Enterprise IT and Transformation
Abstract:
Today’s enterprises are using information technology (IT) in virtually all aspects of their business.
IT enables enterprises to provide seamless access to corporate data; streamline existing and create new business processes; design, improve, and deliver new products and services; and communicate and collaborate with customers, suppliers and other organizations across the globe.
As enterprises undergo transformation of various kinds, IT can become a driving or inhibiting force to successful change.
This chapter highlights some of the current enterprise IT trends, presents the fundamental drivers of the information economy, and suggests some basic architectural IT principles that can facilitate a smooth transformational process.
The success and failure resulting from appropriately, and lack of, implementing these principles are illustrated in numerous examples and case studies throughout the chapter.
The chapter concludes by introducing a novel concept of enterprise IT and transformational maturity and offering some practical guidelines.
Introduction:
Information technology (IT) has been one of the key drivers of business in the twenty-first century.
Enterprises in virtually all sectors of industry, commerce, and government are fundamentally dependent on information technologies.
Enterprises in industries such as telecommunications, media, entertainment, healthcare, and financial services are increasingly digitizing their products, services, and offerings; often times their mere existence depends on the effective application of information technologies.
Similarly, with the emergence of the Internet and electronic commerce, the use of technology is not only becoming an accepted, but also an expected way of conducting business.
Consequently, enterprises are increasingly looking to use IT to improve their business operations and create new opportunities that enable them to achieve higher levels of efficiency and provide them with a source of competitive advantage. Enterprises are using information technologies to seamlessly link their offices, factories, workers, suppliers, and customers around the globe.
The use of IT has led to new business models, businesses, industries, and markets. It has become evident that business and IT are increasingly intertwined.
Enterprise strategies,processes, and procedures are often dependent on IT platforms, applications, databases, and networks.
A change in any one of these elements often requires a change in the other components.
As enterprises pursue transformations, they must therefore take current and future capabilities of their IT systems into consideration and effectively align them with their business strategies.
Continuously changing market demands and environmental pressures as well as changing technological requirements will also impact an enterprises’ IT strategy throughout the transformation process.
Before providing any strategic perspective, it is important to have an understanding of what constitutes enterprise IT, what underlying forces have and continue to shape enterprise IT, and have led to IT as a transformational enabler.
Information technology has become an increasingly integral component of today’s enterprises.
IT is ubiquitous and enables a degree of connectivity that was difficult to achieve even a decade ago.
Technology has evolved so rapidly that is often the cause of enormous transformations.
The growing interdependence between business and technology can be attributed to the soaring power and declining costs of information, communication, and networking technologies.
One of the most stimulating forces for businesses during the IT age has been the emergence of the Internet.
The Internet provides an infrastructure that brings individuals and businesses together and enables global communication and information exchange using telecommunications and computing power.
The Internet, simply stated, is a network of networks that spans the world.
The Internet interconnects a myriad of different networks, systems, and computers.
In an increasingly borderless world, the Internet provides its users with the tools to interact, communicate, and exchange information.
The extraordinary growth of the Internet can be mainly attributed to a few phenomena that can be broadly characterized by three fundamental laws of the Internet age.
Conclusion:
The productivity gains due to advances in information and communication technology over the past decade have been impressive.
Driven by the exponential growth in capabilities summarized by Moore’s Law, IT has extended the reach of enterprises beyond their premises, often beyond recognizable geographic boundaries.
This has enabled not only new businesses but also new business models as global competition aided by IT marketplaces to spring up wherever value can be added to existing businesses.
The growth of electronic commerce and the impact of the Internet and web-based technologies are examples that are by now familiar to all.
Competing in such a rapidly changing environment has required IT professionals to concentrate on the role that architecture plays in the modern IT landscape.
The rush toward open interfaces, standards based solutions and platforms have been driven by a few simple economic forces.
First, in a networked world, the value of IT infrastructure is measured by how many ways it can be used.
Second, it is almost impossible to predict the applications and requirements of the future, so current design investments should make as few assumptions about the future as possible.
Third, the cost of owning an IT system increases dramatically with the complexity of the system.
This is the attractiveness of web-based technologies.
They allow organizations to deploy a common access technology (the web browser) that makes very few assumptions about the physical nature of computers and networks.
Web-based technologies also make few assumptions about applications, so an IT manager is not “locked” into a large investment that is specialized to the applications of a single vendor.
Finally, web-based technologies are conceptually simple and do not require the same level of maintenance as more complex integrated systems.
These are also advantages for enterprises undergoing transformation.
The architectural view of IT infrastructure has proved to be a key component of IT strategy for companies that adapt and change successfully.
The architectural principles that time and again are cited in studies how IT enables successful transformation include:
Open standards and interfaces
Composition and modularity
Data consistency and integration
Network access and applications
Scalability
Service-orientation
Human-centered technology.
An organization that has invested in enterprise-wide deployment of systems that have these characteristics is in a better position to adapt.
In fact, organizations that want to make transformation a core competency set out to explicitly build their information and communications infrastructure according to these principles.
Does that mean that a company that does not use standards based architectures and web applications cannot survive transformation?
There are clearly examples to contrary.
On the other hand, without an architectural basis for change, company leadership is forced to contend with change processes as a (usually complex) change “project” that has to be carefully and successfully managed.
The more complex the change, the more projects there are to manage and the more complex each project becomes.
This has led us to a model of transformational maturity that classifies the inherent capability of organizations to change.
The least mature enterprise has a fixed compartmentalized structure of a vertically integrated manufacturing company, i.e., a company that has been designed functionally well in a predictable competitive and economic world.
A more mature enterprise is lean and flexible and makes use of IT to enhance understanding of its customers and of the large-scale forces that affect it.
At the upper end of the maturity scale is the enterprise that is optimized from a transformational standpoint.
An organization at this level of maturity has invested in “options” that essentially make transformation a core business competency.
Not only are such companies able to accurately predict the impact of change (often with quantitative precision), they can do so under varying assumptions, can measure the effect of change on key processes and feed that data back to decision-makers who can alter the strategy accordingly.