This post is the expanded script of the session I will present at the Enterprise Architecture Europe 2014 next week. It was based on the previous collection of writings about Enterprise Architecture [1, 2,3,4,5,6] and this post called Der Mann ohne Eigenschaften
The Guinea Pig where this method was developed is the Portuguese Engineering Council. Is the regulatory body for the Engineering Profession that have the dream to go DIGITAL. We will come again to that dream later.
Created in 1936, the Ordem dos Engenheiros (OE) is aimed chiefly at contributing to the progress of engineering, by stimulating efforts of its member scientifically, technically professionally and socially and to strive for compliance with the rules of professional ethics.
As a public association, which represents the Portuguese engineers, it is tasked with several functions, among which the support for the personal and social development of these professionals, by promoting the engineering title and profession, as well as the cooperation and solidarity between its members and committing itself in the defence of a prestigious Engineering Council and high-quality, demanding and rigorous engineering
Despite the message of the President is eloquent, the great and critical mission is to assure that members are what is called a “De-facto Engineer”. The ones that can hold such a title, are qualified to execute engineering acts, I mean, they can and are held accountable for designing bridges, critical systems that control refineries, natural equilibrium of habitats and spatial planning. Hence the Engineering council it haves a critical mission vis-à-vis with the society and our own human existence, assuring that when the council evaluates a candidate or a member and assure that she or he is entitled to design and conceive a system to control a refinery it means that the person actually have the skills to perform such a quest and will not put in jeopardy the surroundings where the refinery operates.
Doing Enterprise Architecture in layers can deviate from what truly matters
The fact that when we listen talking about Enterprise Architecture, it seems that it is all about intangible concepts, I mean, people talk about the WHAT Architecture is, what is the concept and the metaphors, but never talk about the HOW to do it. The real value of the discipline is how does it helps managers to make strategic decisions, like entering new business, what kind of customer experience should the company provide, how operations should designed, what kind of technology we should use and so forth. If that it is not the case and we continue to talk about concepts, managers will not buy-in the need to architect. Let me bring an example: if there is a merger between two companies that operate in retail, that become to operate both in youngsters and premium segments, while in the mainstream sector we can outsource manufacturing in China, for the premium brand, we need to find manufacturing facilities that are close to the distribution centres and have deep knowledge how to manipulate garments. In the end we can share the same space in the warehouses were the goods are being distributed to the shops. This must be thought.
The challenge is not about the fact that modelling is a wrong thing, the problem lies when such models impose a way of doing things, in other words, a model is neither true of false (most of he times is false), it is more useful or not.
For example, when we look to the Admission and qualification management of members process, the example that somehow will drive us during the presentation this is all about a candidate achieve the official title of engineer, this is about how you control the anxiety of the candidate. Why? Because if in the end she or he does not get such a title it means that the candidate it’s out of the labour market. It’s just that so simple. It is important that the candidate can interact with the Council using a Smartphone (or not, as we are going to see in the next minutes), but if we cannot during the admission process inform how the application process is running and in the end, the Council only communicate if there is success or not and in the case there is no success, because it was not complied a particular request, the candidate must restart everything from the very beginning, we are not doing enterprise architecture, even if we have the best mobile technology.
The VSM System
VSM had in mind to understand a enterprise as a system. If an enterprise is not understand as a system, managers cannot change it with any kind of predictability. The model, consists of environment and a system. The environment is the one the organization operates, related with the industry sector (or multiple industry sectors) the enterprise is in. It have five subsystems that I am not going on details on it (because the principles how they operate are more important that its own definition), the system exists independently if the enterprise have multiple line of business or not (one of key characteristics, together with autonomy, is it’s recursive nature that like fractals, can be solely applied to a particular activity):
- System 5 – Policy – The system provides strategy and business direction, but the same it’s true for a process. In this context, the process, Management of Disciplinary Matters have the purpose of assuring that any member does not break the rules of ethics and does not executes engineering acts that she or he, was not qualified for that purpose.
