Companies that commit to continually updating their enterprise architectures can deliver goods and services as fast as Internet-born competitors do.

Internet retailers can make crucial changes to their e-commerce websites within hours, while it takes brick-and-mortar retailers three months or more to do the same. Cloud-based enterprise software suppliers can update their products in days or weeks. By contrast, traditional enterprise software companies need months.

Why can’t established companies move as quickly as their Internet-born competitors? In part, because they are limited by their enterprise architecture, which is the underlying design and management of the technology platforms and capabilities that support a company’s business strategies.

The enterprise architecture in traditional companies typically reflects a bygone era, when it was not necessary for companies to shift their business strategies, release new products and services, and incorporate new business processes at hyperspeed. Consider that until this decade, mobile devices, the Internet of Things, and big data and analytics platforms weren’t crucial for competing in the marketplace. Companies did not have an acute need to continually infuse new IT-enabled business capabilities into their operations.

They do now.

To compete against digital-born companies, traditional companies need to adopt a much different approach to designing and managing enterprise architecture—a model we call “perpetual evolution,” because it emphasizes continual changes to and modular design of business capabilities as well as the technologies behind them. This approach encompasses a range of widely known enterprise architecture frameworks but links them together in a new way. It compels executives to take a comprehensive view of their digital capabilities and technologies but to manage them in a way that mitigates or removes interdependencies and emphasizes speed. Indeed, our work with companies exploring digital transformations suggests that a shift to the perpetual-evolution model can result in faster product-development cycles and greater operational efficiencies—outcomes that are in sync with customers’ expectations.

An enterprise architecture built for perpetual evolution differs from a traditional one in six important ways. When considering business processes and activities, IT and business leaders emphasize end-to-end customer journeys rather than discrete product- or service-oriented processes. They use multiple operating models rather than one. When considering the application landscape, IT leaders design and develop applications to be modular and work independently rather than being tightly coupled with other applications or systems. The enterprise architecture features a central integration platform that boasts lightweight connections rather than a heavyweight bus.¹ The IT organization deploys an application-development model in which developers and IT operations staffers work closely to test and launch new software features quickly (DevOps). And the general view of information and communications technology is as a commodity rather than a strategic factor (Exhibit 1).

In this article, we compare the perpetual-evolution model with existing approaches to designing and managing enterprise architecture, and we explore what’s required to shift to this newer approach. The companies that do can unburden themselves of their legacy business processes and mind-sets. They can build the systems and capabilities required to thrive in this era of digitization, enhanced service delivery, and dramatically reduced software-release cycles.

Comparing old, new management approaches

A good way to understand the evolution of enterprise architecture is to consider how companies have traditionally treated its core elements—business operations, business capabilities, the IT-integration platform, IT-infrastructure services, and the underlying information and communications technologies. How would those elements look different under a perpetual-evolution model?

Business operations

Companies have typically designed their business operations using technologies and methodologies with an eye toward simplifying internal processes. They may build systems that automate internal transactions such as “order to cash” and “service inquiry to resolution,” for instance, and only update those systems incrementally.

Under a perpetual-evolution model, business operations and digital systems must be designed with an outward-facing view—that is, focused on the customer experience online and offline. Priorities have changed. The customer used to be an element in a product- or company-centered process; now the products and services are an element in the customer journey. To be sure, companies’ inward-focused view isn’t obsolete. Enterprises need to maintain core transactional processes and systems, whether they are accounts payable and receivable, order management, procurement, or something else. And they must also make sure those business processes and technologies remain efficient.

However, businesses’ operations and IT systems must now reflect all phases of and elements within the customer journey—not just the exact moment of purchase. And the experience must be continually updated. Individual companies are becoming part of larger industry ecosystems that are focused on supporting end-to-end customer journeys. In the old world of TV manufacturing, for example, companies designed their business operations and IT systems to follow the product to retailers. Today’s digital TVs have become platforms for manufacturers to provide a range of TV-related services to the home, such as identifying shows consumers might want based on their viewing habits, targeted advertising, and more. As a result, TV manufacturers’ business operations and IT systems must encompass the end user’s TV viewing experience, not just the retailers’ requirements. And because end-user preferences will be ever-changing, business operations and activities must be adapted on the fly.

Note that B2B companies are not immune to this trend, especially those that embed digital technologies into their products to sell predictive maintenance, performance improvement, and other services—for example, construction equipment, aircraft engines, power turbines, and drilling equipment. Companies’ enterprise architecture must be able to support customers for the entire time in which they use products and services, even in real time.

Business capabilities

As we mentioned earlier, until this decade, companies have not had an acute need to continually infuse new IT-enabled business capabilities into their operations—for instance, identifying the product a customer is most likely to buy next. Rather, they introduced these capabilities into their enterprise architectures slowly and periodically. Business applications that support these capabilities, such as enterprise-resource-planning (ERP), product-lifecycle-management (PLM), and customer-relationship-management (CRM) systems, were managed as tightly coupled systems; making changes in one often required making big changes in others.

In today’s fast-changing digital world, however, companies must be able to continually improve business capabilities without fear of disrupting entire systems. One way to do so is to group processes and systems into two categories: digital business capabilities that are differentiating for the customer experience, and those that support transactional capabilities. We call this a two-speed architecture, and it is a critical element of the perpetual-evolution model because it helps companies direct their resources appropriately.

Consider a retail chain that sells a growing proportion of its products through its website. The company cannot take months to enhance its product-recommendation engine when a digital-born competitor can do that in days or weeks. It must have an architecture that makes business capabilities systems-agnostic. It shouldn’t matter, for example, what kind of core systems the retailer has; its new or enhanced product-recommendation approach should be able to be implemented and changed easily. These digital business capabilities become the basis on which to compete in an online world.

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Here is a direct link to the complete article.

Oliver Bossert is a senior expert in McKinsey’s Frankfurt office, and Jürgen Laartz is a senior partner in McKinsey’s Berlin office.