BACKGROUND
This is the third part 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 this part, I will summarize the main benefits of EA to show where to look to define that value.
THE BENEFITS OF ENTERPRISE ARCHITECTURE
The potential benefits of Enterprise Architecture are well documented.
Van Steenbergen and Brinkkemper (2008), Ross et al. (2006), Rosser (2006), and Allega (2005) all summarise a range of benefits of EA to varying degrees. (Ref. 1,2,3,4, and 5).
All cite increased benefits through increased EA maturity as exemplified in Figure 1 below.
Figure 1 – Benefits correlated to EA Maturity (Copyright MIT Sloan Center 2005, Ref 2.)
Potential benefits can be summarized as follows:
- Reducing IT costs by consolidating, standardizing and integrating corporate information systems
A clear understanding of AS-IS and TO-BE architecture, and the migration plan of how to progress from one state to the other means the implementation of duplicate/overlapping systems can be avoided or managed out, and acquisition and integration can be accomplished more effectively.
To solve duplication and overlap, an organization needs a comprehensive view of its applications, software, and infrastructure and their interrelatedness. By understanding what it has, what it needs, and what is redundant, an organization can tailor its investment to the areas of most need, and identify reuse more frequently.
If development standards and guidelines are in place that define the boundaries of what it is possible for the application developer or infrastructure builder to do, and in effect describe how to behave when creating new capabilities, this can increase the efficiency of development projects.
EA, through its focus on traceability and consistency, reveals duplicate and overlapping processes, services, data hardware and software. By having fewer, as opposed to many, means higher unit volumes and a better ability to support those products, and plan timely transitions that respond both to the business need and the technology progress rate.
Familiarity with standard components also provides repeatable experience on performance, risk and maintenance. Sound choices enable an ability to monitor and track the system in ways that help deliver better client service. Less effort is then needed to integrate, accommodate or link different systems. Installations and upgrades will be simplified, with a reduced need to replace ineffective systems.
- Increasing IT responsiveness by using standard, pre-designed components
The development of enterprise architecture enables earlier preparation for new technologies, smarter timing of projects, and the reuse of development best practices, standard designs and components.
The reuse of existing services, components and infrastructure, and the application of standards, reference models and patterns, can reduce design and development time and reduce support requirements. This mean enhancements and scale-ups can be delivered faster, infrastructure capacity can be increased rapidly, and the enhanced platform can then better accommodate innovations and advances.
- Providing Better Access to Information Across Applications and Improved Interoperability
Enterprise application integration architecture enables more effective data sharing across an organisation and beyond it to trading partners.
By being aware of what applications exist, what data they need and where it is stored, a pro-active plan to ensure it is in the right place at the right time can be established.
Consistency in integration and interfaces can also improve access for external suppliers, customers and partners to the data they require, enabling them to respond faster to the organisation they serve.
- Less IT Risk
Developing a TO-BE architecture and a managed migration plan will mean that the IT function will be prepared to deliver new capabilities in a timely manner, avoiding unexpected surprises and demands.
In short, a more rigorous architecture-led planning process can ensure the organization plans the introduction of new technologies and the timing of projects to its best advantage, rather than being forced into something due to an unforeseen business demand or technology life issue.
This will enable efficient transitions to new capabilities. Capacity planning and monitoring will then improve as system retirements and upgrades can be planned in advance.
A clear two to three year plan for the enterprise is a typical product on EA. Using this, the organization can forecast the required budget, make realistic commitments, and plan in good time for IT changes. An organization without a strategic plan is often consumed day-to-day with the next “emergency”.
While some may say “what’s wrong with that? Everyone is focused on what matters” …….the situation is not healthy for IT or for the business. With focus on the short term, and without adequate time to plan, each new solution is at risk for becoming another silo. Increasingly, more time is spent trying to make each new solution “fit in” than on the solution itself. Capacity planning and applications management becomes very difficult in such environments, which in turn causes further unplanned capacity and system upgrades. This causes a spinoff downward spiral of further project overruns.
- Improved IT Performance and Job Satisfaction
Through better architectural understanding, better comprehension of the solutions being implemented is achieved, leading to more effective design review and testing processes being established.
More-cohesive and shared perspectives are created, and common goals are understood, leading to improved IT performance and job satisfaction.
- Reducing risk and fulfil regulation requirements by cleaning up existing information systems.
EA provides clear traceability between business processes, data, user roles, applications and infrastructure. This traceability makes it easier to fulfill legal and compliance regulations.
A reliable architecture model aids consistency and manageability, and an organization has a much better chance of implementing corporate business standards and planning and managing to those standards on an ongoing basis. An example of the measures and metrics that can be used to demonstrate this is discussed later.
If an organization does not have visibility of its business process, information and how this relates to IT infrastructure, information silos and inconsistent systems will result. This symptom has been exacerbated in recent years by mergers and acquisitions. These have added to the complexity of an organization’s IT estate resulting in duplicate processes.
When changes occur that cause unplanned downtime or other problems manifest themselves such as fraud or regulatory challenges, and no one understands who did it, how it happened, or why it happened, then the odds are high that it will happen again.
The Business and the IT environment are in a constant state of change. A change two or three cycles in the past may not have an impact until the worse possible moment sometime in the future, cascading across the enterprise.
If an organization does not have a clear model of its business, application and technical architecture and the dependencies and interrelatedness, and installed processes and standards to manage that environment, then there will be no traceability or accountability.
EA identifies the processes, applications, and data that need to be consistent if consistent business decisions are to be made. EA also identifies opportunities for integration and reuse that prevent the development of inconsistent processes and information.
