Enterprise Architecture for Small and Medium Enterprise Growth

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DOI: 10.1007/978-3-642-21058-7_5
Issn: 1865-1348
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Abstract
A key constraint for growing small and medium enterprises (SMEs) is the business skills required to grow the enterprises through the stages of transformation. Criticism against growth stage models for SMEs is of concern, since these models contain the typical knowledge that appeals to managers of small enterprises as guidance in how to manage growth. In this article we pro-pose the SMEAG model to explore the relevance of enterprise architecture (EA) for enhancing existing growth stage models in order to counteract some of this criticism. EA is well-known as a field that claims to manage change and complexity. The rationale to combine the concepts of growth stage models and EA is based on the level of change and complexity associated with the growth of small enterprises into medium enterprises. SMEAG combines the existing growth stage model of Scott and Bruce, the Enterprise Architecture Framework by Hoogervorst, and the EA as Foundation for Business Execution Model by Ross, Weill and Robertson.
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Enterprise Architecture for Small and Medium
Enterprise Growth
Dina Jacobs1,3 , Paula Kotzé1,2,4, Alta van der Merwe1,2, Aurona Gerber1,2
1 School of IT, North West University, Vanderbijlpark, South Africa
2 CSIR Meraka Institute, PO Box 395, Pretoria, 0001, South Africa
3TriVector, P O Box 68753, Highveld 2, 0169, South Africa
4 School of ICT, Nelson Mandela Metropolitan University, Port Elizabeth, South
Africa
dina.jacobs@trivector.co.za; {paula.kotze, aurona.gerber, alta}@meraka.org.za
Abstract. A key constraint for growing small and medium enterprises (SMEs)
is the business skills required to grow the enterprises through the stages of
transformation. Criticism against growth stage models for SMEs is of concern,
since these models contain the typical knowledge that appeals to managers of
small enterprises as guidance in how to manage growth. In this article we pro-
pose the SMEAG model to explore the relevance of enterprise architecture
(EA) for enhancing existing growth stage models in order to counteract some of
this criticism. EA is well-known as a field that claims to manage change and
complexity. The rationale to combine the concepts of growth stage models and
EA is based on the level of change and complexity associated with the growth
of small enterprises into medium enterprises. SMEAG combines the existing
growth stage model of Scott and Bruce, the Enterprise Architecture Framework
by Hoogervorst, and the EA as Foundation for Business Execution Model by
Ross, Weill and Robertson.
Keywords: Enterprise architecture, small and medium enterprises, growth stage
models.
1 Introduction
Growing small enterprises to become medium enterprises, with the objective of job
creation in South Africa, is a top priority [5]. However, a key constraint is the busi-
ness skills required to grow the small enterprises through the various stages of trans-
formation. This lack of business skills as constraint is confirmed from a global per-
spective by Jones [7: p. 1] in his statement “it is recommended that training be pro-
vided for all SME entrepreneurs to prepare them for the road ahead and the challenges
and crisis that they will inevitable meet along the way”. Hanks, Watson et al. [4] also
refer to the lack of business skills, although phrased slightly differently: “piloting an
organization through the growth process represents a formidable managerial chal-
lenge”.
The initial assumption may be that there are consolidated growth stage models
available for small and medium enterprises (SMEs) to address this lack of business
skills. However in a review of relevant material [2, 4, 7, 9-10, 12] there is evidence
that this assumption may be questionable, specifically due to the status of such growth
stage models for SMEs. In their review of research on small firm growth Davidsson,
Achtenhagen and Naldi [2] define growth stage models as a description of the distinct
stages of SME growth and the set of typical problems and organizational responses
associated with each stage. They noted that authors of review articles on growth stage
models for SMEs agree that it is not easy to extract a coherent picture from research,
but the inherent complexity of the phenomenon is at least acknowledged. One of the
critiques is that the growth stage models tend to assume all SMEs pass inexorably
through each stage. A second critique is that growth stage models of SMEs are not
sufficiently supported by empirical observation.
This criticisms of growth stage models is of concern since these models typically
contain the knowledge that appeals to managers of small enterprises [2, 9].
