Business Technology Modernization: Building a Blueprint for Success in Application Rationalization

By Prachi Sinha, Rajendra Jagtap, and Pedro Khoury-Diaz

Article Discussion Points:

In today’s rapidly evolving financial landscape,[i] modernization of business technology is essential for streamlining operations, improving customer experiences, and meeting regulatory requirements. This article explores how business architecture (BA) can help companies modernize their applications and achieve their strategic objectives. We will discuss best practices for creating a business architecture blueprint, share a case study from the financial sector, and share insights from 20 years of experience working with financial customers on complex data transformation challenges.

Business Architecture: The Cornerstone of Modernization

Business architecture defines the processes, technologies, roles, and capabilities that drive enterprise value and shows how each relates to and supports corporate strategy. Business architecture is recognized by practitioners as a component of enterprise architecture, a broader framework that encompasses the entire organization. As the cornerstone of modernization, a robust business architecture empowers leaders to successfully execute their strategic objectives by providing complete transparency into their organization’s operations. This transparency, combined with clear insights into the scope and impact of business and technology initiatives, enables executives to make informed decisions, eliminate underperforming projects, and align investments with strategic objectives.

A well-designed business architecture is a blueprint that guides companies through the transformation process.

Figure 1. A Basic Business Architecture Framework

Using the framework of the Business Architecture Guild, the BA golden standard, we provide the five best practices that form the foundation of successful business architecture and describe how to implement them:

  1. Establish a business strategy: The first step in creating a business architecture is establishing a well-defined business strategy. This strategy serves as the guiding vision for the firm and provides the framework for decision-making. It is essential to involve key stakeholders and ensure their buy-in to create a unified, strategic direction
  2. Assess business impact: Once the business strategy is in place, the next step is to assess the impact of various initiatives on the organization. This process involves identifying areas most affected by the proposed changes and understanding the potential risks and opportunities. Calculating business impact enables leaders to prioritize initiatives and allocate resources effectively.
  3. Architect business solutions: With a clear understanding of the business strategy and the impact of proposed initiatives, the next step is to architect the business solutions required to achieve the strategic objectives. This involves designing and modeling the companies’ structure, processes, and systems to optimize efficiency and effectiveness. In addition, the business architecture should be flexible and adaptable to accommodate future changes in the business environment.
  4. Establish initiative plans: Once the development of the business architecture is complete, the company needs to establish initiative plans that outline the specific actions, resources, and timelines required to implement the solutions. These plans should align with the overall business strategy and consider cost, risk, and return on investment.
  5. Deploy solutions: The final step in the business architecture process is to deploy the solutions outlined in the initiative plans. This involves executing the necessary actions, ensuring the availability of resources, and providing support to ensure a smooth transition. In addition, continuous monitoring and adjustment of the solutions as needed ensure alignment with changing business needs and priorities.

Using these best practices, companies can build a robust business architecture that is the blueprint for successful modernization. Leveraging the insights and clarity provided by the architecture, business leaders can make informed decisions, eliminate underperforming projects, and align investments with strategic objectives.

The Role of Application Rationalization in Business Architecture

Modern financial institutions will continually assess and optimize their IT application portfolios to ensure alignment with strategic objectives and maintain a competitive edge. The process of application rationalization is integral to this effort and is most effective when anchored by a robust business architecture. With a clear, detailed vision in place—comprising operations, processes, systems, and strategies—firms are better positioned to conduct a more granular assessment of their technology investments through the lens of application rationalization. The approach enables firms to effectively identify which applications should be retained, replaced, consolidated, or retired by employing application rationalization analysis criteria. These criteria provide a basis for conducting a cost-benefit analysis of each application, assessing its functionality and security risks, and determining its alignment with business objectives.

Figure 2. Application Rationalization (App Rationalization) Process and Methodology

We can improve organizational models by applying application rationalization to enhance efficiency, performance, and flexibility. The implementation roadmap describes the mechanisms for achieving validations, transition, and cutover to production, highlighting best practices and effective architectures. These include DevSecOps CI/CD pipelines powered by AIOps-enabled predictive maintenance, scaled agile service delivery, automation, microservices architecture, containerization architecture, cloud-native adoption and enablement, serverless architecture, and Zero-Trust architecture (ZTA) services. Continuous improvement and innovations are achieved through utilizing a shared responsibility model, effective organizational change management, and governance techniques. By addressing common issues faced during the rationalization of application portfolios, such as the lack of comprehensive and automated analysis for as-is state analysis and target state readiness, application rationalization can lead to more efficient and effective organizational functionality.

