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Achieving ROI on Enterprise Architecture - The EA Value Proposition
Introduction
Companies are investing in Enterprise Architecture (EA) to align business goals and IT projects, enable SOA initiatives, gain transparency over the IT landscape and the business architecture, develop high-level models for new IT initiatives and for many other reasons dependent on the current priority of the organization.
Each of these goals is absolutely valid in their own right. However, in today’s cost-conscious corporate world, a CIO will find it difficult to get approval for investment in an EA program solely based on these objectives. Investigation into the financial issues and demonstration of a solid business case backing the EA initiative will increase chances for approval in an organizational environment where the competition for investments is high and where the business line managers have a vested interest in increasing their margins by cutting costs on any investments they do not consider mission critical.
“Our alfabet implementation means drastically reduced planning cycles to quickly react to change. This meant we were able to avoid redundant applications and associated additional cost. In this way, we were able to save €58 million over a four-year time frame - Deutsche Telekom“
Despite the perception on claims from industry experts that Enterprise Architecture cannot deliver ROI, the experiences of organizations running EA initiatives show that a direct return on investment within a period of one to three years is achieved. So let us take a closer look at what the experts are saying.
They say that EA leads to savings only when the correct decisions are made based on the information delivered by the EA program and also the appropriate programs implementing those decisions are properly executed. This is sometimes referred to as the “return on information” (provided by EA) rather than return on investment.
These savings, if realized, will by far cover any costs incurred by the EA program, but they are not efficiency wins from the EA program directly.
This paper confirms the experts’ statements and makes important additions. Firstly, EA methods and tools will not deliver the potential return on information without a reliable EA information base to plan and manage the enterprise architecture transformation. Today, the only product in the market providing this is planningIT. Secondly, with planningIT a direct return is available due to more efficient management of the EA information.
Indeed, the basic return on information offered by EA programs when run using planningIT can be demonstrated in three particular areas.:
- Savings of 60% of the man-day efforts needed for collection, processing, validation and reporting on the elements of the enterprise architecture - a task done continuously for reasons such as SOX, risk management, data protection, user satisfaction etc. These savings alone can finance an EA program.
- A 10% increase in deliverables from investments in IT projects by architecturally checking projects in the preparation phase to ensure potential risks are identified and mitigated and also to avoid architectural conflicts during the execution of IT projects.
- A 10% reduction in yearly operating costs by the discovery of redundancies or excessive spending in the IT support to business and by standardizing the architecture, which not only leads to cost reduction but also to increased business and IT flexibility and agility.
The following sections will explore the above three statements in detail as well as explain the planningIT unique value proposition in providing return on information.
