Agile and Cloud Transformation Continue to Drive Enterprise Architecture

Enterprise architecture (EA) is an area of growing investment across all insurance segments. After years of a centralized, directive-oriented model, EA is transitioning toward a more federated model. The primary driver is Agile, which has demonstrated benefits that extend well beyond improved success metrics in project delivery. This transformation is changing both the role of EA and how the practice delivers value to the organization.

Last month, I was joined by my colleague, Mitch Wein, for Novarica’s Enterprise Architecture Special Interest Group session. The discussion covered a range of topics, including business outcome and value realization, Agile development, as well as cloud transformation.

Measuring Enterprise Architecture Success

The session began with a conversation around how EA’s priorities get incorporated into business outcome and value realization KPIs. Business growth continues to be the highest priority initiative for EA. As one panelist noted, the primary function of EA is to align business strategy to technology strategy; ensuring that architecture and technology meet business goals is fundamental.

Organizations are evolving into an outcome-oriented approach, where individual teams are engaged with particular outcomes and architecture input from blueprints or guardrails are incorporated into the process at the team level. At a high level, more organizations are driving toward feeding architectural viewpoints into the business processes early. One panelist shared that his team creates data sets that are consumable by customers (e.g., total cost of ownership, business capability model that shows gaps) and makes sure that the data becomes part of the business decision. At a lower level, EA groups are focusing on providing guidance and a standard set of technologies, templates, and processes.

Measuring enterprise architecture success goes beyond paying down technical debt. It’s also about incorporating financials of technical debt into the cost-benefit analysis and planning. This tying into value realization is critical. If insurers prioritize business value, technical debt reduction is categorized by what produces the most value for the business. The focus becomes less about trying to quantify outcomes and more about analyzing overlaps, gaps, and areas of misalignment in strategy and goals. As one panelist noted, the value of EA comes from giving good counsel to IT and business stakeholders.

Agile Development

EA has evolved as organizations have become more Agile. EA has traditionally been characterized as a top-down discipline. Agile, on the other hand, is bottom-up, placing the emphasis on responding to change and providing autonomy at the team level.

Insurers continue to struggle with the friction between Agile and Waterfall. One panelist shared the importance of having guardrails as insurers navigate ways to integrate their architectural functions with their Agile development organization: “As long as teams stay within the guardrails, they can iterate all they want. If it’s about new technology products, deviation from strategies, or new integrations with third parties, we’d need discussions.” Another panelist noted that, “It is important to know what the trigger point is. If you have standardized test blocks (e.g., APIs, loosely coupled services, microservices), these are flexible building blocks that you can leverage.”

Looser affiliations are also used to coordinate activities of enterprise architects. Some organizations have established bi-weekly meetings run by EA that bring in different Agile teams to share information and generate discussion. This allows Agile teams to maintain autonomy while still providing a structure for coordination around standards and best practices.

Enterprise Architecture and Cloud Transformation

Architecture is key to cloud migration. Recent Novarica research suggests that cost savings materialize when insurers change the way systems are architected. Insurers that have adopted cloud-native technologies report significant cost reductions as well as major performance improvements.

EA has a significant opportunity to show value to the business throughout the cloud transformation process. As one panelist noted, “EA can counsel how the ecosystem migrates to the cloud. What pieces should move first? How do you preserve some performance and security? How do you move different mainframes to the cloud? These are all questions that teams come to us for help with. It’s a wonderful opportunity to create value.”

On a final note, the panelists shared challenges with cloud transformation. “Cloud-native is different from cloud-enabled. This base-level understanding was hard to establish. There’s a path to get there, but it’s a lot of time investment to level field.” As insurers plan to expand their cloud footprint, it is important to be aware that cloud transformation is a shift that could involve significant changes around skill sets and readiness.

For more discussions like this, join us for our next Enterprise Architecture Special Interest Group on Thursday, September 9 at 1 PM ET. More details and registration for the session can be found here.

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