The value of Enterprise Architecture can sometimes be questioned. Often, it is a lack of understanding as to the purpose of EA that raises this question, so we thought we would address the question head on. With that in mind, it is interesting to consider the impact of doing nothing by addressing the question ‘What is the cost of not doing enterprise architecture?’.
Let’s remind ourselves what EA is about – ultimately, understanding our people, processes and systems and how they relate; then seeing where we are now, where we are going and working out how we get to that end point. The key point here is that the Enterprise Architecture is a holistic view of the organisation, so can consider impacts across the whole enterprise and not just from one particular perspective.
Strategic Alignment
We want to understand the impact of change on the business strategy – are we supporting the business strategy, is our portfolio of change aligned to the strategy? Are we investing in things which may constrain implementation of the strategy?
Without an EA, an organisation may struggle to show how its IT projects and technology decisions align with its business goals, leading to initiatives that do not support the overall business strategy or deliver optimal value.
A company favouring growth through acquisition should be buying systems and negotiating contracts that support onboarding of more users and more data/transactions without cost increasing significantly. The EA should allow for understanding which processes and technology would be impacted by the strategy, for modelling out the impact and also being used as part of the decision process.
Equally, the architecture can consider strategic trends and be designed to support those, for example, bankrupt US retailer, Sears, was slow to adopt e-commerce, allowing competitors to capture the growing online shopping market. It was Sears’ delayed investment in online sales platform capabilities that contributed to its decline. A good architecture would have designed for agility based on strategic trends in the market, not just the company strategy. In reality, there may be a reluctance to invest but the EA should as a minimum highlight the opportunities to support strategic trends (and, to be fair, the Sears architects may well have done that)
Informed decisions
Your Enterprise Architecture provides a framework for making informed decisions about IT investments and strategies. Without the holistic view that EA offers, decision-makers may lack the full context for their decisions, leading to choices that are suboptimal or that fail to consider the interdependencies and long-term implications for the organisation. Consider the failed merger of Sprint and Nextel Communications in the noughties. The merger was intended to create a wireless behemoth, but instead resulted in operational chaos as they failed to integrate the two companies’ technologies (and cultures) with eventual customer and revenue losses. An upfront architectural view of both organisations, anchored on a business capability model, would have highlighted that they had different customer bases, operational processes and incompatible network technologies.
Effective Spend
Looking across an enterprise application estate in most organisations will almost certainly lead to identification of multiple applications that do the same thing, e.g. multiple reporting solutions or multiple code development tools. In some cases, there may be valid reasons for this, e.g. key capabilities, local regulatory reasons, etc, that mean there is specific functionality that is required. However, in a number of cases, there is no reason for duplication, it was personal preference, lack of awareness or poor market review that led to multiple systems being bought. The cost of that application duplication from a license and support perspective, alongside the cost of training and minimising key person risk mean the organisation is incurring unnecessary spend.
The EA can be used to support the decision process in an objective way by highlighting where existing capabilities exist which can be used. Working with Procurement, the EA can be used to offer proper opportunity analysis and keep costs down by facilitating the conversation around why existing products cannot be utilised.
The EA would also be responsible for the introduction and maintenance of standards. Taking the strategic view into account, the applications and technologies required to support the business across different areas can be identified and a set of standards created and made available across the organisation. In this way the first port of call for a need should be the standards catalogue to understand what already exists and whether that can be used. Not only does this help the organisation in terms of reducing costs and increasing agility, it also helps the individual concerned as it is much quicker to adopt an existing technology than procure a new one.
Risk Management
We talked about this in a previous blog, but understanding and categorising risk is important. If we don’t know where our risks are then we end up with unexpected surprises that can get someone sacked and incur operational harm.
Known risks are easy to see, although they can sometimes be hard to communicate in a way that resonates the real scope of the risk, see our blogs on loss of critical knowledge and key person risk. EA can help by showing the link between business risk and how critical the impacted process is to the business. This mapping of the business to technology also enables unforeseen risks to be uncovered, for example, seeing the scope of critical process and their use of technology can be used to understand if the technologies are fully supported, or if they are utilising unsupported, or out of date technologies, etc. We can also manage risk, for example if we have sensitive client data in a database which has vulnerabilities then we can prioritise risk from an informed standpoint. Without the perspective provided by Enterprise Architecture, the identification and management of risks become fragmented and disjointed, characterised by disparate initiatives based on whom shouts loudest. In this environment, the most critical risks may go unnoticed amongst the noise. Instead, EA offers an impartial viewpoint on all risks, creating a structured dialogue on how to handle these risks, rather than a chaotic and uncoordinated scramble.
Technical Complexity
Over time most organisations find that they see a sharp increase their technical complexity. There are many reasons that this occurs, from tactical changes being implemented and not addressed, the rise of shadow IT due to a lack of standards being available, M&As occurring and the organisation not following through on the effort required to merge the two organisations, to simply a lack of focus on the strategic goals. Over time this increased technical complexity will have a significant impact, with organisations experiencing higher costs (through duplication of technologies and a wider skillset to support and maintain the technology), increased errors, slower response times to change and slower growth. The impact on the business from both an economic perspective and the ability to respond rapidly to market change can be detrimental if not addressed, this is due to the complexity hindering quick changes and/or integration being harder as the need to understand the integrations and their impacts/risk is much harder.
EA plays a key role in mitigating technical complexity. Technical debt is inevitable, tactical solutions will sometimes be unavoidable, but EA can put a process in place to deal with technical debt at the design phase to ensure complexity does not harm the business. Understanding the implications of the decision are key, ‘will this technology prevent us doing something in the future and is the potential impact big enough for us to worry about?’ In some cases, you will accept the risk, or you will have no choice but to accept the risk (just know the mitigation plan), but in most cases you will be able to challenge and ensure the risk is avoided. The key here is it is an ‘eyes wide open’ decision – you know the risk and you accept the risk in the full knowledge of the implications. With EA mapping out dependencies this decision is much easier to make.
Summary
So, to answer the question “what is the cost of not doing Enterprise Architecture?”, the answer is that the effectiveness of your business and IT change will be compromised. Knowing what is in front of you and understanding the potential consequences of a decision is far more advantageous than making choices without any knowledge or foresight.
Note that this isn’t a justification for an EA team, but it is a justification for the discipline of EA. Importantly, we always argue that in an effective organisation everyone acts as an EA however, in reality, people always have their own motives and will often consider those over the wider organisational implications, e.g. a project manager under pressure to meet a committed to date will generally act to preserve their reputation rather than miss the date for the good of the company. As such, some function to manage the EA is usually necessary, and we advocate that an EA team is best placed to do that.