1

Enterprise Business Architecture

Case Studies

2

EXECUTIVE SUMMARY

In the context of today’s demanding market companies are experiencing the

need for multi layered change. The additional challenge to this environment is

addressing the speed of required change, both from a customer and technology

perspective, using dated tools and techniques. These forces at work are driving

organizational impact which reaches far beyond conventional thinking. IAG

believe architecting the business, through strategic planning, understanding the

holistic enterprise and collective change agendas, is the way forward.

Having a viable business strategy is fundamental to the success of organizations

facing increased competition, shifting customer demands, globalization, new

markets and economic pressures. But having a strategy is not enough.

Organizations must be able to execute against that strategy and demonstrate

quantitative, measurable value.

The challenge facing executive is how to turn business strategy into actionable

results. Business architecture provides a vehicle for interpreting business

strategy in concrete ways that can be deployed as coordinated, clearly

articulated business initiatives.

Executive require a different kind of dashboard. One which is provided through

the tools and techniques deployed in the context of building and practicing

business architecture. This whitepaper discusses business architecture in

practice and the benefits realized by the firms who used their own business

architecture to achieve the desired business outcomes.

3

CONTENTS Executive Summary ....................................................................................................................... 2

CONTENTS ..................................................................................................................................... 3

Case Study Overview .................................................................................................................... 4

Human Capital Management Transformation: ........................................................................... 5

Divisional Non-Core Outsourcing ................................................................................................. 6

Centralization FTE and Enterprise Restructuring study ........................................................... 7

Spans of Control Cost Study capability/function, FTE, role ..................................................... 8

Data and Process Ownership ....................................................................................................... 9

Strategic Project Portfolio Development ................................................................................... 10

Strategic Alignment ...................................................................................................................... 12

Portfolio Management .................................................................................................................. 12

Closing Thoughts ......................................................................................................................... 14

4

CASE STUDY OVERVIEW

Business Architecture methods and techniques really come into their own when

applied to a broad range of critical business problems. At the same time,

methods and techniques comprising the discipline of business architecture

continue to evolve.

The following Case Studies are not an exhaustive list yet illustrate the vast

number of ways where value has been driven through the use of the business

architecture collateral to the benefit of achieving the strategic objectives. The

discipline of business architecture applies to multiple common business drivers

some of which are —customer centricity, financial planning, lower operating

costs, optimized application portfolio, modernization and program management

Mature and successful Business Architecture practices work collaboratively with

business leaders, IT Architects, and executives to address current and future

challenges. Adoption and acceptance of Business Architecture, in strategic

planning, has led to an increase in the maturity of the discipline and a business-

centric architecture that focuses on the needs of the business.

5

HUMAN CAPITAL MANAGEMENT TRANSFORMATION:

A Large Tier 1 bank engaged the use of the capability model to transform the HR

function to a future state operating model with the strategic objectives of

outsourcing non-core capabilities, process redesign, and process distribution

across centers of excellence, with Online Delivery and Contact Centre channels.

They strategically defined what Human Resources will provide in future

state services, support and built a capability model

Using the capability model they designed the organization around what

functions HR does

Then decided where those business functions and organizations would

be located

Knowing the location preferences, to drive lower cost operating models,

they decided which functions could be performed by a 3rd Party

Outsourcing arrangement

Researching the vendor catalogue leveraged existing relationships and

Offshoring strategies to reduce costs

Remaining business functions determined the organizational structure

and roles based on spans of control / management and shared services

In the delivery of those business functions Value Streams where

produced to understand how they would flowed through the organization

Process Ownership was assigned to ensure future state process were

optimized, efficient and effective with appropriate controls and metrics

Business Model was fully deployed in less than 2 years with supporting

technologies driven off the business needs and design.

6

DIVISIONAL NON-CORE OUTSOURCING

Organizations quite often look at parts of their business which are non-core, are

necessary to be managed but not necessarily provided internally, as they are not

a core strength. In this regard they look at other organizations, with highly

developed specific capabilities, which can be provided at a lower price point, or

can fill a short-term skills gap.

