The difficulty of strategy execution should not be underestimated Capability-based planning helps make strategy concrete Enterprise architecture closes the remainder of this gap, and ensures alignment and coherence Enterprise portfolio management allows managing large enterprise landscapes based on business value ArchiMate models tie it all together, providing a clear line of sight from strategy definition to realization Powerful tool support makes this a strong combination!

1. ©
Effective Strategy Execution with
Capability-Based Planning, Enterprise Architecture
and Portfolio Management
Iver Band
The Open Group Conference, Baltimore, July 22, 2015

2. ©
INTRODUCTION
2

3. 33 © 2015 Cambia Health Solutions, Inc.
Iver Band
• Enterprise Architect at Cambia Health Solutions
• Chief architect for external web and mobile presence
• Business architect for Digital Solutions organization
• Vice Chair, Open Group ArchiMate Forum
• Co-Chair and Co-Founder, Oregon Enterprise Architects
• TOGAF and ArchiMate certified, CISSP, Certified Information Professional, AHIP Certified IT
Professional
iver.band@cambiahealth.com
http://www.linkedin.com/in/iverpdx
http://www.cambiahealth.com/
http://www.twitter.com/iverband

4. 44
About Cambia
22 companies
and growing
© 2015 Cambia Health Solutions, Inc.
A tax-paying nonprofit
headquartered in
the Pacific Northwest
Nationally recognized:
Top 100 Healthiest
Workplaces
5,300 employees
in 30 states
100 million people
touched nationwide

5. 55 © 2015 Cambia Health Solutions, Inc.

6. 66
Cambia Health Solutions
© 2015 Cambia Health Solutions, Inc.
Senior
Services
Health
Insurance
Retail
Enablement
Provider
Enablement

7. 7
About BiZZdesign
Scientific
DNA
founded in
2000 as a
spin-off from a
Dutch research
institute
known for the
ArchiMate
standard
Passionate
People
over 80% with
advanced
degrees and
over 10% with
doctorates,
sharing
knowledge,
open innovation
Focused on
Solutions
leading digital
enterprises
through
business
transformation
empowerment
Hundreds of
Customers
on 6 continents
across all
industries
Global, Fast
Growing
Company
with a direct
presence in
more than 10
countries
Worldwide
Partner
Network
leading global
consultancies,
boutique
consultancies
and resellers

8. ©
BiZZdesign Enterprise Studio
8

9. ©
Summary
9
• The difficulty of strategy execution should not be
underestimated
• Capability-based planning helps make strategy concrete
• Enterprise architecture closes the remainder of this gap,
and ensures alignment and coherence
• Enterprise portfolio management allows managing large
enterprise landscapes based on business value
• ArchiMate models tie it all together, providing a clear line of
sight from strategy definition to realization
• Powerful tool support makes this a strong combination!

10. ©
The Challenge
• The Digital Enterprise requires major business change
• Many disciplines are involved in these transformations, but a
lack of coherence compromises their success
• The speed of change makes strategy implementation even
more difficult
• Few organizations have a systematic and reliable way of
translating a business strategy into action
• They invest in many assets and change initiatives, but find it
difficult to decide on their value and priority
10

11. ©
TWO BIZZDESIGN CLIENT CASES AS EXAMPLES
11

12. ©
Anonymized Client Cases Used
“ArchiPharma”:
• Large international pharmaceutical organization
• Geographically dispersed locations
• Result of many mergers and take-overs
• Want to be world-leading provider of pharmaceuticals
“ArchiSuranceBank”:
• Medium-sized financial (both banking and insurance)
• Also the result of mergers and take-overs
• Rationalizing the insurance landscape as precursor to separating
banking and insurance businesses
12

13. ©
Similar Necessity for Change in Both Cases
• External
– Large and upcoming competitors
– Strict and changing regulations
• Internal
– Enormous legacy application landscape
– Heterogeneous processes, products, databases, ...
– Cost pressure
 How to perform a strategic transformation on this scale?
13