- System 4 – Intelligence – Measure results perceived by the market (environment) absorbs the internal performance, balances mismatch, sense the future and provides guidance for adaptation. This exists strategically, as also operationally.
- System 3 – Integration – Managing and control operations, provide resources in order to operate (money,humans, equipment, systems).
- System 2 – Coordination – As defined, it was a balancing act between multiple operations in order to reach equilibrium, called homeostasis, like managing a complete supply chain (i.e. you get an order from customer and managers and operators can make it through delivering it according to schedule and have fully visibility of what it’s happening balancing the counter forces that act against it, the need to process and deliver the other customer orders). It also sets up the rules, the procedures the guidelines that “prevent” operations from deviation. It’s function it’s not to control is damping oscillation.
- System 1 – Operations – Where products are manufactured, where services are provided.
All systems are vital to viability, then there is no meaning to be “more important”
VSM Guiding principles
One of the most important principles of VSM is Viability: “To maintain a separate existence”. To be viable, translating into a different kind of words, it is related “to be economic viable”, in this case study, to be viable as an organization, means members pay memberships and the volume of memberships cover and exceed the costs.
VSM sits of the top of an abstract concept referred “a system is viable if is able to cope with variety”. Variety is linked how complexity is measured and as such variety is measured with all the possible states of a system can be (in order words think about working variants of business process that can be infinite). They key is not to calculate all the possibilities because that is absurd, no, again, limiting information flow, operational variants will filter our capacity to operate to understand and to adapt, to live and to be viable. Is curious how these new concepts that are emerging about adaptive case management loomed to the fact that normalization and standardization could not cope with unpredictability, complexity and variety. Deconstructing the philosophical side of the method, think how an airline deals with the flood of tweets requesting assistance coming from passengers. If it ignore the tweets, decreasing variety or do not answer the tweets, not absorbing variety, will let the customers down, frustrated and next time they will choose other airline.
The other important principle is the recursive system theorem. In a recursive organization structure, any viable system contains and is contained in a viable system. VSM is a recursive system of systems at each level of recursion (like fractals, imagine what is dividing a square in 4 squares and so forth) there is a system that have its own existence. This is the reason why when companies merge or demerge, they continue to exist in the very short term (they continue to be viable). The recursion principle also sets up that all the approach into the full enterprise, to a line of business, to a value chain to a business process to an activity.
The case study
The strategy of the Engineering council was going digital. This was the main strategic focus of the organization. According to top management, they could not continue to rely about the lack of information technology to support business operations. Despite, there was a member portal where they could submit requests, most of the operations were handled by e-mail, spreadsheets and legacy databases (today this is called the personal cloud). This is the typical starting point of about a good project to help an organization to make a shift.
There were two important challenges I would like to stress:
- The first is the digital paranoia. We all agree that the digital is becoming the way to operate. Companies that were already born in this new era had the possibility to develop very different business models that challenged mature markets, like for example what happened when zip car was bought by Avis (and these days Uber is eating taxi drivers share). But painting this organization fully digital can harm some of the members, the ones that are “digitally impaired”. The council have a long tradition of existence. Some of the older members like civil engineers around their 60’s and older, are not very familiar with the operation of a Smartphone. You can hear from these grownups “before I could operate any telephone, today with this new phones, some you need to swipe left to right, others it’s top bottom, I get confused how to use it”. You can question “but they are engineers, don’t they have an e-mail, they don’t know what an app is?”. Well it turns out that they do not. This constraint have a huge impact about how we will interact with these kind of members. Meaning, phone lines need to be available to customer support, because they don’t know how to operate in self service mode, because they prefer face to face interaction.
- Again, I stress that the moto of this project (“that is reflect in the slide deck was at reach of a click or a touch”) needed to be slightly redefined.
- The second most important aspect is that according to the strategy plan (not what you are looking at, because this is just a part of it), there was an intention to setup an engineering observatory. That observatory had as main objective, understand the future trends in engineering and the impact that it will have in the future of engineering at large and particularly in the country, like for example what kind of renewable energy sources should the country adopt and other themes like smart grids. This is like a think tank. We got excited about it once this pure VSM’s system four, but working on reverse, because the results direction were pointed to the society.
