1

• British Aerospace - Mechanical Engineer

• Active Intranet plc – CTO and Chief Architect

• Aviva – Lead Enterprise Architect in Central Services, supporting Life and Pensions business

• Capgemini UK and Sweden – Enterprise Architect and lecturer on Capgemini Integrated Architecture Framework (IAF) at Capgemini global university

• HP/EDS – Client facing CTO, Retail Sector

• IBM – Technology Solution Executive in Nordic Strategic Outsourcing

• ISG – Principle consultant for large outsourcing transactions and Nordic lead for Service Integration

• Sandvik – Director of CIO Office, responsible for Strategy, Risk Management and Enterprise Architecture

Director – CIO Office, Sandvik AB Stephen Brown B.Eng (Hons)

Mobile: +46 702 401159 stephen.brown@sandvik.com se.linkedin.com/in/steveb63/

•What should we get from Architecture and why do we do it? •Capgemini’s Integrated Architecture Framework •Examples of EA in practice

•Example 1 – Business Case •Example 2 – Business Process Harmonization and System consolidation •Example 3 – Financial Transformation – UK Retailer •Example 4 – 2020 Business Operating Model Strategy

Agenda

Sandvik IT 3

• Two key words: •Structure •Visibility

•Three simple purposes: •Governance •Decision making •Communication

What should we get from Architecture and why do we do it?

Sandvik IT 4

Rudyard Kipling’s six honest men: • Where are we and where do we want to be? • Why do we want to change? • When do we want to change? • How will we get there? • What are the costs, risks and dependencies? • Who will it involve and who will it impact

• Which products and services are delivered to the customers?

• What is the business & its interaction?

• How is the business (ideally) structured?

• How are the products and services delivered?

• With what resources are the products and services delivered and at what location?

• Which parts of the business will change?

• What are the costs and cost drivers?

A1 Fx

A2 V1

Capgemini Integrated Architecture Framework A Service Based Architecture Framework

• What information must be recorded and exchanged in support of the business?

• How is the information structured?

• How is it recorded, retrieved and exchanged?

• Which processes us the data? • On which systems is the data

mastered?

• What repositories are used? • Who owns the data? • What are the costs and cost

drivers?

Capgemini Integrated Architecture Framework A Service Based Architecture Framework

• What IS service is required & what is their interaction

• How are the Information System systems (ideally) structured

• Which packages & bespoke software are required and where?

• What are the costs and cost drivers?

SAP FI

Roads Other

SAP HR

Capgemini Integrated Architecture Framework A Service Based Architecture Framework

• Which services must the infrastructure deliver in support of the applications and the business?

• How is the infrastructure configured and structured?

• At what locations are the infrastructure components implemented and what resources are used?

• What are the costs and the cost drivers?

DB

SAN

DB

Capgemini Integrated Architecture Framework A Service Based Architecture Framework

Example 1: Supporting Global Manufacturer’s Business Process and System Consolidation Program using EA to support the Business Case Benefit Logic Tool

Reduced cash out

Increased cash in

Less working capital

OsA P

rogramm

e

Reduce fees to Capgemini AM

Reduce fees to IBM

infrastructure

Reduce internal ABB costs

Reduce basic services

Reduce extended services

Reduce # of servers

Rightshore strategy

Reduce IT costs

Reduce business cost

Re-negotiate contracts

Reduce # of installations

Coordination with other LBU

Consolidate applications

Renegotiate contract with IBM

Reduce IT personnel

Make use of systems efficient

Reduce # of processes

Reduce # of service requests

Effective organization

Transformation of processes

Enterprise Architecture

Process harmonization

Maturity

PMO

Governance

Business Case

Reduce complexity

Reduce will to change

Improve governance

Effective organisation

Coordination

Reduce complexity

Reduce project cost

Reduce licence costs

Reduce costs for AM

Reduce costs for infrastructure

Improve knowledge

sharing

Rightshore AM

Reduce # of systems

Optimize application

usage

Renegotiate contracts

Reduce functional support

Reduce application enhancement

Coordination Increase stability

Politics

Fewer processes

Fewer systems

Standardize user support

Improve governance and

coordination

Centralize administration

Greater volumes

Security

Governance

Conceptual

Logical

Physical

B I IS TI

Contextual

DB

SAN

DB

SAP FI

Roads Other

SAP HR

A1 Fx

A2 V1

• Identify which processes and business will be effected, and how they will change

• Shows changes in Business costs

Using EA to help develop the business cases in OsA

• Derive which applications are involved and how they will change

• Shows changes in Application costs

• Shows changes in operational costs

• Derive which infrastructure is involved and how it will change

• Shows changes in hardware costs

• Look at growth through new services and revenue opportunities

A1 Fx

A2 V1

SAP FI

Roads Other

SAP HR

DB

SAN

DB

Example 2: Using EA to help drive process harmonisation and system rationalisation in OsA

• What business processes and information are handled by which LBUs

• What applications are used

• Which IS processes are involved

• What systems support the applications?

