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Seminole establishes an EA practice to build foundation for execution. To achieve, Seminole undergoes the stages of enterprise architecture maturity. Enterprise architecture maturity is derived from the operating model. A mid-sized company, Seminole’s EA practice melds with existing business units. Domain architects perform the role of technical managers and the chief enterprise architect assume the CIO’s role. Skilled staff from the various units immerses in establishing the EA process to help align strategic business capabilities with those of IT. Senior management is an active participant in establishing, steering and overseeing the enterprise architecture group.
This paper discusses optimizing Seminole’s core processes, which is stage 3 of the enterprise architecture maturity. Seminole has successfully undergone stages 1 and 2. Prior to embarking on the enterprise architecture journey, staff members at the different organizational levels went through extensive about the architecture and the fundamental role it plays in forming a good foundation for execution. To avoid any abstraction in explaining the initiative of the mission, the enterprise architecture was translated directly into mission, vision, goals, and business capabilities. Hence, seamless organizational transformation has taken place prior to embarking on stage 3 of architecture maturity.
Business architecture is one of four architectures comprising the enterprise architecture. Through outsourcing to cloud vendors, an enterprise builds robust standardized infrastructure and processes in a short period of time. The enterprise architecture’s primary role is to solve business issues and enhance business capabilities. That results in adding value to the organization. In this respect, enterprise architecture is actually the new business architecture. The decision of what applications, operating systems, and hardware get outsourced remains a C-Suite team decision. Seminole business architecture is described below:
- Business Operating Model
Seminole’s replication operating model is derived from its business operations. Seminole is a Build-To-Order machinery and equipment manufacturing company. Manufacturing takes place in the US except 20% which gets outsourced to vendors in Asia. The Asian outsourcer manufactures parts that do not require OSHA regulations. Seminole’s headquarters are located in Maryland with local and global branches. Customers deal directly with branches in their locality. Branch managers deal with customers directly, route the orders to the headquarters to build the equipment ordered. After manufacturing is completed in the United States, machinery gets shipped to customers’ location. Customer relations are handled at the branch level. Managers have developed personalized relationships with customers resulting in customer intimacy. There is no interaction among the individual branches. Such operating model describes the replication model. The replication operating model exhibits highly standardized core business processes along with data architecture and platforms that supports the business processes. The replication model allows Seminole to grow either organically, through acquisitions, or form partnerships. Organically, Seminole benefits in 2 major ways: first, startup costs are low, and second, leveraging readily existing processes provides a quick start in new markets. In case of acquisition, Seminole will rip the acquired company’s operating model and replace it with its own. Forming partnerships is combining forces of the partnering companies to expand markets or add new products.
Selecting and implementing an operating model is the first step toward building foundation for execution (Ross, 2006). The operating model is one constituent of the foundation for execution along with the enterprise architecture and IT engagement model. The foundation for execution is the natural derivative of a mature enterprise architecture.
Figure 2: Foundation for Execution process
- Business Functions
The main business functions that distinguishes Seminole are:
Operations function makes and ships equipment upon completion. Shipping takes place through UPS.
Marketing function studies, plans, promotes, manages products and market segments, and works with branch managers to meet customers’ expectations and demands.
Customer Relations function is locally managed by branch managers individually. Branch managers handle customer questions, orders, and demands.
Finance function includes processing online payments, and wiring the money to the bank. When processing an order, a receipt is automatically issued to customers at the branch level.
- Organization Structure
Seminole’s structure is composed of the Headquarters in Silver Spring in Maryland. Branches are dispersed nationally and globally. Each branch is autonomously run by the Branch Manager. A high-level organization structure is shown below:
Figure 2: Organizational Structure View
Customer-facing interaction (the front office) as well as marketing take place at the branch level.
The Mission of the Initiative
Seminole’s vision is to implement the replication model (high standardization and low integration) among its branches, both nationally and globally. Seminole’s C-Suite team converts the general vision of the operating model into a guide for their business processes and IT capabilities. The enterprise architecture seeks to achieve customer intimacy and operational excellence through standardizing technology and business processes. The mission of this very initiative is to embark on stage 3 of enterprise architecture maturity by optimizing core processes.
The ultimate target state is building a ‘good’ foundation for execution. The foundation for execution is the consequence of a mature enterprise architecture in which business modularity allows Seminole to reuse IT-enabled business process to preserve global standards while enabling local applications (Ross, 2006). This enables Seminole to create an engine for growth and competitive advantage. As such, this very initiative of standardizing business processes will be leveraged to grow new markets and add new products. Standardizing core processes is followed by business modularity after which the foundation for execution is achieved. the role of IT in a business modularity architecture is to provide seamless linkages between business process modules. Ensuring the predictability of core processes, modular architectures provide a platform for innovation by enabling local experiments of which the best ones spread throughout the company. Enterprises do not stop at business modularity, rather they venture out to expand into new markets and invent new products through dynamic venturing. At that stage, Seminole’s opportunities are abundant; expand organically, by acquisitions, or through partnerships. Therefore, enterprise architecture is the road map to turn processes into efficient and effective solutions (Ross, 2006).
Business Silos and Standardized Technology Architectures
Replacing the organizational, system, and application silos with well integrated processes, systems and technologies to build shared capabilities as opposed to feeding the silos. Business silos are associated with high costs of both the IT operations and application maintenance. These costs, between stage 1 and stage 4 are cut by 42% due to higher investment in shared capabilities; technical infrastructure, shared data, and enterprise systems (Ross, 2006). In the standardized technology architecture, technology standards are established to diminish the number of platforms managed resulting in lower costs. Stage 2 automates local business processes toward global or shared processes. Efficiencies are introduced by standardizing and consolidating technology platforms in order to provide shared infrastructure services. Applications with redundant functionality get eliminated. Application IT standards (governance) determine which IT applications have the best fit in terms of functionality. Those applications that do not fit the established technology standards are rejected. Companies achieve cost savings and reliability through standardized technology, which applies to Seminole’s case.
Optimized Core Architecture
In this stage, senior IT and business managers learn together how to articulate the company’s operating model and how to identify the IT capabilities required to implement the operating model (Ross, 2006). In stage 3, senior management defines what processes are built into the foundation for execution and provides oversight and leadership to protect and enhance the capabilities constituting the foundation (Ross, 2006). This very stage of architecture maturity is when data or/and business processes are standardized. Seminole’s reusable business processes and data platforms are composed of a set of totally predictable core processes, which drive a rapid implementation of future strategic business initiatives. The following core processes were identified, and therefore, standardized:
Business processes and services are enabled by BPM systems. BPM systems can monitor performance of the intercompany services and provide all parties with the real-time reporting they need by continually adjusting the business processes that deliver these services as conditions change. To implement Seminole business processes, the following transaction processing systems will be deployed: the business process that receives orders, bills the customer and routes the orders for fulfillment, and ships the ordered products. There are several transaction processing systems involved: a web-based product catalogue and order entry system; an order routing system; a shipping system; a billing system; and an account receivable system. A BPM optimizes the process by monitoring the flow of data between these systems, and it can spot problems as they develop, which affect the efficiency of the whole process. A BPM allows Seminole to break business processes into collections of interconnectedness tasks. This is exactly what Seminole has been missing; real time data that allows executives to make strategic decision regarding strategic performance, customers, manufacturing, and sales.
Branch managers place orders on the designated portal, pay for their orders, and track them through a UPS interface. Figure 4 exhibits three core business processes identified:
Figure 4: Global view of Customer Order
1) Customer ordering view:
Order Received—>Payment Received—>Order Routed for Fulfillment —>Order Completed—>Order Ship
Payment Verified—>Transferred to Bank
Sub-processes Order Routed for Fulfillment:
Notify Finance—>Notify Operations
Sub-processes Shipping Order:
Order Completed—>Notify Customer—>Ship Equipment
Sub-processes Notify Customer:
Customers can track shipment through UPS. UPS tracking system is incorporated into the Seminole’s customer portal.