14. ©
Transformation Challenges
• Need to
– Do strategic planning
– Get from planning to execution
– Monitor execution
– Be able to quickly adapt planning
– Keep the IS landscape up and running
during transformation
 Requires collaboration between many disciplines
 And sharing & integrating information to support this
transformation
14

15. ©
Connecting Strategy and Execution
ArchiPharma’s starting point:
• Business capability map
– Identify key business capabilities based on
strategy
– Decompose each key business capability
• Project and program portfolio
– Define programs that realize desired capability
increments
– Decompose programs into projects
 12 key capabilities, 200+ programs & 5000+
projects
Strategic
management
15
Project portfolio
management

16. ©
Gap Between Strategy and Projects
• Many project deliverables are not aligned with the
strategy
• Projects with similar deliverables
• Projects with contradicting deliverables
• Programs with a solution unrelated to the strategy
• Strategy parts not reflected in any program
• Unclear what the effect is of application
rationalization
 How to manage this large transformation? Project portfolio
management
Strategic
management
16

17. ©
Strategy, Architecture, and Portfolio Management
17
Strategy
management
Enterprise
architecture
Portfolio
management
Aim
Analyze & Design Realize
Coordinated
approach

18. ©
ArchiMate Models to Connect Strategy, Architecture
and Portfolio Management
18
Strategy
management
Enterprise
architecture
Portfolio
management
Realize
Aim
Analyze & Design

19. ©
Relating Strategy & Capabilities to
Target Architecture & Change Programs
19
Business Goals
Capabilities
Architecture Plateaus
Change Programs

20. ©
Bringing Enterprise Architecture to the Next Level
• With a mature enterprise architecture you are ready for the
next level:
– How do I use my architecture to realize strategy, make investment
decisions, support management decisions, etc.?
– How do I gain control of the large asset and project landscapes
that I need to manage?
– How do I move away from a narrow focus on implementation
towards designing and supporting business change?
 Make your enterprise architecture actionable
 Move towards designing the future of your organization
20

21. ©
Enterprise Architecture in Context
Enterprise
Architecture
21

22. ©
EA as Knowledge Hub for Coherence
Enterprise Portfolio
Management
Strategy
Capability-Based
Planning
Process, Rule &
Data Management
Governance, Risk
& Compliance
Development, Delivery
& Improvement
Program & Project
Management
Enterprise
Architecture
Service
Management
22

23. ©
STRATEGY
23

24. ©
Determining Your Business Goals
First you need to know what your goals are:
• Business Strategy: What is the course of your
organization?
• Stakeholder and Driver Analysis: Who are involved and
what are their needs?
• Business Models: Where to play and how to win?
24

25. ©
Stakeholder and Driver Analysis
• Where do decisions on investments take place?
– For example, is there a Program or Portfolio Board consisting of
senior management, or busines line management with their
own budget?
• How do interests of stakeholders influence each other?
– Can investments be targeted wisely for different interests that
support the same goal?
– How can we prevent wasting funds by investing in conflicting
interests?
25

26. ©
Business Strategy
• Align your organization’s investments, operating model,
architecture and processes with its strategy!
• Use models for traceability from strategic goals to
realization, and vice versa
26

27. ©
Stakeholder and Driver Analysis
27

28. ©
Business Models
• Business Model
Canvas gives a
useful overview
of your strategy
• Good starting
point for deciding
on investments
28

29. ©
Modeling Strategy in More Detail in ArchiMate
29

30. ©
CAPABILITY-BASED PLANNING
30

31. ©
Business Capabilities
• A business capability is something an enterprise does or can
do, given the various resources it possesses
– Which capabilities do you need for your strategy, business model
and operating model?
– What are the required capability levels?
– What are the necessary resources?
– How do plan the evolution of your enterprise?
• Input for investment decisions: portfolio management
• Helps you plan and manage programs & projects
31

