The Role of Enterprise Architecture in Technology Research

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1 Research Publication Date: 26 December 2007 ID Number: G The Role of Enterprise Architecture in Technology Research Brian Burke Enterprise architects are often tasked with identifying disruptive technologies and overseeing the introduction of new technologies into the organization. This document examines some of the risks and challenges of technology introduction and the role that enterprise architects must play in that process. Key Findings To be successful, research activities must be formalized, funded and managed as a value-adding IT function. Enterprise architecture teams are often responsible for technology research. Innovation lead time is driving increased investment in technology R&D activities. Leading companies are formalizing these activities to maximize the return on their investments in innovation. Recommendations IT organizations in rapidly changing industries must formalize the technology research function. Technology research activities should be directly accountable to stakeholders and, if possible, directly funded by stakeholders. Technology prototyping and piloting must be done in the context of a business-driven change project. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner's research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.

2 ANALYSIS Technology research has evolved from a "kids in the sandbox" approach to a serious research function. Often, the enterprise architecture team is responsible for technology research, heavily leveraging deep technology knowledge both inside and outside the organization. Mature technology research groups are focusing on the disruptive impact of technological change on their industries, with the intent of selecting the appropriate time frame for technology adoption based on their risk tolerance and alignment with business strategy. A clear sign of a mature technology research group is that the product of its work is research papers, not prototypes. To be successful, the technology research group must move beyond being a "news feed service" to determine the second- and third-order effects of technology innovation on its organization's business and industry. Enterprise architects are well-positioned to oversee technology research activities due to their understanding of technology trends and business strategies, but research activities must include a broad range of participants in the overall process of introducing new technologies into the organization. Enterprise architects typically play the role of technology researchers as a part-time rather than full-time role. They work closely with external research companies such as Gartner to identify key technology trends using emerging trend research, such as Gartner Hype Cycles and other research (see the "Recommended Reading" section below). Enterprise architects must translate broad industry-based perspectives to understand the impact on their own industry and company. Once the enterprise architecture team recommends the adoption of a new technology, the prototyping and piloting work is performed by a project team that reports to a business sponsor. After the project has been initiated, enterprise architects act as overseers rather than hands-on implementers. The project team must also assume responsibility for ensuring that the new technology it is implementing will be suitable for a broader rollout across the organization. For all intents and purposes, the project team becomes an extension of the enterprise architecture team, charged with the introduction of one or more specific technologies. The Technology Research Process The technology research process must be singularly focused on the deliverables that are valued by stakeholders. All too often, well-intended efforts get distracted pursuing research avenues that hold interest for the researchers, but not for the sponsors. To be successful, the enterprise architecture team must clearly define the deliverables of the effort and "work backward" to clearly define the process that will produce the deliverables at a defined level of quality. The issue of quality is a challenge for enterprise architecture organizations as the research process is never truly complete definitive answers on the value of a new technology rarely exist until long after implementation. The key to success is to apply the 80/20 rule to the research effort that is, to define a process that will extract 80% of the value of the analysis activity in the first 20% of effort, rather than attempting to define research deliverable quality at a level that is provably correct (a goal that cannot be attained until after implementation). The depth of analysis determines the quality of the deliverable, and appropriate expectations must be set with the customers to avoid expectation/deliverable gaps. An analogy for the quality of research deliverables can be found in the pharmaceutical industry, where the cost of drug discovery (finding a promising compound) represents a very small portion of the cost of bringing the drug through clinical trials and approval by the U.S. Food and Drug Administration (proving the correctness of the discovery). Publication Date: 26 December 2007/ID Number: G Page 2 of 7

3 Governance and Funding The basic tenet for technology research governance and funding is to create a close relationship between the sponsors and the beneficiaries. In large organizations with autonomous business units, the technology research function should be funded and governed at the business unit level but, to minimize duplicated effort and increase leverage, these activities must be supported by enterprisewide communication and collaboration. To this end, leading companies create a virtual technology research council and leverage knowledge management tools to extend the value of research across all lines of business. Ideally, the technology research function is a profit center, generating revenue from businessunit-sponsored research projects and published reports. Currently, many technology research functions are funded as cost centers, creating the risk of misaligned focus and deliverables. Creating the technology research function as a profit center ensures that deliverables are truly valued by the customer business unit management. Technology-Driven vs. Planning-Driven Research Technology-driven research has historically failed, and will continue to do so. Companies will not and should not fund "technology sandbox" activities. Technologists often view this lack of research support as a vision gap on the part of business unit managers, but more appropriately, this lack of support is a byproduct of shortsightedness on the part of technologists. Investigating "cool" technologies is a means that cannot be directly attributed to a profitable end. Planning-driven research directly supports the company's strategy and planning efforts and will gain approval and support. Planning-driven research maintains a watch on emerging, disruptive technologies and on the position of competitors in adopting those technologies providing business planners with insight for selecting the appropriate timing for technological adoption. High-performing companies make conscious decisions about technology adoption using the research supplied by the technology research function. Given that research, companies can choose to be innovators, early adopters, early-majority adopters, late-majority adopters or laggards. Successful companies proactively select technology adoption strategies that are aligned with the organization's broader business goals, choosing different adoption strategies for different technologies and balancing the risks and rewards to match the company's broader goals. Simply declaring that the company is a "Type A" and blindly choosing an "early adopter" strategy are inappropriate, and will lead to misguided adoption tactics. Companies must evaluate the impact of each new technology on their markets and industry, and determine an adoption tactic that is aligned with the company's broader strategies. For example, a company that has a specific goal to be "a leader in customer service" may choose to be leading-edge in CRM deployment, but an early-majority adopter of technology to integrate supply chains. Alternatively, a company with a specific goal to be "the lowest-cost provider of widgets" may choose to be leading-edge in supply chain integration technologies to drive down costs. In this way, technology is appropriately positioned as an enabler to support business goals. Disruptive Technologies While technological advances are continuous, disruptive technologies introducing step-change advances (as opposed to incremental improvement) enable leading-edge adopters to capture competitive advantage. New technologies are often mismanaged through planning and implementation. It is common for companies to misinterpret the impact of technological change and use reckless methods in implementation. In companies where new technologies are not wellunderstood, there is often the false belief that the new technology is so different that all the old Publication Date: 26 December 2007/ID Number: G Page 3 of 7