Figure 5: Shipping Order
To compete globally, Seminole’s strategic business benefits from the optimized process are operational efficiency and customer satisfaction (Ross, 2006). Seminole’s success depends on standardization of shared technology and business process environment as a building block toward a mature enterprise architecture. Ultimately, the mature enterprise architecture will provide an agile foundation for execution by leveraging the readily available processes allowing faster response and greater profitability (Ross, 2006).
- Toward The Foundation
To achieve the foundation for execution, stages 4 and 5 must be completed. In stage 4, “management refines, and increasingly modularizes, the processes that were digitized in the third stage” (Ross, 2006). As Seminole progresses through the architectural maturity stages, business modularity of stage 4 grants the individual branch managers greater discretion in the design of “front-end processes” which can be individually built as modules connecting to core data. That requires negotiations between IT executives and senior management to clarify which processes are standardized, which are acquired, and which can be developed locally (Ross, 2006). At this point, the foundation for execution is built enabling Seminole to expand organically, by establishing partnerships, or acquiring businesses. Companies will increasingly partner to enter new markets and create new industries by linking modular business capabilities. Companies whose foundations for execution can easily reach across company boundaries and plug and play their modular business capabilities with partners will win fast-paced world of global opportunities. The benefits of the foundation are:
- A foundation for execution allows a company to automate predictable processes so management can focus on higher-value tasks like innovating, partnering, and identifying new opportunities.
- The foundation enriches employees jobs by reducing redundant tasks while providing information to innovate and customize.
- The foundation of digitized processes enhances agility of the organization to better position it for profitable opportunities that may come up.
The Balanced Scorecard and Dashboard
A Balanced Scorecard and dashboards cannot be deployed prior to the completion of Stage 3 of enterprise architecture. In Stage 3, processes are defined, more efficient through eliminating process redundancies throughout the enterprise building upon the standardization of technology that took place in Stage 2. Hence, it is only after the completion of optimized core processes stage that Seminole can extract clean data necessary to deploy strategy performance analyses tools such as the Balanced Scorecard and Dashboards. A balanced scorecard measures Seminole’s strategic performance while the dashboard measures daily operational performances. The goal of a balanced scorecard is to align performance measure with the organization’s strategy. The misconception of the balanced scorecard is to determine what to measure as the first step. Ideally, organizations need to first determine what objectives they need to achieve. Therefore, strategy maps delineate the objectives in sequential manner. The strategy maps are a derivative of the organizations’ vision and goals. The four perspectives are:
- a) Financial: how do we look to shareholders?
- b) Customer: how do customers see us?
- c) Internal core processes: what must we excel at?
- d) Innovation and learning: can we continue to improve and create value?
Figure 6: Balanced Scorecard
This diagram focuses on the objectives that will be accomplished for each perspective. These objectives will be used to determine what will need to be measured to achieve organizational goals.
These four perspectives have a cause and effect relationship with each other, (Kaplan & Norton, 1996). For example, the objectives based on the internal perspective are objectives based on operations and productivity. Depending on the outcome of the measured results from each objective will have an effect on the other perspectives. For instance, Seminole has not been able to organize information in a database that utilizes a standard format. This weakness in their operations is related to low productivity, increases the costs related to finding information, reduces the ability to manage customer information, and reduces the amount of time the organization could be spending in other areas such as innovation or providing customer service. Another example of the cause and effect relationship between each perspective is the objective that Seminole needs to meet regarding creating online services (customer perspective). Because of what current customers are looking for in the market, Seminole’s competitors have created an online services for their customers. Seminole has yet to provide an online experience for customers. Seminole will implement a web based customer portal that will allow current and future customers to take advantages of services such as online ordering, order tracking, and the ability to search through inventory catalogs. This web based customer portal allows multiple advantages that span across multiple perspectives. Since customer preferences include online services, Seminole will be able to fulfill customer needs and preferences and attract new customers which will increase market share. The customer portal will also create more value toward products and services offered by Seminole. Business processes will be more integrated and streamlined because of the use of the customer portal which will also reduce overall cost of operations.