32. ©
Defining Business Capabilities
• They are owned by the business and named and defined in
business terms
• They are unique and stable
• They may be composite, consisting of sub-capabilities
• They can be organized in a business capability map
• Their maturity can be assessed cross different dimensions
• This will be supported in the next ArchiMate version
32

33. ©
Business Capability Map
33

34. ©
Capability Assessment in Different Dimensions
Analysis and planning
of capabilities using
an ArchiMate model
and various metrics
34

35. ©
Capability Analyses
35

36. ©
ENTERPRISE PORTFOLIO MANAGEMENT
37

37. ©
Why Portfolio Management?
• Decisions are needed on many different investments
– Both in assets such as applications and in changes, such as projects
• A structured overview is needed, grouping these
investments in categories known as portfolios, such as
– Innovation, New Product Introduction, Going Concern
• Pre-allocating investments to these portfolios based on
business value supports a balanced capital allocation
– Avoids problems such as as the “innovation squeeze”, an ever-
growing maintenance budget that eats up other investments
38

38. ©
What is Enterprise Portfolio Management (EPM)?
• Enterprise portfolio management manages the
entire enterprise landscape (projects, assets,
services, capabilities, etc.) in portfolios
– Group things of the same type based on some criteria
– Manage groups as a whole
– Provide enterprise-wide overview
– Support analyses and comparisons
– Promote consistent and informed decision-making at all
levels
• Manage on business value, not only on costs
39
Retirement
Back office
Front office
Critical

39. ©
Gartner on IT Portfolio Management
“The challenge is to provide the integration of individual
portfolios (projects, assets and IT services) to present a
holistic story regarding the true state of the IT portfolio.
Integrating these views enables IT leaders to see the cost,
effort, technical complexity, feasibility and interrelated
effects of a proposed IT change or initiative.”*
And there is more than just IT!
40*Gartner, Magic Quadrant for Integrated IT Portfolio Analysis Applications, 2013

40. ©
How Are Asset and Project Portfolios Related?
• Program and project portfolio
management
– Manage and monitor project portfolios
– Manage asset change through roadmaps
• Asset portfolio management
– Manage and monitor asset portfolios
modeled in architecture
– Basis for defining change projects
41
Project portfolio
Asset portfolio
Projects Roadmaps

41. ©
Common Use Cases for EPM
• Application portfolio management
• Long-range capability planning
• Benefits optimization
43

42. ©
Enterprise Architecture & Portfolio Management
• Enterprise architecture:
– Modeling as-is and to-be situations
– Analysing gaps, giving direction and defining roadmaps for coherent
change
• Enterprise portfolio management
– Quantitative analysis of as-is and to-be situations
• Defining metrics on costs, risks, benefits,..
– Prioritization based on business criteria
 These models and analyses allow coherent, informed decision-
making, prioritization, and planning
44

43. ©
Questions to the Audience
• How do your enterprise architecture and portfolio
management functions cooperate?
• What are the challenges you encounter?
45

44. ©
Integrated Portfolio Management Process
• Design phase:
– Investigate goals and stakeholders, related to business strategy
– Define suitable portfolios
– Choose valuation criteria
• Execution phase:
– Collect and score assets
or change initiatives
– Analyze portfolios
– Decide as input to the realization
46
Strategy Portfolios Valuation
Design
Collection Analysis Decision
Execution

45. ©
PORTFOLIOS
47

46. ©
Portfolio Grouping Criteria
• Strategic objective
• Such as supply chain optimization, outsourcing, increasing market share, cost
reduction.
• Supported business capabilities
• Allocating investments to strategically important capabilities is a good way to
implement your business strategy
• Product life cycle stage
• Such as the ‘cash cows’, ‘dogs’, ‘stars’, and ‘question marks’ of the growth-
share matrix
• Follow best practices such as
• Do not put all your money in your cash cows
• Do not over-invest in question marks
48

