table of contents
- “Business architecture” and “technology architecture”
- Approach to guide DX
- 10 capabilities to accelerate DX
“Business architecture” and “technology architecture”
One of the things I learned while working at Cisco Systems and thought, “This is great,” was the concept of systems. It’s not a particularly difficult topic; it’s just a matter of thinking about systems in terms of two layers: “business architecture” and “technology architecture.” The image is that business architecture is superimposed on technology architecture.
Why is business based on technology? That’s because technology is there to solve business problems and achieve goals. While you need to assess the available technologies, it’s important to start with your business architecture. After all, that is the purpose of systematization.
Recently, I interviewed a person in charge of a domestic company that is famous for its business model. This person did not think about DX (digital transformation) from the beginning but rather thought about the service they wanted to provide to their customers and then applied the appropriate technology, resulting in the creation of an advanced service.
Approach to guide DX
A strange DX boom is occurring in Japan. Many vendors make claims such as “If you introduce this technology, you can achieve DX,” but in reality, that is impossible. DX is a business transformation that utilizes digital technology, so first of all, as a business architecture, there is a purpose of how to transform the business model, business operation model, or organizational model, and to implement it. There is a technology architecture.
In other words, the direction of the approach is opposite. Many companies have established specialized departments to promote DX, but the book “CHANGE: Why Organizations Don’t Change” (author: John P. Cotter et al.) argues that if such an approach is lax, DX will not work. states. Because the purpose is different. The book contains the following points:
| Why can’t DX be achieved by specialized departments alone? | Why can DX be realized by the cooperation of a large number of diverse people and a specialized digital department? |
|---|---|
| The purpose of change remains unclear | It clearly explains what opportunities the change will open up. |
| React to customers, markets, and new technologies, independent of overall business strategy | Integrate all activities and align them with business objectives |
| Focusing only on technology and data, ignoring people and change | We value behaviors, mindsets, and engagement, not just tools, technology, and training. |
| Anxiety and uncertainty caused by DX and unwillingness to deal with huge amounts of data | Addressing employee fear and anxiety and calming survival channels |
| They are promoted only by a small group of highly homogeneous people, opportunities are not taken advantage of, there is a lack of direction, and they are met with resistance. | Create a sense of urgency among a wide range of employees and get them serious about change |
| Inflexible in the transformation implementation process and too dependent on management processes | Activate the prosperity channels of a wide range of employees, elicit actions, and demonstrate leadership. |
Until recently, this technology architecture was represented by OSI’s seven-layer reference model. It starts with the physical layer, then the data link layer, network layer, transport layer, session layer, presentation layer, and then the application layer. That’s nostalgic. Business problems are solved at the application layer, and the layers below are the foundation.
Now that we are in the cloud era, this technology architecture is also transforming. I think there are probably multiple approaches. For example, if you look at native cloud applications such as IFS Cloud and Workday, enterprise applications have a common platform on cloud PaaS and storage services, on which applications are implemented, and finally BI and analytics for data utilization. It is structured so that
The common platform implements common technologies such as workflow, data lake, and AI engine. It has a structure that stores transaction data generated in applications and facilitates data utilization.
Also, recently, container technology has been attracting attention, so I guess it is an architecture where there is a container engine on PaaS, and a container is implemented for each application on top of that.
A while ago, I had the opportunity to explain about the Metaverse, which is currently attracting attention. The foundation of Metaverse uses technologies such as 3D, VR, IoT, AI, machine learning, NFT, bots, 5G, voice recognition, automatic interpretation, and simulation. NFT (non-fungible token) is a bit unique, but the other technologies are not unique to the Metaverse and are the same whether it’s DX or normal digital business optimization.
Therefore, when thinking about DX, technology architecture is no longer the starting point. Unfortunately, for those involved in IT, the above techniques are common skills that must be learned. You need at least the level of knowledge to instruct an expert. However, the rapid evolution of AI is certainly accelerating changes in technology architecture. AI is the point.
10 capabilities to accelerate DX
When thinking about business architecture to promote DX, I found the MIT Sloan School of Management’s report “10 Capabilities to Accelerate Digital Transformation” very helpful. Please read the original text for details.
This report categorizes the capabilities to implement DX into “customers,” “operations,” “ecosystem,” and “foundation,” and states that a total of 10 capabilities are required. It is as follows.
Customer
1. Deliver a great multi-product customer experience
2. Be purpose-driven
Operations
3. Modular, open, agile
4. Challenge to ambidexterity
Ecosystem
5. Lead or join an ecosystem
6. Pursue dynamic (and digital) partnerships
Foundation
7. Treat data as a strategic asset
8. Develop and maintain the right talent
9. Connect individual and team actions to company goals
10. Drive rapid learning across the company
Regarding “3. Modularization, openness, and utilization” and “4. Challenge to ambidexterity,” it is difficult to understand from the title alone, so I will provide some additional information.
“3. Modularization, openness, and utilization” appears to be referring to technology, but it means that companies can provide various digital services by modularizing, opening, and utilizing their business. It means the ability to do something.
Furthermore, in “4. The Challenge of Ambidexterity,” it is states that digital technology requires two methods: constant innovation and controlling costs and accelerating that innovation.
In short, DX cannot be achieved without developing business architecture skills. Technology architecture capabilities are of course important, but in an era where digitalization is the norm, it seems necessary to make them a normal capability for companies.
The report states, “Building these capabilities is an ongoing effort that requires leadership, purpose, metrics, budgets, new approaches, and patience. As a result, companies are future-ready and competitive. They will be able to gain and maintain an advantage.”
Since the purpose of a company is to gain and maintain a competitive advantage, make employees happy, and contribute to society, I think that the capability “2. Being purpose-oriented” should come first. think. It’s been a very difficult time.