Enterprise architecture (EA) is widely claimed to be an approach to manage
change and complexity [6, 18]. EA not only constitutes a baseline for managing
change, but also provides the mechanism by which the reality of the enterprise and its
systems can be aligned with management intentions [16]. We argue that EA can con-
tribute towards a solution to the criticism against growth stage models that a small
enterprise may not pass through all stages of transformation.
This paper explores using EA to enhance existing SME growth stage models with
the objective to provide guidance for SME managers during the transformation proc-
ess from being a small enterprise to becoming a medium enterprise. The rationale to
combine the concepts of growth stage models and EA is based on the level of change
and complexity associated with the growth of small enterprises into medium enter-
prises.
The output of this research is the proposed ‘SME EA growth’ (SMEAG) model.
Experience in industry assisted with developing the SMEAG model through combin-
ing theories from the SME growth stage models and EA domains. The SMEAG
model is derived by combining the existing growth stage model of Scott and Bruce
[14], the Enterprise Architecture Framework by Hoogervorst [6] and the EA as Foun-
dation for Business Execution Model discussed by Ross, Weill and Robertson [13].
The SMEAG model allows for judicious selection of appropriate states and transition
during the SME growth process. The proposed SMEAG model is illustrated, using as
case study, the operating model of an SME that is in the transformation phase from
being a small to becoming a medium enterprise.
The value contribution of the SMEAG model can be summarised as the enrichment
of the existing SME growth stage model concept with the following three concepts
from the EA domain:
Replacing the stage concept with a current to future state transition approach.
The Hoogervorst Enterprise Architecture Framework [6] to indicate the areas of
concern, design domains and the architecture principles and standards.
The Foundation for Business Execution Model [13] to identify the operating
model and the level of standardisation and integration required.
The SMEAG model is developed keeping the constraint of resource poverty in the
SME world in mind.
Section 2 describes the background by examining the domains of SMEs, growth
stage models and enterprise architecture. The proposed SMEAG model is presented in
section 3. Section 4 illustrates the application of the SMEAG model in a case study
and discusses the value of SMEAG model in the context of this case study. Section 5
concludes with a reference to future research.
2 Background
This section provides the background and the motivation for the research by introduc-
ing the relevant domains, namely SMEs, growth stage models and enterprise architec-
ture.
2.1 Small and Medium Enterprises (SMEs)
In order to better comprehend the problem domain, it is necessary to understand the
nature of SMEs compared to their larger counterparts. Several factors can play a role,
namely:
The role of SMEs as part of the global and the local (in our case South African)
economies. According to Cassell, Nadin et al. [1] approximately 99% of all firms
in the EU are SMEs, which employ about 65 million people in total. Globally
SMEs account for 99% of business and 40% to 50% of gross domestic product
(GDP).
The reality of resource poverty in the SME world. Welsh and White [15] argued
that the very size of a small business creates a special condition, referred to as re-
source poverty, distinguishing them from their larger counterparts and which re-
quires different management approaches than that followed by larger business.
Only a small percentage of SME owners envision growing from a small to a me-
dium enterprise. Several studies have shown that across countries, SME growth is
not the norm [2]. Most firms start small, live small and die small, and most busi-
ness founders have modest growth aspirations for their firms. According to Jones
[7] the average life cycle of SME’s is in the region of five years or less.
The Global Entrepreneurship Monitor (GEM) report [5] identified the need in
South Africa to assist small enterprises to grow into medium enterprises and in doing
so to stimulate job creation. The GEM research program was initiated in 1997 as a
joint venture between academics at London Business School and Babson College in
the United States. GEM has grown to a consortium of 64 national teams and is re-
garded as one of the most important longitudinal studies of entrepreneurship in the
world.
From the GEM perspective [5], a number of statistics and statements relevant to
SMEs in South Africa can be listed to provide a better understanding of the cause of
the problem addressed in this paper. Of the 2.4 million registered companies in South
Africa in 2009, 2.2 million were SMEs. SMEs thus play an important part in the
economy. Only a small fraction of firms (3.9%) in the start-up phase employ any
staff, and only a tiny fraction (<3%) of necessity-oriented businesses create six or
more jobs. The GEM Report also mentioned that formal business require training in
skills, such as how to keep records, budget, manage cash flow, maximize trade credit
and write a business plan.