Dashboards are necessary tools for Seminole to make use of to achieve the objectives that have been set. Merely setting objectives without measuring the performance is not effective use of the balanced scorecard. Dashboards serve as performance management systems and consist of a series of graphs and charts that provide viewers information about the measurements of key activities and processes, (Eckerson, 2005). A simple example of how a dashboard will work for Seminole is measuring the performance related to the number of orders that are received. Since the number of orders received have been decreasing over the years, Seminole can set a goal to reach each month for number of orders. Seminole can measure their actual number of orders versus the goal they wish to accomplish.
Projects: each architecture maturity stage takes place sequentially and distinctly. Stages 1 and 2 have been established sequentially where each stage was distinct in nature. Stage 3 starts after stage 2 ends. Stage 2 has standardized technology upon which core processes of stage 3 are built. Projects within each stage are carried out one at a time as governance and standardized project management methodology mandate. Each project has to be fully aligned with a strategic business goal or goals.
Process change: as architecture matures, management focus extends beyond local business process changes. management develop the capability to lead companywide change first around technology standards, then around data and process standard. By the time the company reaches stage 4, the entire organization has become comfortable with the discipline of implementing, maintaining, and benefiting from standards.
Learning: learning takes time. Changes are less disruptive at companies that pursue the stages one at a time. Learning through the architecture stages encompasses both technology and business processes. Organizations learn how to design and manage enterprise processes, how to instill discipline in process execution, how to lead IT-enabled change, etc. Organizational learning must seep throughout a company for businesses to leverage IT and core business processes.
As indicated above, stage 2 has laid the technology foundation upon which processes are built. Digitizing processes will take up to 21 months.
Months 1 to 6:
Learning: As indicated by Seminole’s operating model, branches are run autonomously with no discretion over business processes. IT teams are to travel to branches to smooth out stage 3 to branch managers and staff. Branch managers will tell their business process story (how they do business) when the IT teams will just translate those processes in IT terms presented in simple graphs. IT teams will highlight Seminole’s overall vision and goals as the driving force underlying EA maturity. The organization’s vision and goals is the framework within which all EA stages serve.
Months 3 to 18:
Processes standardization: here learning and process design do overlap. As branch managers are learning about process digitization, IT teams implement process changes as part of the coaching process . Hence, branch managers and staff get a first-hand learning experience which is invaluable to them and the organization.
Months 18 to 21:
Testing and training are completed.
The optimized core process is derived from the operating model requirements. Each individual initiatives adheres to a companywide preset standards and measures through which strategic business goals are achieved. Through these initiatives, the IT engagement model aligns and coordinates IT with business goals. To ensure companywide synergies, Seminole assigned a body of decision rights for each key IT decision, as follows:
- IT principles: Executive committee of CEO, CIO, president, VP of operations, heads of the three functional business units (manufacturing, marketing, and finance).
- Enterprise architecture: a team of five enterprise architects headed by the CIO.
iii. IT infrastructure strategies: senior IT management team.
- Business application needs: VP of operations and business unit leaders for local systems.
- IT investment and operations: a steering committee comprising five senior managers headed by VP of operations.
Each project follows the standard project development methodology governing the eight-phase life cycle methodology. That all ensures the alignment among projects and company-wide IT governance mandated by the operating model.
Achieving enterprise architecture maturity is crucial to Seminole’s success and global competition. By standardizing technology and processes, data, warehoused in singular depository, is available in real time. Management will be able to make strategic decisions to reposition itself in the market place just like it used to be.
Eckerson, W. (2005). Performance dashboards: Measuring, monitoring, and managing your business. Hoboken, NJ: John Wiley & Sons.
Jeanne Ross, P. W. (2006). Enterprise Architecture as a Strategy. Cambridge, MA: Harvard Business School Press.
Kaplan, R. S., & Norton, D. P. (1992). The Balanced scorecard – measures that drive performance. Harvard Business Review, (92105).
Kaplan, R. S., & Norton, D. P. (1996). Linking the Balanced Scorecard to Strategy. California Management Review, 39(1).
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