Making a Case for Enterprise Architecture

One of the toughest things to do is to sell an enterprise architecture planning initiative or to get funding to hire enterprise architects. At should be clear in most people’s mind that enterprise architecture adds value. After all, will you live in a house that has not been architected?

One of the toughest things to do is to sell an enterprise architecture planning initiative or to get funding to hire enterprise architects. At should be clear in most people’s mind that enterprise architecture adds value. After all, will you live in a house that has not been architected?

However, there is a lack of understanding of the value beyond that. Business leaders associate Enterprise Architecture with pretty charts and graphs that have little utility beyond covering walls. They have also been bitten by funding enterprise architecture projects that went on for a year or more and ended in…well, more wall paper.

It is in the best interests of the CIO and her EA team to understand that the rationale for architectures is that they are essential to structurally sound buildings. Nobody and I mean nobody, pays for architecture that does not result in a building being constructed to its specifications.

If your organization does not have enterprise architecture, to be more precise, documented enterprise architecture, then you are out of luck in a lot of ways. By asking for funding, you are in affect asking for architecture for a building that has already been constructed!

In the past, people have tried to quantify the value delivered by enterprise architecture. There are two problems with this approach:

  1. Most business people do not buy this IT value estimates. Most are not worth the paper they are written on.
  2. Most of these benefits are never realized. If IT budgets were to deduct last year’s “projected” cost savings, forget having an IT budget, most IT organizations would owe money to the rest of the business!
  3. What part of the building is already constructed did you not understand? Why would anyone fund architecture for it? Especially, when there are bigger and better opportunities to invest money in!

Therein lays both the catch and the solution to this age old problem of getting funding for Enterprise Architecture.

Why do we need Enterprise Architecture?

We are not going to split hair by adding “now” to the question above. I think you got my point earlier. Also, this question has to do not with getting people to understand the value of enterprise architecture. It has to do with getting it to the priority list.

Enterprise Architecture provides the following benefits (I believe EA makes lousy wall paper. But this is just my opinion and I could be wrong. So please feel free to add that as another benefit):

  1. Saves money by
    1. Eliminating duplication in applications, projects, infrastructure etc.
    2. Making implementations more efficient through standards, reuse and interoperability etc.
    3. Providing an optimized view of IT demand for software, hardware and services. This can then power effective procurement through strategic sourcing
  2. Makes money by
    1. Identifying gaps in current capability. Plugging these, the enterprise can become more effective and efficient
    2. Optimizing processes to reduce time to market

Everybody gets this. Nobody will argue with it. However, this is not enough to convince business leaders that enterprise architecture should be a priority.

Trying to quantify these benefits to sell EA on its value is definitely an option but it does not work well for the reasons mentioned earlier. There is another reason why quantification does not work.

EA lies in between strategy and execution. This middle layer translates a strategy into implementation projects and IT components.

Despite great many attempts, there are no well defined boundaries to this middle layer – it bleeds into both strategy and implementation. So do its benefits.

Can we take advantage of this fact to sell enterprise architecture? Yes, of course. We can package EA with either an IT strategy initiative or a major implementation – say an ERP installation – to deliver a more palatable ROI!

Are there other ways to get this effort funded? Yes, there are.

Well, if anyone is counting, we really have these choices to make EA stick:

  1. Sell EA on its own merits by quantifying its benefits
  2. Package it with one of the two layers it connects, namely, IT Strategy or a major implementation
  3. Fund it through savings from some other initiative
  4. Seek partial funding to do the upfront analysis. This would then provide a better basis to fund – or reject – the bigger project

Let us take a look at each and see which one, if any, works the best

Option1: Quantify EA’s benefits

Should we try to get the value of EA to the accuracy of dollars and cents? As I mentioned before, no matter how hard you try, quantifying the value of EA or anything else in IT, in dollar terms is at best “swag”. Period.

But there is an even more pertinent question to ask: do we have to?

Let’s assume, for argument sake, that one could indeed come up with an accurate estimate of the value EA will deliver. Say, one’s tireless efforts to get to the “true” value of EA led them to believe that this value is $50MM.

Now, let us ask them this question: would they still do the project if it made only $5MM?

In other words, is there a threshold that this project must pass to become a “priority” for the enterprise?

Remember, the goal is not to be accurate to the last penny. It is to get funded so you can unleash the true potential of the enterprise. We all agree that there is substantial value locked up in the enterprise but one has to find a way to get to it.

A good approach is to get to an “adequate estimate” or a “reasonable threshold” to make this “swag” more accurate than a wish. I like this approach because it gets you started versus spinning your wheels trying to jig numbers that just won’t.

Take for example, the duplication that EA reduces. We can take a pretty accurate swag at the cost of duplicate people, systems and infrastructure – 15% of total IT budget. Even if you end up with 10% nobody is going to kill you. Trust me; 10-15% duplication exists in the best run IT shop.

But here is the catch. You will need some preliminary analysis to support this “estimate.” More importantly, what if your business sponsor insists on taking 15% or whatever you save, out of next year’s budget?

There are ways to address both these issues.

Option 2:

Packaging EA with either the strategy or a major implementation offers one of the best ways to get funded.

The logic is that we cannot – to be more precise, should not - go from strategy to implementation without EA. This “deep interconnect” with these layers also makes it difficult to accurately quantify benefits and costs by layer. Hence, ROI calculations would be off if done individually.

By combining these two of these efforts, say strategy and EA, one can assure success of the initiative and provide a bigger bang for the buck.

Granted, one cannot justify the “complete” EA as part of another initiative. But this is strength not a weakness of this approach. We must let go of this idea of a “complete” or “perfect” EA. The former is unnecessary boiling the ocean. The latter does not exist.

The success of this strategy depends on our ability and willingness to pick the domain that is most pertinent to the effort it is being packaged with. Over time, the EA will be “completed”, as the pieces of this puzzle are put together, packaged in this way with other initiatives enabling other domains within the enterprise.

There is another, albeit arguably sneaky, reason for this approach. IT Strategy projects get funded for all the right reasons. If EA is part of the mix, it will get funded as well.

Large implementations funded on cost estimates that are, again, “swags”. Is there room for little EA work in a multi-million project?

Having said that, I must reiterate that EA is essential, indeed critical, for both strategy and major implementations.

Option 3:

You can also fund the EA effort through strategic sourcing justification. Typically, a mid to large size organization can reduce their IT purchases by 10-14% through strategic sourcing. EA powers this process. Is 10-14% of external purchases enough to sell the project?

Option 4:

Get seed money to quantify the benefits. Typically, you can ask for 15-20% of the total cost of the project to do the analysis of the benefits that will accrue as a result of the EA project. You have identified the potential payoff and with this you have reduced the money at risk and a business minded person will support that.

Summary

Getting Enterprise Architecture initiative funded is tough. We make it tougher by focusing on “accurately” quantifying benefits of EA. We have discussed a few approaches. This is not an exhaustive list. There are many more. The point is that one has to focus on the objective of getting funding for a worthy cause by thinking creatively.

Sourabh Hajela is a management consultant and trainer with over 20 years of experience creating shareholder value for his Fortune 50 clients. His consulting practice is focused on IT strategy, alignment and ROI. For more information, please visit http://www.startsmarts.com/. Or feel free to contact Sourabh at Sourabh.Hajela@StartSmartS.com .


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Posted on 05/27/2009 by


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