2.2 SME Growth Stage Models
Growth stage models are important for SMEs in order to understand. manage and
predict problems that might arise during growing the business. The question is
whether growth stage models can successfully assist the SME manager that wants to
transform the small enterprise in to a medium enterprise.
Both Davidsson et al. [2] and McMahon [9] did comprehensive reviews of litera-
ture related to SME growth stage models. According to Davidsson et al. [2], studies of
small firm growth are no longer in short supply, but it does not necessarily imply that
everything is known about small firm growth. All of the authors of the articles they
reviewed commented on the lack of a coherent picture portrayed by reference mate-
rial. However, there is no evidence in the literature that this identified lack of material
is currently addressed by researchers. This is unfortunate because growth stage mod-
els represent the type of knowledge small firm managers typically require.
Both Davidsson et al. [2] and McMahon [9] refer to the seminal book by Penrose
[11] explaining the two different connotations of growth, namely the amount of
growth versus the process of growth. SME growth stage models are related to the
process of growth. SME growth is viewed as a series of phases or stages of develop-
ment through which the business may pass during an enterprise life-cycle.
Massey, Lewis et al. [8] confirmed that the life cycle phenomenon has been found
meaningful by SME owner managers. A comprehensive comparison of ten life-cycle
models, with particular focus on the life cycle stages and the organizational dimen-
sions used to describe them, is reported in Hanks et al. [4].
All the reviews [2, 4, 8-9] mentioned the justified criticism regarding over-
determinism, questionable empirical support and that the stage models tend to assume
all SMEs pass through each phase of a growth stage model.
Various models have been proposed specifically addressing the criticism regarding
the sequential stages. As an example, Perenyi, Selvarajah et al. [12] proposes a con-
ceptual model with the focus on the transitions between the life cycle stages. These
transitions can indicate the development of SMEs, without constraining the model by
imposing the sequential nature of the stages. In Hanks et al. [4] it is proposed that
each life-cycle stage consists of a unique configuration of variables related to organi-
zation context and structure.
The SME growth stage models that focus on generic problems organizations may
encounter during growth is, however, valuable for the definition of SME operating
models and assisting SME managers to make important decisions [7]. The model by
Greiner [3] makes entrepreneurs aware of possible crises and solutions as part of the
transformation through the different stages. The model by Scott and Bruce [14], the
five stages of which is illustrated in Fig. 1, is based on the model by Greiner.
Stage 1
Inception Stage 2
Survival Stage 3
Growth Stage 4
Expansion Stage 5
Maturity
Stage of
Industry Emerging,
fragmented Emerging,
fragmented Growth, some
larger compet-
itors, new
entries
Growth, sha-
keout Growth/shake
out or ma-
ture/declining
Key Issues Obtaining
customers,
economic
production
Revenues and
expenses Managed
growth, ensur-
ing resources
Financial
growth, main-
taining control
Expense
control, prod-
uctivity, niche
marketing if
industry de-
clining
Top Man-
agement role Direct super-
vision Supervised
supervision Delegation,
co-ordination Decentraliza-
tion Decentraliza-
tion
Management
Style Entrepre-
neurial, indivi-
dualistic
Entrepre-
neurial, ad-
ministrative
Entrepre-
neurial, co-
ordinate
Professional,
administrative Watchdog
Organization
Structure Unstructured Simple Functional,
centralized Functional,
decentralized Decentralized
function-
al/product
Product and
Market Re-
search
None Little Some new
product de-
velopment
New product,
innovation,
market re-
search
Production
innovation
Systems and
Controls Simple book-
keeping,
eyeball control
Simple book-
keeping,
personal
control
Accounting
systems,
simple control
reports
Budgeting
systems,
monthly sales
and produc-
tion reports,
delegated
control
Formal con-
trol, systems
management
by objectives
Major Source
of Finance Owners,
friends and
relatives,
suppliers
leasing
Owners,
suppliers,
banks
Banks, new
partners,
retained earn-
ings
Retained
earnings, new
partners,
secured long-
term debt
Retained
earnings,
long-term debt
Cash Genera-
tion Negative Negative /
breakeven Positive but
reinvested Positive with
small dividend Cash genera-
tor, higher
dividend
Major In-
vestments Plant and
equipment Working capi-
tal Working capi-
tal, extended
plant
New operating
units Maintenance
of plant and
market posi-
tion
Product-
market Single line
and limited
channels and
market
Single line
and market
but increasing
scale and
channels
Broadened
but limited
line, single
market, mul-
tiple channels
Extended
range, in-
creased mar-
kets and
channels
Contained
lines. Multiple
markets and
channels
Fig. 1. Scott and Bruce SME Growth Model [14]
In the Scott and Bruce model the different criteria, such as stage of the industry,
key issues, etc., are presented related to each stage, from the inception stage through
to the maturity stage. For example, in the first stage, inception, the key issues are that
of obtaining customers and economic production, which change in the maturity stage
to that of expense control, productivity, and niche marketing if the industry is declin-
ing.
