Industry analysis is the process of reviewing a business environment, its challenges and opportunities, and combining it with current trends in the technology sector. Domain knowledge, which implies an understanding of common business terminology from the operating context, combined with industry structure and operating processes, is a pre-requisite for industry analysis.

Information technology has been the leading force behind major industry shifts and business disruptions in the last half century. Therefore, architects have to play an important role in industry analysis. Architects bridge the gap between business and technology by identifying developments in technology that can address prevailing industry problems and deliver positive outcomes to a business. The range of business outcomes can vary from strengthening existing business capabilities for competitive advantage to transforming a business or industry or ultimately creating new industries.

Industry analysis involves observation and analysis of factors such as market behaviors, competitive forces and, financial, regulatory, socio-economic and technological trends that influence the domain. Industry analysis delivers insights into business drivers and key success factors relevant to the domain.

Industry analysis is a business owned activity to assess the existing business environment and its competitive position. It is one of the preliminary steps in strategic planning. An architect will interpret an industry analysis and combine it with knowledge of existing and emerging technology to define domain architecture, IT strategy and future state. The architect works with business and IT leadership in the strategic planning process and uses industry analysis as an input to drive alignment between business and technology strategy. Business stakeholders require architect to function as advisory, guiding architecture direction to address prevailing business problems. Industry analysis capability enhances an architect’s involvement in understanding business needs and facilitates a consultative approach in requirements development.

Architects should have an understanding of business, both in context of business fundamentals and domain processes, in order to meaningfully engage with business stakeholders. The IT architect is expected to keep track of trends so that their technology and business skills are constantly improved.

Industry analysis requires an architect to develop a broad external perspective and analytical skills to research information and interpret data drawn from disparate sources. Even if utilizing secondary research, an architect will still have to work on the “last mile” to apply the proper context for the technology strategy or initiative on hand. Common tasks in industry analysis involve drawing information from multiple sources related to an industry. These include business, trade sources and technology analysts following the domain. Information is commonly available through industry communities, forums, publications and data. Architects study technology adoption by peers or first movers in the industry, as well as interpreting emerging technology trends that will have relevance to business. Architects build the domain architecture and incorporate changes necessitated by industry shifts.

Industry analysis enables development of domain architecture and is a valuable capability to move an architect from technical architecture to business solution provider role. It is an important requirement in the career path of an Enterprise or Business Architect. Through mastery of industry analysis architects can communicate value of architecture in business terms and increase visibility of architecture. By a thorough understanding of industry, architects can potentially define “game changing” technology solutions and become advisors to the business.

A key challenge for majority of architects is that they have a background software engineering or other information technology disciplines. Architects may not have formal training or education in business fundamentals or an industry. They may also have limited access to industry knowledge within the business or have to take up industry analysis as an individual initiative. As business leadership may usually engage external advisory organizations for analysis, architects may experience limited involvement in the strategy process.

• Develop an “outside-in thinking” and understand the business from a customer viewpoint.
• Build an understanding of business motivation (why and how businesses exist and survive) generally and in the organization where the architect works.
• Study industry reference models such as value chain analysis, Porter’s Five Forces model, PEST (Political, Economic, Social and Technological), PESTLE (PEST with Legal, Environmental impacts) or STEEPLED (social, demographic and ethical impacts).
• Follow information sources on industry beyond technology e.g. trade publications, business journals.
• Develop domain knowledge through knowledge sharing with business, business glossaries or training on industry fundamentals.
• Developing or studying reference domain architecture for the industry.

Industry Research

Industry research is the acquisition of corporate intelligence on a broad range of issues including macro environment, market and competitive landscape and consumer analysis. As a rule, an architect will be required to perform secondary type of industry research i.e. research is derived from aggregation of existing sources of information and data, as well as broader research reports published by dedicated research and analyst firms. Sources of industry research include publicly available information, government released statistics, trade publications, data suppliers, research and analyst organizations. To consume and analyze industry research, an architect should have a broad understanding of business operations and knowledge of the specific domain. Domain knowledge pertinent to industry research includes understanding industry codes, markets, product offerings, regulatory requirements, financial information, as well as international variations if needed.

Information Analysis

Information analysis is the process of discovery and quantification of patterns in industry-specific data and trends. An architect will perform information analysis to interpret macro and mega trends, financial indicators, market growth indicators and influence of technology in shaping business outcomes.

Industry Segmentation

Industry segmentation is the process of defining and subdividing a large homogenous market into clearly identifiable components having similar needs, wants, or demand characteristics. Industry segmentation is driven by factors such as products, target markets, geography, demographics and size of businesses that constitute an industry. Industry segmentation determines key factors such as product, pricing, business composition and resources required for operation. An architect needs to understand industry segmentation as it has an influence on technology resources and technology enablement within the industry. Industry segmentation is a business artifact, however architects should recognize that technology can enable creation of niche and new segments wherein it becomes a technology led activity.

Industry Trends

An assumed tendency of a given industry to move in a particular direction over time; trends are classified as secular trends for long time frames, primary trends for medium time frames, and secondary trends lasting short times. Mega and macro trends influence the product offering, market size and overall competitive nature and life of an industry. Information technology has been a primary and rapid disruptive force for businesses in the last fifty years, making the role of architects very important in signaling industry changes arising from technology trends. Architects combine industry and technology trends to provide input and direction for technology strategy.

Sustainability Strategy

The preparation of a sustainability strategy for IT, taking into account political, legislative, economic, social and technological factors. Identification of major external standards, practices, or schemes to be adopted. Architects will be responsible for identification of technology choices to support corporate sustenance strategy and alignment of IT strategy.

• Business Fundamentals
• Business Valuation

–         Definitions can be found at IASA IT BoK and Business Technology Strategy Training Materials.

–         More about Industry Analysis

• Quick MBA – http://www.quickmba.com/strategy/
• http://blog.credera.com/management-consulting/seven-favorite-frameworks/
• 6 Tools Every Business Consultant Should Know http://www.dce.harvard.edu/professional/blog/6-tools-every-business-consultant-should-know

–         Government Sources of Data for Industry Analysis

• World Trade Organization – http://www.wto.org
• EconomicIndicators.gov (US) – Daily releases of key economic indicators
• (USA) Office of Entrepreneurship Education | Resources – http://www.sba.gov
• Enterprise and Leadership (EU) http://ec.europa.eu

–         Financial Sources of Information

• Internet sources – bix.yahoo.com
• Dun and Bradstreet www.dnb.com

–         Consulting and Analyst Sources for Industry Analysis

• Management Consulting Firms – McKinsey (www.mckinsey.com), Ernst & Young (www.ey.com), Price Waterhouse Coopers (www.pwc.com)

–         Analyst and Research Firms

• IDC (Www.idc.com), Datamonitor (www.datamonitor.com)

–         Books

Business and Competitive Analysis: Effective Application of New and Classic Methods by Craig S. Fleisher, Babette E. Bensoussan ISBN-13: 978-0132161589ISBN-10: 0132161583

Maya More

Maya More is an IASA member and CITA-Foundation certified architect having over 19 years experience in business technology consulting, enterprise architecture and technology implementation. She has worked with global businesses in multiple countries and industries such as insurance, healthcare and oil & gas. She currently works as Architecture and Technology SME for a leading oil & gas corporation in India.