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An Introduction to Pace Layering

Brian Rice

Leadership Partner

EITL Enterprise Applications

Tweet: #GartnerLOC

Improving The Business/IT Conversation

One Size

Fits All

Business Leader

Apps/IT

Leader

Better

Ideas

New

Ideas

Common

Ideas

Governance

Solution

How Do Other "Systems" in Industry Deal With Varying Rates of Change? Pace Layering/Shearing Layers

Structure:

Skin:

Space Plan:

Services:

Stuff:

30 – 300 Years

20 Years

3 – 30 Years

7 – 15 Years

1 Day to 1 Month

Site: Eternal

Note: For more on pace layers and shearing layers in building architecture see “How Buildings Learn” (1994) by Stewart Brand

Systems of Record

Systems of Differentiation

Systems of Innovation

A Pace Layered View of Systems

New

Ideas

Better

Ideas

Common

Ideas

Business applications can be categorized by the nature of the problem they address, their rate of change and the

distinctiveness of the solution.

Unstable Foundations Lead to Failure

System of Record

Financial

Reporting

Regulatory

Change

Flexibility & Speed

Co

mp

lian

ce &

Eff

icie

ncy

Your Application Portfolio Should Match Business Strategy Requirements

System of Differentiation

System of Innovation

Sort Apps

Based on

Layer

Not

Vendor Packaging

(ERP, CRM, SCM)

Packages

Vendor

Sweet Spot

Change in Supply Chain

Managing Talent

Market Product Innovation

Unique Selling Model

Few Packaged Offerings

Systems of Record

Systems of Differentiation

Systems of Innovation

Pace Layering and Budgeting

System of Record

Governance Differences Between the Layers

System of Differentiation

System of Innovation

Process Change

Architecture

Funding

Agile Practices

Waterfall

Development Practices

Business Engagement

Planning Horizon

Strict Change Control Experimentation

Investment Pool

Capital Process

Traditional Alternate Platforms

Doing the Work

Formal Process

7+ years 2-3 months 1-2 years

Leveraging Pace Layering to Understand Areas of Innovation and Differentiation

Sell and Service Products

Support Campaigns

Administer Sales

Develop Channels

Service Customers

Prospect for New

Customers

Onboard Customers

Develop and Manage Partners

Define Strategy

Use Credit Brokers

Manage Data Source

Partners

Support Retail Partners

Manage Channel Partners

Evolve Contracts

Execute Banking Products

Support Consumer Deposits

Provide Consumer

Credit

Offer Credit/Debit

Card

Service Transfers

Offer Corporate Loans and Make

Deposits

Provide Corporate

Credit (SMB)

Service Payments

Provide Credit Services

Execute Account Mgmt.

Administer Collateral

Issue Account Services

Detect Fraud

Manage Accounts

Develop Marketing Strategy

Develop Product Strategy

Operate Competitive Intelligence

Market Products

Define Business Direction

Operate Customer

Intelligence

Set Pricing

Detect and Resolve Fraud

Detect Consumer

Fraud

Model Fraud

Detect Corporate

Fraud

Prevent Fraud

Manage Security

Research and Develop

Manage Risk

Develop Risk Models

Forecast Regulatory Changes

Manage Reputation

Track Regulatory

Requirements

Define Risk Strategy

Outreach to Market

Operate Business

Govern Technology Investment

Support Investors

Maximize Human Capital

Develop Strategic Planning

Optimize Facilities

Manage Financials

Execute Investment Products

Execute Consumer

Investments

Provide Investment Education

Deliver Corporate Financing

Execute Fund

Management

Manage Corporate

Investments

Offer Corporate Tax

Services

Strategic Future-State Business Capabilities (Three Years)

Innovation Differentiation Record (Commodity) Strategic Areas

Recommendations for Layers Characteristic Systems of

Record

Systems of

Differentiation

Systems of

Innovation

Strategic Focus Improve execution,

lowest TCO

Strategic advantage New idea

Lifespan 10-20 years 3-5 years 6 months to 3 years

Pace of Major Change Infrequent More frequent /

configurability is key

Very frequent

Process Viability Understood & stable Understood & dynamic Ambiguous & dynamic

Data Integrity High Moderate Limited

Support Requirements 75% technical

25% business

50% technical

50% business

25% technical

75% business

Sourcing Integrated packaged

application suite

Best of breed Custom, orchestrated,

open innovation

Customizations Best Practices, limited

or no customization

Some custom

configuration or

customizations

Custom code, best

practices, configuration

Technical Deployment On-premise; cloud

emerging

On-premise or SaaS Any, but typically on-

premise

Investment Capital asset Capital or expense Expense

Pace Layered Application Strategy

Refocus time, money & attention

(What's in it for the business?)