Using the business architecture to deconstruct the business to functions and

process exposes the dimensions of the capabilities, you might consider

outsourcing, or clarify the best options for alternative capability sourcing.

An Investment division, of a large tier 1 bank, focused on operational provisioning

and used the business architecture mapping of capability, business functions,

locations, processes and vendors to deconstruct the business. This analysis

exercise:

Exposed several outsourcing possibilities from Real Estate Operations to

Documentation Archive and Retrieval processes

Brought clarity to the opportunity of consolidation of current multi-vendor

relationships

Produced Cost of Ownership analysis to support the business case

Enabled the RFP to be very specific as to the capabilities, business

functions and processes which needed to be contracted.

CEO was impressed with the speed of discovery and the foundational basis for

decisions.

7

CENTRALIZATION FTE AND ENTERPRISE

RESTRUCTURING STUDY

Good organizational design is built on the basis of functional alignment, spans of

control and the right balance between distributed and centralized capabilities.

Distributed capabilities support agility and centralizing capabilities will grow

expertise, reduce cost and address complexity.

Using the business architecture a retail organization wanted to know what was

being done, where, by who and what was the driver of effort.

A socialized and executive agreed business functional model was available. This

was used as the foundation for a global survey of the business unit managers.

The FTE data set, by business unit, by location was extracted from the HR

system and aligned to the business functions being performed.

Additionally the business processes were catalogued against the business

functions.

Survey was structured to reflect Business Function- Business Unit-Location-

Business Processes, number of FTE. A drop down was provided to discover

what events where drivers of effort.

The Survey resulting analysis drove a global off-shore, near-shore and

centralization location strategy with approximately 30% reduction in cost base.

8

SPANS OF CONTROL COST STUDY

CAPABILITY/FUNCTION, FTE, ROLE

Finance Transformation, of a large Tier 1 bank, used the business architecture

mapping of capability to business function to business process to role.

It was quickly discovered the number of managers to staff members was on

average 3 to 1. The Spans of control for Industry best practice was a ratio of 6-9.

Adding the dimensions of transactional Time, Frequency and Volume, to

determine the correct number of FTE required to complete the processes, the

business units were Right Sized to the number of people necessary to perform

the work and organized to reflect the industry benchmark number of staff

members to manager ratio.

Sales & Marketing Products & Services Operations & ProcessingRisk & Financial

ComplianceStrategy & Governance

Market Research &

AnalyticsProduct Development Resource Planning Regulatory Advisory Business Strategy Mgmt

Customer Mgmt

Strategy

Product Research &

Analytics

Operations Policy &

ProcedureAlliance Planning

HR Planning &

Governance

Segment Analysis &

PlanningChannel Mgmt Channel Mgmt Risk Mgmt

Programme & Change

Mgmt

Marketing Mgmt Business ContinuityFinancial Accounting

& Reporting

Regulatory &

Compliance Policy

Brand Mgmt Information Tech Decision Support Mergers & Acquisition

Sales & Contract

Monitoring

Product Catalogue

Mgmt

Central Service

ManagementBalance Sheet Project Mgmt Office

Relationship MgmtProduct & Service

MonitoringVendor Management Credit Oversight Audit

End to End Service

Level Perf MonitoringChannel Performance Statistics & Measurement Legal Advisory

Business Policy

Oversight

Authorization/ApprovalsRisk & Financial

Control

Compensation &

Benefits

Auth & Limits Delegation Financial Data MgmtRegulatory Compliance

Monitoring

Client Acquisition &

Referrals

Transactional

ProcessingCustomer Data Mgmt

Accounts Payable /

ReceivablesProject Cost Acct

Contact Mgmt Order Mgmt Statement Prep InvestigationsLearning &

Development

Compliant Mgmt Document Mgmt Collections &

RecoveryRegulatory Reporting

Prospecting & Sales Credit ProcessingCredit Approval &

ProcessingBusiness Procedures

Campaign Execution Fees & Billing MgmtFinancial

ConsolidationM&A Due Diligence

End Consumer Sales Payments Tax Reporting Vendor Mgmt

Strategic

Control

Execute

CAPABILITY MODELILLUSTRATIVE

Product Performance

Mgmt

Campaign

Management

Pricing Policy

Channel Delivery

Mgmt

Product

Configuration Mgmt

9

DATA STEWARDSHIP: GOLDEN SOURCE,

OWNERSHIP, RATIONALIZATION, MI REPORTING

Data stewardship is of primary focus in these days of privacy yet regulatory

transparency. Organizations are looking to produce single version of the truth

data sets to streamline redundant information, improve business intelligence and

provide effective reporting.

