9 years, 17 days ago

Measuring Benefits of Enterprise Architecture

Link: http://workitsmart.blogspot.com/2012/03/measuring-benefits-of-enterprise.html

Hurdle #2: Measuring benefits of EA

(This is the second part of a five part series on “Five Hurdles in Implementing EA“)

Photo Credit: danorbit

I was speaking to the Chief Information Officer of a large organization.  He recognized the importance of Enterprise Architecture, but one core question he had was what are the benefits of doing EA and how these benefits can be measured. 

This is a key question facing many organizations, especially those who are just starting on their EA journey and need to justify investments into additional EA resources.

Why is it so hard?

The book “Enterprise as Strategy” identified five areas where EA benefits are evident: “IT costs, IT responsiveness, risk management, managerial satisfaction, and strategic business outcomes”.[i]  United States’ Government Accountability Office (GAO)’s 2002 survey of government agencies yielded similar findings: Lower costs, enhanced productivity, improved management and greater interoperability.[ii]  Is it not sufficient to simply measure for these benefits?
The challenge is that these benefits often cut across departments and business units in an organization; individual departments might take credit for those benefits.  For example, EA might have resulted in greater clarity into an organization’s processes, allowing a department to more easily streamline its own processes.  The department can take credit for its improved effectiveness and the benefits of EA would go unaccounted for. 
Secondly, some EA benefits take more time to show.  “Enterprise as Strategy” described EA as building an organization’s “foundation for execution”; rightfully, a good foundation will only show its worth when the storms set in, which does not always happen immediately.  As such, organizations looking for immediate results might give up on their EA efforts before their efforts can deliver benefits.  However, I believe there are ways to structure EA efforts such that they deliver both short term and long term benefits.  “Enterprise as Strategy” shares the same viewpoint, encouraging organizations to build their EA one piece at a time, instead of doing a big-bang tear down and rebuild which is both risky and costly.  This requires a conscious embedding of EA efforts into existing projects.
Thirdly, some EA benefits are less tangible, for example greater clarity, coherence within the organization or more knowledge sharing.  In one of my past EA exercises, my colleagues and I were creating the future state of an enterprise, and as part of that work we interviewed many stakeholders of the enterprise.  What we realized was the interview process gave people a sense of involvement in the transformation exercise, and that helped to make the later implementation of change easier.
Lastly, there might not be a one-size-fits-all benefits metric.  The reason is EA is about facilitating the design of an organization, so the success of EA is how well it helps move the organization towards that design.  If the design is for the organization to be more profitable, then measure profitability.  If the design is for greater customer satisfaction, then measure that.  It does not make sense to measure profitability when the organization is designing for greater customer satisfaction.

Possible Solution

A good approach to measuring benefits of EA is to incorporate the identified benefit areas into a balanced scorecard, similar to the one described in Nick Malik’s article “How do you measure Enterprise Architecture?”[iii].  Nick proposed including not only profitability or cost savings on the scorecard, but also other aspects such as feedback from various business units on their view of EA, and the number of EA deliverables produced.  This approach helps to provide a more holistic view on the impact of EA in the organization.  Via Nova Architectura’s paper “A balanced scorecard approach to measure the value of enterprise architecture” provides further suggestions on how the scorecard can look like[iv].  
Separately, PwC principals Chris Curran and David Baker suggested a few EA quick wins that will help organizations deliver EA’s value early[v].  Their suggestions include embedding Enterprise Architects into projects to help those projects succeed and focusing EA on a high priority business domain or a core IT capability.

[i]Enterprise Architecture as Strategy by Jeanne W. Ross, Peter Weill and David C. Robertson
[ii] “Enterprise Architecture Use across the Federal Government Can Be Improved” page 19, United States Government Accountability Office, http://www.gao.gov/new.items/d026.pdf
[iii]“How do you measure Enterprise Architecture?”, Nick Malik, http://blogs.msdn.com/b/nickmalik/archive/2009/03/06/how-do-you-measure-enterprise-architecture.aspx
[iv] A balanced scorecard approach to measure the value of enterprise architecture, Joachim Schelp and Matthias Stutz, http://www.via-nova-architectura.org/files/TEAR2007/Schelp.pdf
[v] How to Deliver Enterprise Architecture Value Early, Chris Curran and David Baker, http://www.ciodashboard.com/architecture/how-to-deliver-enterprise-architecture-value-early/