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Enterprise Architecture Matters

Adrian Grigoriu

The Enterprise Architecture Return of Investment

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The Enterprise Architecture would document your Enterprise and enable the alignment of technology to the operation it supports. The Enterprise operation would be streamlined, duplications reduced, projects grouped in a portfolio with dependencies and priorities, the strategy effectively mapped for execution... In the end, EA facilitates a better understanding of your Enterprise workings.

I once classified the principal advantages of the EA in four categories:
  • Operational (improved operations, technology resources aligned to business needs),
  • Governance (improved governance structures, decision making...)
  • Strategic (vision mapped and executed)
  • Communications and Collaboration (having same EA vocabulary...).

An Off-the-Shelves framework enables the construction of an EA with all the benefits at a fraction of the cost, since it is saving you the effort of developing one which effort, if unsuccessful, will inhibit any further EA development, as it is so often the case. Furthermore a framework guarantees predictable and repeatable deliveries. What you want to do is describe your Enterprise, mend issues, align technology, map your goals... not re-invent and develop EA frameworks.

EA benefits in each category can be classified in a table of key benefit indicators that can be used to justify and guess/estimate the value of the EA development.
To be representative, the benefits have to be expressed as relative values to the no-EA case, in percentages, that is point to advantages to be had compared to the case you don't build the EA.

While the EA is implemented, the table can be also used to measure the actual value of each indicator and as such, in the end, an overall relative figure for benefits that suggest the real value added by the EA as it is implemented. That will please the management indeed. This is what they need to support your effort. 
One can change, add or weight these key benefit indicators. Thus, this is a method rather than a prescriptive procedure. The benefits can be refined and improved.

Overall, assuming the simplification that the key indicators equally contribute to benefits, the relative revenue/costs ratio of the architecture versus the revenue/costs for the non architecture case will give you the relative return on the EA. In truth, EA becomes an asset, once developed. The better the framework, the better the EA and better the return that increases with the EA deployment progress.

Because the business thinks in financial terms, considering the EA a competitive asset, an NPV can be calculated, taking into account the investment costs over the development time plus the relative revenue/costs of the architecture vs non architecture case, calculated as stated before. I build a conceptual model in a spreadsheet so that I can play with key parameters like investment size, assumed benefits, initial EA development time. It was a mild surprise to discover that if done properly and in time the costs may out-weight the savings and increases in efficiencies. 

Why do you need this? Because you have to justify the costs of your project to build an EA, like any other project, in other words you need to build a business case. Then you may want to quantify progress in delivering the business benefits rather than the EA.

This is all described at some length in my EA book available at Amazon, Trafford and elsewhere with reviews available from BPTrends and Angry Architect.

So long, Adrian

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Adrian Grigoriu blogs about everything relating to enterprise and business architecture, SOA, frameworks, design, planning, execution, organization and related issues.

Adrian Grigoriu

Adrian is an executive consultant in enterprise architecture, former head of enterprise architecture at Ofcom, the spectrum and broadcasting U.K. regulatory agency and chief architect at TM Forum, an organization providing a reference integrated business architecture framework, best practices and standards for the telecommunications and digital media industries. He also was a high technology, enterprise architecture and strategy senior manager at Accenture and Vodafone, and a principal consultant and lead architect at Qantas, Logica, Lucent Bell Labs and Nokia. He is the author of two books on enterprise architecture development available on Kindle and published articles with BPTrends, the Microsoft Architecture Journal and the EI magazine. Shortlisted by Computer Weekly for the IT Industry blogger of the year 2011.

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