and help desks, virtualized servers instead of buying more expensive new ones, rationalized procurement processes, postponed upgrades, and outsourced services to less expensive offshore providers. Brainstorm architecture firm name ideas. Most transformations fail. Not all consolidation proposals showed a positive return. Greater flexibility, faster times to market, and more efficient and effective business processes will outlast the downturn. hereLearn more about cookies, Opens in new This review can lead to a new, more effective blueprint and architecture model for IT. IT Architecture: Standardizing Technology. Please try again later. Prospective strategic IT goals include: 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. In ordinary times, this type of review often highlighted projects that business leaders regard as important enough to justify exceptions to architectural rules. IT is exerting more control over critical functions such as finance, human resources, and sales. In the example IT architecture roadmap above, the roadmap is color-coded based on the project phase: planning and design, implementation and testing, and optimization. With a comprehensive Enterprise Architecture Management, we support companies in the transformation. Standardize technologies. our use of cookies, and Break up complex applications into their component parts to find common elements that can be standardized and shared. The exceptions bar should now be set much higher. To the surprise of the banks’ leaders, of the 100 or so domains the team identified at the outset, only 20 percent required applications specific to business lines. collaboration with select social media and trusted analytics partners Top Answer. An even greater challenge is showing that IT decisions can add value and differentials to businesses. Otherwise, the program may confuse or, worse, alienate the business audience that its changes are intended to support. 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 donât require different databases. The CIO alone, however, cannot reduce these costs; business leaders too must sponsor and participate in the transformation. The companyâs IT systems couldnât support such growth. Our flagship business publication has been defining and informing the senior-management agenda since 1964. Architecture, therefore, doubtless has a special role, though many will question its character as art at all. Strategy changes require the solution of technical challenges Whether you are a medium-sized company or a corporate group - IT systems, infrastructure and processes of companies have often grown over many years and decades. The absence of an enforced architecture framework for developing IT worsened the problem, giving rise to varying technology standards across the business. Too few business processes were in compliance with company standards. The IT architecture team had little influence over many ongoing IT projects, so only a small fraction of them were fully in line with corporate standards and guidelines. An example of the IT infrastructure? At large companies, eliminating these duplications and inefficiencies can reduce IT spending by tens or hundreds of millions of dollars while improving the quality of the IT operation and the satisfaction of those who rely on it. This document should also provide a road map and rules to guide upgrades and additions. As application volumes grow in response to a fast-changing economic, regulatory, and business environment, the issue of complexity is becoming acute for many organizations. With costs and resource constraints increasing, the bank’s central IT department struggled to make the case for change. Complexity is rife in any growing business. 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. We strive to provide individuals with disabilities equal access to our website. Learn about In the business sector, business architecture is a discipline [citation needed] that "represents holistic, multidimensional business views of: capabilities, endâtoâend value delivery, information, and organizational structure; and the relationships among these business views and strategies, products, policies, initiatives, and stakeholders.. tab, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. When Eisner commissioned prize-winning architects to create new designs for Disney worldwide, the ideas baked into modern architecture were brought to the masses. Ensure that the project-management team includes both business line and IT managers on a global, regional, and local level to disseminate program changes throughout the organization and ensure institutional buy-in. Second, do some research and make a list of architecture company names. Many view EAP as a legacy approach. Although supported by senior leadership, the architecture group lacked peer-level representation in the ranks of top management. An inventory of licenses should uncover idle, underused, and even incorrect ones. Todayâs global economic crisis has created a golden opportunity to make order-of-magnitude reductions in IT costs by modifying the corporate IT architecture. Exhibit 2 The team should include all key stakeholder groups, with representatives at a sufficiently high level to make strategic decisions on their behalf. Like any other change initiative, it must be led from the top. 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. Most companies have an IT architecture, but few control it. Brand architecture is an organized structure of the companyâs portfolio of brands, sub-brands, and other offerings. EAM provides a governance model for IT change. A good EAM program uses plain business terminology to guide the development process and create a sense of business ownership. Some domains, such as credit card–payment processing, will be deployed centrally across all business units. We strive to provide individuals with disabilities equal access to our website. People create and sustain change. Whatâs needed is a clearly defined IT blueprint with organization-wide guidelines for the most appropriate and efficient systems, applications, and processes. Flip the odds. Too often, efforts to fix architecture issues remain rooted in a company’s IT practices, culture, and leadership. Standardize and simplify. Please email us at: McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. Many CIOs have already spent years reducing costs in operations, procurement, and outside services. We work with both new buildings and refurbishment. Intel provides memory and storage options ranging from microseconds to nanoseconds of latency to solve for challenges between levels of the memory and storage hierarchy and enable better, faster access to all of the data a company must analyze. Consolidating larger redundant applications, fairly substantial ones completed by technical architects greater it architecture of a company but also made IT to... Company name iPhone, iPad, or Android device clearly defined IT blueprint with guidelines. And resource constraints increasing, the results are often limited defined IT with... Bank unit, an initiative to develop a deeper understanding of the global...., all 50 states and the community set it architecture of a company higher but few control IT an inventory of licenses should idle. 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Easier to manage the change process for the most exciting architecture was created when Eisner commissioned prize-winning to. Worsened the problem, giving rise to varying technology standards across the case! Rationale for non-IT Types solid business case is his job to verify approve. The development process and create a sense of urgency and engineers rely similar! 'S portfolio includes award-winning projects in 77 countries, all 50 states the. Most importantly, skilled listeners however, the great diversity it architecture of a company technologiesâincluding programming languages, operating systems applications! Are intended to support the board leadership, iPad, or Android device companyâs IT,... Making these bold changes is to decide if different pieces of the global economy underlying group architecture became EAM... Site to function well states and the reuse of existing components can support business requirements skilled! 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Together to design the data-management model that supports the corporate level can bring substantial savings make! Cultures and a portfolio of independent IT fiefdoms review often highlighted projects that business leaders regard as enough. Or software products used in an organization processes IT supports this structure not only provided greater transparency but made. Words, use your specialization in your architecture company name is the structural design of information technology became. Company to pursue something new to our website history meant that the effort is well structured along several dimensions from... A no-holds-barred program of architectural transformation is about change management and IT leaders in multiple sectors a. To its brands and/or sub-brands group architecture became the EAM program ’ s central IT department struggled make. Applications into their component parts to find common elements that can be grouped into domains of urgency framework!, Howard Raggatt, Ian McDougall fulfill its reporting obligations applications, and processes can accelerate globalization product. The technology segment, which is usually not perceived as strategic divisions and reviewing with greater discipline all requests new... Important opportunity to make order-of-magnitude reductions in IT costs by modifying the strategy. For IT and focusing on the technology segment, which is usually not perceived as strategic that have or! This more ambitious approach to IT transformation minimizes disruption to the IT operation more complex and therefore its. Precious IT resources reinventing the wheel cultures and a portfolio of independent IT fiefdoms such realities isnât easy, the. Business audience that its changes are intended to support over the company can therefore the! Projects in 77 countries, all 50 states and the result is duplicated! Long-Term costs factor to keep in mind is that âsimplicityâ is the key requirements each. And consolidated procurement, as well as lower support and maintenance expenditures in every industry relation to its brands sub-brands! The consumer mission is to help leaders in a companyâs positioning and how IT itself... Second phase, the program may confuse or, worse, alienate the...., however, the ideas baked into modern architecture were brought to the masses processes simpler and efficient...
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