This week revolves around the topic - Understanding Business Context. In order to set a clear business context it is necessary to understand the core business functions. It is here that the operating model comes into picture. It is vital for every company implementing EA to have an operating model. The author of the book - Enterprise as a Strategy defines an operating model as - "An operating model is the necessary level of business process integration and standardization
for delivering goods and services to customers." Operating models provide a clear vision of the business strategy and lays the path in which the company wants to make progress in. Integration and standardization are the key terms here called as the 'key dimensions' of an operating model. Both of them are defined in the context of business processes in an organization. It is the business processes that constitute the core of an organization.
Integration - Combining or sharing information/data across the various business units in order to create a unified face of the organization.
Standardization - Put down a clear layout of the various business processes in the organization in order to reduce ambiguity.
These two features are very important because they are responsible for improving the overall performance and efficiency of the organization by increasing throughput, improving coordination and imbibing agility.
Based on these two factors, the author has devised four types of models:
1. Diversification (low standardization, low integration)
2. Coordination (low standardization, high integration)
3. Replication (high standardization, low integration)
4. Unification (high standardization, high integration)
Out of the four, I think organizations must aim at having the Unification type of operating model as it emphasizes on having high levels of standardization and integration. The heart of this model is managing all the operations centrally. The operations include IT functions, governance decisions and management processes. By having a central control on the functioning of the organization, the key dimensions can be achieved. However, achieving a centralized control is easier said than done. Integrating and standardizing data from disparate areas of business is a cumbersome task. Also, adoption of an operating model also depends on the nature of the organization. Having a centralized operation may not be beneficial to all organizations. This makes it important for organizations to put in a lot of thought in devising a good operating model. Once established, the operating model is going to show the plan that needs to be adhered to.
References:
Ross, J. W., Weill, P., & Robertson, D. (2006). Enterprise architecture as strategy: Creating a foundation for business execution. Harvard Business Press.
for delivering goods and services to customers." Operating models provide a clear vision of the business strategy and lays the path in which the company wants to make progress in. Integration and standardization are the key terms here called as the 'key dimensions' of an operating model. Both of them are defined in the context of business processes in an organization. It is the business processes that constitute the core of an organization.
Integration - Combining or sharing information/data across the various business units in order to create a unified face of the organization.
Standardization - Put down a clear layout of the various business processes in the organization in order to reduce ambiguity.
These two features are very important because they are responsible for improving the overall performance and efficiency of the organization by increasing throughput, improving coordination and imbibing agility.
Based on these two factors, the author has devised four types of models:
1. Diversification (low standardization, low integration)
2. Coordination (low standardization, high integration)
3. Replication (high standardization, low integration)
4. Unification (high standardization, high integration)
Out of the four, I think organizations must aim at having the Unification type of operating model as it emphasizes on having high levels of standardization and integration. The heart of this model is managing all the operations centrally. The operations include IT functions, governance decisions and management processes. By having a central control on the functioning of the organization, the key dimensions can be achieved. However, achieving a centralized control is easier said than done. Integrating and standardizing data from disparate areas of business is a cumbersome task. Also, adoption of an operating model also depends on the nature of the organization. Having a centralized operation may not be beneficial to all organizations. This makes it important for organizations to put in a lot of thought in devising a good operating model. Once established, the operating model is going to show the plan that needs to be adhered to.
References:
Ross, J. W., Weill, P., & Robertson, D. (2006). Enterprise architecture as strategy: Creating a foundation for business execution. Harvard Business Press.
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