What business are we in?
If there is a strategy, if there is a guide and that is clearly understood, the next step should be about the catalogue of business services that we will provide to the stakeholders. In other words WHAT the organization does.
Ask yourself: “what are the services we will provide?”
But, a business service is associated with a value. If there is no perceived, again, perceived value by the stakeholders, you have “ghost” services just to please someone in the organization (or justify a place in the organizational diagram).
So again, Ask yourself: “What are the services necessary to deliver value to the customer ?”
Before going into details, make a reflection on the what should be, like for example a State.
As you know, the Portuguese State, as well others were under a program of direct aid from the IMF and the European Union. During the financial aid program, it was attempted by the government (I’d say it was only a formal act, poorly done, that public opinion never cared about it) to create a script on the reform of State. In this script, the focus was the balance between a minimal state and a state where everything is universal, from a state where education to health care is provided by private companies and citizens have to pay for it in exchange for less taxes or the same services are public, universal, free, which implies an increase of the tax burden. It is precisely this type of exercise that organizations have to do about the “WHAT “.
Instead of creating 500 boxes and arrows, we need to identify what are values to be delivered to the stakeholders.
A value comes with a result. There is a big difference distinguishing between an output and result. A result of a business process is what is perceived by a customer, let me bring an example:
An insurance company that a customer celebrates an insurance policy is an output, if during an accident or an issue, the insurance company legally defended the customer, assured mobility or health care it delivers a result. Hence, the customer feels in fact, insured (the value).
When the team made a reflection about the most important values to be delivered to the stakeholders, the top three of the list were:
- To be a “de-facto” Engineer (we already talk about that in the introduction of the case);
- Be protected of Engineering acts, it means that the Engineer is protected against intellectual property, and the society is protected about the accountability regarding whom executed a particular engineering act when had a negative impact;
- Provide Technical collaboration, related with acting as advisors on engineering domain expertise (for example how to implement smart cities).
Based on these results it was built a relationship network, of the necessary business services that should exist to assure that set of values could be accomplished. It resulted that:
- Membership services: related with admission requests and renew or canceling the membership status and technical qualifications related with the membership;
- Trainee academia: necessary to assure internships (for those that just finished their degree);
- Professional Training : specialized training that the council provides to its members;
- External relations: necessary to setup partnerships with third party enterprises (like for example if you have an account in this bank and you pay your quotas trough it, the member get a discount);
- Protocols and partnerships: that is the extension to cross sell services regarding the partnership that were celebrated, and;
- Events and venues: services directed at large to the society engineering related, or, specific topics to the engineering themselves.
As you can see, we have here the foundation of the business architecture, this is the core. This is done doing a very deep reflection about the values to be delivered, contrary of adopting predefined frameworks and going through endless interviews about what people do, what people should do, doodling models, etc.
Define the value chain
To build a value chain, as we saw, it must be defined first the services of the organization, what the organization is the “WHAT”. For each service there must be a process that “realizes”, operationalizes the service. The service is attached with value.
In the end we wrap up all the services and as you can see there is now a proper place about the observatory of engineering. This service is not a representation of the VSM system 4, is under system thinking theory, “a system is what is does” and if it is necessary to understand the future of engineering there must a be a place for that. We will come back to that latter.
The definition of the value chain is based on several important principles :
There should be a value chain for each line of business, however, some of the services / processes may be shared. For example, a conglomerate that is in engineering and construction, waste treatment and renewable solar energy business, should have 3 distinct value chains. Processes such as Procurement and Recruitment should be shared with some variations according to the specific business line of business. Creating multiple value chains, based on the cybernetic principle of recursion and autonomy, the organization as a system, is itself constituted by other organizations.
- Each service must be supported by at least one process . If there only exists in your imagination, you have fillers. Delete them.
- Do not try to “best fit” value chain models in your business . Although models such as generic SCOR eTOM, APQC are a starting point to reflect on what processes a company should have, are normally contrary to the specific nature of the business model.
- Do not decompose services or processes to a level of infinite granularity. Don’t do capabilities maps. For example, let’s consider a Procurement Process. What is the value for a manager knowing that you have to specifically improve the way payments are made to suppliers, because this is the cause of the delay in closing the accounts and makes the financial statements take more than 10 days to be published? This information should be part of the Business Case of the improvement project. To the manager, is only necessary to know that the procurement process must be improved.
For many years we have heard how BPM eliminates silos within companies, because when designing a process it goes through the various departments and the communication barriers are broken, as also, the formal reporting and hierarchical pyramids tend to fade. I tend sometimes to believe this harmonic operation (I am fooling myself), but as soon the organization overcomes the organizational silo syndrome it starts to suffer from the process silo type. The old organizational silos, became the new process silos, because there are no dynamic linkage between processes. The lethal variety attenuator is ignorance (Beer). And such we are putting in danger the understanding of an organization to be viable.
First principle of the organization. Managerial, operational, environment varieties diffusion tend to equate.
Stafford Beer (Adapted)
One of the important aspects when modeling architecture is reflecting in the high-level diagrams that were previously created. In this perspective, we see that within the realm of “Membership” service, the value expected to be achieved is that engineers are “de-facto” engineers . This is our purpose. In this sense, lets dwell on the Admission and qualification management of members process.
These are the basic principles needed to assure process viability, within the maximum recursion level as VSM defines (from process, sub process, activity and tasks).
- On purpose. This process is responsible for assigning the title of Engineer or “de-facto Engineer”, i.e. , have the skills necessary to design and build bridges or designing information systems that are responsible for the management of nuclear plants. The way the skills assessment is carried is very detailed and we will not expose it here (it can be formalized in a BPMN diagram if you like), just to provide some insight includes among others, after receiving the application for admission: Evaluate the completion of the degree of Engineer; Undertake a traineeship, Present a traineeship thesis; Create technical reviews, etc.
- On a proper environment. This particular process have a very unique environment. It is the society. Very few organizations whose own environment is so vast and simultaneously as critical. In the field of engineering, we can be dealing about risks of human life. A poorly designed bridge falls. A poorly designed automobile can cause accidents. Within this large specific environment, candidates are members within each specialty colleges (mechanics, electricity, construction, biology, etc).
- On the boundaries.Identifying the vertical boundaries is one of the most important aspects of attaining viability, based on the intangible and philosophical fact that many times is quoted that “only variety absorbs variety” and people don’t understand it’s meaning. Absorbing variety, information flux to reason and adapt, means it is necessary to setup dynamic communication channels between operations in a way they can process information. If we limit the way communication flows, because we tend to think they are useless, we are killing the opportunity of adaptation. On the other hand this will prevent bigger oscillation, damping the business (putting shock absorbers) occur when there is a truly dynamic interaction between business processes that tend to equate, rather than set them isolated (process silo mentality) and become uncontrolled. This is typically System 2 prescribes, the homeostasis.
An organization is basically self organizing. All systems are interconnected.
Vertical boundaries. The vertical boundaries are about the nature of interaction with other processes , whether internal or external to the organization. As mentioned earlier in this article we have to eliminate the risk of the silo effect. If you have already set the high-level architecture of services and the value chain, it is easy to define the interactions with other processes. In the case of process “Admission and qualification management of members” interactions are:
- Partnerships Management. Because after the admission of the member, you are offered the possibility of obtaining a package of services offered by external entities under preferential conditions.
- Training Management. The Engineering Council offers a catalog of specialized training in that members may be interested in signing up . This catalog of training is normally open to members and non-members, hence for the purposes of assigning specific qualifications related to acts of engineering , it is important to intimate relationship between the process of training management before, during and after the candidate has been admitted.
- Internship Management. In some cases, it may be envisaged that the candidate has to undertake an internship, particularly if it’s getting out of high school and does not have professional experience.
- Management of information and complaints requests. The member can complain about decisions made during the application process.