- Better traceability of cost
EA provides greater understanding of the interrelated nature of business, application, and infrastructure assets. This enables greater understanding of how the architecture is structured, and enables more accurate cross-charging or service billing. It enables high cost areas of the IT estate to be identified more accurately, and a fairer cost model to be developed.
Most organizations can identify the individual cost of an asset. However, many cannot understand the cost of an asset as it relates within the organization with all its interrelatedness and interdependencies. IT departments can typically identify that a server costs so much, but they cannot identify what organizations that server supports, what the maintenances costs are, or what critical business applications are using that server. In many cases, organizations don’t have a mechanism to understand holistically all the costs associated with those related assets.
- Enabling strategic business goals via better operational excellence, more customer intimacy, greater product leadership or more strategic agility.
Without an understanding of business, application and technical architecture, a business doesn’t know what it is going to take to align and to implement IT to execute its business strategy. In essence, it doesn’t know what it has or doesn’t have.
This ensures when planning programmes and projects, that effort is targeted onto those aspects that really matter, and this adds to the strength of the enterprise, rather than diluting or duplicating something it already has, or investing in something that is not a priority.
The topic of Business-IT alignment is nothing new and it is a commonly agreed goal that IT investment is targeted on the key business goals and performance. Value Management and Portfolio Management techniques also address this issue. EA specially focuses on “how” an organization will build a business or IT capability to meet that its business goal, rather than “why” or how much proportion of the portfolio budget it needs.
Without EA, organizations frequently approve projects that, from all outward appearance, are not associated with any business strategy. Organizational clout, supposedly self-funding business cases, and compartmentalized decision processes drive these behaviors. If you cannot easily identify the strategy supporting the funding decision, then there probably isn’t one.
If IT can introduce new technologies and functionalities faster to key business areas, this ensures the organization can respond faster to competitive pressures, and deploy differentiating capabilities faster. These areas are most likely to be spotted when business and IT staff collaborate closely in the EA process because a more rigorous analysis of business process-application-technology interrelationships will have occurred than would otherwise have been the case. The outcome is that technology is ready when it is needed, transitions are smoother, and unnecessary change is minimized.
Similarly, if the organization can free up more cash it can allocate that to alternate targets, such as innovation. Assuming that the innovation results will enhance the organization’s competiveness then this is another good example of an indirect value contribution of EA.
Common symptoms in organizations without a robust EA are emergency projects and high-than-average project overruns. When new, important strategic projects are created, without a comprehensive understanding of the current state, the desired state, or the interrelationships of processes, people, and technology affected by that project; unforeseen problems will occur resulting in project overruns.
The business goals and objectives that can achieved quicker depend on the organization of course; typically they could involve:
- Lower business operating cost
- Faster time to market
- Faster production cycle time
- Faster response to service requests
- Better customer relations through easier, more-convenient information access
- Less consumption of working capital
- Being more advanced and innovative in the marketplace
- Superior collaboration — internally and externally
- Better facilitation of mergers and acquisitions or divestitures
- More agility to enter new businesses
- Richer choices or service options for the customer to select
If we need a topical example of the problems and opportunities that can be identified, we can take the rental car industry. Currently, the rental car industry is undergoing a major upheaval as new rental car companies enter the market in many countries. These companies are offering a new competitive service where one can rent a car for specific hours and the car is parked at fixed slots distributed in the town. The classic rental car companies now have a competitive agility problem, since their IT processes and systems are often not flexible enough to deal with hourly rentals. However, by analyzing the existing capabilities they offer, this might reveal a key opportunity for the classic rental company; their systems are wide enough in scope to be able to manage the movement of vehicles between urban areas (since this is what they already do); the classic company can then offer that service to the new companies that currently cannot do this.
EA recognises that there is no single perfect architecture for everything – and an advantage of one enterprise architecture (redundancy, robustness) might be a disadvantage in another dimension (fast and easy to change and adopt). Similarly, not all business processes are equally important. By defining a prioritised set of business objectives and linking these to the architecture of the organisation, one can then identify which capabilities and systems to invest in or change.
For example, a HR system of an average company can afford to be out-of-action for a few hours a day, a very high level of redundancy is not required. However, if a company’s key business is in the area of Professional Services, or is a service/outsourcing provider of HR processes for other companies, the HR system is a key system.
The point is not so much which goals benefit from EA, but that EA means that IT can target the goals that matter to the business more effectively, and proactively identify the possibility of new goals or innovative opportunities through the more intense dialogue that is created.
SUMMARY
In summary, EA can bring benefit to IT by identifying unnecessary duplication and cost, reducing the level of complexity involved, and through effective provision of strategic building blocks, reducing the time it takes to respond to new business requirements, and reducing the risk involved. Meanwhile, the business can then use IT to improve its job performance, by employing IT specifically where it can contribute directly to the strategy the business unit is pursuing, and by shaping and instigating of visionary investments or new opportunities.
In Part 2 of this blog (The Value of Enterprise Architecture - Part 2 - Why is it so difficult to define?), we recommended that we should look to measure and observe the impact of EA introduction if we are to demonstrate its value, just like any business would if they decided to do something innovative. In Part 4, we will look at where to start in how to decide what to measure and what to observe.
REFERENCES
- Van Steenbergen and Brinkkemper (2008) Modelling the contribution of enterprise architecture practice to the achievement of business goals. Proceedings of the 17th international conference on Information Systems Development (2008)
- Ross, et al. (2006). Enterprise architecture: Creating a foundation for business execution. Harvard Business School Press
- Allega (2005) - Enterprise Architecture Will Never Realize a Return on Investment. Gartner Research
- Rosser (2006) - Measuring the Value of Enterprise Architecture: Value Context. Gartner Research
- Rosser (2006) - Measuring the Value of Enterprise Architecture: Metrics and ROI. Gartner Research
