Economic architecture enables business and IT leaders to better express the financial underpinnings and potential benefits of their digitalization initiatives and the impact of their investment decisions. By integrating the different economic architecture elements (income statements, balance sheets, market share and so on), coupled with microeconomic and macroeconomic trends, EA practitioners can illustrate and highlight a variety of business and technology investment scenarios from different financial perspectives, which should be attractive to business executives and boards of directors.
Today, the reality is that most organizations will progressively develop their approach and practice of EA, and as part of the EA efforts, they will evolve their economic architecture. This is because many organizations are still figuring out business-outcome-driven EA (see Note 2), and many organizations are in the early stages of developing their digital business strategies that extend beyond the current focus, which is still predominantly on digital marketing and selling online and through social and mobile.
As more organizations begin to embrace the value proposition of economic architecture and use it as a competitive weapon, we expect the pendulum to shift. According to respondents in Gartner's 2015 Digital Business Survey of IT, Business and Marketing Executives, the top mindset or behavior that has to change for their organization to realize, build and optimize its digital opportunities is understanding digital business models, developing clear value propositions and justifying investment
One of the keys to business growth lies in continuous innovation; consistently unlocking value by revisiting the organization's value creation mechanisms or economic architectures. In the digital era, inventing, or investing and deploying technology is done because of identified business opportunities that will re-engineer the income statement and balance sheet. In other words, to be competitive and successful, organizations must understand what they can do with new business/operating models and technology (new and emerging) to change or enhance their financial positions. Conversely, they must also continuously revisit their economic environment and financial statements to find new opportunities to introduce new business/operating models that exploit technology.
EA practitioners:
- Gain a thorough understanding of your company's strategic capabilities, value drivers and differentiators. Do the same for the industry or vertical in which your company operates and competes. Understand your current and potential competitors (such as, digerati, 2 interlopers and players in adjacent industries), business and operating models, and key financial and performance metrics (economic architectures)
- Find ways to evolve and transform your enterprise through understanding the environment in which it operates. Also, consider rearchitecting the company's business architecture, information architecture, solution architecture, technical architecture and other viewpoints of enterprise architecture based on economic and financial drivers.
- Provide business and IT leaders with the diagnostic deliverables, economic consequences and actionable deliverables that help focus and balance their organization's investment decisions.
- Use economic architectures as a competitive weapon, balancing short- and long-term targeted outcomes the business seeks to achieve by exploiting the economic architectures, and making digital investment recommendations that will change the organization's business direction and drive its competitive advantage.
Regardless of your organization's level of EA maturity, EA practitioners must begin to reactively and proactively apply economic architecture as another viewpoint of EA to provide higher business value to their organization. EA practitioners do not need to become economists or financial and accounting experts. However, they must be comfortable and conversant with the different and more-sophisticated business, operating and financial models that will underpin digital business initiatives. They must identify, understand and examine the current- and future-state business economic and financial levers that are susceptible to digital transformation and thus business strategy and the future business state. Ultimately, EA practitioners will be required to proactively leverage and manipulate their organization's economic architectures — driven by making investment recommendations in digital technologies — as part of EA, to continuously change their organization's business economics, value-creation mechanisms, and profitability, and to drive targeted business outcomes.http://www.gartner.com/document/3184121?ref=feed
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