Chapter 1: Enterprise IT's generational shift

The world of Enterprise IT is in early stages of a generational shift moving from packaged application centric ecosystem to an architecture featuring user centric experiences composed of smaller heterogenous applications and services.

This shift was kicked of largely by maturing cloud platforms, being proven to be a more effective approach by start-ups and consumer tech for application delivery, whom for some years now have gained a competitive edge over larger enterprises as a result. For the slower moving corporate world, the reality has dawned that a new approach is required to remain not only competitive but remain in touch with customers. Currently this change is manifested as the ubiquitous phrase known as Digital Transformation and in the past 2 years it has been largest investment driver in organisational IT systems according to various surveys.

Generational technology shift chart. Source: Rimini Street

The demands of this new world have presented a challenge for many medium and large enterprises with mature IT environments specifically those with significant multiyear investments in a monolithic ERP system, which have reached a level of maturity (and limits).

Most of these enterprises have defined architectural and product strategies, which tie them closely to their ERP software vendor. In many of cases like the one with SAP, the vendor has entered the “digital” space with their own offerings and are pushing customers to adopt their products. However, IT management of long-standing ERP customers have in recent years found themselves repeatedly explaining low ROI of some of their chosen vendors offerings stemming from various factors to be covered later.

The pressure to respond to business needs stemming from disruption and digital transformation is greater than ever, but what are the options and what strategic architectural change is required to accommodate not only digital but application delivery over the next 10–20 years?

  The Layer Cake 

The purpose of this series is to explore the possible architectural options and application delivery strategy for the typical enterprise IT that is heavily invested ERP and other software suites from a tier 1 ERP vendor which now needs to re-align to the organisation’s digital transformation requirements. The reality is that it is simply not possible to present a single architecture approach which will not require revision in the next few years due to changing application approaches but rather let looks at this process as an evolution.

TODAY: Gartner’s Pace Layered architecture released a few years ago perfectly describes what is probably the status quo in most organisations today:

ERP as the core System of Record, some packaged solutions as the Systems of Differentiation. Lastly a generic layer for Systems of Innovation which could encompass any number of technologies or solutions. This view of SOI is rather limiting with veracity of options in the new digital world.

TRANSITIONAL ARCHITECURE: Currently the systems of innovation layer consists of numerous fragmented subcomponents, to make more sense of the layers as we expand on this series, we are going to separate them into their component parts of what can be considered a transitional layered architecture.

We are going to focus on how to build a scalable architecture and a Systems of Innovation capability whilst minimising disruption to the stable Systems of Record which have a longer path to modernisation.

FUTURE STATE: As what happens which each generational shift it will end with the inevitable consolidation of fragmented technologies and companies, more than just product mergers there will also be significant architectural changes with certain components becoming seamlessly fused.

Integration is evolving and merging in event processing build into applications on the one side, on the other side integration is becoming a native part of data. Analytics, machine learning tolling will mature and consolidate and even possibly encompass technologies like IOT forming Systems of Intelligence. Ultimately as the cloud and digital technology mature, they are likely to collapse the layers into a 3 layer stack representing Systems of Engagement and System Intelligence with today’s Systems of Differentiation essentially forming part of the ubiquitous Systems of Record

You may be asking yourself, why not just leapfrog to the final state? The answer is that the current products and technologies simply are not mature enough at this point, however this is a multiyear journey that cannot wait and needs to start asap.

Which Digital defines you?

There are many definitions of digital transformation and any one of these is often misunderstood by most organisation, before going down any architecture rabbit hole its best to clearly understand which digital road your company is taking as it has a material impact on the architectural decision you will be requirement to make.

True digital transformation is more about implementing leadership driven new business models than IT driven technology implementations, sadly for most organisations their programs tend to be IT focused and thus Digitalization programs.

“Digital is not just a thing that you can you can buy and plug into the organization. It is multi-faceted and diffuse, and doesn’t just involve technology. Digital transformation is an ongoing process of changing the way you do business. It requires foundational investments in skills, projects, infrastructure, and, often, in cleaning up IT systems. It requires mixing people, machines, and business processes, with all of the messiness that entails.” (Why so many high profile digital transformations fail)

If you are not sure if your company is doing digital transformation then a simple test would be to confirm if your roadmap involves more than just one or two of the nine elements defined by the widely praised Capgemini study and Roadmap on digital transformation.

Now assuming your organisation is engaged or planning to undertake digitalization and/or digital transformation projects and still running monolithic ERP applications then this series of articles is here to help understand the challenges with the traditional single suite vendor approach and hopefully provide some solutions on how IT can prepare and respond to your organisations demand in coming years. If all you are engaged in is digitization aka IT modernisation, then likely your vendors product offering will suffice for now.

What’s the way forward?

The path we will following in this series will be firstly to examine existing enterprise architecture choices and strategy and why these may ultimately result in failure in your digital journey and methodically go through the process of building out each building block of a approach. The purpose is to give you an idea on how to build out an architecture that will scale beyond just digitalisation onto the next phases of this new generation of enterprise IT.

It is also the objective in the series is also to be pragmatic, very often articles covering Digital Transformation call for wholesale change to IT systems, some even calling to the divestment from ERP. Rarely does this approach work especially if one considers the years of investment by a company to reach a mature level in ERP it is neither practical. It is also important to recognise the strengths of ERP systems and they have an important role to play in the long term of any enterprise, but we also need to understand and be honest about the systems limitations when looking at the demands from digital initiatives.

Before we continue there is some caveats that must be put in here. Firstly, it is impossible to cover all the options and architectural permutations as each customers landscape and requirements differ, this is intended to merely illustrate what is possible in a typical enterprise.

In terms of selection of solutions for the purpose of this series we will use SAP as its the traditional enterprise ERP software powerhouse. The advantages of cloud platforms tend to significantly outweigh those of on-premise, so for our series we will be using the Microsoft Azure offering for solution examples but platforms such as Amazon’s AWS could just a easily be deployed if you feel it is a better a fit. A later point I will in more detail do a comparison of AWS vs Azure but in context of enterprise level solutions.

So for those of you in the long term ERP space I hope there is something useful for you in this series in which to help undertake the digital journey and not suffer analogue relapse. You can connect with me on linkedin/hgiddy .