6 years, 9 months ago

Assessing Business Architecture’s Value Contribution

Link: http://feedproxy.google.com/~r/TheBusinessArchitect/~3/dpzlWYuqb58/

DashboardI have been working on a business architecture practice dashboard to help BA leaders manage and grow their practice. The dashboard contains three basic metric types: impact, value, and activity. Each type provides valuable insight into business architecture’s performance and organizational impact. In this post, I focus on value contribution metrics.

Value contribution metrics report the overall value the business architecture initiative delivers in bottom-line, financial terms. Some of the measures report quantifiable data while others report estimated value. Value contribution measures are the most difficult measures to develop. Quantifiable financial measures are not readily available for the majority of the work business architecture performs such as strategy clarification, capability assessments, or road mapping. Unfortunately, most of the clearly quantifiable measures are the result of more tactical work than business architects aspire to focus on.

The challenge with the measures in this metric set is getting stakeholders to agree with the estimation process. There are two parts to the process. The first part is determining actual outcome value and the second part is allocating value to all of the participants. The fewer organizations involved in value delivery, the easier it is to allocate value. The more conservative the estimate, the easier it is to gain stakeholder buy-in. The categories currently defined are:

Quantifiable Financial Value –This metric category is for items where there is little, if any, doubt about the financial value delivered. The items here can be either revenue gains or cost reductions. Cost savings are the predominate measure used here as they are much easier to quantify and capture value from than revenue gains. The value of items in this category are often calculated by others which makes them the most powerful of the value measures in demonstrating business architecture’s contribution.

Estimated Financial Value –This category includes items where business architecture’s value contribution can be estimated and the estimated value is beyond the actual cost incurred. This is where stakeholder buy-in to the estimation process is critical. One estimation method that works well here is to have business architecture clients declare the value of the work performed. For example, a business unit leader might declare the value of a capability assessment to her organization as $200,000 when the actual cost of the effort was $150,000.

Work Effort Contributed –This category provides a way to demonstrate where business architecture is applying its resources when other value capturing methods are not feasible. It reflects the actual, fully loaded cost to the organization of applying business architecture resources to specific activities.


The bottom line:_________________________________________________________________

Measuring business architecture success is difficult at best. No one measure or even category of measures will tell the complete story. Bottom line financial value contribution measures are the most difficult to quantify but also the most powerful to exhibit. Creating value estimation models that stakeholders support lays the foundation for creating future buy-in.  

Tagged: Business Architecture Practice, Metrics, Value