FI’s White Paper on Application Rationalization provides a framework for optimizing rationalization for your organization.

Why do we use this framework? Is it commonly used by financial institutions? Is it the most widely accepted model? Are there lots of variations? If there are and we chose this one for simplicity’s sake, say that.

Case Study: Leveraging Business Architecture for Improved ROI

Background

A leading financial institution sought to improve its ROI by leveraging business architecture to align its strategic initiatives with overarching goals and objectives. The primary drivers for this effort were enhancing customer experience, mitigating risk, ensuring operational efficiency, and achieving cost savings or avoidance.

Challenges

The organization faced challenges implementing its business architecture-driven approach, including:

  • The inability to set measurable targets for various objectives due to a lack of historical data or benchmarks.
  • The inability to track key metrics.
  • Uncertain timelines as a byproduct of an Agile development approach

To overcome these challenges and ensure a successful outcome, the organization focused on the following:

a)     Creating linkages and alignment between the objectives defined by the initiatives and overarching strategies and goals. This process ensured that all efforts achieved the organization’s strategic vision.

b)     Identifying and engaging the partners delivering the capabilities impacted by the initiatives to define and gain commitment on objectives, metrics, and timing. This collaboration helped establish a clear understanding of the expected outcomes and fostered a sense of ownership among stakeholders across IT and Business teams.

c)     Defining clear goals and metrics for each initiative and employing business architecture to lead the transformation and development of the data ecosystem. This approach enabled the organization to track progress, identify potential issues, and make data-driven decisions to optimize resource allocation.

d)     Establishing critical milestones for long-range goals to keep targeted benefits realization dates on track. This practice helped maintain momentum and focus on achieving the strategic objectives, despite the challenges associated with an Agile approach.

Results

By implementing a business architecture-driven approach, the organization overcame its challenges and achieved its desired ROI. The alignment between initiatives, strategies, and goals ensured that resources were directed toward high-impact projects, while the collaborative engagement with stakeholders helped maintain commitment and ownership. In addition, defining clear metrics enabled the organization to measure the effectiveness of its investments while establishing critical milestones that kept the realization of targeted benefits on track.

This case study demonstrates the power of leveraging business architecture to improve ROI by aligning initiatives with strategic objectives, engaging stakeholders, defining clear goals and metrics, and establishing critical milestones to keep projects on track. These data transformation milestones incorporated additional metrics that further improved decision making. By adopting this approach, organizations can maximize the value of their investments and drive long-term success.

How FI Helps Clients Connect Strategy with Execution

With more than 20 years of experience serving the financial sector, FI Consulting has honed a comprehensive understanding of the unique challenges both public and private institutions face when it comes to aligning capabilities and strategic vision. As experts in business architecture, we support our clients in refining their business models with the precision necessary to drive their modernization efforts forward. Regarding application rationalization, we collaborate closely with our clients, immersing ourselves in their culture, processes, and procedures to identify the needs of the application end-users, who are the main participants. We use frameworks that align with other trusted methodologies such as the Information Technology Service Management (ITSM) framework, which along with application rationalization helps design, build, deliver, operate, and control information services.

Our synergistic approach empowers clients to leverage their data to make informed decisions, enhance operations, create innovative programs and products, proactively engage with leadership and stakeholders, and deliver secure digital services. By offering pragmatic, adaptable, and scalable solutions that evolve alongside changing requirements, we position our clients for enduring success in an increasingly digital business landscape.

Conclusion

Business technology modernization is essential for all firms, particularly in the financial sector, as they strive to keep pace with changing customer preferences and economic volatility. An essential aspect of the modernization process is identifying and eliminating underperforming projects, effectively reallocating resources towards more strategic and value-generating initiatives. A robust business architecture is a foundation for successful application rationalization efforts, enabling organizations to align technology investments with their strategic objectives. Moreover, firms with an established business architecture can continuously evaluate their technology portfolios to identify and transition from or retire technologies no longer relevant or aligned with the firm’s objectives. This proactive approach ensures that firms maintain a competitive edge by keeping their technology ecosystem updated, efficient, and closely aligned with their strategic vision.

[i] Gartner: Adapt Business Application to Deliver Agility and Innovation https://www.gartner.com/smarterwithgartner/adapt-business-applications-to-deliver-agility-and-innovation

 

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