G00269850

Future of EA 2025: Evolving From Enterprise to

Ecosystem
Published: 7 October 2014

Analyst(s): Marcus Blosch, Betsy Burton

Digital business is altering and broadening industries, businesses and

people. EA practitioners will expand their perspectives beyond an
"enterprise" to deliver business outcomes and leading response to
disruptive trends with the context of a broader ecosystem of customers,
partners and competitors.

Key Findings
■ Competing in the digital business era will demand that EA practitioners take a business
ecosystem perspective to allow their organization to successfully orchestrate and influence their
network of relationships.
■ Enterprise architecture teams will evolve and adapt to support their organization's digital
business objectives, or be disbanded with EA activities being assumed by other roles.
■ Senior executives will expect the primary EA value-add to be influencing the business
ecosystem in support of targeted business outcomes and operations.

Recommendations
■ EA practitioners, determine with your stakeholders what ecosystem focus for EA is needed to
support your business in the next two, five and 10 years based on the internal and external
disruptive forces that will impact your business. Continue to invest in business-outcome-driven
EA and deliver signature-ready deliverables that drive business and IT change. But start to
expand your business outcome focus for EA to include your biosphere and ecosystem of
customers, partners and competitors.
■ Get creative! Use your short- and longer-term digital business scenario plan to determine a few
deliverables that you could create to address your organization's potential digital business
future. Use this to engage business and IT leaders in planning your short- and longer-term
business models and designs.
 Table of Contents

Strategic Planning Assumptions............................................................................................................. 2

Analysis.................................................................................................................................................. 2
To Compete Effectively, Your Digital Business Strategy Is Your Business Strategy............................3
Digital Business Requires Business Model Transformation................................................................4
Digital Business Models Drive Significant Changes for EA in 2025.................................................... 5
Perspective.................................................................................................................................6
Impact of Business Change........................................................................................................ 7
The Future of EA: Architecting the Digital Business Ecosystem......................................................... 7
Those Who Will Lead Tomorrow Are Taking on Digital Leadership Today......................................... 9
Recommended Actions.................................................................................................................. 10
Gartner Recommended Reading.......................................................................................................... 11

List of Figures

Figure 1. Future Scenarios for EA in 2025...............................................................................................5

Figure 2. EA Perspectives.......................................................................................................................6
Figure 3. EA Operations in 2025........................................................................................................... 10

Strategic Planning Assumptions

By 2025, the organization will primarily focus enterprise architecture (EA) on business outcomes
from the perspectives of their digital business ecosystem.

By 2017, 60% of organizations will execute on at least one revolutionary and currently unimaginable
business transformation effort.

Analysis
Digital business is about transforming business designs, industries, markets and organizations.
1
Major business and technology forces (Nexus of Forces, 3D printing, Internet of Things [IoT]) are
combining to disrupt existing business models and create the opportunity for entirely new ones. The
examples of this transformation are easy to find (see Note 1). In almost every industry, there is
evidence of digital transformation underway, from dentistry, where 3D printing is opening up new
2
treatments, to travel, where services such as "couchsurfing" open up new opportunities for
3
travelers and homeowners. Gartner predicts that, within the next 10 years, every industry will be
4
transformed by digital.

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 As organizations continuously adapt to the disruption of digital technologies, so will CIOs and their
5
IT organizations. Enterprise architects will change and adapt to digital disruption and adopt a new
set of practices and competencies to reframe EA so that it continues to add business value and
remains relevant in the digital age. In this research, we explore the future of EA in 2025 and take the
position that:

By 2025, organizations will predominantly focus EA on

delivering business outcomes from the perspectives of their
business ecosystem.

In this research, we are referring to "digital business ecosystem" in several places. We are
6
specifically using this term to refer to collection of organizations, people, technologies, information,
processes and assets (including technology) and disruptions (social, economic and political) that
have either a direct or an indirect impact on an enterprise's ability to operate, compete and
transform.

This research is written for enterprise architects and their stakeholders looking to understand the
implications of digital disruption on EA, and how they must evolve to meet this challenge.

