Strategy Management Through Enterprise Architecture, Warren Ritchie, CIO, Volkswagen Group of America
Session abstract: “The strategy domain is comprised of two sub-functions: strategy formulation and strategy implementation. Corporate strategy researchers, consultants, and practitioners have traditionally placed a great deal of emphasis on the formulation function through evaluation of the fit between products and services within current and future markets.
However, the strategy implementation function gets far less notoriety, despite a generally accepted business adage that mediocre strategy brilliantly implemented will generally outperform brilliant strategy with a mediocre implementation. The simple truth seems to be that implementing strategy, and in particular strategic change, generally involves manipulating elements of the internal structure to get a different organizational outcome, which is a difficult task.
This keynote address will describe some of the major challenges of strategy implementation and propose that a robust internal enterprise architecture practice can play an essential role in corporate strategy management. It will also highlight the current Business Technology Management initiative that was launched in 2010 at the Volkswagen Group of America to drive the alignment of their business and technology architecture in an effort to respond more quickly to changes in the environment in which it operates.”
Dr. Warren Ritchie (Phd in Business Strategy) opens telling us his background is in business, not IT. He was always critical of IT. Then, he got “shipped there”.
Ritchie is going to tell us three stories: His personal journey with EA, Utility of EA in globalization concept and Speed to 1st Benefits of implementing an EA practice in VW of America.
Ritchie believes that EA is the missing piece in strategy management.
Strategy formulation is your intent. Strategy implementation is manipulating structure to deliver the intent. Interplay (continuous) of strategy, structure and performance.
Ritchie is speaking from his dissertation: Why don’t firms change strategy simultaneously. Started: “Small is fast, big is slow”. Learned: “Small is fast, medium is slow, Large = multi business = spinoff, which is fast”. So, Big can be Fast.
[Dissertation: "Organizational Inertia Within the U.S. Personal Computer Industry: Attributes Related to the Adoption of Internet Direct Sales Channels Between 1996 and 1999", Warren Ritchie, 2002.]
Learned that strategic choice is constrained by structure. Need to manipulate structure to successfully implement strategy.
Also, need to note that a change to structure will have an impact on product & services. So, don’t change structure without understanding intended impact on product and services.
Ritchie quotes Zachman, “you can’t change manage what you can’t describe”. Likes the overall construct of Zachman Framework. Says, a bit difficult to implement.
Why does strategic change fail? Not typically a failure on the to-be side. It’s a failure on the as-is side. Don’t properly understand the “as-is”.
Consultants bring what is wrong and what you need to be. BUT, miss what you need to do. What are the actions to implement the change. Again, calls out failure in describing “what is”, right now.
Ritchie has moved to second point, the Utility of EA in VW’s globalization concept. VW needs to standardize processes and systems. Need consistency across countries.
VW does have standardization in manufacturing, set of standard car “platforms” with configurations for different models. VW Touareg and Porsche Cayenne come off same line. Challenge is, how to apply this platform, configuration model to processes and systems. VW working to identify global services versus local services.
Third, Ritchie moves to managing strategy and enterprise architecture: speed to 1st benefits – VW of America. Not ultimate benefits, but 1st benefits.
VW started with a “failure is not an option” project. Not huge project, but important. Demonstrate real value.
Steps:
- layout the EA Framework
- populate repository as a trailing edge activity
- re-use repository content for later phases
- first efforts are labor intensive but returns start quickly
First project: VWGoA: Application management services (AMS) supplier transition. Goal 1: Transition Suppliers. Goal 2: Manage Knowledge
With old AMS, VW was knowledge dependent on the AMS supplier. Now, have knowledge (business architecture concepts and application concepts) in VW repository.
With this information, knowing what’s connected, VW is saving 15% in project costs.
Not only did EA investment help complete supplier transition, VW “is flat out better, because of it”. ROI for EA investment > 100 on risk mitigation alone.
Right now, benefits are continuing to grow. Sees the benefits flattening out over time. EA demand is high. Offering shared services to other VW divisions around globe.
“After initial VWGoA investment in EA, each incremental investment is resulting in disproportionately positive returns”
Investment in EA is an investment in knowledge.
During Q&A, Ritchie stated “never knew so much about my company until I worked in IT”.
Yesterday afternoon, I fired off a series of "You aren’t really an enterprise architect if…" tweets. The tweets were inspired by real-life encounters. However, I won’t be revealing my muses. That would be rude. 
