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Digital Strategy and Architecture

Digital Strategy and Architecture

Digital Strategy and Architecture

The subject of digital strategy came up at an MIT CISR conference I attended earlier this month.  To organizations that were founded and built on a digital foundation (such as Google, Amazon, HubSpot) this is nothing new, but to the majority of organizations, this represents significant disruption and change.

What is digitization? 

It can take many forms.  Here are a few types of digitization of business and examples:

TYPES EXAMPLES
Products that add digital components Sports equipment with sensors for immediate feedback
Products sold through digital channels Conde Nast magazines
“Solutions” that are assembled and delivered in digital channels USAA Insurance
Products that are entirely digital Apple iTunes, eSurance, PayPal, Google
Companies monetizing their data Healthcare clinical data

The really interesting thing about digitization that you can see from some of the examples above is that it enables new competition to enter your space and competitors to leap industry boundaries.  The concept of “barriers to entry” itself is eroding.

The Impact of Digitization on IT

Some interesting facts from MIT CISR’s research with Boards of Directors on digitization jumped out at me:

  • Board members estimate that 32% of company’s revenues are under threat from digital disruption.  This is a really stunning number when you think about it.
  • Half of Board members believe that their board’s ability to oversee the strategic use of IT is “less than effective.”
  • 26% of Boards hired consultants to evaluate major projects or the IT unit.
  • 60% of Boards want to spend more time on digital issues next year.

The Impact of Digitization for Architects?

It boils down to two things:

  1. Architects need to deliver a digital platform to enable business agility in a time of increasing competition and disruption. This includes standardization around business processes, data, and the platform.
  2. Architects need to get more proactive in the strategy process for their organizations both in terms of the platforms and architecture and in terms of a general understanding of the challenges and opportunities that arise from digital disruption.

For more on enterprise data architecture, best practices and reference architectures see the eBook:  Think “Data First” to Drive Business Value

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Architects: How Will You Stay Relevant?

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We are way past the point where the architecture needs to be aligned with business goals and value delivery.  That is necessary but no longer sufficient.  We are now at the point where architecture needs to be central to the creation of an organization’s strategy process.  Not to get hyperbolic, but anything less is risky for your career.

The Challenge: Digitization

I just came back from the MIT Center for Information Systems Research (CISR) research forum.  One of the leading topics was digitization and how every business is becoming digitized.  To those in the High Tech industry, this may be an “of course” topic, but to most other industries it is a wrenching change.  Even those who are comfortable with the idea of digitization risk taking this too lightly.

The fact is that most products and services will have a digital component to them in the near future and an increasing number of  products and services will be entirely digital.  The fact is that digitization and the technologies that enable it are going to bring about a period of increased disruption.  This will mean:

  • New competitors.  Examples: autonomous cars, sports equipment with embedded sensors that provide feedback, personal assistant fully capable of making decisions and taking action.  Gartner is predicting that almost everything over $100 will have a sensor by the turn of the decade.
  • New competitors jumping across industry boundaries.  Examples: Apple iTunes and Google cars to name a few.

Why Architects Are Important

Architects are in a unique position to not only understand the technology trends driving this disruption, but they also to know how to leverage these trends to drive business value within their organizations.  The very best architects are going to be those who are deeply involved in defining the organization strategy, not just figuring out how to implement it.

Evidence of Change

Many architects and CIOs currently report very little interest from upper management in IT.  That is about to change, and quickly.  At the MIT CISR forum I attended last week, they presented research around this area that is very telling:

  • Half of Board of Directors members believe that their board’s ability to oversee the strategic use of IT is “less than effective.”
  • 26% of Boards hired consultants to evaluate major projects or the IT unit.
  • 60% of Boards want to spend more time on digital issues next year.
  • Board members estimate that 32% of their company’s revenues are under threat from digital disruption.

That last bullet is the really interesting piece of research.  32% is a huge impact.

The Role of Data in Digitization

Digitization by its very nature is all about data.  The winners in this space will be those that can manage and deliver relevant data the quickest.  The question for architects is this: Do you have the architecture and agility to take advantage of the coming disruptions and opportunities?  Are you actively advising your organization on how to leverage them?  As we have documented in many previous blogs, many organizations are poorly positioned to manage their data as a discoverable and easily sharable asset.  This will essential for:

  • Delivering business initiatives and showing value faster (agility).
  • Enabling business self-service so that IT is not the bottleneck in new analyses and decisions.

All of this requires new thinking around enterprise data architecture.  For fresh thinking on this subject see Thinking “Data First” to Drive Business Value.

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Does Your Organization Have the Data Architecture to Succeed?

Does Your Organization Have the Data Architecture to Succeed

Does Your Org Have the Data Architecture to Succeed?

Adrian Gates was facing a major career challenge. Auditors hired by his company, Major Healthcare, to assess the risks the company faces, came back with “data quality” as the #1 risk. Adrian had been given the job of finding out exactly what the “data quality” issue was and how to address it.

Adrian gathered experts and built workgroups to dig into the issue and do root cause analysis.  The workgroups came back with some pretty surprising results. 

  • Most people expected  that “incorrect data” (missing, out of date, incomplete, or wrong data) would be the main problem.  What they found was that this was only #5 on the list of issues.
  • The #1 issue was “Too much data.”  People working with the data could not find the data they needed because there was too much data available, and it was hard to figure out which was the data they needed.
  • The #2 issue was that people did not know the meaning of data.  And because people had different interpretations of the data, the often produced analyses with conflicting results.  For example, “claims paid date” might mean the date the claim was approved, the date the check was cut or the date the check cleared. These different interpretations resulted in significantly different numbers.
  • In third place was the difficulty in accessing the data.  Their environment was a forest of interfaces, access methods and security policies.   Some were documented and some not.

In one of the workgroups, a senior manager put the problem in a larger business context;

 “Not being able to leverage the data correctly allows competitors to break ground in new areas before we do. Our data in my opinion is the ‘MOST’ important element for our organization.”

What started as a relatively straightforward data quality project became a more comprehensive enterprise data management initiative that could literally change the entire organization.  By the project’s end, Adrian found himself leading the data strategy of the organization. 

This kind of story is happening with increasing frequency across all industries as all businesses become more digital, the quantity and complexity of data grows, and the opportunities to offer differentiated services based on data grow.  We are entering an era of data-fueled organizations where the competitive advantage will go to those who use their data ecosystem better than their competitors.

Gartner is predicting that we are entering an era of increased technology disruption.  Organizations that focus on data as their competitive edge will have the advantage.  It has become clear that a strong enterprise data architecture is central to the strategy of any industry-leading organization.

For more future-thinking on the subject of enterprise data management and data architecure see Think ‘Data First” to Drive Business Value                

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