- Management of disciplinary matters. Before, during or after the admission of a new member, questions about the profession can be raised. It is important that if complaints about fraudulent acts, prevent the member admission or accelerate member demoting.
- Quality Management. The assessment of member satisfaction during the admission process is an important aspect of consultation about members needs and expectations.
Horizontal boundaries. The horizontal boundaries are about the nature of interaction with stakeholders . One of the biggest mistakes of process design is to ignore who are the real stakeholders. There is a tendency to ignore them, if there is no direct interaction in execution mode, for example, in the particular circumstances of the case “Admission and qualification management of members” there not a single activity to interact directly with the headquarters of the Engineering Council, since the local branches have total autonomy. However, the headquarters exercises control mechanisms in terms of applicable polices and internal regulation (some are adaptation of national laws) but have particular interest in the number of new admissions and “desertions”, as also it have a particular interest to constitute technical groups that provide services to enterprises or government agencies. The stakeholders of this process are:
- Members ;
- Technical committee that evaluate the proposals;
- Entities that offer the possibility to perform a traineeship;
- The Board of the local branches and the Board of the National Engineering Council. Regarding this particular Stakeholder, I would like to stress that they are not even involved in the process, they do not interfere, but they are very keen in order to figure it out what kind of women and men the Council is made of, in case they need to participate in technical committees to help the government to make decisions. For that reason, that must be an open channel about the kind of members, their expertise, interests, past and current projects that they are involved.
Feedback mechanisms, regulation and control. In some organizations the lack of rules and monitoring capacity and visibility is critical and must be given the relative importance of these aspects. Here is here an organization meets Business Intelligence, Dashboards and KPI’s but it is truly important is the algedonic channel.
What resources are needed? This is pure System 3, what is called the bargaining process. Human , systems , equipment, facilities. The way VSM was conceived during the mid 60’s – 80’s of last century fits in the budgeting process. Although this classical process still exists in the majority of organizations what is important here is to highlight more than having the right resources to run, is the qualification (skills and ability) authority (delegation of duties) to perform. Dietz in the Ψ theory, expressed clearly in the operation axiom about the three conditions that an actor must have to be able to play its role in a process and that based on what we already mentioned above:
- Authority: The actor can perform a particular activity on behalf of an organization in a process. Authority can be delegated.
- Competence: The actor has the necessary knowledge to perform the role? If it is a Controller, has a background in finance and accounting to understand whether the entries in the financial statements are correct?
- Responsibility: By virtue of the values, culture and policies of the organization one represents, is expected to exert the granted authority in a responsible way.
These architectural principles of process that I leave here listed here are vital to achieve operational stability, eliminate the process silo effect and is headed towards system engineering thinking and ensure the viability of the organizations, instead at the expense of creating a company of heroes.
In this case we are talking about the lack of applications for membership or membership cancellation. Being a member of the Engineering Council implies pay memberships fees. These fees are the main source of revenue of the organization (the other businesses that can be seen in the value chain (like advertising) are waste, if you delete the revenue coming from membership and perform an acid test, the organization enter in bankrupt mode in the next day).
Theoretically, all the acts produced across the organization are recorded (despite this is somewhat far from the truth). Hence data (that constitutes the information architecture) is the mirror of what occurs during process execution (independently if it’s automated, normalized, ad-hoc, adaptive, etc). Today, we are headed towards the digitalization of all data as a consequence of the new norm that is, organizations are becoming digital. Hence, the data explosion phenomena, however, there is still data on paper as also data that it is deleted.
Using that amalgamation of data, actors should have the opportunity to infer, reason, make decisions, the expression of our intellect, that is the reason of being the “Information space” – (how knowledge is diffused) that ultimately supports the own existence of the corporation.
The information layer, called by Dietz the datalogical world, is the “fossil” of what occurs in the organization as a result of executing business operations. Information is the fuel that drives business processes; their flow generates value to the user.
Analysing the nature of coordination acts will allow us to identify the informational entities that will build the master data dictionary and will shape the application landscape. It will define what kind of data is necessary for each actor to create and consume during activity execution.
An Informational Entity is: any person, place, concept, thing, or event in the context of the business, about which information is necessary to keep the informational attributes of the entity itself. For example, the informational entity Customer has the attributes: “Number”, “Name”, etc.
Hence, by identifying the informational entities (that can also be redefined as business entities or as Archimate puts it, a Business Object) we are defining what kind of information, actors (humans, machines, systems) will need to access to accomplish its job they have been authorised to by the use of enterprise applications that process such kind of information intake. For example: an invoice is used when making payments, but also when analysing the customer orders history. The invoice will be also used in multiples applications like Billing, Accounting, Recommendation Engines (by retrieving the products that belong to the lines of each invoice in order to cross sell).
Building Information Architecture – identification of informational entities
The process to identify informational entities is bidirectional. Top-bottom, looking to what is the intake during process execution, and bottom-up, looking to the existing applications identifying what is attached to it. Luckily in this example we are working on the top of blank sheet of paper, meaning that most of the existing applications will be erased and we do not need to concentrate in the bottom-up approach. Still, a word of caution: neglecting what the current applications do regarding for example creating and updating informational entities, may cause extreme conflicts in data governance, data quality and confidence by the actors when accessing data. For example: a Controller cannot expect that a Customer balance report includes invoices are on due, but the billing application already processed payment.
The process is pretty straightforward. Start looking to each process that belongs to the value chain in a high level terms (don’t try to detail it, don’t go for BPMN diagrams, at maximum, keep it decomposed into high level steps or sub processes as you like), identify the main activities executed and question what informational entities actors should create, consume to succeed achieving the process results. Identify if during executing process, the informational entity is Created, Read, Updated or Deleted. The CRUD operations should be not seen as database operations but as Application Services that the an Actor invoke.
You should have as a result of analysing a business process, like admission and management of members something like this picture.
This way it is possible to create a puzzle that intersects the processes against the informational entities. The first exercise will result in a very high cluttered board as illustrated. The end result through the application of a set of heuristics will create application clusters.
The application architecture have what I would call very straightforward, most of applications are very clear taking into consideration its purpose, process oriented by bicephalous BPMS / CMS running on top of the secondary “line of business” applications.
One I would like to point out that its particular important, but it’s importance does rise on the diagram is the WIKI.
The observatory of Engineering that relied heavily on the wiki that the critical mission of dealing with engineering variety. Here is a good example about how a viable system can deal with variety. Let me bring this scenario: how to understand the impact of drone use in agriculture? Questions rose like:
- How to operate in order to make effective crops?;
- What about data collection, like images that rise privacy issues?
- And what about licensing to fly?
How to study and bring this challenges to society?
The wiki have three main missions:
- Support Task forces: “everyday”, it is necessary to create a task force on a specific topic. It can be around creating standards or acting as a liaison with standards agencies, understanding the changes of legislation and alike and its impact, it can be a focus group that develops new engineering methodologies it can be applied on everyday engineering, it can be a collaborative environment about the thinking of engineering and it is applied for example in schools. This is truly necessary to support the observatory of engineering.
- Knowledge Repository: the externalization of tacit knowledge in order to become explicit and help members to find answers that are not documented. For example lawyers like to write books about the interpretation of the law to help other professionals to reason an make decisions on that, but that is not practice in Portugal due to the fact that there is no publishing industry that supports that outcome.
- Experts discovery. When it is necessary to find someone that participated in a project / task force or have a particular skill in a domain expertise is critical to make invitations or interact in order to resolve particular matter. Constructing a social network on top of an ontology is critical to put the people working to make the best teams.
The law of narrative order as an adequate way of construing the meaning of enterprises does not apply anymore. The challenge is to decipher the meaning of the futuristic way of do Enterprise Architecture that Stafford Beer created that this case study is a living example.
 – Pedro Sousa – Enterprise Architecture Alignment Heuristics – http://msdn.microsoft.com/en-us/library/aa480042.aspx
 – Enterprise Ontology – Jan L.G. Dietz – Springer – ISBN-10 3-540-29169-5