To Compete Effectively, Your Digital Business Strategy Is Your Business Strategy

Digital technologies transform strategy and competitive advantage. They simultaneously disrupt and
displace existing business models and create the opportunity for new business models.
Recognizing this potential, 52% of CEOs and senior business executives say their organization has
7
a digital business strategy. For leading organizations, their digital business strategy is their
business strategy and reflects an emerging trend of organizations creating new business designs by
blurring the physical and digital worlds. Specifically, what make digital business distinct and
differentiated are:

■ Digital business is primarily focused on the broader business opportunity to compete (or serve),
not on an element of technology.
■ Digital business is specifically focused on the peer exchange and communication between
business, people and physical things as equal entities.
■ Digital businesses are digitalizing their physical assets, as well as their virtual assets (such as
data and business processes).
■ Digital business will increasingly include the connection or integration with assets beyond the
control of any one company.

Jeffrey Immelt, CEO of industrial giant General Electric (GE), proposed the vision of the "Industrial
Internet," which brings together the Internet of Things of industrial equipment, combined with the
8
Internet of customers working to drive their own business outcomes. This will allow GE to create
entirely new products and services, and new efficiencies in industrial equipment, setting GE apart.

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 Combining people, things and information underpins the opportunities of digital and is driving a
9
transformation as great as the Industrial Revolution.

Digital Business Requires Business Model Transformation

Digital business impacts every aspect of the business model, from the products and services
offered to customers through to the back-office processes. It is possible to identify some key
10
impacts:

1. "Remastering" of products and services — Products and services are redefined around
digital content and delivery; cars are now a "connected platform," bringing together a range of
11
services from navigation through to entertainment and autonomous driving.
2. Innovation through the business ecosystem — Innovation is delivered through collaboration
with complementary organizations; Apple's success brings together a broad ecosystem ranging
12
from app developers, authors, entertainment companies and publishers.
3. The need to be "smart" — Using big data and predictive analytics to be able to serve up the
right information, product or service, or action at exactly the right time; retailers use big data
and analytics to understand their customers in great detail and create tailored marketing and
13
promotion, driving increased revenue.
4. Blending technology and business — Digital business demands a blending of the capabilities
of combinations of nexus technologies and business models; here there is no distinction
between technology and the business. At Starbucks, the VP of Digital Ventures and CIO work
closely to blend technology and the business model, from social media to engage customers to
14
rapid mobile payments to cut customer wait times.
5. Becoming an experimental organization — Digital technologies build on each other with
wave after wave of innovation; customers adopt and use products and services in unexpected
ways. There is no right answer, so organizations must experiment and adapt over and over
using "lean startup" or "agile" approaches; a European telecom company we worked with had
its customers using a lean startup approach to developing new online services.

While many organizations initially focus their digital business strategy around the customer/
constituency, the longer-term impacts will be felt across the whole business model. These five
trends point to two overriding operating principles that will have a profound impact on how
organizations support EA:

■ Invest with the assumption that your business will innovate and adapt to new digital business
designs.
■ Weigh enterprise architecture decisions based on the direct and indirect impact on your
enterprise strategy and operations from your ecosystem.

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 Digital Business Models Drive Significant Changes for EA in 2025
15
In 2011, Gartner wrote a note predicting the future of EA in 2020. At that time, there was
significant market hype and speculation regarding the "death of EA." As such, we explored the
purpose of this research, which was to use current market trends and research to analyze a
spectrum of potential scenarios for how organizations would operate EA in the future. Based on this
research, we predicted that by 2020, the majority of organizations will support EA as a distinct
discipline that is an integral part of business and IT strategic planning (55% probability).

This year, we are extending this 2011 research by exploring the future of EA in 2025 in terms of its
primary focus (see Figure 1).

Figure 1. Future Scenarios for EA in 2025

Source: Gartner (October 2014)

To accomplish this, we looked at the future of EA based on the perspective that organizations will
take toward their business and the impact of change affecting the business it is dealing with.

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 Perspective
The primary scope of the enterprise architecture includes the people, processes, information and
technology of the enterprise. However, the perspective that EA practitioners take on this scope is
significantly impacted by their relationships to one another and to the external environment (see
Figure 2). The vertical axis refers to the spectrum of the point of view being taken when considering
the scope of EA (from "inside-out" to "outside-out").

