Enterprise blockchain is the evolution of economic architecture

In my decade-long career at Microsoft, leading platform architecture. NET, visual studio. Developing NET, an application platform, enterprise strategy and Microsoft Digital, I have been involved in building technologies for multiple wavelengths of platforms: early web, service-centric architecture, what’s known as Web 2.0, and more recently, the Cloud.

While there is no doubt that previous waves of platform technologies have delivered significant benefits, their impact has been limited because they are “passive” plumbing for applications and infrastructure. Overall, with previous waves of platforms, cost savings have been the basic and sometimes individual measurable element of business results.

Blockchain platforms are unique because, for the first time in the history of computing, we have a technology platform that has an inherent economic model – incentives, rewards and sanctions for all entities, humans and systems – that are “inherent” in architecture. Unlike past “inert” technology piles, blockchain capabilities signal the arrival of new economic platforms.

How does this disrupt enterprise IT architecture? First, retrospective.

Looking back: Old school enterprise architecture models

It can be said that the field of enterprise architecture began in 1987 with the announcement in the IBM Systems Journal from an article entitled, “A framework for information systems architecture,” by John Zachman.

In his groundbreaking paper, Zachman set out the imperative and challenge for enterprise architecture: the rapidly increasing IT budgets and the fact that the success of the enterprise was now increasingly dependent on technology required a structured approach to manage the increasing complexity of IT applications. and infrastructure.

There are three broad approaches to enterprise architecture:

The perspective-oriented address diverse perspectives within and across the enterprise. The framework that typically represents this approach is Zachman’s framework for enterprise architecture. Here, the enterprise architecture serves as the enterprise’s integrated blueprint and describes it from several viewpoints (planner, designer, etc.). This is central to perspective in that it meets the needs of diverse stakeholders and their differing perspectives.

The process-oriented This approach outlines the procedures that define and deliver the IT achievements. The methodology that typically represents the second approach is the Open Group Architecture Framework, or TOGAF. It is realized as a rigorous model of enterprise orders, structures, information, processes, and systems for decision-making purposes. This is process-centric in that it seeks to accurately portray the process used to model the enterprise.

The based on standards an approach defining and enforcing the use of standards throughout the enterprise. The model that typically represents the third approach is the Federal Enterprise Architecture, or FEA. It highlights the need to define well-established and well-understood patterns and practices based on standards (referral models, shared services and others) within and across the enterprise communicating these artefacts to ensure compliance and governance.

The foresight and vision that business value and agility can be realized effectively through a holistic approach to IT architecture has shaped the IT industry for the past three decades. However, what is lacking and what has held IT back is the absence of any economic or thinking principles in all previous approaches to enterprise architecture.

So what does the new (economic) enterprise architecture look like?

Looking ahead: The new enterprise economic architecture

Ronald Coase defined a company as: “The system of relationships that emerges when resource direction depends on the entrepreneur.” The company study evolved significantly when Oliver Williamson opened the black box to understand companies as organizations. Building on this work, Douglass North argued that organizations provide key constraints and enablers, thereby shaping the incentives.

The enterprise is an economic institution. To be relevant (and certainly of any practical value) the enterprise architecture needs to reflect the underlying economic model (s) underlying the enterprise. It has been said that most economics can be summarized into one word – “incentives” – and the new enterprise economic architecture highlights this principle.

In this incentive model approach, enabled by blockchain platforms, rewards and sanctions (collectively referred to as “tokens”) for each entity, human and system within and across the enterprise are endogenous in the enterprise architecture , and practiced programmatically (through smart contracts).

Roadmap for the enterprise: IT as organizational technology

The Oldschool enterprise architecture focused on approaches that emphasized perspectives, standards, and / or capabilities, and thus reflected views on IT as a static passive infrastructure dive. The new enterprise economic architecture includes an institutional set of economic capabilities that reflect the true nature of the company as an economic institution.

Peter Drucker described his “business theory” as the set of assumptions that shape enterprise behavior, drives its decisions about what to do and what not to do, and decides what it does considered as desired business results. These assumptions are about markets, about identifying customers and competitors, about the strengths and weaknesses of an enterprise. At their core, they are realized through software.

Today, whether aware of it or not, an enterprise theory of the business is being realized, validated, corrected on a course and renamed using and using it through technology. So where do we start?

Firstly, as a prerequisite, is to model and build a map of the enterprise. The old “Five W’s” – who, what, when, where and why – should be supplemented with “to whom.” Who are the benefits for? This sixth W forces enterprise IT to consider economic constraints and impact, and provides the basics for the next steps.

Second, whether IT uses one or more of the enterprise-centric, process-oriented or standards-based architecture approaches, this should be supplemented by a “motivational-oriented” approach, where all entities, human and / or a system (“for whom”) with an incentive model manifested in the underlying architecture.

Thirdlyalthough IT has historically focused on the business, information, application and technology architecture (referred to as the “BIAT” model), it should now be added to the “economic architecture” layer – the one that reflects the theory of the business. This enables the enterprise to test, validate, refine and enhance its evolving business and operating model.

Last, any current off-the-shelf architecture approaches should be reevaluated: They are based on the view that IT is a plumbing infrastructure, and furthermore, reflect a lower-common denominator view of the industry and markets. An enterprise must configure and refine any existing tools and tools to reflect its unique organizational capabilities (and its associated competitive advantages).

The new enterprise economic architecture will transform enterprise IT architecture into strategic, competitive toolboxes, and blockchain platforms will be how your enterprise gets there.

The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.