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 This has decreased the cycle time at our factories and reduced warehouse space—space that has been replaced by more manufacturing lines.”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.