Coming Out of the Recession: The Role of Enterprise Architecture
Over the past decade, companies, government agencies, and academic institutions around the world have made significant investments in enterprise architecture. This move was largely spurred by two factors. The first was the Year 2000 challenge. Faced with the task of modifying program code that relied on a two-digit year field, many systems managers were shocked to find what a poor understanding they and their people had of their organizations’ existing IT applications and data. Then, for a large number of companies, the dot-com boom spawned a host of loosely constructed, rapidly implemented, and inadequately documented systems that added further complexity to the mix.
Setting up a formal enterprise architecture function was an obvious way for organizations to impose the necessary discipline on a situation that was clearly out of control. The EA function was typically charged with two main tasks: first, enable better understanding and control of the installed base of applications, databases, and technology platforms; and second, provide an architectural framework and a set of rules to coordinate and guide the design and sourcing activities of individual business change projects.
More recently, the economic downturn has forced organizations to prune their IT budgets and shelve major business change projects, and this has caused many to question the value of enterprise architecture. All too often, top managers have regarded it as an expensive overhead activity of little relevance to their cost-cutting challenges.
Enterprise Architecture During the Recession
During the recession, it has made extremely good sense to seek immediate tactical gains at the expense of longer term strategic business interests. However, wise organizations have used their enterprise architecture teams to enable them to deal with the challenges of the downturn and adverse trading conditions by focusing on initiatives that addressed the immediate business priorities, typically:
How to make savings in respect of the current asset base?
How to get maximum value from the limited investment funds that were still available?
Applying EA to an Organization’s Cost-Saving Agenda
To help an organization make short-term savings, the astute enterprise architect has typically concentrated on the current state model of the existing business, paying particular attention to areas where rationalization of existing assets and business process simplification were possible. This particular focus, combined with use of an appropriate enterprise architecture toolkit to record only the relevant details of the current state, provided a clear view of the relevant aspects of the underlying structure of the business and its related IT assets, enabling the organization to make short-term savings in a number of ways:
- Rationalizing existing technology platforms, for example, by eliminating redundant servers, often leads to major cost savings. The media company that provided the original beta test site for the Essential Architecture Manager toolkit opted in the first instance to record its current technology assets and model their interdependencies. This exercise revealed inefficiencies, duplication, and obsolescence in a number of areas, and it highlighted where early savings could be made.
- A similar case can be made for understanding current IT applications and the business activities they support. This can reveal scope for rationalization and simplification, which can, in turn, yield significant tangible benefits—for example, savings in license fees and software maintenance charges.
- Such an exercise can also reveal areas where applications or business processes are duplicated. While working with a financial services company, one member of the Essential Project Team used such a targeted architectural approach to demonstrate that a range of new financial products could be supported by the firm’s existing systems portfolio. This completely avoided the need for a proposed new suite of applications.
Using EA to Help Prioritize Spending on Business Changes
When times are hard, managers are pressured to make optimal use of their available resources. IT governance mechanisms that had degenerated into rubber-stamping committees suddenly acquire teeth, as spending across the business comes under greater scrutiny. Project portfolio management emerges as an important way of prioritizing business change initiatives and managing demand for IT systems and services.
During the downturn, enterprise architecture has provided crucial support for all of these activities, as figure 1 indicates. By documenting the business and IT structure and by exposing the interdependencies between business functions and processes, information, applications, and technology platforms—in respect of the current state—it has provided managers with critical information on which to base their decisions and handle the potential risks. By focusing effort on the areas covered by the project portfolio, the enterprise architecture function has also played an important role in identifying the scope for reuse of existing business process elements and IT assets, and in ensuring alignment of all the change initiatives. Finally, the overview information provided by the enterprise architecture has been particularly important during a time of crisis, when decisions often needed to be made under unusual time pressure.
Enterprise Architecture as we Emerge from the Recession
Organizations need to manage three different management agendas—often simultaneously (see figure 2). In any given enterprise, one of these agendas is likely to prevail at a particular time. Enterprise architecture has a different role to play in addressing each of these agendas, so although the skills requirements are common, it is important to ensure that the work of the enterprise architects is appropriately aligned.
It is now widely predicted that the worst of the recession is behind us and we need to look again at the priorities for the enterprise architecture function. We need to move from the short-term Tactical Agenda discussed earlier, that has dominated during the recession, to the longer term Strategic Agenda.
The Strategic Agenda can be defined as one that has a long-term time horizon, is set in response to actual or predicted changes in market conditions, and is focused on the company’s future competitiveness.
Organizations emerging from the recession will be looking to embrace radical change initiatives to secure their future competitive position in the market. Radical change calls for a well-constructed model of the future state business, its required IT capabilities, and other critical interdependencies.
This future view is likely to be expressed at a high level initially, but it will be refined over time as the design of the future processes and their supporting systems becomes more concrete. In some cases, it may be appropriate to produce more than one future-state model. This will apply where multiple business scenarios need to be played out.
The Strategic Agenda also requires a view of the current operating model, but only at the level of detail necessary to provide a reliable baseline for costing the change program and for judging which of the organization’s existing assets might be deployed to support the future model. (It’s all too easy to get lost in irrelevant details of the current state!) Much of this view may already be available if the Tactical Agenda was correctly focused on during the recession.
The key task for the enterprise architecture function, when a business is emerging from recession, is therefore to support the organization’s plans for radical business change. It will do this by developing a target operating model driven down to an appropriate level of detail in terms of both business and IT capabilities and assets. This will provide the necessary architectural framework within which the various change projects can then be positioned and constructed.
To allow this to happen effectively, the organization will need to have appropriate governance mechanisms and specialized architecture support groups, processes, techniques, and tools in place to prioritize, coordinate, and manage the changes to the business operating model. If the enterprise architecture function is able to quickly move its focus toward the Strategic Agenda, it should prove to be a real asset to the business.
In contrast, sticking solely with an Operational Agenda, which made perfect sense during the recession, means that enterprise architecture activities will be treated as low priority and easily expendable. The eventual consequences of this are easy to predict. Without the coordinating influence of the enterprise architecture team, individual business change projects will evolve their own IT solutions, duplication and inconsistencies will abound, and the complexity of the installed base will increase, storing up problems for the future.
In short, now is the time for smart enterprise architects to begin to look toward the future and actively contribute to the more Strategic Agenda that will ensure their organization’s continued success.
by Alex Mayall, a senior partner at Enterprise Architecture Solutions (EAS) Ltd., a niche consultancy specializing in enterprise architecture (www.enterprise-architecture.com).