4 rules about development methods and operations rigor no longer apply. Many companies suffer "corporate amnesia," forgetting the disasters of the past, as implementation missteps are repeated with each new technology. Each time, problems with reliability, scalability and availability drive increased rigor into new technology deployment processes, eventually resulting in the integration of new technologies into the mainstream of IT, supported by traditional IT processes. Risk Assessment, Market Positioning and Strategic Alignment The introduction of every new technology challenges planners to assess the technology's viability, risk, and impact on the marketplace and industry structure. The key to capturing technologically based competitive advantage is to know which technologies will alter the marketplace, how business models will change, when those technologies will be mature enough to implement and who will lead the change. Using Gartner's STREET process (see "Strategic Technology Planning: Picking the Winners"), technology and business planners must work together to: Scope Understand the context of why, where and how much to innovate. This may not be explicitly articulated by individuals, but there is still an implicit focus of attention and interest against which opportunities are assessed for relevance. Track Identify candidate innovations. The most-innovative individuals and enterprises use a broad spectrum of inputs. An innovation network can further expand the pool of ideas. Rank Prioritize opportunities, given limited resources. Rather than explicit return on investment or other financial metrics, individuals may perform an initial ranking or filtering based on peer recommendations mapped against their own scopes of interest. Evaluate Investigate areas where insufficient knowledge is preventing a final determination of whether to adopt. A highly effective crossover point from personal STREET to corporate STREET can occur when centralized groups leverage the experimentation and evaluation of individual employees (for example, with personal productivity tools). Evangelize Inspire others in a position to drive adoption. Early adopters of a new technology frequently act as a hub of influence on other potential adopters. For networkbased technologies (for example, social networking or collaboration tools), they may actively encourage colleagues to join in as part of the evaluation process. Transfer Transfer knowledge to those who will deploy or use the innovation. Distributed evaluation means that the transfer of knowledge and experience is multidirectional for example from innovative individuals into the IT or emerging technology group; between business units; or from partners and suppliers. Adoption Planning Companies must evaluate each technological innovation to determine the impact on the company to select an appropriate adoption approach, such as innovator, early adopter or early-majority adopter (see Figure 1). Usually, late-majority and laggard approaches are not so much choices as defaults without effective planning, companies will be forced into the position of being latemajority or laggard adopters of technology: Publication Date: 26 December 2007/ID Number: G Page 4 of 7

5 Figure 1. Technology Adoption Life Cycle Innovators Early Adopters Early Majority Late Majority Laggards Source: Geoffrey Moore, "Crossing the Chasm" (HarperCollins Publishers, 1991) Innovators: Technological innovation is typically pursued by small, agile players, often introducing completely new business models built around the innovation. These companies accept a high risk (and potentially high return) to prove a new or changed business model. When successful, these companies define the advantage of the innovation, but often these smaller companies cannot scale to realize the broader market penetration and reward. Early Adopters: Companies with well-established planning functions are wellpositioned to be early adopters of technological innovations, if the innovation supports core business strategy. Larger companies can leverage resources (such as financial, human or partner resources) and market clout to take innovations created by smaller players and drive them into the broader marketplace, reaping the lion's share of benefits from the innovation. These larger, leading-edge adopters either develop a copycat innovation or simply acquire a small company that has developed the innovation. A leading-edge adopter approach has been the hallmark of many of today's most successful companies (such as Microsoft, IBM and Cisco). Early Majority: The early-majority adopters are the fast followers who remain "in the game." Early-majority adopters do not intend to capture significant price premiums from an innovation; rather, these companies make a conscious decision to minimize risk when adopting a technology. This approach is an appropriate decision if the technology does not provide significant advantage in support of the company's core business strategies. Late Majority: Some organizations in protected markets (such as government sectors and regulated industries) may choose a late-majority strategy; however, most latemajority adopters are blindsided by technological innovation the result of poor planning. These companies are in "react mode," responding to loss of market share as exit barriers have been breached. Publication Date: 26 December 2007/ID Number: G Page 5 of 7

6 Laggards: In addition to the poor planning associated with the late majority, laggards are typically plagued with dysfunctional management. Broken decision-making processes, political infighting and unclear lines of responsibility characterize laggard companies. These companies fail to react even when a changed business model is wellestablished, the innovation has been commoditized and a customer exodus is evident. Conclusion To gain competitive advantage, leading companies select appropriate technology adoption strategies by assessing the impact of technological innovation on markets and industry structure, balancing risks and rewards, and selecting the adoption approach that best supports the business strategy. Companies must institutionalize technology adoption planning developing the processes and skills needed to assess technological innovations and their market impact to enable effective decision making. RECOMMENDED READING "Strategic Technology Planning: Picking the Winners" "Gartner Predicts 2007 and Beyond" "Predicts 2007: Emerging Trends Drive Disruptive Innovation" "Client Issues for Emerging Technology Management" "Key Issues for Emerging Trends, 2007" "Managing Technology Life Cycle Risks" "Understand the Challenges and Opportunities of the Market Life Cycle" "IT Spending and IT Adoption Profile" Publication Date: 26 December 2007/ID Number: G Page 6 of 7

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