2.3 Enterprise Architecture
Section 2.1 confirmed the importance of SMEs to contribute to job creation consider-
ing the large number of SMEs that is part of the economy. Three of the challenges
derived from the discussion in section 2.1 are the phenomenon of resource poverty,
the small number of SMEs that are interested in growth to become a medium enter-
prise, and lack of skills of SME managers to transform a small enterprise into a me-
dium enterprise.
The question is whether growth stage models can successfully assist the SME
manager that wants to transform the small enterprise to a medium enterprise. Section
2.2 mentioned that growth stage models are criticized. One of the key reasons for this
criticism is that all the enterprises do not pass through all the stages in a specific se-
quence following all the stage criteria for a specific stage. It was also noted that the
transformation from a small to medium enterprise is complex with high change im-
pact.
From the perspective of change and complexity EA is considered as a discipline
that could contribute to the solution to assist the SME management during the growth
of a small enterprise. Investigating the relevance of EA to compliment growth stage
models is therefore relevant.
The four EA concepts that are specifically considered as part of the development of
the SMEAG model are briefly presented in the remainder of this section, namely:
The relevance of EA considering the change and complexity associated with
SME growth.
The introduction of the state transition approach versus a stage based approach.
The Hoogervorst EA Framework [6].
The Foundation for Business Execution Model [13].
The Hoogervorst EA Framework [6] is defined as the expression of aspects (areas
of concern and design domains) that are considered relevant and must be addressed by
the architecture to be defined. EA is defined as a coherent and consistent set of prin-
ciples and standards that guides enterprise design [6].
Hoogervorst [6] states that enterprise engineering enables enterprise change and
adaptation, with EA providing the guidance for the design in order for the enterprise
to operate as a unified and integrated whole. Zachman [17] also discussed EA as an
approach to manage change and complexity by emphasising the state transition con-
cept of the change from a current state (as-is) to a future state (to-be) perspective.
Ross et al. [13] proposed the Foundation for Business Execution Model where en-
terprises have to define their operating model and define the processes and infrastruc-
ture critical to their operations (i.e. their EAs). The model describes how an enterprise
can thrive and grow. In order to grow you need to understand the relevance of process
standardization and process integration as part of the transformation process. Process
standardization delivers efficiency and predictability across the company and integra-
tion links the efforts of organizational units through shared data.
The operating model determines the level of standardization and integration re-
quired. Four different types of operating models are described [13], namely diversifi-
cation (low standardization and low integration), coordination (low standardization
and high integration), unification (high standardization and high integration) and rep-
lication (high standardization and low integration). For each of the operating models a
core diagram is proposed [13]. Fig. 2, for example, presents the proposed replication
core diagram. When designing a replication core diagram, one starts with the identifi-
cation of the key processes to be standardized and replicated across the business units.
The next step is to identify the technologies automating those key processes. It is not
necessary to include the data and customers as part of the core diagram as integration
is not a requirement to support growth as part of the replication operating model.
Standa rdized
Processes
Autom ating
and linking
technologies
Business-unit-
specific data
Business-unit-
specific
customers
Customer
types
Required
Optional
Business
process
Data
Technology
Processes
Outcome
Fig. 2. Replication core diagram (adapted from Ross et al. [13])
3 The Proposed SMEAG Model
In this section we propose the SMEAG model, where the objective is to provide a
model for SME managers that are involved with the transformation of a small enter-
prise into a medium enterprise to assist them during the growth process. The abbre-
viation SMEAG evolved from the different concepts included in the proposed model,
namely Small Medium Enterprise + Enterprise Architecture + Growth.
