An enterprise fundamentally executes business services, and thereby delivers revenues and margins to its owners. These business services typically include procurement, manufacturing, workforce management, sales, marketing and order management for the goods and services their customers purchase. These business services are most often manifested as business processes, which execute using a combination of IT-enabled business functions, composed of inhouse or outsourced assets and execution partners. For instance, a supply chain business service for a large apparel firm comprises sourcing, warehousing and logistics processes, which are, in turn, implemented with IT packages as well as execution partners such as a hierarchy of global suppliers, with the whole business service itself managed by in-house and consulting staff. The IT packages run on servers with access to data (storage) and connecting to other internal and external systems (via networks).
When business leaders review the performance of the enterprise (the past) and optimize for the future (based on the forecast), they can usually can only take a ‘tunnel vision’ view by business service. They also often optimize by reducing spend in some areas which they consider excessive. The implications of these kinds of optimization on overall business outcomes are often not clear upfront or even retroactively as there is little traceability and transparency between the worlds of say, business process and IT. So, if the apparel manufacturer decides to optimize its supply chain by switching to a lower cost IT packaged product that reduces the flexibility in logistics and imposes lower margins on suppliers, there could be ‘stock out’ inventory misses in the stores (revenue loss) and negative publicity from bad labor practices with newer suppliers (reputation risk).
Expenses are often arbitrarily allocated across various cost centers. So, when budgets of IT projects that are ongoing (supporting existing processes) are compared with those of IT transformation projects (redesigning some existing process), loose projections of how, say, capital expenditure on the transformation project will reduce operating expenditure on the existing process, are often the basis to fund projects themselves. And there is very little ability, let alone accuracy, of verifying the savings once the project is completed.
We propose a structured hierarchy of linkages of solution elements. First, the linkage of business services to IT-enabled business functions, via business processes. Second, business functions are connected, through a structured taxonomy, with underlying internal or ecosystem foundation services. Therefore, it becomes very easy to see the implications of projects that could span any or all of business services, IT-enabled business functions and underlying foundation services. It also enables transparent consideration between options, right down to decision-making at the lowest level of granularity – such as ‘going to Public Cloud for data ingestion will increase the agility and reduce the cost of the campaign design and execution, but expose the marketing business service to increased risk of GDPR non-compliance’.
SIAM 4.0 framework
The schematic in Figure 2 is the essence of the SIAM 4.0 model and illustrates a representative ‘hierarchy’ of business services, business processes, business functions and then the realization atop IT assets and execution partners.