Competitive advantage High Low

Low

High

Value

Optimize

Harmonize ?

? • Process in this region can be harmonised, and the effects on IS and the organisation understood and decided upon

• IS can be simplified • Hardware decommissioned

• This area requires more detailed analysis using SOA methods

Example 3: Supporting Financial Transformation in UK Tier 1 Retailer

•Detailed architectural study of existing system landscape and business systems to analyse root causes of program failures and options to move forwards

•Continued “best of breed” integrated approach or migration to single integrated suite •Changes is behaviour and governance in the relationship between Business and IT

Security

Governance

Conceptual

Logical

Physical

B I IS TI

Contextual

0 1 2 3 4 5 6 7 8 9 10

Assetts

Other Ledger - Depreciation

Planning

Store Details

Cash

Other Ledger - GL Postings

Bank Details

Customer details

Other Ledger - AP postings

Other Ledger - AR Postings

Other Ledger - P&L Postings

Sales

Stock/Waste

Credit

Expenses

Other Ledger - Audit

Other Ledger - Debit Note

Other Ledger - Journal entry

Credit Control

Currency

Other Ledger - Accruals

Payment

Tax

Vendor Details

MI & Reporting

Other Ledger - 6 Part Keys

Purchase

Type

s of

Dat

a O

bjec

t

Number of Systems Mastering Data

85% Of Key Data Is Mastered In More Than One System

Ideal Position

• The target for any integrated system is for a given data object to be mastered in only one system

• Client Finance has many examples of many systems mastering the same data

• In an ideal world each system is compatible with the others

• Client has several key systems which are incompatible and require complex hard-coded mapping e.g: -

•FICs •ePS •E-Xpenses

• In an ideal world each business process is supported by one system or a number of compatible systems with full accountability and authorisation

• Client as several systems that have many points of data entry and authorisation for the same data objects, e.g: -

•NMP •MP (Food)

• The target for any integrated system is that data only needs reconciling because of business requirement

• Client has to use analysts in order to gather and reconcile data, spending more time doing this than adding value analysing the data

Unsustainable number of systems mastering same data

Technology Platforms at M&S

0

0.5

1

1.5

2

2.5

3

3.5

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Year Implemented

Mainframe

Windows 2000

Web based

Technology Platforms deployed in Client Finance (Size of bubble indicates value to business)

Tactical Approach Over Last 5 Years Has Driven Up TCO Dramatically • Strategic Systems over 10 years old and do not provide all retail functions

• Additional Systems implemented in tactical fashion, so are not all compatible

• 300 plus interfaces to link systems together, but referential integrity lost as systems work differently

• Many Systems Duplicate Functionality: - • For example IPS and IMS • Leads to many systems being master for

same data types • Inability to control, allocate and audit spend

• Wide Technology Base • Not eliminating older technologies as

newer ones implemented • Increasing point to point interface burden

as new systems implemented • Many systems out of support • High resource requirement to maintain

systems, difficult to consolidate due to diverse nature of skill base

• Diminishing ROI • Many projects with increasing costs and

over-spend, reducing in returns, taking longer and longer to deliver with increasing risk of failure

• e.g. eFSA, Food Marging Browser • Many projects dropped at initiation as

business case show costs outweigh benefits

• e.g. POS to GL cash rec

Over 40 systems including eSFA, IPS, IMS, ePS, Dashboard, BankRec, FMB, GMB, MySpend etc…

Last strategic investment in mid-90s. About 12 main systems including GEAC, CFAR, SPA and FTP

Only way to regain control is to consolidate applications around a new strategic platform designed for retail, eliminating incompatibilities and consolidating systems, data and skill base

• Fin IT “run the business” figure is approx. £X+Y M pa

•£Y M to run mainframe •£X M to run distributed systems

• Original Mainframe spend unknown • Distributed project spend over 2002

to 2005 was about between £Z M pa

£1M pa

£4M pa

Very Fragmented Data • No referential Integrity • Inaccurate Data • Lack of trust in data by all users • Incomplete Picture • Inability to properly audit and reconcile e.g: -

