Archive for the 'EAM' Category

08SepTwo Key Trends in ‘New Finance’

Financial Services and Banking respectively are affected by two major trends. Causes for these trends are internal and external influences:  External influences are for example new technological developments and Web 2.0 / Enterprise 2.0 while internal influences are such as cost pressure on Information Technology departments and organizational restructuring.

  • Trend 1 – Enterprise Architecture Management (EAM) key for cost savings and flexibility
    Due to planned cost savings, large financial organizations are trying to understand how their Enterprise Architecture works. This is key to start IT consolidation, release IT budget (especially RTB  - “Run the Bank” a.k.a. “Run the Business” costs) and increase flexibility, but this intent is also a great challenge. Usually, Business/IT models and the corresponding IT landscapes have grown over time. Therefore, in most organizations there is no real Business/IT Alignment and we find a complex IT landscape with duplicate functionalities in almost all areas – frequently accompanied by a silo-structure: The principle “one business request => one IT application” has shaped the existing Business/IT structure and the corresponding inflexible “IT elephant”.
  • Trend 2 – New Financial Services (also referred to as “Finance 2.0″, “Bank 2.0″ and “New Banking” *)
    Due to new developments such as Enterprise 2.0 and Web 2.0, new business models are emerging  within traditional finance and banking areas.  Two examples:
    1) The Web 2.0 era results in “parallel financial worlds” and Peer-2-Peer (P2P) models, circumventing traditional and established organizations.  People are using second markets to manage their trading activities (such as https://www.secondmarket.com/) or are using new providers to manage their personal finance (like http://www.mint.com).
    2) Future mobile technologies will enable everybody to pay via mobile phone, circumventing banks and mobile carriers. Developments such as Near Field Communication (NFC) allow making payments without using money within your wallet or credit cards. In fact, we are waiting since more than ten years for the breakthrough of mobile payment. To date, mobile carriers and banks prevented “ready for market” – solutions. As of now, there are new technologies and new financial service providers (see ex. 1) making easy mobile payments possible – without bank or carrier support.
Why do I see these two trends? That’s a simple question.
  • Trend 1 – The growing competitive pressure forces financial services organizations to increase flexibility and reduce complexity. Key is the existing organizational and IT strategy and their corresponding alignment. To date, there was not any need to go into this field, since finance was not subject of depression. After burst of the two big bubbles, the dot.com and the US housing bubbles, pressure increased and areas such as investment banking are not profitable enough any more.
  • Trend 2 – Financial services and banks are still in the area of “Web 1.0″. To date, there is no adaption of new technologies and opportunities are not perceived. This is the chance for the new financial service providers to fill this gap and to leverage new forms of financial services – easy and in real-time.
In addition, both trends are compatible. While consolidation within financial services organizations starts, budget will be released to invest in new ways to manage financial services. But keep in mind: The later the established organizations will start consolidation and moving to the new finance model, the later the new services can be made available… New financial services providers such as Google (see http://www.google.com/wallet/) will use their lead to divest established organizations their customers.

In the next days I will go into the Bank 2.0 / Mobile Payment – example…

References:

  • Google Inc.: “Google Wallet – make your phone your wallet” – URL: http://www.google.com/wallet/
  • Intuit Inc.: “Free Personal Finance Software, Budget Software, Online Money Management and Budget Planner | Mint.com” – URL: http://www.mint.com
  • SecondMarket Holdings Inc.: “SecondMarket – Secondary Market for Alternative Investments, Private Company Stock” – URL: https://www.secondmarket.com/

*) Since these terms are used in different context and have partly different meanings, a clearer differentiation is necessary. The definition and differentiation of these terms goes beyond this article. A good introduction to the term “Bank 2.0″ gives Brett King, author of “Bank 2.0″, see http://www.banking4tomorrow.com/ – The term “New Banking” is described in the blog of Dirk Elsner, http://www.blicklog.com/ .

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14JunBusiness Capability Management (BCM) – frei verfügbares eBook

Entgegen meiner ursprünglich Planung, dieses Buch über einen meiner favorisierten Verlage in den Druck zu geben, stelle ich nun meinen Enterprise Architecture – Beitrag “Business Capability Management – Gezielte Ausrichtung der Artefakte einer Unternehmensarchitektur” frei für den persönlichen Gebrauch zur Verfügung.*

Remark for English-speaking readers:

I will take up some topics of this book in the coming months.

Auszug aus der Einleitung:

Aufgrund der turbulenten wirtschaftlichen Entwicklungen der vergangenen Jahre sieht sich das Management von Unternehmen heute mit neuen Herausforderungen konfrontiert. [...]