The SMEAG model is an enhancement of the Scott and Bruce growth stage model
[14] incorporating :
the EA principle of a current and a future state,
the Hoogervorst EA framework [6] concept describing the areas of concern, the
domain and the enterprise architecture principles and standards, and
the operating model and core diagram concepts from the Foundation for Execu-
tion model of Ross et al. [13].
The growth stage model by Scott and Bruce [14] was selected since it highlights the
typical decision making points in the transformation from a small to medium enter-
prise.
The Scott and Bruce growth stage model (Fig. 1) was adapted not to pass through
the stages sequentially and phase by phase, but rather based on the identification of
the current state to the future state concept advocated by EA.
The Hoogervorst EA framework [6] was selected to incorporate EA concepts in-
cluding the areas of concern, EA design domains and the EA principles and standards.
The Foundation for Business Execution Model [13] was selected as EA model for
inclusion in the SMEAG model to support the applicable operating model. It is the
potential value of the operating model to address growth that makes this model appli-
cable to the SME manager. Not only will it position the importance of the selection of
an appropriate operating model, but also the level of process standardization and
process integration required to support the growth based on the operating model.
The SMEAG model, as illustrated in Fig. 3, consists of three components:
The SMEAG Fact Sheet.
The SMEAG Work Sheet.
The Operating Model Core Diagram.
These components are described in more detail in the following three sub-sections.
Hoogervorst
Enterprise
Architecture
Framework
Scott and
Bruce
Growth Stage
Model
State
Transition vs.
Stage
Approach
SMEAG Model
Fact Sheet
Work Sheet
Operating Core
Diagram
Ross et al.
Foundation for
Execution
Model
Fig. 3 SMEAG Model
3.1 The SMEAG Fact Sheet
The SMEAG Fact Sheet is a generic accelerator using EA to enhance the SME
growth stage models that is pre-populated and available as accelerator for the SME
management.
There are two aspects that relates to the SMEAG Fact Sheet. The first is the struc-
ture, referring to the relationships between the Area of Concern, the typical options to
consider describing the State, the Design Domain and the Architecture Principles and
Standards. This generic structure is derived from the Scott and Bruce Growth Stage
Model [14] (Fig. 1) and the Hoogervorst Framework [6].
The second aspect is the content of the SMEAG Fact Sheet, as illustrated with ex-
amples in Fig. 4. The first row, Organization Structure, has its origin in the Scott and
Bruce growth stage model [14] , and the second row, Operating Model is a contribu-
tion from the Foundation for Business Execution Model [13]. The Area of Concern is
identified from either a growth stage model or an EA model. The various States are
identified from the various sources and then the Design Domain is allocated with
guidance from Hoogervorst [6]. The Architecture Principles and Standards are either
sourced from EA models or developed by EA experts. The preparation of the
SMEAG Fact Sheet is not merely a ’concatenation’ of the various sources, but rather
an analysis, contextualisation and alignment of the information from the various
sources.
Area of
Concern State Options Design
Domain Architecture Principles and Stan-
dards
Organiza-
tion Struc-
ture
Unstructured
Simple
Functional centralized
Functional decentralized
Product/... decentralized
Organization
Technology
* Grouping of activities (units) must
create minimized cross-boundary
relationships.
*Process design must address dele-
gation of coordination activities explic-
itly.
*Collaboration services must be made
available.
Operating
Model Diversification
Co-ordination
Replication
Unification
Business
Information
Technology
*Key processes to be standardised.
*Multiple customer interaction chan-
nels must operate transparently (inter
functionally)
*Informational data may have only
one authorizing source.
*Customer data must be available
from one unified source.
*Redundant data entry about the
same data is not allowed.
Fig. 4. SMEAG Fact Sheet
3.2 The SMEAG Work Sheet
The second component of the SMEAG model is the SMEAG Work Sheet. In contrast
with the SMEAG Fact Sheet the SMEAG Work Sheet is dependent on the input of the
SMEAG management to complete the following four steps:
1. The review and extension of the SMEAG Fact Sheet with SME specific ‘areas of
concern’, if available.
2. The selection of the ’areas of concern’ from the SMEAG Fact Sheet applicable to
the SME.