• Till loss to Cash Position • AP to Asset Register • Food Margins

• Unkown positions e.g: - • Cash in tills • Inaccurate Stock Position

• Sub-optimal decision making • Increased resource requirement

Data

• More than 80 poorly integrated (53 core) Financial IT systems

• 12 core mainframe systems costing £1M pa to run • 41 core distributed systems costing £4M pa to run

• Over 300 Interfaces • About 150 Access DBs and 1000s of spreadsheets

• Client probably need less. For example: - • 1 Merchandising Procurement System, not 3 • 1 NMP/Purchasing, not 4 • 1 system processing expenses, not 5 • 1 system processing “card” purchasing, not 3 • 1 Master data system, not many • 1 Core Accounting system not 4 • 1 On-line Dashboard style system, not 5 • 1 MI/Reporting system, not many

Systems

• Forced tactical spend rather than strategic investment, leading to proliferation of distributed systems

• Silo project thinking separate from Business Strategy

• Systems not meeting customer requirements and the response has been to enhance current, or build new systems, rather than fix root causes

Causal Factors

• Current Constraints on the Business: • Impossible to change a single system to meet BU

requirements e.g: - •eSFA, Food Margin Browser

• Difficult for Finance to invest in IT as a result, as costs can quickly outweigh benefits e.g:-

• POS to GL cash reconcilliation • Constraints on Finance Transformation Programme:

• Needs a single point holistic solution in order to make a measurable difference to the business

• No easy integration method or integration tool to bring all data together to solve issues

Constraints

Client system problems contribute to the excessive amount of activity on gathering data and supporting systems

•Working with president and senior management team of two BAs •Creating outline strategy to support IT enabled business transformation on program of change to 2020

•Facilitating business decisions regarding ambition to standardise business processes and information

Supporting major business change program in two BAs Example 4: Business Operating Model

Sandvik IT 17

Business Process Standardization Low High

Deg

ree

of S

hare

d In

form

atio

n Lo

w

Hig

h

Coordination • Shared customer, products or suppliers • Impact on other business units transactions • Operationally unique business units • Autonomous business management • Business unit control over business process design • Shared customer/supplier/product data • Consensus processes for designing IT Infra-

structure services; IT application decisions made in business units

Operational models drives standardization strategy, different strategies can be applied at different organisational levels

Diversification • Few, if any, shared customers

or suppliers • Independent transactions • Operationally unique business units • Autonomous business management • Business unit control over business process

design • Few data standards across business units • Most IT decisions made within business units

Replication

• Few, if any, shared customers

• Operationally unique business units

• Independent transactions aggregated at a high level

• Autonomous business unit leaders with limited discretion over processes

• Centralized or federated control over business process design

• Standardized data definitions but data locally owned with some aggregation at corporate

• Centrally mandated IT Services

• Customers and suppliers may be local or global • Globally integrated business processes often

with support of enterprise systems • Business Units with similar or overlapping

operations • Centralized management often applying

functional, process, business units matrices

Unification

• High-level process owners design standardized processes

• Centrally mandated information • IT decisions made centrally

Enterprise Architecture as Strategy Harvard Business School Press

Rig / vehicle assembly

Engineered equipment assembly

Manufacturing (machining,

heat treatment)

Raw material (steel, carbide)

Transportation, installation,

commissioning

Transportation, installation,

commissioning

Distribution

Products A, B & C

Products D & E

Products F

Spare Parts

Configure/assemble -to-order

Engineer-to-order

Make-to-stock

Deliver stocked items

Example products

Manufacturing(machining,

heat treatment)

Raw material (steel, carbide) Transportation

Products G & H Mass customization

Commercial components

Machined components

Proprietary components

Distribution

Sales & Marketing

(Order, Deliver)

Sourcing (Source)

Buying (Buy)

What is the standardisation in the value streams?

18

Manufacturing (Engineer, Order, Plan, Make)

Distribution (Deliver)

XX

PA

ZZ

XX

YY

ZZ

YY

Installation, commissioning

Project management

Supplier selection and management

Outsourced manufacture &

assembly

Aftermarket Services (Service, Contract)

Forecast & Order

Equipment

Engineer-to-order Products I

YY

Supplier selection and management

Supplier selection and management

Supplier selection and management

Supplier selection and management

Supplier selection and management

Forecast & Order Parts

Forecast & Order Tools

Forecast & Order CC

Forecast & Order

Workshop & field service

Workshop & field service

Performance Contracts

Contracts

Inspection & service

Spare parts Supplier

selection and management

•2 key words •3 purposes •6 wise men •4 examples

Summary

19

EA is a strategic business enabler