According to a report from Forrester, approximately 61% of APAC organizations have failed to build robust and successful digital business models, primarily due to poor practices by enterprise architecture (EA) teams.
An enterprise architecture team is responsible for designing and implementing IT solutions with the goal of improving business efficiency.
While the failure rate looks marginally better compared to global, North American and European regions – whose failure rates are 63%, 66% and 63% respectively – it’s nothing to be happy about.
A digital model describes the entire route an enterprise takes to digital transformation, including operational changes in an organization, by integrating with emerging technologies to drive more efficient business processes and results.
One of the reasons for the higher success rate at APAC is the relatively high percentage of young companies adopting emerging technologies from startups.
“Because of these new age companies, APAC is less affected by legacy compared to other mature markets such as North America. If you look at the numbers with this information in the background, APAC’s success rates should have been higher,” said Sam Higgins, principal analyst at Forrester and co-author of the report.
Forrester compares a successful digital model based on efficiencies driven by IT infrastructure implementation and the so-called customer obsession, all of which can be broken down into sub-metrics such as revenue growth, profitability, customer retention, and employee engagement.
The report, which surveyed 924 software decision makers from the APAC region, as well as 1,431 North American and 1,235 European software decision makers, points out that the reason for the high failure rates lies in the approach taken by an enterprise architecture team.
Enterprise architecture is the key to success
“To regain momentum, enterprise architecture practices must shift their value proposition from cost-oriented technology architecture analysis to insight-based adaptive architectures that address business outcomes, including delivering customer value,” Higgins said.
Enterprise architecture teams often fail to evaluate the needs of application users or the experience they will go through.
Nearly 22% of respondents in the APAC region said that a lack of alignment between IT and business outcomes is one of the biggest challenges an organization faces in executing its software strategy, despite fewer budget constraints compared to with more developed regions such as North America and Europe.
By comparison, about 18% and 16% of respondents in North America and Europe, respectively, cited a lack of alignment as one of the challenges.
“While North America and Europe have marginally better alignment of IT and business outcomes, they suffer from security vulnerabilities and budget constraints — both of which far exceed APAC’s,” explains Higgins.
Only 22% of APAC decision makers identified security as an issue, compared to 31% in North America and 26% in Europe. In terms of budget, 29% of European decision-makers cited it as a constraint, followed by North America at 27% and APAC at 21%.
Diversity of needs affects dropout rates
Some of the other factors that heavily influence failure rates in APAC and other regions include diversity of business needs across divisions, inflexibility of existing applications, availability of partners for help, and unavailability of relevant skills.
Forrester believes that enterprise architecture teams in APAC can drive more value and improve their chances of success by linking business capacity modeling (BCM) to customer journey mapping and by using value stream management (VSM) to drive effective change. VSM calls on companies to adopt strategies to streamline and optimize the value stream associated with business initiatives. This includes setting business goals and creating investment plans to support the delivery of value to customers.
Using these techniques, stakeholders, including enterprise architecture teams, talk to each other to identify desired business opportunities, get continuous feedback from customers (or employees) about technology requirements, and then deliver a solution that can be updated.
To achieve this, Higgins believes development team leaders should integrate VSM with strategic portfolio management to optimize business alignment, improve delivery observability and automate a closed feedback loop to the portfolio.
“In terms of VSM tools, the preferred way to start is usually through integration with existing continuous integration/continuous delivery toolchains via API connectivity. Your data architecture should also include the common data models of VSM tools to get a holistic view,” said Higgins.
Some of the other approaches include prioritizing cloud platforms to change technical architecture to support business innovation, and embracing cloud native to accelerate cloud modernization.
According to Higgins, as technology elements in traditional architecture shift to a range of services in the cloud across the tech stack, it is not enough for enterprise architecture teams in APAC to rethink their technology architecture to identify areas that could be enhanced with cloud platforms.
“They should also comprehensively assess the impact of cloud adoption data management on platform and data architectures in areas such as database as a service, cloud data warehouse, and AI/machine learning in the public cloud,” the report said.