The Business Case for Enterprise Architecture

We have the frameworks. Plenty of them: Zachman, IEEE STD 610.12, FEAF (Federal Enterprise Architecture), and now an updated TOGAF (Open Group Architecture Framework) you can find more about at (http://www.opengroup.org/togaf).

We know what to do. All of us know what should be done and have a pretty good idea of how to do it. For example see what the GAO has institutionalized in their view of our profession in the publication labeled “A Practical Guide to CIO Council – Federal Enterprise Architecture. February 2001, Version 1.0 “.

Why do it?
Now comes the hard part. How about a business case for investing in this discipline? Expressed in terms ordinary business people can understand.  I have yet to find (I have looked) a really compelling piece of work that can express quickly what impact EA would have across five essential elements every business leader understands and manages to on a daily basis:

– cash flow
– margin (profitability)
– velocity
– growth
– customer (responsiveness, intimacy, and alignment)

I’m  guessing this is because we are all technicians at heart. I have also come to believe this is essential to having our peers in the business understand our value proposition. I remain convinced this discipline can (done properly) enable significant improvements in each of our organizations.  Any thoughts or suggestions are welcome, encourage all of us in this profession to evaluate and think carefully about what our real value is – as business people first, then as trusted advisors and partners to our business and IT colleagues alike.

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4 thoughts on “The Business Case for Enterprise Architecture

  1. Consider the five essential elements Jim mentions:
    – cash flow
    – margin (profitability)
    – velocity
    – growth
    – customer (responsiveness, intimacy, and alignment)

    These all speak to a “Throughput” management (or accounting) philosophy (http://en.wikipedia.org/wiki/Throughput_accounting). This whole list also makes me think of “growth”, and is where I’d personally like to focus my energy. I think architects of any sort probably like to focus more on “building” things.
    However, even if we manage to make the case for Enterprise Architecture in Throughput terms, there will still be pressure on Enterprise Architecture professionals to build the case in Cost terms.

    First, because most companies (in my experience) seem to always gravitate to a “cost” driven management / accounting philosophy (even more so now that the economy has struggled). My speculation is that this is either “what they know”, or “how they are measured” (or both). In either case, the “promised” future financial advantages we describe in throughput terms take time to be realized.

    Second, because many enterprises are contracting in this economy. These enterprises may very well have viable business models as “smaller” (not just “leaner”) companies serving a shrinking market (think of the Auto industry… even Toyota does not expect to have the same sized pie in the future, even though they have gained so much market share over the years).

    Enterprise Architecture has the potential (but its professionals need to develop it) to help a company in contraction has well. Virtualization cuts costs, modern SOA based architectures should help the process of sun-setting tired legacy systems that are costly to operate.

    At the end of the day, I absolutely agree with Jim, but am also trying to force myself to tell “the cost story” in the business cases I develop for any of my professional efforts. It at least seems to be important in my local market… Did I mention that I live ten miles from GM’s headquarters 😉

  2. Hi James,

    I have a collection of anecdotal evidence on the value of EA that I have presented around the traps. Things like;
    • 3 months analysis exercise reduced to 3 weeks
    • Delivery of a fully costed solution architecture for a bid in a single day, as opposed to a minimum of 3-4 weeks – 15x to 20x improvement
    • 20-30% better success rate of proposals due to the quality and accuracy of the recommendations
    • 3x reduction in the project initiation to review time-cycle
    • Up to 50% reduction in architecture office resources to output the same (and in most cases better) support to the business – work “smarter” not “harder”!
    • Avoidance of additional costs through making a wrong decision through gut-feelings
    • Exploitation of a common meta-model with a predicted overall 10-20% efficiency improvement across the board
    • 2x productivity increase by “parachuting in” centralised experts

    That’s the sort of thing you want init?

  3. Jim,
    I agree wholeheartedly with you – it is not possible to find any compelling business case for EA in terms of “accounting” benefits upfront.

    When you have an EA practice in place, then you can make the financial sums after the fact by means of cost savings etc. As a consultant walking into a client’s office and trying to give them a cost benefit analysis is impossible. The best way I managed to demonstrate the business case of EA to a new client is by presenting the value of EA to that organization.

    Thanks for the great posts, I’m looking forward to more in 2010.

  4. Even so I agree with the majority of your statments I do think that there are possibilities to demonstrate the immediate value of planning IT – or EA, if you like.

    One example could be to look at the Opex-Capex relationship and to benchmark past projects and project successes with the current state. By defining the number of applications, the IT budgets, the ratio, the number of hours spent on an application, the average hourly costs per resource and the percentage of successful projects, you can actually create a statement on how much could be saved through a methodolgical approach with reusable objects inside a repository depicting the relationships.

    I’m happy to share this approach with anyone who is interested.

    Skype me if you like at fbjk2000, or have a look at our blog http://www.beyondea.com.

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