Information Systems 2A: Operating Model

• The notes are for Information Systems 2A (ILS2A01)
• The Cut-Off Date for Assessment for Week 2 is 24 February 2025
• The study material covers Learning Unit 1 and 02
• Topics covered include defining the operating model, implementation via EA, navigating EA maturity stages, increasing value and ROI from architecture maturity, understanding the IT engagement model, EA and outsourcing, EA growth and ROI, and the leadership agenda
• The learning unit aims to describe an operating model for baseline architecture, explain the key dimensions, and differentiate between four types of operating models

What is an Operating Model

• An operating model acts as the blueprint for an enterprise

• It represents how an organization operates

• The operating model embodies a general vision of how a company enables and executes its strategies

• This operates as a holistic representation of how an enterprise creates and delivers value to its customers or beneficiaries

• Considerations when defining an operating model:

• Tailor standardization and integration with strategic goals

• Take into account industry context

• Consider organizational characteristics

Process Standardization

• Process standardization involves adhering to standards to ensure uniformity and consistency

• These can be guidelines, specifications, or protocols

• This applies across various components and processes of different business units

• Process standardization creates a common framework for various sections of the business

• Process standardization provides:

• Uniformity, consistency, and compliance

• Consistency and conformity are essential

• This focuses on defining and enforcing common rules within a domain or industry

• Standardization of processes could be independent of efforts to integrate different systems

Process Integration

• Process integration involves seamless combination of diverse systems

• Connects applications and components to cohesively exchange data and functionality

• Process integration brings together diverse sections of the organization to function cohesively and eliminate data silos

• Applied in technology, systems, and data contexts

• Links different software applications, systems, or databases

• Streamlines operations and improves data flow across business units of the enterprise

• Linking and coordinating activities across various domains or systems

• Process integration requires:

• A degree of standardization to establish common protocols, data formats, and communication methods

Four General Types of Operating Models

• Coordination: Low standardization and high integration

• Unification: High standardization and high integration

• Diversification: Low standardization and low integration

• Replication: High standardization and low integration

• Each operating model presents different opportunities and challenges for growth, so choosing the correct one is crucial

Operating Model with Coordination

• A scenario where flexibility and diversity in how business processes are executed is emphasized

• The processes are well-connected and work seamlessly together

• Coordination entails:

• Diverse processes across different business units or departments, allowing customization

• High degree of flexibility in how processes are designed and executed

• Enterprises can easily adapt to changing business conditions without rigid standards

• It values innovation emphasis and technology-driven integration

• Adaptive governance

Operating Model With Unification

• There is a strong emphasis on uniformity and consistency

• This emphasis extends to how business processes are designed and executed

• Unification entails:

• Uniform business processes

• Consistency across business units

• Centralised governance

• IT decisions are made centrally

• Efficiency through standardization

Operating Model With Diversification

• Limited uniformity in processes is emphasized

• Components operate independently with limited interaction

• Diversification entails:

• Decentralised decision-making

• Data silos

• Risk management challenges

• Communication challenges

Operating Model With Replication

• Uniformity and consistency are emphasized

• There is limited interaction between different components of the organization

• Replication entails:

• Efficiency through standardization to eliminate variations and reduce errors

• Regulatory compliance is ensured

• Strict adherence to regulatory requirements is required

• Consistency in processes assists in demonstrating compliance with industry standards

• Centralised governance and standardization support consistent risk management practices

Applying the Operating Model

• Quadrants emerge when analyzing how a company approaches business process integration and standardization.

• Organic growth: Expanding the business through internal means without relying on mergers.

• Acquisition growth: Merging with other organizations or purchasing to achieve growth.

• Determine your desired quadrant to define your company's intentions to clarify how it intends to deliver value

Process Standardization and Process Integration

• Integration: The extent to which the successful completion of one business unit's transactions depends on the availability, accuracy, and timeliness of other business unit's data Process Standardization and Process Integration

• Determine to what extent the company benefits by having business units run their operations in the same way

Diversification to Unification Considerations

• Only switch operating models if the current one is unsuitable to market realities

• Switching should not be done regularly

• Switching operating models can lead to:

• Traumatic organizational change

• Existing systems becoming obsolete

• Existing processes becoming obsolete

• Organizational structures and roles may become obsolete

• Costs and Increased business flexibility

• Unification to Diversification entails:

• May provide more opportunities to leverage core business

Operating Model as Company Vision

• Operating models provide guidance for developing IT and business process capabilities
• Operating models enable IT to become pro-active
• Requires top management commitment
• Determines strategic opportunities