Architecture at the Crossroads

I have been reading a seminal post by Tom Graves covering the real issues being unearthed with approaches such as TOGAF to the consistent and relevant application of Enterprise Architecture planning within companies.

Well to say I let out an audible cheer as I read the post by Tom would almost be an understatement !!

I really think that the tide is changing slowly now and the pedantic IT centric approach to Enterprise Architecture is maturing as those who have developed and delivered real, enabling architectures are speaking up about how actual architecture works in successful corporations.

I have often said here that I am a supporter / advocate of some of the work being done at MIT by Jeanne Ross, Peter Weill and David Robertson. Their published work "Enterprise Architecture as Strategy" is the starting point, in my view, for those wishing to deliver architectures that are relevant, actionable, agile and financially responsible.

As Tom notes there has been an unfortunate "industry" developing around EA certification that is built upon a foundation of sand. A foundation based upon a highly IT centric, dated and inflexible process enshrined within TOGAF. This is a big problem as it strikes to the core of The OpenGroup and many of their key financial and intellectual contributors who have businesses based upon the proliferation of TOGAF certification.

TOGAF is really only ONE reference point describing a methodology for being exhaustive with respect to IT centric architecture development. In most of my work this is only a contributing component to the work we do. That is why we developed industry specific methodologies to drive our architecture initiatives as knowledge and experience in the critical business drivers within an industry sector are by far and away more critical inputs into the development and deployment of the discipline of EA within an enterprise. It is true to say that in most engagement we try not to use the words Enterprise Architecture...it is too IT centric and is in fact often a generator of distance rather than alignment between the key business leaders and those trying to align and deliver the technology framework for delivering on the corporate strategy.

Much more is to be said and written in this area and Tom is correct to say that co-operation and dialogue within the EA "industry" is critical to avoid progress in the formalism of EA skills and capabilities being thrown in the too hard basket.

Between the work being done by MIT with respect to what actually has been successful, and the knowledge and pragmatism of practitioners such as Tom (and perhaps myself...he says hopefully...), we need to work towards a practice that recognises more holistically how enterprise strategy development, architecture (both business and technology) planning, and service delivery need to work within a consistent logical framework. Such a framework needs to cover the key actors and actions, the required artifacts and their connections/linkages, relevant governance models and management/delivery mechanisms.

We live in interesting times and I for one am excited and challenged and a little worried.....

Professionalism in Architecture Practice

I strongly endorse the work being done by the Center for the Advancement of the Enterprise Architecture Profession (CAEP). Their approach in defining a socal contract for those involved in responsible enterprise design and management makes a lot of sense to me. This is their take on defining the core values for the EA profession....

Hippocratic Oath for the Enterprise Architecture Profession

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As an Enterprise Architect

I serve as society’s fiduciary for one of its most important institutions: enterprises that bring people and resources together to create valued products and services that no single individual could produce alone. My purpose is to serve the public’s interest by enhancing the value my enterprise creates for society. Sustainable value is created when the enterprise produces an economic, social, and environmental output that is measurably greater than the opportunity cost of all the inputs it consumes. In fulfilling my role:

I recognize

that any enterprise is at the nexus of many different constituencies, whose interests can sometimes diverge. While balancing and reconciling these interests, I will seek a course that enhances the value my enterprise can create for society over the long term. This may not always mean growing or preserving the enterprise and may include such painful actions as itsrestructuring, discontinuation, or sale, if these actions preserve or increase value.

I pledge

that considerations of personal benefit will never supersede the interests of the enterprise I am representing. The pursuit of self-interest is the vital engine of a capitalist economy, but unbridled greed can be just as harmful. Therefore, I will guard against decisions and behavior that advance my own narrow ambitions but harm the enterprise and the societies it serves.

I promise

to understand and uphold, both in letter and in spirit, the laws and contracts governing my own conduct, that of my enterprise, and that of the societies in which it operates. My personal behavior will be an example of integrity, consistent with the values I publicly espouse. I will be equally vigilant in ensuring the integrity of others around me and bring to attention the actionsof others that represent violations of this shared professional code.