47. ©
Portfolio Grouping Criteria (cont.)
• Customer/market segment
• Such as based on competitive position or predicted growth in these
markets
• Architectural dependencies
• Such as applications that use shared data or support the same
channels
• or business processes that are part of the same value chain
• Technology life cycle stage
• Experimental, innovative, mature, and legacy technology
• Pace layering (Gartner)
49

48. ©
Portfolio Landscape View
50

49. ©
VALUATION
51

50. ©
Valuation Criteria
• Cost is often the least complicated to calculate
– Elaborate cost models are used by many financial departments
to ensure all costs are accounted for
– However, estimation of technical projects is often challenging
as well, although these challenges can be addressed by a set of
best practives
• Benefits can be more difficult to determine: assessing
future benefits has to deal with a lot of uncertainty
– In public sector organizations, societal benefits may be more
important than financial revenues
52

51. ©
Valuation Criteria Continued
• Architectural fit
– Does the asset or project fit within the envisaged architecture?
• Development risk
– The risk that a project fails to deliver part or all of its value
• Strategic importance
– For example, replacing a monolithic legacy system with a new,
flexible business process management suite may enable
various valuable future options, such as being first to market
with new products or outsourcing business processes
53

52. ©
Asset Metrics
Two common metrics to assess the importance and quality of
applications are:
• Business value: the extent to which an application supports
the business capabilities
• Technical value: the technical quality of the application,
including its adaptability to changing circumstances
These might also partly be derived from the relationships in
your architecture, such as those with
• Business processes, capabilities and strategy
• Technical infrastructure
54
http://www.aslbislfoundation.org/nl/asl/best-practices/cat_view/5-asl-best-
practices-nl/8-application-cycle-management

53. ©
Metrics in ArchiMate
• A Metric is a specialization of the Driver concept in ArchiMate: a
driver that can be measured
• The definition of a metric includes information on how the
represented property is measured, such as:
– the unit of measurement (type of measurement result)
– the way of measurement, e.g., manual or automated
• Metrics are associated with architecture elements
– To measure, for example, the business value of an application
– The result of a measurement
can be modeled using an
Assessment in ArchiMate
55

54. ©
Aggregated Metric Definition
• The score of an aggregated metric is determined by its
components. For example
– The score for the metric “performance” is determined by the
“number of incidents”, “user experience” and “SLA
compliance”.
• Only the lowest-level components
are scored; the rest is calculated
56

55. ©
Adding Metrics to Portfolios
• Relevant metrics are
added to portfolios
• Objects in the portfolios
are scored against these
metrics
• Dashboards are used to
display metric scores
58

56. ©
PORTFOLIO DATA COLLECTION
59

57. ©
Data Collection Questions
• Where to get the data that is needed as input for the
valuation? Inside, or outside the organization? From
people, or systems?
• What is the quality of the available data (accuracy,
timeliness, etc.)? And what is the quality that is needed?
• Which disciplines in the organization need to be
involved? What’s in it for them?
61

58. ©
Adding Data to the Architecture
62
Architecture
Repository
Asset inventories
Contract information
Project plans
Presentations
Evaluations
ArchitecturesCost & revenue data

59. ©
ANALYSIS
63

60. ©
Analysis
64
• Analyses combine metrics in an
appropriate visualization
– E.g. a bubble chart showing the total cost,
benefit, and risk of projects

61. ©
Dashboards
• With appropriate tooling, each portfolio view can be
summarized on a dashboard as a collection of charts
• Tools should allow automatic chart population from portfolio
analyses
• Select the charts to address stakeholder concerns and
learning styles
65

62. ©
Application Lifecycle Analysis
66

63. ©
Application Landscape with Life Cycle Advice
67

64. ©
Tracking and Archiving
• An important aspect is the ability to track the
development of these portfolios over time, in terms of
their scores against metrics
• Appropriate tooling can make snapshots of the current
state of a portfolio, including scores and dashboard, and
place these on timelines
68

