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Anatomy of Agile Enterprise

Janne J. Korhonen

Towards Business-IT Confluence

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Information technology has traditionally been seen as mere "cost of doing business" that is "aligned" with business at best. As IT infrastructure has commoditized at operational levels and the business environment has become increasingly complex, however, the focus of IT has shifted to more strategic considerations: effective enablement of business change and renewal resilience in the face of incessant transformations.

The evolving relationship between business and IT is depicted in Table 1. Herein below, I will discuss each type of business-IT relationship in more detail: IT Alignment, IT Enablement, and Business-IT Confluence.

Table 1. The evolving relationship between business and IT.

Alignment with BusinessEnablement of BusinessConfluence with Business
IT FocusReliabilityValidityResilience
Value Creation LeverageValue realizationValue engineeringValue innovation
Time OrientationPresentNear futureFar future
Governance CharacteristicsInternal control and risk managementDistributed, competence-basedNetwork governance

IT Alignment

The notion of business-IT alignment actually exacerbates the business-IT divide, by sharpening the distinction between the two. IT is seen as a separate, value-adding function, relegated to a subordinate role that needs to be aligned with business. Such languaging implies support rather than unity; as if IT is asking for a permission to be on the board -- or at least on board.

When IT is "aligned" with business, IT function is seen as a mere service and cost center. The emphasis is on present-day value realization: only IT projects that are "aligned" with the current enterprise strategy are approved, financed and prioritized. IT may satisfy all the idiosyncratic and sometimes conflicting business requirements, but does not accommodate any future contingencies. The traditional approach of "IT follows business" gives little consideration to strategic IT capabilities and systemic competencies needed to create new IT-driven business opportunities.

The focus of IT is on operational quality and reliability - producing predictable outcomes on a consistent basis. Consequently, human judgment and error is removed from work that is codified, digitized and automated through IT. Variance is eliminated through cascaded goals, metrics and controls that are ultimately passed down to the IT function in top-down, deterministic manner. This results in clearly separated, relatively independent sub-functions and sub-systems that have their own goals and ways of working. It is assumed to be enough to know how the constituents integrate with each other and work together. The internal logic of the components is considered irrelevant.

Respective governance arrangements focus on minimally required compliance, internal control and risk management.

IT Enablement

Whereas IT alignment is about supporting the current enterprise strategy "top-down", IT enablement means enabling the future enterprise strategies in a "bottom-up" fashion. IT is designed to enable (re-)engineering value and produce relevant outcomes with some trade-off for consistency; it balances the focus on reliability with focus on validity to create value, not only today, but also in the unfolding near future. The value of IT comes increasingly from how it is used rather than from the technology itself. Human judgment and discretion increase in importance.

IT enablement creates enterprise flexibility and capability to change. IT is effectively arranged in anticipation of changes, whose exact nature cannot be accurately predicted. Pertinently designed enterprise architecture is an essential means for enabling expeditious business redesign. Rather than tightly following the enterprise strategy, IT "vicariously selects" components, competencies and capabilities likely to accommodate future contingencies. Service-Oriented Architecture is a case in point of an attempt to enable flexible reassembly of processes, capabilities and services in new, innovative ways.

IT enablement perspective calls for a distributed, competence-based view on governance, in which IT solutions are led by business, enabled by enterprise architecture and IT infrastructure.

Business-IT Confluence

Whereas IT enablement is about enabling enterprise effectiveness through a design-oriented approach, business-IT confluence transcends the mere equilibrial and adaptive stance and embraces resilience in the face of transformative, unpredictable change. The "wicked problems" of today's interdependent and rapidly changing environments call for hybrid thinking and confluence of business and IT.

Not only must enterprise architecture address the initial design and building of a robust system but also the successive designs and continual renewal of a resilient system. As business models are periodically reinvented in alignment with the continually shifting value proposition, the architecture must allow for major overhauls from a balance state to a reorganized new balance. Gartner has already coined the term "panarchitecture" for this emerging approach.

IT not only enables business change, but creates the very vital conditions for new, transformative business models. The upsurge in e-business, facilitated by the Internet, in the 1990s, for instance, represented a major disruption to incumbent businesses, as unconventional exchange mechanisms and transaction architectures suddenly enabled entirely new ways to innovate, create and deliver value. Business increasingly follows IT, not the other way around.

Business-IT confluence perspective requires network governance that relies on shared goals and values in coordinating highly interdependent work.

Janne J. Korhonen provides insights into how information technology can be applied strategically to catalyze organizational change and responsiveness. Drawing from both theory and practice, he discusses agile enterprise and its governance.

Janne J. Korhonen

Janne J. Korhonen is an independent business and IT consultant,specializing in enterprise architecture, business process management,service-oriented architecture and pertinent governance models. He has over ten years of experience as an architect and consultant in a variety of extensive and mission-critical IT projects. With strong theoretical underpinnings, his consulting encompasses systemic co-development of business, organization and information technology.

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