3. The identification of the current state per area of concern from the SMEAG Fact
Sheet, as well as the future state if relevant.
4. To determine the actions required for the transition from the current state to the
future state.
The SMEAG Work Sheet is an input for the business plan prepared by the SME man-
agement for each financial year. An example of a Work Sheet is illustrated in Fig. 7
when we discuss the case study.
3.3 The SMEAG Operating Core Diagram
The third component of the SMEAG model is the Operating Model Core Diagram to
guide the SME manager through the standardization and integration of processes and
identification of the enabling technology. This step involves the incorporation of the
Foundation for Business Execution Model [13]. At this stage it is necessary to con-
firm the operating model for growth (diversification vs. coordination vs. unification
vs. replication.)
4 Case Study
This section illustrates the use of SMEAG using a case study. Section 4.1 provides the
case study background. Section 4.2 highlights the stage vs. state problem and section
4.3 applies SMEAG.
4.1 Case Study Background
The case study is based on an SME that is growing from a small enterprise into a me-
dium enterprise. The nature of the underlying business conducted by the small enter-
prise is that of a ‘consulting practice’ with a narrowly defined service range. The
number of full time employees is around 35 and the number of sub contractors varies
between 10 and 20.
The SME’s management wants to understand the areas of concern and wish to
identify the initiatives to be included in the business plan to manage the growth from
a small to medium enterprise deliberately.
During 2010 the SME developed an operating model with one of the objectives the
growth of the enterprise from a small into a medium enterprise. The growth model for
2011 is based on the replication of new pipelines and, although not clearly stated as
part of the 2010 operating model, the replication model [13] was found a good fit to
describe the growth model. A brief overview of the 2010 operating model of the SME
is included in Fig. 5.
Focus Area Current State Future State
Ownership:
Legal structure One registered entity No change
Ownership: Sharehold-
ing Current shareholding weighted
towards non managerial interest. Restructuring of shares into
individual management as op-
posed to investment hands.
Cash generating capa-
bility Solid No change
Operating Model Although different “markets”
exist within the definition of the
current business focus the busi-
ness runs as one consolidated
whole
The end-state envisages the
dismantling and restructuring of
the entire organization so as to:
Stabilize end state revenue.
Refocus the business mix so as
to achieve higher margins.
Maintaining overheads. Chang-
ing financial reporting.
Operating Model:
Dividend Policy No defined dividend policy. Dividend policy in conjunction
with risk and performance man-
agement system.
Operating Model: Busi-
ness Definition Company plays in the bottom
segment and margins are at the
lower level of the possible range.
The end-state envisages a drift
to higher margin business within
the current business definition
and a diversification into “effi-
ciency” originated process work.
Operating Model:
Performance Manage-
ment
The organization design (and
the financial support system) is
not geared to report on divisional
/project profitability.
A performance management
system based on consistency of
rewards versus roles and a
clearly articulated and motiva-
tional reward system.
Risk Management Retention of cash and a mixed
of permanent and variable re-
sources.
Limitation of current model turn-
over. A mix of fixed versus vari-
able resources. Retention of
cash.
Risk: Contingent liabili-
ties or area of future
financial risk
None No change
Organizational Struc-
ture: Corporate Gover-
nance
Multitude of roles played by
certain individuals. A more formalized governance
structure.
Fig. 5. 2010 Operating model of SME to be used as case study
4.2 Stage vs. State Problem Confirmation
The SME’s initial problem was that it was not possible to determine the current and
future ‘stage’ of the SME using growth stage models as guideline.
Using the 2010 operating model (Fig. 5), the current and future states of the SME
were mapped according to the Scott and Bruce model (the model is illustrated in Fig.
1). The outcome of the current and future states mapping for the case study SME is
illustrated in Fig. 6. The current state varies between Stage 2 and Stage 4, and the
future state between Stage 3 and Stage 5 of the Scott and Bruce model. For four of the
criteria there is no difference between the current and future states.
0
1
2
3
4
5
6
Current State
Future State
Fig. 6. Current and Future State (Case Study)
This mapping illustrates why the SME had a problem to determine its current and
future ‘stage’ according to the guidelines of growth stage models. The mapping illus-
trates that an enterprise is not necessarily in the same stage for all criteria when grow-
ing, i.e. an SME does not necessarily progress sequentially and simultaneously
through all the criteria of a stage. The enterprise thus may not gain any value by mov-
ing automatically to the next stage for of all the criteria, as proposed by growth stage
models.