DATA AND PROCESS OWNERSHIP

Large Tier 1 Insurance Company Enterprise Architecture team used the business

architecture capability model to map the application inventory.

Each application was reviewed for business value and the data was catalogued

to the business capability it underpinned. The analysis revealed the opportunity

to rationalize, or componentize the data, to a Golden Source and the applications

which would consume or provide data to it. It also identified the logical business

owner and stewardship.

Strategy & Governance

Business Architecture &

Operating Model

Global MIS

Strategy

Governance

Business Strategy Management

Alliance Planning Mgmt

End to End Service Level Management

Executive & Stakeholder

Management

IT Architecture

Risk

Operational Risk Control

Management

Balance Sheet Management

Treasury Management

Financial Accntg & Reporting

Decision Support

Financial

Internal AuditRegulatory & Compliance

Compliance

Sales/ProductMonitoring

Sales, Market & Relationships

Market Management

External Corporate

Comms

Marketing Management

BrandManagement

Client Relationship Management Sales & Distribution

Independent Asset

Management

Electronic Service

Channel Management

Market Risk Control

Management

Settlement Risk Control

Management

Legal Awareness & Compliance

Regulatory & Legal Doc.

Management

Products & ServicesBusiness resource & sales planning

Client mkt research &

analytics

Branch Telephone Post Online Email IntermediaryPDA

Hedge Funds Management

Securities Product

Management

Funds Product Management

Trade Services Management

Product / Servicing Sourcing

FX & MM Management

CashManagement

Structured Product

Management

Card Product Management

Insurance Products

Management

Operations & Processing

Merchant Operations

Corporate Actions

Management

Client Tax Reporting

Performance Measurement

Safe Keeping Management

Payments CustodyNostro Cash

ManagementMarket Data Management

Involved 3rd Party

Maintenance

Specific Product Processing

Credit Processing

Securities Processing

Card Processing

Fund ProcessingFX & MM

Processing

Structured Products

Processing

Trade Services Processing

Insurance Processing

Hedge Fund Processing

Product Management Service Management

Product & Services Support

Execution Management

Trade Reporting

Order Management &

Grouping

Execution Services

Confirmation & Matching

AllocationsProduct & Service

Control

Processing & Execution Support

Research & Analysis

Customer & Transaction Services

Client Support

Customer Insight

Customer Management

Strategy

Business Policies and Procedures

Operations strategy & policy

Correspondent Banking

Authorisations

Cash Services Rewards Admin

Securitisation (incl.

Syndications)

Segmented Servicing

Credit Risk Control

Management

Contact Management

Relationship Management

Client Acquisition & Referrals

Counter/ Branch

Services

Product Catalogue

Management

Credit Management

Client Account Admin

Reconciliation

Credit Approval

Management

Document Management

Fees & BillingManagement

Client Accounting &

Reporting

Operational Monitoring

Clearing

Settlement

Segment Analysis & Planning

Customer Behaviour

Models

Collections and Recovery

Collateral Handling

Prospecting & Sales

Sales ExecutionSales Force

Management

Group / PB Advisory Services

Client Risk Profiling

Discretionary Portfolio Mgt

Services

Family Office Services

Trust & Estate Planning

Strategic Asset Allocation

Tactical Asset Allocation

Cross-Product/Service Client Facing Processing

Design apps & IT infrastructure

Build apps & IT infrastructure

Operate & maintain apps &

IT i/f

Business continuity

Security

Information Technology

Legal

Programme & Change

Management

Facilities Operation & Maintenance

Procurement HR & PayrollInternal Comms (excl. customer)

