The Value of Enterprise Architecture – Part 1- Introducing the problem
This blog series addresses one of the most important topics facing Enterprise Architects; namely how to justify the value of Enterprise Architecture (EA).
Increasingly, many organizations are value-driven; their business models, objectives and primary processes are designed to achieve maximum value.
Enterprise Architecture is a capability and competency that contributes benefits and opportunities as a key support process.
It is common for such business support processes to define their value proposition and offer this as a service to their internal consumers.
The objective of this blog series is to help Enterprise Architects who want to be able to define the benefits of their activities to their stakeholders, and to help IT Executives understand how Enterprise Architecture contributes to the primary value-adding objectives and processes.
In this way, Enterprise Architects will be more able to define the benefits they provide more effectively to their stakeholders and gain the support and resources they need to support their organization, and IT Executives can understand the contribution that EA delivers.
There is no denying the popularity of Enterprise Architecture today as a global IT core competency:
- As of January 2011, there were over 14,000 certified individuals of The Open Group Architecture Framework (TOGAF) in the world today (Ref 1.)
- In August 2010, in its Hype Cycle for EA, Gartner found that 73 percent of surveyed clients aspired to support “mature enterprise architecture” during the next three to five years, demonstrating that business strategy will be pervasively understood and supported within EA and across business and IT. (Ref 2.)
- When SAP launched its own EA training courses in 2007, by 2009 they rapidly became the second most popular in the training curriculum ; from 2009 to 2010, participants in classroom training grew by over 25%, and EA-related certifications grew by 40% ( Ref 3.)
- EA Tool vendors are also experiencing this popularity, most EA tool vendors reported continued revenue growth in 2009 and into 2010, despite the recession, with annual revenue ranges typically between $10 million and $25 million (Ref. 4)
What remains as a key issue for Enterprise Architects is defining and communicating the value of Enterprise Architecture.
In September 2010, ASUG/SAP published the findings from the EA Best Practices Survey conducted in 2009-2010. (Ref. 5)
Some of the top challenges identified in the survey are not new to Enterprise Architects and the first one we can immediately recognize:
- “Lack of business case and value proposition of EA to sell it to IT and business community”
- “Lack of architecture governance and execution”
- “Lack of business buy-in to support aligning business and IT strategy and architecture”
- “Lack of understanding and adoption of EA best practices”
The study however also concludes that these same companies, who adopted EA Best Practices, also experienced a series of benefits:
- Companies with higher overall Enterprise Architecture maturity have on an average 64% lower IT Spend as % of Revenue as compared to companies with lower maturity; see Figure 1 below;
Figure 1 – EA Maturity versus Average IT Cost
- Companies with higher overall Enterprise Architecture maturity have on an average 36% lesser Emergency Projects (as a % of Total Projects) and 36% lower Number of Interfaces per Billion Revenue ; see Figures 2 and 3 below ;
Figure 2 – EA Maturity versus Emergency Projects
Figure 3 – EA Maturity versus Number of Interfaces
- Companies with Higher Maturity in Enterprise Architecture Processes category spend on an average 1.5 times more of their IT budget on Innovation as compared to companies with lower maturity. (See Figure 4. below)
Figure 4 – EA Maturity versus Innovation Cost Share
This is the first in a six-part blog post that address one of the most important topics facing Enterprise Architects; namely how to justify the value of Enterprise Architecture (EA).
In the next part, I will focus on why it is so difficult to define such value.
In the third part, I will summarize the main benefits of EA to show where to look to define that value.
In the fourth part, I will describe how to construct a model to observe and measure that value for architecture stakeholders.
In the fifth part, I will look at two worked examples.
In the sixth part, I will summarize and conclude what this means for Enterprise Architects.
- The Open Group TOGAF Directory of Certified People (January 2011)http://www.opengroup.org/togaf9/cert/cert_archlist-short.tpl
- Enterprise Architecture Hype Cycle (2010) Gartner.http://www.gartner.com/it/page.jsp?id=1417513
- Kirby (2009) – SAP EAF and TOGAF 9 – History, differences, similarities, and recommendations for the future. The Open Group Conference. Proceedings of The Open Group Conference London, 2010.
- Wilson and Short (2010) Magic Quadrant for Enterprise Architecture Tools – October 2010 – Gartner RAS Core Research Note.
- ASUG Enterprise Architecture Best Practices Survey – (October 2010) Aggregate Findings Report. ASUG. http://www.asug.com/EventsCalendar/EventDetails/tabid/150/EventID/2024/Default.aspx