The proposed SMEAG model, suggesting a possible way to address this problem,
was next applied to the case study.
4.3 SMEAG Model
The case study SMEAG model is based on the 4 steps described in section 3.2. Step 1
is to review the SMEAG Fact Sheet with the 2010 Operating Model of the SME (Fig.
5). An example is included as illustration in Fig. 7.
Area of
Concern State Options Design
Domain Architecture Principles and
Standards
Dividend Pol-
icy No dividend policy
Dividend policy Business
* Minimum 10% of turnover
available for working capital
before dividend is consid-
ered.
Fig. 7. Example SMEAG Extended Fact Sheet (Case Study)
The second step is to complete the SMEAG Work Sheet as described in section
3.3. The third step, adding the required actions are also included in Fig. 8 to illustrate
the outcome.
Area of
Concern 2010 State
(Current) 2011 State
(Future) Actions
Organization
structure Functional centralized
Functional cen-
tralized Review process design to
ensure delegation of coor-
dination activities is explic-
itly addressed.
Operating
model None Replication Key processes to be stan-
dardised.
Fig. 8. Example SMEAG Work Sheet (Case Study)
The final step is to prepare the replication core diagram. The replication core dia-
gram is representing the key processes to be standardized as well as the enabling
technology. The case study described in this paper is based on replication as operating
model and Fig. 9 illustrates the replication core diagram for this case study. Since it is
a replication model only processes and technology are included in the diagram (inte-
gration is not a not a requirement to support growth as part the replication operating
model). The identification of the key processes was done during a work session using
reference models as accelerator.
Subcontractor Management
Project & Engagement
Service Delivery
Client & Oppor tunity
Management
Strategy & Planning
Engagement Management
Proposal and O rder
Management
Invoice Management
Time and Expense
Management
Accounting
System
Time
Management
System
Knowledge & Resource
Life-Cycle
Document
Management
System and
E-mail
Enterprise Management &
Support:
Human Capital
Management
Financials
HR Syste m
Payroll
System Accounting
System
Processes Enabling
Technologies
Legend
Fig.9. Case study replication core diagram
4.4 Discussion
From the perspective of the SME management the SMEAG model successfully ad-
dressed the ‘stage’ problem in the case study by replacing it with the state based ap-
proach. The SMEAG Fact Sheet was successfully used to populate the SMEAG Work
Sheet. The final outcome is the 2011 Business Plan and the SMEAG Work Sheet con-
tributed to a more complete description of the areas of concern. The value of the rep-
lication core diagram is seen as the first step to standardize the key processes for roll-
out to the different pipelines. Based on the architectural principles and standards the
SME management are asking for the integration of the systems to have a single source
for information. A key benefit is that accelerators are making it a feasible model from
a SME resource poverty perspective, considering that the number of hours required
from SME management is relatively low and the cost implication a minimum.
5 Conclusion
The primary objective of the SMEAG model is to provide guidance for SME manag-
ers during the transformation process of growing from a small into a medium enter-
prise. In the case study that was used to illustrate the use of the SMEAG model, the
state based approached was successfully used to address the stage based problem.
There is thus evidence that enterprise architecture is relevant to complement existing
SME growth stage models. Not only does EA address the gap regarding the configu-
ration of the various current and future states per area of concern, it also enhances the
model to have a better understanding of the different operating models for growth and
the importance of the standardization and integration of processes.
The key contributions of the SMEAG model are:
The positioning of the current state versus future state concept.
The positioning of EA regarding its principles and standards against those of
growth stage models..
The integration of the operating model core diagram to identify process stan-
dardization and integration.
The packaging of the model to make it a practical tool for SME managers.
The outcome of this research is the first version of the proposed SMEAG model.
The next iteration of development will focus on the completeness of the model, the
interdependencies between the areas of concern, as well as the options indicating the
state per area of concern in the SMEAG Fact Sheet. The content of the SMEAG Fact
Sheet will also be verified and extended against more growth stage models and other
EA models.
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