I vow

to represent my enterprise’s performance accurately and transparently to all relevant parties, ensuring that investors, consumers, and the public at large can make well-informed decisions. I will aim to help people understand how decisions that affect them are made, so that choices do not appear arbitrary or biased.

I will not permit

considerations of race, gender, sexual orientation, religion, nationality, party politics, or social status to influence my choices. I will endeavor to protect the interests of those who may not have power, but whose well-being is contingent on my decisions.

I will manage

my enterprise by diligently, mindfully, and conscientiously applying judgment based on the best knowledge available. I will consult colleagues and others who can help inform my judgment and will continually invest in staying abreast of the evolving knowledge in the field, always remaining open to innovation. I will do my utmost to develop myself and the next generation of Enterprise Architects so that the profession continues to grow and contribute to the well-being of society.

I recognize

that my stature and privileges as a professional stem from the honor and trust that the profession as a whole enjoys, and I accept my responsibility for embodying, protecting, and developing the standards of the Enterprise Architecture profession, so as to enhance that respect and honor.

Measuring architecture by the kilogram...

Recent excellent articles by Mike Walker and Mike Rosen have prompted me to examine why I have been feeling a little uncomfortable with how many are looking at the new TOGAF V9 release.

Now to be clear up front I think that TOGAF V9 is a major step forward, specifically in the recognition that it is a broad inclusive methodology open to being used in part and not a dogmatic, inflexible, prescriptive process.

But as with all community developed standards or methods, in the political process of being all inclusive one ends up with a Reference Work rather than a pragmatic guide for execution. The detail on the sets of documentation are comprehensive but dangerous in the hands of those who would seek to gain credibility for the EA process through ensuring that the process is seen to be broad and deep. Many of us have "project skeletons in our closet" where multiple telephone books of analysis and documentation were developed for an EA initiative......an initiative that eventually collapses under its own weight of analysis and fundamentalist rigour.

I often reflect on the ideas in Jeanne Ross, Peter Weill and David Robertson's excellent book that we need to keep reminding ourself of a few "home truths"

• Any business initiative, be it a new business service, and IT project or an EA initiative need to keep foremost in their objectives to be timely and demonstrably beneficial to the enterprise
• The real goals behind an EA initiative should be to
  
  • design the execution capability that is consistent with the type of enterprise (Federation, Distributed etc..) and,
  • deliver, at a very early stage, new agile technology services that can deliver on high profile strategic business initiatives.

In other words, to echo the sentiments of the two Mike's above, focus on early deliverables that are not measured by the kilograms of paper written but rather can be seen through the prism of the successful early delivery of new business efficiencies and/or strategic initiatives.

In my experience this approach is well understood and accepted at the CEO level but one often finds resistance (funnily enough) in the Architecture and IT groups in that they seek form and process as a sign of good practice and risk minimisation. It does take balls (sorry...) to deliver the vision and target architecture early and drive towards rapid deployment of capabilities consistent with the target architecture.

Now that the "reference works" of Zachman and TOGAF have reached the comprehensive state that they have....the information that is really needed now are detailed case studies or cookbooks that can provide guidance on the sort of implementation patterns or profiles that have seen the rapid enhancement of an enterprise's execution capabilities and the realisation of these new capabilities with key new business initiatives.

What I think we will see is profiles or methodologies developing for certain vertical sectors and also for types of enterprises. That is what we did for the Capital Markets with EXarch...take the enormity of TOGAF and focus it down on the business of running capital markets...you get a much more streamlined approach to developing and enacting an EA and it is constantly honed or tuned by successive implementations.

Dealing with the Race to the Bottom....

With trading fees under pressure and most market providers racing to the bottom with respect to their base cost to trade…what is going to be the financial model for a modern exchange??

It used to be that traditional exchanges lived on three legs

• Trading and Listing Fees,
• Market Data Revenue, and
• Clearing and Settlement Fees

Nowadays many exchanges do not have the luxury of having their own clearing house operations so they are left to eke out a living with the revenue gained from trading and market data

Trading and Listing fees are under extreme pressure due to the explosion in alternate trading venues and the regulatory frameworks that ensure that price transparency between alternate trading venues. So what are exchanges to do ….how can they build a sustainable revenue growth story?

