Business-Technology Alignment: Understanding the Connection
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Chapter 1: The Interdependence of Business Models and Technology
This article aims to explore and stimulate thought regarding how a company’s technological framework is influenced by its business model. Nowadays, it's common to hear that “every company is a tech company.” Technology is utilized to enhance efficiency across virtually every sector. Therefore, understanding the business-technology alignment has become increasingly crucial, as technology is likely to be integral to any business. While "business-technology-org alignment" might be a more accurate term, we'll keep it concise.
Throughout my experience, I’ve observed numerous instances where the technological vision and organizational structure did not optimally support corporate objectives. This often occurred because decision-makers opted for familiar solutions rather than what the business actually required.
Two fundamental questions I frequently ponder are:
- How does technology relate to the existing business model of my organization, and when does this relationship evolve?
To illustrate, let’s consider two distinctly different products I’ve worked with: a mobile application and a comprehensive billing system for telecommunications.
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The mobile app, priced at around $5, garners hundreds of thousands of downloads. It auto-updates and generates revenue from users who opt to purchase it. This app faces stiff competition and is just one of many offerings from the company. The aesthetic component is particularly significant here.
Conversely, the billing system comprises around 30 to 60 applications. It meticulously accounts for every call, SMS, data packet, and additional service to produce millions of invoices monthly. Moreover, this system is involved in activating or deactivating services across numerous remote systems, with costs reaching into the millions. Installation or upgrades can take several months and require extensive collaboration.
The technical and organizational distinctions stem primarily from the variations in their business models. Let’s delve into various aspects:
Section 1.1: Sales and Marketing Dynamics
How do sales and marketing strategies differ between a mobile app and a billing system, and what implications do these differences have for technology? (Hint: Demonstrating the billing system in a real-world scenario is virtually impossible.)
Subsection 1.1.1: Legal Considerations
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How do legal factors vary, and how do they influence technical decisions? (Hint: Certain components of the billing system are restricted to a select group of users.)
Section 1.2: Client Payment Structures
Do all clients pay uniformly? How does this affect the product's architecture and organizational structure? What methodologies are employed to develop roadmaps and choose features? (Hint: Gaining insights into the pain points of billing system users can be quite challenging.)
Chapter 2: Data and Technical Transformations
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The processing of data and the rise of machine learning have been prominent for a while. In sectors like e-commerce, data flows act as a lifeblood, driving many decisions. With the advent of affordable storage and processing capabilities, collecting and analyzing data has become more accessible, leading to the emergence of numerous applications.
As a result, we often hear that “every company is a data company.” How do data structures and flows correlate with the business model? In which scenarios would it be beneficial to introduce a dedicated data layer in the technical architecture? What objectives would this serve?
Technical Transformations
Any shift in business strategy resonates throughout the company’s technological framework. Imagine receiving the following directive: “Replace a jet engine on a commercial aircraft during the flight, while ensuring passenger satisfaction and safety.” This scenario occurs when the existing architecture or organizational structure fails to meet the new business demands. It’s then essential to conduct a cost-benefit analysis to determine the necessary changes in the technical landscape, selecting the best options for the organization’s future.
For instance, we might choose to substitute certain systems with third-party solutions or develop new components internally. Sometimes, we must maintain parts of legacy systems until the new ones are fully integrated. In some situations, a complete overhaul may be unavoidable, necessitating a different execution approach.
In all these instances, technology isn’t the primary hurdle. Organizational structures and company culture (unregulated work practices) play crucial roles. Such transformations are predominantly social, cultural, and organizational, with technical aspects following suit.
The connection between organizational structure and technical architecture is well articulated in Conway’s Law, which states that communication channels shape systems architecture more than vice versa.
In Conclusion
Numerous questions arise, but no definitive answers exist because offering a universal solution is impractical. Each context is unique, and applying prior experiences to new environments can be risky. Understanding the business context before diving into technology is the optimal approach, as strategies that work in one company may not be suitable in another.
Initially, we posed several questions, and here are a few insights based on my experiences:
- Do all clients pay the same? For the mobile app, they do, but for the billing system, variations exist based on different tiers (bronze, silver, gold, etc.), necessitating smart management of code and deployments. New feature requests undergo thorough scrutiny, ultimately hinging on profitability.
- How does testing differ? In the mobile app context, our internal QA team was heavily involved, while in the billing system scenario, the client engaged a separate QA company focused on defect detection during upgrade projects, as this was a temporary but intensive effort.
- The organizational structure of a mobile game development team is compact and often cross-functional. Conversely, the billing system’s team structure is more siloed, which has a significant impact on the technical architecture.
I hope these insights aid in your decision-making process. For more articles, feel free to visit my portfolio: