So if architecture is the connection between business and technology,
where does innovation fit? Microsoft has been pushing an idea of
“integrated
innovation”
for several years now, but that’s primarily around technology
innovation:
[T]he mission [of] Integrated Innovaton is about ensuring that the
value of the Microsoft platform is greater than the sum of its
components. It’s the coordination of software products, the way entire
systems can be made to work together better. It’s a strategy to add
customer-driven features and functionality to achieve specific
business results while reducing cost and complexity
[‘Integrated Innovation’ Provides Partners with Roadmap to
Success]
But what about business innovation? How often do we talk about that? Not
enough IMO. Especially since the business innovation is much more likely
to make or break a company than technology innovation. For example, how
did Dell became the dominant company in the PC business? To quote from
the Amazon review of Michael Dell’s
book: “What makes
Dell Computer unique is not what it sells, but rather how it sells it”.
Usually, people note Dell’s direct-selling model as the catalyst for
their success. Direct-selling might have been absent in the PC industry
before Dell came along, but it’s not like direct-selling is a
particularly innovative business model. However, what made the
direct-selling of highly-configurable computers a reality was the
innovative approach Dell took to managing it’s supply chain. Quoting
from an Accenture case study on Dell’s supply
chain:
Explains Dick Hunter, vice president, supply-chain management: “We now
schedule every line in every factory around the world every two hours,
and we only bring into the factory two hours’ worth of materials. We
typically run a factory with about five or six hours’ worth of
inventory on hand, including work in progress. This has decreased the
cycle time at our factories and reduced warehouse space—space that has
been replaced by more manufacturing lines.”
Not surprisingly, the project has produced more than just enhanced
supply chain efficiencies and accelerated, highly reliable order
fulfillment. At any given time, there is less than four days of
inventory in the entire Dell operation, while many competitors
routinely carry 30 days or more. In addition, automation has helped
Dell react more quickly to correct potentially out-of-balance
situations, made it much easier to prevent components from becoming
obsolete and improved response times across the supply chain by
providing a global view of supply and demand at any specific Dell
location at any time.
Certainly, there is technology innovation involved in the management of
Dell’s supply chain (and w/
RFID
on the horizon, significantly more technology innovation in this space
is still to come) but the primary innovation here was business oriented.
I wonder where the next business innovations are going to be?
John asked me over lunch if the
people who read this blog would think I’m an architect or an engineer.
Personally, using the definitions I’ve laid out this week, my heart’s in
engineering but I’m getting more interested in architecture. Maybe I’m
wrong, but it feels to me that pure engineering problems are giving away
to more architectural problems as Moore’s law and it’s corollaries in
network speed and storage space keep pushing out the limits of computing
power. Jim Gray & Charles Levine wrote an funny
article
pointing out that Jim’s two year old TabletPC with a 1.6 GHz Centrino
processor can handle over 8,000 transactions per second. To put that in
perspective, in 1976, Bank of America’s DebitCredit system reached 100
transactions per second. It took a decade to build a system that handle
over 200 transactions per second. Now, most of us are walking around
with machine that could easily handle 40 times that performance.
As Moore’s law continues to solve technical challenges, I think it is
creating new business challenges. And you know me…I like a challenge.