Figure 2. EA Perspectives

Source: Gartner (October 2014)

■ Inside-Out — The bottom of the x-axis is an inside-out perspective. Taking an internal

perspective (inside-out), means EA is focused on guiding how people, process, information and
technology interact relative to delivering operational value indirectly to the business. This is the
traditional focus management, consolidation, standardization and simplification of assets to
operating efficiently and effectively.
■ Outside-In — The middle of the x-axis is an outside-in perspective. Taking an outside-in
perspective starts with a focus on the business outcomes needed to deliver business value to
your customers, constituencies, partners and stakeholders, then working inward to determine
and guide changes to people, processes, information and technology to drive these outcomes.
The focus is less on delivering services, and more on collaborating with, leading and
empowering business and IT to deliver business outcomes in response to business disruptions
(threats and opportunities).
■ Outside-Out — The top of the x-axis is an outside-out perspective. Taking an outside-out
perspective starts with an even broader focus beyond the enterprise and its known customers,

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 partners and competitors, into the world of possible (unknown) customers, constituencies,
partners and stakeholders. With this broad perspective, EA is focused on understanding the
trends that could affect the business and its ecosystem, then working inward to determine and
guide changes to people, processes, information and technology to drive these outcomes. The
focus is on disruptions well beyond the immediate scope of the organization (be it new
technologies or competitors, for example) that could drive change and innovation.

Impact of Business Change

The horizontal axis refers to the impact of business change that is occurring within the business and
16
its ecosystem. We define "big change" to be measured based on the degree of:

■ Volatility: The situation is evolving quickly and in unpredictable, even uncontrollable, ways.
■ Novelty: The degree of uncertainty and/or ambiguity on how to achieve the end goal.
■ Disruption: The degree of departure from current operations to the desired state.
■ Complex Scope: The diversity and number of people, things, processes, technologies, systems,
cultures and regulations are involved or will be impacted and require some alteration.

It is critical, that when considering the impact of "change," we include change to business, people,
17
process, information and technology, and we consider fluidic, serial and episodic change.

The Future of EA: Architecting the Digital Business Ecosystem

The reality is no organization will operate only with just one perspective, but rather a combination of
perspectives. As such, the vertical axis perspective should also be viewed as a scale from more
internally focused to more externally focused.

This leads us to four scenarios for the primary focus for EA in 2025, including:

■ Optimizing Operations — In this future scenario, organizations are experiencing little change
and are taking a perspective between inside-out and outside-in. In this scenario, EA primarily
remains almost exclusively concerned with the efficient operation of the organization itself. This
is a highly unlikely future scenario (1%) due to many of the above-mentioned trends, not the
least of which is that we believe the majority of organizations will be remastering their products
and services to take advantage of digital business threats and opportunities. Therefore,
business change is inevitable for the majority of organizations. By 2017, 60% of global
enterprise organizations will execute on at least one revolutionary and currently unimaginable
18
business transformation effort.
■ Maximizing Business Outcomes — In this future-state scenario, organizations are being jolted
by a high impact from business change; however, they are still primarily taking a perspective
between inside-out and outside-in. In this scenario, EA primarily remains largely business-
outcome-focused; new approaches to rapidly developing and delivering business outcomes are
created by using methodologies, such as lean startup and agile, to speed the time to market

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 19
and pace layering of EA. While this scenario represents many organizations' focus for EA
today (see "Hype Cycle for Enterprise Architecture, 2014"), we believe it is a very low probability
for 2025 (4%) as organizations increasingly support digital business models, technologies,
information and processes outside the scope of their own business, and as they leverage
existing and emerging partners, customers and competitors to drive innovation.
■ Orchestrating Your Business Biosphere — A "biosphere" refers to a closed/defined
ecosystem. In this scenario, organizations are experiencing little impact due to change and are
taking a perspective of outside-in to outside-out. The interesting aspect of this scenario is that
because the impact of change is low, scope of the ecosystem is fairly defined; hence, a
biosphere. Here EA is primarily business-outcome-focused, and some vanguard EA capability is
added initially through partners and vendors bringing in new services and capabilities, using
20
approaches such as "adaptive sourcing." While this is a reasonable scenario, we believe this is
a significantly likely scenario (35% probability) for the majority of organizations, given the
impact of new digital business designs, fundamental changes that are impacting organizations
due to the integration of business and IT.
■ Influencing Your Business Ecosystem — Unlike a biosphere that is closed and controlled,
supporting EA with a perspective and focus on the ecosystem means that enterprise architects
are working on understanding the near and far forces and disruptions that could have a direct
or indirect impact on an enterprise's ability to operate, compete and transform. In this scenario,
the impact of change is medium to high, and the perspective is out-outside-out to outside-out.
We believe this is the most likely scenario (60%) for most organizations, because of all trends
previously mentioned, and more specifically due to the trends of: (1) remastering and redefining
products and services around digital content and delivery; and (2) driving through collaboration
with complementary organizations. In this scenario, pressure of digital innovation is high, and
organizations take advantage of digital innovation through known and unknown partners,
customers and competitors. At first, senior executives will expect primary EA value-add to be
providing decision support to business leaders concerning the relationship between outward-
focused business outcomes and internal operations, across the business ecosystem. In the
long run, senior executives will expect the primary EA value-add to provide advice and
guidance and influence the business ecosystem in support of targeted business outcomes and
operations.

It is critical to note that we are not trying to imply that all

organizations will architect only with an ecosystem perspective.
In fact, most organizations will operate with different
perspectives, because some investment decisions are more
internally focused and some investment decisions may have to
do with parts of the business that are less affected by change.

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 Therefore, most organizations will support EA with some focus
on enterprise operations, enterprise business and digital
business ecosphere. However, the critical shift is that
organizations will primarily move toward a broader ecosystem
perspective for EA in order to balance investments within the
business (business and IT), with their biosphere partners and
customers.

Those Who Will Lead Tomorrow Are Taking on Digital Leadership Today
As EA practitioners have increased their focus on delivering business outcomes, we have seen EA
practitioners take on new skills and capabilities. These sometimes new and strengthened skills
include increasing business savvy, conceptualizing relevant business scenarios, creatively applying
abstract concepts to solve problems and census building (see "Define EA Team Roles and
Competencies to Maximize the Team's Effectiveness"). Renewed business-outcome-focused
capabilities include developing a business outcome statement, creating actionable and diagnostic
deliverables, leading responses to disruptive trends, and engaging in business and IT strategic
planning and management.

These skills and competencies will continue to be critically important. To help enable their
businesses to take advantage of digital business opportunities and respond to threats, EA
practitioners will develop capabilities that will enable them to support their business reality of
supporting a greater degree of change within a broader digital business ecosystem. These
capabilities include:

■ Digital business innovation — Providing the future-focused business and IT leadership to seek
out new opportunities and threats
■ Digital business leadership — Providing the insight, structure and process to benefit from
digital innovation
■ Digital execution — Guiding and informing both investment decisions, including people,
business process, information and technology
■ Delivering business outcomes — Ensuring strategy and business outcomes are effectively
and efficiently achieved
■ Technology innovation — Leveraging developments in technology and services to innovate
the operating model
21
This reasoning strengthens a Gartner prediction made in 2013 that "by 2016, 30% of global
organizations will establish a clear role distinction between foundational and vanguard enterprise
architects." Vanguard enterprise architects are primarily concerned with driving innovation with

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 disruptive technologies, and foundational enterprise architects are concerned with systems of
record and maintaining the (primarily technology) estate. Based on our 2025 scenario (see Figure 3),
vanguard enterprise architects will primarily operate with a focus that is on outside-out and with
responding to business and IT areas' high impact of change (green), and foundational enterprise
architects will operate with a focus more on outside-in and with responding to business and IT
areas with lower impact of change (blue).

Figure 3. EA Operations in 2025

Source: Gartner (October 2014)

Recommended Actions
■ Use the definitions and future-state scenario in this note to determine your own organization's
future state for EA. Work with your stakeholders to determine where your business needs to be
in the next two, five and 10 years based on the internal and external disruptive forces that will
impact your business directly and indirectly. Compare these future states with your current
focus for EA. Integrate these scenarios into your business outcome statement planning (see
"Define the Business Outcome Statement to Guide Enterprise Architecture Efforts ").
■ Determine if your business and/or IT counterparts are already thinking about, developing or
executing on a digital business strategy. Look for opportunities to engage by creating

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 actionable and diagnostic deliverables from the perspective of outside-out and outside-in that
could be used to drive business and IT change.
■ Continue to invest in business-outcome-driven EA and delivering signature-ready deliverables
that drive business and IT change. But start to expand your business outcome focus for EA to
include your ecosphere and ecosystem of customers, partners and competitors.
■ Get creative! Use your digital business scenario plan to determine a few deliverables that you
could create to address your organization's potential digital business future. Use this to engage
business and IT leaders in planning your short- and longer-term business models and designs.
■ Identify and focus the resources and operations EA into two groups, including: (1) fast-paced,
leading-edge (vanguard) EA efforts required to explore digital business opportunities; and (2)
the more stable and reliably focused (foundational) EA efforts, required to support ongoing
business operations.

