By Jason Baragry, Chief Enterprise Architect, Ardoq
Enterprise architecture teams struggle to quantify the benefits they provide to their organizations. They struggle to build a business case to either establish, expand, or maintain their teams. Indeed, showing the value of EA was identified as one of the top challenges in a recent Chief Architect Forum session. We also see it in our own practice in Ardoq. For instance, last year we surveyed over 100 enterprise architects (EAs) about their biggest mistakes and by far the top answer was the failure to align EA initiatives to business goals. This article looks at how EA teams can focus on business outcomes and quantify their efforts in terms that will bridge the communication gap between them and the business side of their organizations.
What Should Go Into a Business Case for EA?
A business case for EA needs to outline benefits that matter for the organization. These benefits should be measurable outcomes that will help the business operate or deliver new products and services to market. While EAs do talk about the benefits they provide, they often focus on benefits that are too vague or focused on EA itself rather than the ways their activities will benefit their organization. EAs benefits such as “improved IT and business alignment” and “improved documentation” need a clear connection back to business value and metrics to be compelling for the rest of the organization and key stakeholders.
EA Benefits and How to Define Them
To begin with, EAs should look into the broad buckets of value their activities fall under. Two recent empirical research studies have summarized many of these EA activities and the benefits they provide. A summary of the benefits they have identified is provided below.
| Category of EA Value | Value Description |
| Strategic and Political | Improve IT and business alignment
Enable governance and compliance management Enhance the management of IT and business capabilities Facilitate decision-making in IT investments and the development of new infrastructures, capabilities and so on |
| Transformational | Navigate from strategy to the delivery of projects and portfolio management |
| Communicational | Improve top-down communication
Improve communication between IT and business professionals |
| Economic | Reduce IT costs
Reduce operational costs |
| Flexibility and Agility Related | Increase IT flexibility
Increase agility (responsiveness and speed to market) |
| Integration and Interoperability Related | Integrate business processes dispersed across the supply chain
Integrate IT resources across the enterprise Integrate IT and human dimension |
| Inter-organizational | Improve acquisition management
Improve management of external relationships |
| Knowledge Management Related | Facilitate knowledge sharing between IT and business professionals
Work as a knowledge source for requirement elicitation |
| Others | Improve end-to-end security by having a total overview Ensure client orientation (client satisfaction)
Enable service availability analysis Increase spending on emerging technology and innovation Minimize information overlap and duplication |
Categories of EA Value Supported by Evidence From Literature [Gong2019][1]
Eight Major EA Activity Areas and the Benefits They Provide [Kurnia2021][2]
The studies above are two different approaches to defining EA benefits and the business value they connect to. Both are helpful starting points for categorizing the kinds of benefits that you can currently and potentially offer your organization. The next step is to link these EA benefits to business benefit metrics. While experienced EAs will recognize and nod sagely about the benefits listed above, they are not in themselves sufficient as a business case. It’s not obvious to your COO or CIO how they would measure the return on their investment to enable most of these EA benefits. Consider also that there may be competing proposals from other teams for reducing IT duplication and reducing operational costs. For instance, “improved IT and business alignment” can also be reframed as “20% improvement in lead-time from product ideation to first customer-experiment”. “Improved IT and business alignment” is required to deliver this, but it only describes the technique, not the final outcome and benefit for the organization.
Translating EA Benefits Into Business Metrics
To connect EA benefits to business benefit metrics, EAs need to identify the business outcomes that they will be enabling. With most organizations, the goal is to operate successfully as a digital business. What makes this challenging is the increasing rate of change needed to compete in the market and keep up with end-user demand. At the same time, digitalization is also increasing which means that business and operational processes are becoming increasingly IT-intensive. The result is that demand for change is increasing but the ability to change becomes harder as organizations become more digitized. Digitalization makes some changes easier but more significant changes, especially those that cross multiple areas, become harder. The role of EAs is to enable change to happen in a continuous and successful way, to help the business deliver more change, faster. These changes come in many forms including:
- New / transformative products and services
- Improved / transformative operational processes
- Improved / transformative customer and partner interactions
- New products and customer bases through mergers and acquisitions
Determining Relevant Business Metrics
There is no one clear approach to categorizing business outcomes as it will vary with the needs and strategy of your organization. In Ardoq, we group the business needs into three major areas.