Support & Logistics

Support Infrastructure

OPS Design & Implement

Centralised Service Centre Management

Cross-Product/Service Non-Client Facing Processing

GSC Monitoring

Service Centre Mgmt

AML/Fraud Detection

Lending

Deposits

Underwriting Claims

ATM

Pricing /Quotes

Reference Data

Financial Planning

Trust Administration

Valuation

Investigations

Legal & Regulatory Risk

Mgmt

Direct

In-Direct

10

STRATEGIC PROJECT PORTFOLIO DEVELOPMENT

All transformation programs will be strategic. Not all strategy implementations will

be transformational. One common application of capability modeling is in

developing strategic project portfolios.

Organizations struggle with identifying strategic projects because each business

lead submits project proposals, based on how or what their organization can do

to support a strategic plan. This approach is flawed as it will not address an end

to end solution to execute on the strategy. Strategic plans need to be broken

down to reveal the objectives and therefore the projects necessary to fulfill the

plan. A clear disconnect in a strategy development and therefore deployment.

A capability approach resolves this problem by identifying first the capabilities

necessary to support the strategic plan and then assessing their ability to affect

the plan. It is only then projects can be identified to address capability gaps.

Finance Division of a large global Investment bank used this strategy mapping

and deployment methodology to ensure all projects were aligned to strategic

goals.

11

PROJECT PRIORITIZATION

There are always more projects than discretionary funding can support. A project

tabled for funding should have positive ROIs but the important question is “Which

projects create the most business value?” A quick alignment of projects to

capability to business strategy provides a fast first pass. Then a more detailed

assessment of each project’s impact to capability improvement will narrow the

prioritization.

Large Global Organization had a year over year spend exceeding 75MM. Project

names were nebulous and clarity was limited as to the business outcomes and

strategic alignment.

Project scope and Business Outcomes were mapped to the capability model

definitions which identified a number of projects operating/impacting the same

capabilities, projects which had delivery dependencies and projects which were

not directly related to a strategic capability.

These results prompted;

a reorder of project delivery in line with the clear dependencies

project deliverables were able to be reused or consumed by other concurrent projects

non-strategic projects were stopped and funding redirected,

a Consolidation of the portfolio mix where associated projects were bundled into programmes

Redirection of funding from realized savings

Domain Competency Capability Definition

Projec

t 1

Projec

t 2

Projec

t 3

Projec

t 4

Total

Budget in MM 0.5 10 15 7 32.5

Strategy 0

Management activities to analyse environment and to establish and monitor the

strategic direction, ensuring it aligns to the overall corporate mission, vision,

principles, goals etc

Includes value analysis and planning. May include client profitability and

segmentation as well as product profitability. Input of Group Strategy requirements

into product and service development developments.Also includes M&A activity

Note there are Business Strategy Planning activities carried out by business support

which fall into this domain

Refers to annual planning of business resources and sales .

Plan and allocate budgets across all lines of activity for both revenue and cost

centers at the macro and executive level (normally annual)

Make buy/rent decision for physical (e.g. property)

Includes profitability reporting (client, products, teams, enterprise etc)

Also capture, analyse and report for other process and performance metrics (e.g.

volume, exceptions, statistics and general reporting).

Conduct and consolidate market research and information on client segments

internally. Incorporate information on competitor, participant, and customer behaviors

(e.g. channel behaviour, access devices).

Analyse customer satisfaction. Develop guidelines and approach to gather, store,

analyse data and draw conclusions based on customer needs and review of

competitive landscape. Identify trends: buying behaviors, risk profiles, customer

segmentation by agent channel, customer segmentation by product, etc.

Sales / Product

Monitoring

The functions undertaken as part of the strategy to monitor the sales of products and

services, covering profitability, client distribution, risk profiles of products to company

and coverage of products and services taken up by clients.

1 1

Identify potential alliance partners, screen them and develop high-level commercial

agreements.

Manage alliance partners relationship.

Includes all non product related alliances & partnership, including Sourcing, BPOs,

Management Providers, IT Outsourcers. Includes Sourcing Strategy.

