How To Build a Foundation for Execution
Note: This article is updated at Build a Strong Foundation for Execution to Improve Business Agility and Reduce Risk.
A strong foundation for execution for your company includes an operating model, an enterprise architecture, and an IT engagement model. If your company builds a strong foundation for execution, you can experience higher profitability, faster time to market, and lower IT costs.
In the book, Enterprise Architecture as Strategy: Creating a Foundation for Business Execution, Jeanne W. Ross, Peter Weill, and David C. Robertson share how a company can build a foundation for execution.
According to Ross, Weill, and Robertson, the operating model is the vision of how the company will operate. The enterprise architecture is the key architectural requirements for the foundation for execution, as defined by the Business and IT leaders, and based on the operating model. The IT engagement model specifies how each project benefits from, and contributes to, the foundation for execution.
The key benefits for building a strong foundation for execution include better profits, faster time to market, and cheaper IT costs. But, those aren't the only reasons you would want to build a strong foundation for execution. Additionally, growing complexity in a company's systems can create inflexibility in the systems, and excessive costs, without added value. Also, business agility depends on a strong foundation for execution. More agile companies have their core processes digitized. Changes in regulations are another reason to have a strong foundation for execution so that you can increase the likelihood that necessary data is available or can easily be obtained. Lastly, building a foundation is less risky than the alternative. You can use ongoing projects to steadily build your foundation for execution, while decreasing IT costs, and increasing business efficiencies.
3 Keys to Building a Strong Foundation for Execution
According to Ross, Weill, and Robertson, the three keys are:
- Operating Model
- Enterprise Architecture
- IT Engagement Model
The operating model is the level of business process integration and standardization for delivering goods and services. Ross, Weill, and Robertson write:
“The operating model is the necessary level of business process integration and standardization for delivering goods and services to customers. Different companies have different levels of process integration across their business units (i.e., the extent to which business uits share data.) Integration enables end-to-end processing and a single face to the customer, but it forces a common understanding of data across diverse business units. Thus, companies need to make overt decisions about the importance of process integration. Management also must decide on the appropriate level of business process standardization (i.e., the extent to which business units will perform the same process the same way). Process standardization creates efficiencies across business units but limits opportunities to customize services. The operating model involves a commitment to how the company will operate.”
The enterprise architecture is how you organize the business processes and IT infrastructure to support the operating model. Ross, Weill, and Robertson write:
“The enterprise architecture is the organizing logic for business processes and IT infrastructure, reflecting the integration and standardization requirements of the company's operating model. The enterprise architecture provides a long-term view of a company's processes, systems, and technologies so that individual projects can build capabilities - not just fulfill immediate needs. Companies go through four stages in learning how to take an enterprise architecture approach to designing business processes: Business Silos, Standardized Technology, Optimized Core, and Business Modularity. As a company goes through its stages, its foundation for execution takes on increased strategic importance.”
IT Engagement Model
The IT engagement model helps align business and IT, and ensures that individual solutions are guided by the enterprise architecture. Ross, Weill, and Robertson write:
“The IT engagement model is the system of governance mechanisms that ensure business and IT projects achieve both local and companywide objectives. The IT engagement model influences project decisions so that individual solutions are guided by the enterprise architecture. The engagement model provides for alignment between the IT and business objectives of projects, and coordinates the IT and business process decisions made at multiple organizational levels (e.g., companywide, business unit, project). To do so, the model establishes linkages between senior-level IT decisions, such as project prioritization and companywide process design, and project-level implementation decisions.”
If you want to stay in your market for the long-haul, exploring how to build a strong foundation for execution, if you don’t have one already, can be one of your best moves.