- Running the business: business-IT transparency and governance
- Changing the business: prioritizing, executing, and realizing the benefit of change
- Improving the way of working: enhancing execution in the previous two areas
Regardless of how you categorize business outcomes, the important thing is to begin with them so you can turn EA activities into quantified benefits. The figure above nicely illustrates the link between EA activities and benefits for the business. It is also important to get a sense of which benefits are more critical for the current and future strategy of the organization through close discussions with the business. Then you will be equipped to prioritize and quantify these benefits in terms relevant to your CxO. We will illustrate this with the first two areas: running the business and changing the business.
Running the Business
Here EAs can provide deliverables that support business-IT transparency and governance, ensuring the enterprise operates in a cost-effective, predictable way and with an appropriate level of risk management. Some activities and deliverables that enable this are:
- Quickly and accurately enforcing compliance and governance policies
- Minimizing operational risk
- Maintaining a full understanding of how business capabilities and value streams are realized using processes, teams, information, and IT
Consider compliance and operational risk as an example. Businesses must ensure they are compliant with a range of regulatory, industry, and self-defined policies such as passing audits on GDPR, ISO 27001, SOC II or internal operational risk checks. This requires either annual checks, checks during each change initiative, or a response for each incident that occurs. For instance, a company may have policies to minimize operational risk by ensuring each application has a technical owner. This technical owner is responsible for enforcing operational risk policies while the company maintains a full software asset inventory with links to all these application owners, vendors, contracts, and costs.
When an incident occurs – such as the Log4Shell issue last year – then the asset inventory and owner can be used to immediately inform the people who need to respond and ensure all software assets are checked. The time taken to respond to and resolve this issue is a business benefit that can be measured. A well-maintained asset inventory will reduce response time and ensure complete coverage of operational risk enforcement. The benefit of that inventory can be quantified in the reduction of hours needed for an effective response. Moreover, this benefit will be increased by the use of a tool that can automate the process of ensuring coverage and triggering enforcement checks, providing clear documentation for the time and resources taken in a report that is easy to share with stakeholders. A digital native EA tool could help visualize and present these savings, making it easier to communicate these measurable benefits.
Let’s say that this has helped to reduce policy enforcement or action from five hours to just one. It may seem like a small benefit but most companies now have hundreds of applications spread across multiple business units and locations. If you take the number of applications your company has and multiply that by the number of governance and compliance checks that need to be performed each year, then you are actually saving hundreds of hours across the organization. The EA technique or activity to achieve this is Application Lifecycle Management but the business case for the company is potentially hundreds of hours saved compared to not using this EA technique. This is the critical starting point for the business case for an EA team. We will propose how to reallocate all of that time saved in the discussion section below.
This is just one example of savings EAs can enable when it comes to running the business. EAs spend a lot of effort maintaining documentation of how the business operates through IT. They also need to identify how people use that information for governance and compliance requirements, and help teams understand the complexity of the business and their role within it, not just through explicit governance policies but also through feasibility and incident analysis. The time saved answering those questions rather than having to manually find that information is a foundational business case for an EA team.
Changing the Business
Change is the only constant for organizations and EAs perform numerous activities to enable this in a continuous, successful way. Changes may be triggered by the need for new products and services, operational improvement, or application rationalization. EA activities in this area can help determine what the organization should prioritize, how it should go about realizing a given change, and how to ensure benefits are realized from that change. Many of these deliverables and activities are listed in the figures above and include:
- Defining an overall architecture target direction and transitions that deliver certain functional improvements or qualities for throughput including scalability, separation of concerns, and cost-effectiveness
- Defining the feasibility of change proposals on operational processes, teams, information, and IT
- Identifying the impact of change on delivery teams and competences
- Cost of delay, opportunity cost, or real options analysis on change proposals
These EA activities are performed during the analysis of change initiatives or as a preparatory step for all change initiatives so here is where the business case for EA work can be derived. These analysis activities help create the business case for change by covering just enough solution understanding to determine what the cost could be, who needs to be involved, how much effort it will take, when it can happen, and when benefits can be realized. Digital businesses are currently trending towards more semi-autonomous teams, long-term investment in product areas rather than projects, and a focus on continuous value delivery rather than a plan-build-run mentality. Regardless of the form of organization, there is still a need for initiatives that cross product areas or value streams and to provide information to those autonomous teams to make their own decisions.