Systems of Record

Systems of Differentiation

Systems of Innovation

How to Build a Pace-Layered Strategy

1. Create a panel of business users and IT application experts.

2. Decompose existing suites into individual applications.

3. Associate each application with the business process it supports.

4. Analyze the characteristics of each application and process.

5. Use the pace-layered application characteristics as a starting point to assign the application to a layer.

6. Adapt your application governance model to fit the objectives and needs of the three layers.

7. Establish a set of connective technologies to facilitate the interoperability of the application within and between layers.

8. Build awareness of pace layers throughout the organization.

9. Encourage users to think about applications and processes based on their probable rate of change.

Pace Layer Publications

• Overall Approach

- Accelerating Innovation by Adopting a Pace-Layered Application Strategy (G00230228) - http://www.gartner.com/resId=1890915

- How to Use Pace Layering to Develop a Modern Application Strategy(G00208964) - http://www.gartner.com/resId=1488129

- How to Get Started with a Pace Layered Application Strategy (G00211245) - http://www.gartner.com/resId=1607414

- Gartner’s Application Pace Layer Model: Governance and Change Management (G00211809) - http://www.gartner.com/resId=1635516

- Application Delivery Options in a Pace-Layered Application Strategy (G00231418) - http://www.gartner.com/resId=1937919

- Operational Tempo and Pace Layers: Go Fast When You Must; Be Thorough When You Can (G00205005) - http://www.gartner.com/resId=1401131

• Specific Layers

- Use Systems of Innovation to Respond Rapidly to Urgent Business Needs (G00217538) - http://www.gartner.com/resId=1837216

- Systems of Record: You Can Not Innovate On An Unstable Foundation (G00214816) - http://www.gartner.com/resId=1759924

• Connective Tissue

- Connecting Technology for a Pace-Layered Application Strategy (G00211492) - http://www.gartner.com/resId=1635415

- SOA Enables a Pace Layered Approach to Applications (G00213703) - http://www.gartner.com/resId=1728037

- Pace-Layering Services Will Improve SOA Value (G00218721) - http://www.gartner.com/resId=1851518

- Metadata Management for Pace Layering (G00218035) – http://www.gartner.com/resId=1931814

Pace Layer Publications – Business Domains

• What Can Gartner’s Pace Layered Application Strategy Do for an Enterprise’s Business (G00215750) - http://www.gartner.com/resId=1767418 – this is the top view for the June/July 2011 note set

• Business Domain-Specific Pace Layer Notes:

- Use Gartner’s Pace Layer Model to Structure Customer Service Applications Based on Business Value (G00213641) - http://www.gartner.com/resId=1718814

- Applying Pace Layering to E-Commerce Processes and Applications ((G00213791) - http://www.gartner.com/resId=1749814

- Use Gartner’s Pace Layers Model to Better Manage Your Financial Management Application Portfolio (G00213657) - http://www.gartner.com/resId=1730539

- Best Practices in Finance Shared Services: Using Pace Layers to Prioritize Processes and Applications (G00224945) - http://www.gartner.com/resId=1871421

- Applying Gartner’s Pace Layer Model to Human Capital Management (G00214212) - http://www.gartner.com/resId=1749915

- Applying Pace Layers to Marketing Processes and Applications (G00213629) - http://www.gartner.com/resId=1744727

- Applying Pace Layering to Customer-Centric Order Processes and Applications (G00213908) - http://www.gartner.com/resId=1744722

- Use Gartner’s Pace Layers Model to Structure Your Procurement Application Portfolio (G00213761) - http://www.gartner.com/resId=1738114

- Apply Gartner’s Pace Layer Model to Sales Applications (G00213505) - http://www.gartner.com/resId=1746633

- Applying Gartner’s Pace Layers to Supply Chain Applications and Processes (G00214453) – http://www.gartner.com/resId=1750324

Pace Layer Publications

• ERP

- Applying Pace Layering to ERP Strategy (G00227719) - http://www.gartner.com/resId=1907416

- Use a Pace-Layered Application Strategy to Clean Up ERP During Upgrades and Consolidation (G00230527) - http://www.gartner.com/resId=1918714

- Using Pace Layers to Boost the Value from Your SAP ERP Investment (G00213735) - http://www.gartner.com/resId=1745114

• Analytics, CPM & Real-Time

- Applying Gartner’s Pace Layer Model to Business Analytics (G00226265) - http://www.gartner.com/resId=1881231

- How to Apply Gartner’s Pace-Layered Application Strategy to CPM (G00233046) - http://www.gartner.com/resId=1979416

- Use Pace Layering as a Best Practice for Real-Time, Operational Intelligence Architecture (G00219562) - http://www.gartner.com/resId=1799915

• Concepts of Pace Layering in System Design (G00223857) - http://www.gartner.com/resId=1860114

• What Types of Model-Driven Applications Are Most Appropriate for a High Pace of Process Change? (G00228565) - http://www.gartner.com/resId=1952415

• Use the Pace Layer Model to Leverage the Consumerization of IT (G00218056) - http://www.gartner.com/resId=1842216

An Introduction to Pace Layering

Brian Rice

Leadership Partner

EITL Enterprise Applications

Thank You