65. ©
DECISION
69

66. ©
Supporting Decision-Making and Planning
• Prioritizing and Planning Projects: How do you select
and order different change initiatives?
• Roadmapping: How can you use ArchiMate models to
define roadmaps and plateaus?
• Resource Planning: How can you use ArchiMate models
to describe the resources necessary to carry out projects
and programs?
70

67. ©
Gap Analysis: from Baseline to Target
71

68. ©
Programs and Projects
• Programs contain projects, including their relations
• Per project, cost, value, risk and status (approved, in
progress, etc.) are important
• Aggregate program-level metrics can be calculated
72

69. ©
Roadmapping
• The ArchiMate Implementation & Migration extension is
useful for defining plateaus of your architecture
• Don’t plan detailed plateaus too far into the future,
especially in complicated or complex situations
• Use intermediate plateaus with temporary measures to
evaluate alternative transition scenarios with respect to
benefits, cost, and risk
73

70. ©
Roadmapping
• You can model roadmaps of programs and projects,
showing dependencies between projects and putting
them on a timeline
74

71. ©
Conversion Roadmap of ArchiSuranceBank
75

72. ©
Application Landscape Evolution
Cost reduction
2012 2014 2016
76

73. ©
PUTTING IT ALL TOGETHER
77

74. ©
Strategy on a Page
Vision
Become the leading provider of pharmaceutical products in the world
Capability heat map
Business Outcomes
• Improved customer experience when
administering their insurance
• Reduced operational costs from product
maintenance
• Improved way of billing customers
• Increased business agility and
adaptability to new regulations
• Improved administration of customer
information
Strategy
2010 – 2020: Product leadership
2015 – 2020: Operational excellence
Objectives to address assessment
• Improve product offering
• Minimize operational costs
• Eliminate local variance
• Facilitate resource sharing
• Improve information sharing
Initiatives to realise objectives
• Professionalize sales and marketing
process
• Professionalise product and asset
portfolio management
• Consolidate applications
• Harmonize processes
• Centralise information
Assessment of current situation
• Heterogeneous and complex product
offerings
• Lack of insight and anticipation on new
regulations
• Product maintenance is expensive
• Non-uniform way of billing customers
• Difficult to comply in time with new
regulations due to complex landscape
• Multiple and inconsistent CRM databases
Mission
We offer the most innovative pharmaceutical products with a quick and reliable solution
Red – needs big improvement; Yellow - needs medium improvement; Green – at desired level
Legend
Application rationalization
Harmonize billing process
Homogenize info & data
Improve global accessibility
Instalment of APM process
Product rationalization
Professionalize marketing
Revision of PPM process

75. ©
Caveat: Organizational Resistance
• Knowledge = power: Control of this information gives people
influence or power in the organization
• Transparency = threat: You may uncover inefficiencies,
overspending, quality issues and other problems, and people
may fear to be blamed for those
• Money = power: Budget allocation is often based on e.g.
business units or departments. This is often not the best way
to distribute investments, but changing this may create
resistance among stakeholders, because they lose control
84

76. ©
Summary
• The difficulty of strategy execution should not be
underestimated
• Capability-based planning helps make strategy concrete
• Enterprise architecture closes the remainder of this gap,
and ensures alignment and coherence
• Enterprise portfolio management allows managing large
enterprise landscapes based on business value
• ArchiMate models tie it all together, providing a clear line of
sight from strategy definition to realization
• Powerful tool support makes this a strong combination!
85

77. ©
Questions?
Iver Band
Enterprise Architect
Cambia Health Solutions
iver.band@cambiahealth.com
Marc M. Lankhorst
BiZZdesign Enterprise Architecture Service Line Manager
m.lankhorst@bizzdesign.com
Webinars, blogs, e-books, customer stories, training portfolio, software and more on
www.bizzdesign.com
Whitepaper From Strategy to Successful Implementation with Enterprise Portfolio
Management: http://bit.ly/1E1itkC
ArchiMate industry usage poll: http://bit.ly/1P9Os63
86

78. ©
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