Organizations will always be constrained in terms of time, people, competence, and money, so prioritization decisions will always need to be made to determine the best use of these constrained elements. The business and IT components that make up an organization are increasingly complex. No one person can understand how they all fit together which is why many EA deliverables and activities related to business change focus on surfacing the information needed to make these change decisions.
The business case for EA here comes from understanding how EA activities and deliverables assist in performing decision-making to support change in the organization. Change initiatives require analysis work that involves interviews, workshops, documentation archeology and creation, and other design sessions. They are generally manual, intensive what-if cost, benefit, and time analyses. This analysis work can require the effort of several people over weeks to months, not including the time needed by others outside the IT or EA team to contribute their knowledge of how the business operates through IT. Furthermore, it is usually the same people who are implementing these changes which means that they are torn between participation in the analysis of new ideas and implementation. Often this process results in documentation and spreadsheet analysis that maintains relevance only for the length of the decision-making process and then immediately begins to atrophy without an effective system for maintenance. The lifespan of the analysis work can be even shorter when relying on external contractors or consultants as the knowledge gained can immediately vanish at the end of their engagement.
How many change initiatives do you perform in a given year where it is not immediately obvious how the change should be implemented or how the change should be prioritized compared to competing ideas? Maintaining an up-to-date understanding of business capability realization, application integration management, future-state architecture alternatives, and consequences, and strategy to portfolio insight are all examples of activities that EAs perform that shorten and improve the quality of decision-making for change prioritization and direction.
A mid-sized company may analyze over 20+ change initiatives each year that require this kind of analysis work. If done manually, this would mean manual analysis from scratch each time, requiring about six weeks of work for a team of 3-4 people for just one initiative. However, utilizing the EA techniques and activities mentioned previously can cut that time by 30% – 50%. This will save considerable time for decision-makers and improve the quality of those decisions.
So to build their own business case, EA teams need to start by identifying how many change initiatives they have, the number of people involved in the analysis, and how much time it will take without EA deliverables as a benchmark. Then, look at how EA deliverables could considerably shorten that process compared to recreating the information each time and how the quality of decision-making can improve based on that work. This is the business case for EA.
Discussion: Reallocation of Saved Time and Resources
The benefits in both areas mentioned above are often measured in terms of time and cost savings. They could also be presented in terms of reallocated time rather than time saved. EAs provide considerable design expertise – especially in terms of knowledge that crosses multiple areas of the business. This expertise is also a constrained resource. By saving time and effort on governance and compliance tasks, EAs can reallocate resources towards impacting activities that deliver new and improved value to the organization. EAs provide more benefit when they focus their constrained time on working with business leaders on delivering impactful change rather than collecting, governing, and documenting information. Freeing up the design expertise of EAs to better leverage the architectural overview that no one else has in the organization to aid strategy and decision-making is the real impact of a business case for EA.
EA deliverables also provide benefits that cannot be easily quantified such as:
- Improved speed of decision-making
- Improved collaboration through establishing a common understanding of the current landscape and planned direction
- Creating a common language for communication
- Increased throughput of change through the democratization of decision-making
- Decreased risk and improved certainty in decision-making
The Value of the Approach and Magnitude Over Precision
An EA team will inevitably have to deal with a lot of estimation in order to build a business case. The numbers featured in this article are estimates based on our research of existing literature and surveys of our own customer cases. If you would like to tap this research for inspiration in building your business case, we have repackaged it into a simplified, self-service benefits estimator. It is important not to get caught up in achieving precise figures as large variations will exist and it will be difficult to generalize for all the work that you do. Ultimately it is the approach that matters. We have experienced that approximations can be sufficient for building a compelling business case and that the order of magnitude is more important than the precision. Connecting EA activities to business metrics and goals with figures that help indicate approximate magnitude will result in a strong business case for the benefit you as the EA can provide in terms that are relevant for your CxO.
[1] Gong, Yiwei, and Marijn Janssen. “The Value of and Myths about Enterprise Architecture.” International Journal of Information Management 46 (June 2019): 1–9. https://doi.org/10.1016/j.ijinfomgt.2018.11.006.
[2] Kurnia, Sherah, Svyatoslav Kotusev, Graeme Shanks, Rod Dilnutt, Paul Taylor, and Simon K. Milton. “Enterprise Architecture Practice under a Magnifying Glass: Linking Artifacts, Activities, Benefits, and Blockers.” Communications of the Association for Information Systems 49, no. 1 (2021): 668–98. https://doi.org/10.17705/1CAIS.04936.