Gartner Recommended Reading

Some documents may not be available as part of your current Gartner subscription.

"The 2014 Gartner CEO and Senior Executive Survey: 'Risk-On' Attitudes Will Accelerate Digital
Business"

"Taming the Digital Dragon: The 2014 CIO Agenda"

"Predicts 2014: Seizing The Digital Business Advantage"

"Seven Ways to Build Your Business Ecosystem for Greater Impact on Business and IT Planning"

Evidence
1 "Transform Your Business With the Nexus of Forces"

2 D. Shamah, "New Niche for 3D Printers in Dentistry," Start-Up Israel, 3 March 2014

3 "Couchsurfing"

4 "CEO Resolutions for 2014 — Time to Act on Digital Business"

5 "Taming the Digital Dragon: The 2014 CIO Agenda"

6 Ecosystem

7"The 2014 Gartner CEO and Senior Executive Survey: 'Risk-On' Attitudes Will Accelerate Digital
Business"

8 J. Gertner, "Behind GE's Vision for the Industrial Internet of Things," Fast Company, 18 June 2014

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 9 M. Annunzianta, "Welcome to the Age of the Industrial Internet," Ted, October 2013

10 "Predicts 2014: Seizing The Digital Business Advantage"

11 "The CNN 10: Future of Driving,'' CNN, 2014

12E. Jackson, "Apple Isn't a Hardware or Software Company — It's an Ecosystem Company,"
Forbes, 3 June 2014

13 S. Vizard, "Tesco Buys Into Big Data to Make Marketing More Personalized," Marketing Week, 3
April 2014

14
M. Fitzgerald and others, "Embracing Digital Technology, a New Strategic Imperative," Sloan
Management Review, 7 October 2013

15 "The Future of EA in 2020; EA Is Integral to Strategic Planning"

16 "Unrelenting Business Disruptions Require New Approaches to Driving 'Big Change'"

17 "Digital Business Technologies Are Changing the Nature of Change"

18 "Predicts 2014: Business Process Reinvention Is Vital to Digital Business Transformation"

19 "Toolkit: Use Pace Layering with Business Capability Modeling to Become a Digital Insurer"

20 "Seven Ways to Build Your Business Ecosystem for Greater Impact on Business and IT Planning"

21 "Predicts 2014: Enterprise Architect Role Headed for Dramatic Change"

22 "The Attack of the Moocs," The Economist, 20 July 2013

23 P. Olson, "Wearable Tech Is Plugging Into Healthcare Insurance," Forbes, 19 June 2014

Note 1 Examples of Digital Business

Education — The cloud and mobile create the opportunity to engage thousands of students
through "massively open online courses," or "moocs," creating a revenue opportunity for
22
institutions and giving students access and flexibility in learning.

Automotive — The car becomes the "connected platform" linking consumers to a variety of
services ranging from entertainment, navigation, local information and automated diagnostics
11
through to finance packages.

Healthcare — Developments in diagnostics, wearable devices and ubiquitous connectivity allow

23
patients and doctors to monitor and manage health in real time.

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 Note 2 Ecosystem (source: Wikipedia)
An ecosystem is a community of living organisms (plants, animals and microbes) in conjunction with
the nonliving components of their environment (things such as air, water and mineral soil),
interacting as a system. These biotic and abiotic components are regarded as linked together
through nutrient cycles and energy flows. As ecosystems are defined by the network of interactions
among organisms, and between organisms and their environment, they can be of any size but
usually encompass specific, limited spaces (although some scientists say that the entire planet is an
ecosystem).

More on This Topic

This is part of an in-depth collection of research. See the collection:

■ The Nexus of Forces Is Creating the Digital Business

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