In an ever-changing business world, it is imperative that IT evolve flexibly to support business goals. The enterprise architecture defines IT targets and creates a balance between flexibility, cost-efficiency and complexity. So that this can be implemented operationally, new approaches to effective software procurement are required.
Enterprise architecture as a motor for modernization
Even after more than ten years of digitization, the topic has not lost its relevance in the German economy. Departments are still in the middle of building new processes and business models. This increases the pressure on IT departments to provide suitable solutions.
The enterprise architecture (EA, also corporate architecture) represents the strategic link between the department and IT. Its goal is to build a lean, flexible and cost-efficient IT landscape in order to support long-term competitiveness. The premise applies: develop your own software in the areas in which you generate your sales and use standard software where this is not the case.
IT complexity as a barrier to competitiveness
As simple as the work can be formulated, it is as difficult in reality. The past IT age was characterized by systems developed in-house or heavily customized standard software, especially SAP ECC. The result was highly specific business processes that make the IT landscape rigid and complex today. But it is precisely these processes that have to be translated into modern IT solutions in order to be able to react flexibly to market changes again.
Numerous digital projects such as Haribo with SAP S/4 HANA show that such highly specific processes are difficult to modernize. The project to harmonize IT at 16 production sites even had a negative impact on sales in 2018. At the same time, the complexity increases due to the offer of software-as-a-service solutions (SaaS), where a department only needs a credit card to introduce new software. In combination with the stagnating modernization, the pressure on IT to support competitiveness is increasing.
Software procurement as the key to successful EA?
There are two ways to implement an IT vision. On the one hand there is internal development (delivery) to further develop existing systems. On the other hand, there is software procurement, in which primarily standard software from the market is used.
In the past, companies were often focused on in-house development. The reason for this was the specific requirements of the respective departments and a lack of offers on the market. But more than ten years of digitization have produced one thing above all: a wide range of software solutions across all industries. Today alone, g2.com lists over 145,000 solutions in 2,100 categories – an average of 69 solutions per category.
IT departments have always known the potential of standard software: better focus on in-house development, automatic further development via updates and lower costs. Unfortunately, only a few companies manage to fully exploit this potential. Market research takes too long, the requirements are too unclear and the assessment of one’s own business processes is too specific. But it is precisely the wide range on offer that allows you to look beyond the box and the dominant providers. Even smaller solutions show the potential to come close to the specific requirements and to exploit the advantages.
Success factors for a successful software selection
When choosing software, many parties in a company have to be coordinated. The dominant approach is often still the recording of a clear actual and target process as the basis for requirements. In a world of plan-build-run – first plan everything, then develop everything – this makes sense, but our world has become more agile and fast-paced.
By the time a business process is fully documented and approved by all departments, reality has often overtaken it. Furthermore, the approach is associated with a high investment of time by the departments, which has a negative effect on motivation and participation. A department then quickly tends towards the first best solution or cost-intensive further development of the existing systems. In a control group, IT is often at a disadvantage if the process takes too long.
The key success factors are therefore time and effort. Selection processes must lead quickly from the idea to the first provider and involve little effort for those involved. This is the only way to keep up the motivation for an adequate evaluation of the market. It is in EA’s own interest to create the appropriate environment and break down silos between departments. There are already a large number of tools that can support the software selection process through strong collaboration and external data, such as ready-made requirements catalogues. The combination of your own requirements with data from comparable companies accelerates the selection and enables a well-founded and data-driven purchase decision.
It is essential to have a lean mindset and not to think directly in a 100% process. The department in particular should be motivated to first formulate challenges and wishes. This often provides a good basis for quickly evaluating providers. In this way, departments can get in touch with possible solutions to their problem more quickly and can often specify requirements further. The speed and moderation of the iterative process also strengthen the perception of IT as an enabler in the department.
Prospects for EA and software procurement
Enterprise architecture is a hot topic for CIOs and is in high demand as a skill. However, the role of the enterprise architect is often very broad – from specialist processes to infrastructure. Fortunately, the market has already recognized the need for support and has produced the first intelligent and collaborative tools such as LeanIX. These enable stronger collaboration across departments, create a common basis for information and enable decisions.
In addition to an efficiently moderated process, the wide range on the market in particular also creates more opportunities for partnerships. In addition to in-house development and off-the-shelf software, strategic partnerships with “smaller” providers show great potential for medium-sized and large companies. The animal care provider Fressnapf shows a good practical example. The company entered into a partnership with enfore at an early stage to advance the development of a new omni-channel POS solution. As a large pilot customer, Fressnapf was able to actively help shape the further development of the standard software without doing this in-house. This is an attractive alternative to purchasing standard software with all the advantages and still adapting it to the individual needs of the company.