In the trading world, the key metric is depth of liquidity, most exchanges are tightly focused on how they can ensure a deep liquid market. I have even heard that some exchanges are now looking to pay participants to bring liquidity to the equity markets…as per the practice in derivatives markets.

Furthermore, market data is only as valuable as the liquidity and vitality of the underlying marketplace.

OK so now I am paying for liquidity..…..not a sustainable long term strategy…what can I, as an exchange operator, do to attract deeper liquidity and build new revenue streams?

I expect that many exchanges will soon need to revisit their strategic perspective on exactly what assets they have and how best to leverage those assets. One of those key assets is their secure PRIVATE network infrastructure. An infrastructure that is highly trusted and already has broad connectivity to those participants that the exchange wishes to engage.

In todays vernacular...one could call this a private cloud....

I think the leverage of this private cloud will be a major strategic initiative for exchange providers over the next few years. They already have the basic infrastructure in place…so what sort of things could they do to leverage this:

• Re-build/redesign the network to ensure low latency trading with measurement and management tools to enable participants to see / measure the latency
• Re-negotiate the underlying telecoms service providers to enable rapid addition and removal of bandwidth as needed to enable the exchange to add and remove services and participants rapidly and deal with market volumetrics
• Partner with infrstructure providers that can offer hosting services deep in the use of virtualisation and physical server hardware sharing. e.g people like Rackspace
  
• Build a SaaS management infrastructure to allow new service providers to offer their services to members across the existing Exchange Cloud. Here I would envision the exchange deploying an application and service management mechanism to allow them to offer new services (applications) to members and provision / manage those services e.g. an Algorithmic trading service, a new data analysis service, a hosted Execution or Order Management System (EMS/OMS). Have a look at Dynamic Ops
  

• High performance gateway services to major clearing service providers to enable members to access clearing service from the single exchange link

• Collateral Management Software offered as a cloud service

• Risk Management Software offered as a cloud service

You can see what I mean…leverage the trusted secure infrastructure as a delivery vehicle for BOTH exchange and third party service delivery to your stakeholders…offer them a single service management interface and (if you really want to be innovative) a single billing service for these offerings.

In other words, given the race to the bottom with respect to trading services, make hay in the support and trade facilitation services areas and make use .....actually try to enhance and defend...your position as the central hub within the trade cycle....

The winds of change in Exchange IT

Following on from some recent opportunities I have been working on ….I have wondered what is right technology model for a major capital market. Should an exchange own and operate all their own technology?? What should (publicly listed) exchanges do to leverage technology while becoming more fiscally responsible with respect to how much of the company’s assets should be invested in tech…

Right now most exchanges operate on a tech model that is around 10 years old (at least). While some exchanges use outsourced data centre / facilities management, the majority still want to own the hardware (or lease) and they want to either build their own software (still !!!) or license then significantly customize a software platform.

When confronted by a developing exchange who asks …”what is best practice in IT strategic planning for exchanges” , I am challenged to rail against the current models. Do I really need to own the data centres and hardware and the licenses….or can I run a market by leasing the software (say for a ticket clip per order) as a service and running in a virtualized server/network environment…

Can an exchange be more agile/responsive to the winds of global order flow changes by running their own IT department, or by paying a vendor to customize then install a platform to meet their domestic market models or by looking to adapt their market practices to suit a more standard market model delivered by a global market service provider ?

Well right now in most geographies the only realistic answer is that you have to go with the traditional ownership model…this is not because I think the “cloud” or virtual” exchange model is not worthwhile, rather it is the lack (outside the US) of the pervasive reliable high speed networks and virtual service providers that the more flexible model requires.

I do not believe that capital markets are isolated from the undeniable economies that virtualization and software being licensed/delivered as a service can provide.

I think this is only a matter of time and entrepreneurial vision…