„Capabilities are one of the later ‚hot topics‘ in Enterprise Architecture Management.“ [Kell09, S. 1] Von dem in diesem Beitrag behandelten Business Capability Management (BCM) erhoffen sich Top Manager, die Gestaltungsobjekte einer Unternehmensarchitektur (Enterprise Architecture, EA) zielorientierter ausrichten zu können. Das geschieht ausgehend von einem abstrahierten Betrachtungswinkel und unabhängig von einer konkreten Implementierung. Dabei wird vor allem der zukünftig gewünschte Zustand von Geschäftsfähigkeiten adressiert (SOLL-Zustand, „future state“) und in der Sprache des Business artikuliert (vgl. [Hopk10], [Rose10, S. 1ff.]).

Download und Quellen des Auszugs:

*) Copyright siehe Impressum des Beitrags (im pdf). Jede kommerzielle Nutzung, jeder Druck, jegliche Vervielfältigung oder Bereitstellung zum Download bedarf der schriftlichen Zustimmung des Autors.

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14FebBusiness Capabilies in Enterprise Architecture Management

What are Business Capabilites?

The Management of Business Capabilities attracts the attention of Business, IT and EAM representatives. It not only represents one of the cornerstones of Business Informatics (and Information Systems respectively) but it is also considered a key topic of Enterprise Architecture Management (EAM). As outlined by Wolfgang Keller,

„Capabilities are one of the later ‚hot topics‘ in Enterprise Architecture Management.“ [Kell09, p. 1]

Beimhorn et al. describe the term “Capabilities” as follows:

„Capabilities represent firm-internal encapsulable services, i.e. units of business functionality. In contrast, a workflow or procedure is the end-to-end group of activities that describes how a capability is performed, while a business process is the interconnection resp. a composition of capabilities to fulfill a market demand.“ [Bei+05, p. 5]

Balasubramanian et al. provide the following definition:

„A business capability is a distinctive attribute of a business unit that creates value for its customers. Capabilities are measured by the value generated for the organization (…). Thus, capabilities differentiate an organization from others and directly affect its performance. ” [Bal+00, p. 41]

As you can see, there are a lot different views on this topic and a “plethora” of definitions. From my point of view, Business Capabilities are a promising instrument that promotes the sustainable alignment of the artifacts of the Enterprise Architecture to the corporate strategy. Capabilities allow a business-focused perspective – abstract from technologies, applications and infrastructure. This is an encouraging way to reduce complexity and to support management decisions. Another aspect is the constancy:

„While processes are modified, technology changes, and people reorganize, a business capability remains constant.” [SyCl09]

Beside, this instrument helps companies and groups to achieve transparency in their IT landscape.

As investments are more and more questioned and budgets get increasingly scarce, the business value of Capabilities will increase in future. A good introduction is given by Wolfgang Keller (see [Kell09]). Currently, I am working on a further publication on this topic. You will hear on this website about this publication (expected Summer 2011, http://www.generate-value.com/publications/).

Reference list:

  • [Bal+00] Balasubramanian, P.; Kulatilaka, N.; Storck, J. (School of Management, Boston University): Managing information technology investments using a real-options approach. In: Journal of Strategic Information Systems 9 (2000).
    Amsterdam: Elsevier, 2000, pp. 39-62
  • [Bei+05] Beimborn, Daniel; Martin, Sebastian F.; Homann, Ulrich: Capability-orientated Modeling of the Firm. In: Proceedings of the IPSI 2005 Conference. Category: Proceedings. http://www.wiiw.de/publikationen/protected/CapabilityorientedModelingoft1269.pdf. Registration required, last verified on April 7, 2010.
    Amalfi/Italy: IPSI 2005 Conference
  • [Kell09] Keller, Wolfgang; Using Capabilities in Enterprise Architecture Management, Version of 2009-12-18. URL: http://www.objectarchitects.biz/ResourcesDontDelete/CapabilityBasedEAMWhitepaper.pdf, last verified on April 20, 2010.
    Lochham: Wolfgang Keller, 2009
  • [SyCl09] Sykes, Martin; Clayton, Brad (Microsoft Corporation): Surviving Turbulent Times: Prioritizing IT Initiatives Using Business Architecture. In: MSDN Architecture, The Architecture Journal, www.thearchitecturejournal.net, last verified on April 13, 2010. URL: http://msdn.microsoft.com/en-us/architecture/aa902621.aspx.
    Redmond: Microsoft Corporation, 2009
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