Operations Strategy &

Policy

Design and select operational processes and the major policies and plans around

them1 1

Customer

Insight

Provides data and analysis on customer wants, needs and behaviours that can be

used by other competency areas 0

Customer Management

Strategy

Management activities to establish customer direction (e.g. customer growth and

loyalty), ensuring it aligns to the overall strategy. Includes client profitability analysis. 1 1 2

Customer Behaviour

Models

Consolidate internal/external customer insight & activity data (spending patterns,

share of wallets, delinquency data). Develop/refine behavioral models (production

feedback). Oversee roll-out & track value of models. Maintain comprehensive internal

and external customer and transaction data. Develop hypotheses, refine rules and

models. Assess coverage and impact of models

1 1

Segment Analysis and

Planning

Determine market segmentation and set coverage and performance targets. Analyze

competitive environment, compare and determine competitive responses 1 1 2

Governance The administration of: business direction, organasition, target performance,

accomplishing continual improvement in the business reorganisation; interaction of

the enterprises business assets & resources.

0

Develop and maintain the business capability model that defines the scope and

mechanics of operations.

Develop and refine business architectures. Support interpretation and deployment.

Define underlying procedures and techniques. Map selected industry standards into

the blueprint.

Executive & Stakeholder

Management

Executive Management of the business and its alliance partners (as a high

performing team) to achieve strategic and operational management objectives.

Includes a direct input from performance measurement component

0

IT Architecture Develop and maintain the Application IT architecture that adapts to the business

architecture requirements via the IT Strategy of the . Develop and maintain the IT

models that define the scope and mechanics of the 's operations 0

End to End Service Level

Management

Driving and monitoring the meeting of customer service standards, income generation

and cost management and the delivery of the customer service (linked to proposition

devt and deployment). Includes external partners. - i.e. control of alliances. Planning

and control of business SLAs.

0

4

1

1

1

0

1

Business Architecture &

Operating Model

Alliance Planning &

Management

1

1

Client Market Research

and Analytics

1

Global MIS

1 1 1

Business Resource &

Sales Planning1

Business Strategy

Management

1

12

STRATEGIC ALIGNMENT

Given the significant regulatory agenda a Global Credit Risk CEO wanted to

know what projects were globally working on Credit Risk capabilities and

functions. The Global Enterprise Business Architecture team had the ability to

provide the CEO with a report which focused on Risk Capabilities, to business

function, to projects, to region, to total spend. His department assessments lead

to a prioritization and rationalization of regional efforts to global focus driving cost

down and raising the global strategic risk profile.

PORTFOLIO MANAGEMENT

A second case study is an example of the most active application of business

architecture in organizations.

Business vision is the driver of the strategy, the strategy is the driver of Portfolio

Planning and subsequently approved projects ensuring overlap and duplication

of spend or effort is not present. This highly valuable and strategic application of

business architecture ensures the entire organization is focused on the end

game.

If we consider the regulatory agenda, in play at the moment, we will recognize

organizations are aligning approved projects to the regulator or the regulation

and not the business capability or process. As a result Dodd Frank, SOX, Basel,

all focused on Finance capability and financial reporting process, are

predominantly funded, resourced and managed separately within the same

portfolio.

Accenture released a white paper in 2011 warning to “Tear up the Road Once”.

By design, in the current state practice of the annual budget cycle and project

funding, most regulatory programmes are “tearing up the road” a multitude of

times as each regulator publishes new/revised regulations.

We present here a Portfolio Management case study from Ford.

13

14

CLOSING THOUGHTS

Strategic change initiatives are rapidly growing and the number is increasing in

many organizations. This demands an architected view to ensure investment is

focused on strategically aligned initiatives. The holistic viewpoint of the business

architecture exposes multiple programs impacting the same business

capabilities, i.e. improve customer experience, or compete against each other

with conflicting objectives, in effect countering expected business outcomes.

Business Architecture is an enabler to your organization's capability to manage

change and the challenges of change. To get all key stakeholders on board and

demonstrate efforts are contributing toward a valuable goal, you need a well-

defined, documented, and visible strategic plan using business architecture.