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For many organizations the enterprise landscape is growing out of control. Simply keeping up with competition and evolving markets means that organizations constantly renew services offered to customers. These new services are supported by new processes, applications and infrastructure that are added to the landscape, making it larger and more complex. Other organizations are confronted with mergers, leading to information systems that have duplicate functionality. They lack an overview of the ever-growing application landscape and, therefore, have no proper basis for making well-informed decisions. 

Enterprise portfolio management

To gain control over these large landscapes, it is necessary to move away from the occasional rationalization effort and the ad hoc manner of managing these landscapes. Therefore, organizations look for a way to implement a continuous process for evaluating the landscape against business-relevant criteria, deciding on investment priorities based on this evaluation, and acting upon these decisions. Many organizations choose to gather, for example, applications and projects into portfolios. Portfolio managers gain a better overview of the landscape and can manage it as a group, instead of having to manage each application and project by itself. Budget can be allocated at the more strategic portfolio level, avoiding detailed discussions by upper-level management on many small initiatives. 

Enterprise Portfolio Management (EPM) is an integrated portfolio management approach that tightly manages strategic planning against the various portfolios of interdependent assets, like product portfolios and project portfolios.  In this blog series we illustrate what EPM can do for your organization. We show how EPM creates an enterprise-wide view of your organization that takes all of its levels, from strategy to infrastructure, into account. In this way, investment decisions contribute to the strategy of the enterprise. 

There is a difference between managing the things you have (assets) and the things you want (changes). An asset portfolio can consist, for example, of services, products, applications or servers. Managing such a portfolio means that you consider which assets you want to acquire, keep, change, replace or phase out. Based on these decisions, change initiatives are formulated to realize the changes. These initiatives can take the form of the familiar programs and projects, but increasingly we see organizations moving towards a way of working based on value streams and continuous delivery. Our EPM approach applies to these as well. 

These initiatives, in turn, are managed in portfolios where decisions on resource allocation, investments and planning are made. Detailed roadmaps show, for example, which product can be launched at what moment. Periodically, both the asset and change portfolios are assessed and readjusted based on their performance and changing business priorities.

The relation with Enterprise Architecture

Enterprise architecture provides an abundance of information on your organization. Using this as a basis for portfolio management will bring an enterprise wide-view of the landscape, while connecting it to different disciplines such as strategic management. 

Defining meaningful portfolios is a prerequisite for successful portfolio management. Decisions on, for example, which products, projects or applications are managed in one portfolio define the success or failure of EPM for your organization. The enterprise architecture assists in this discussion by providing the interdependencies between the different elements of a portfolio and their context. For example, an application portfolio might hold applications related to a certain channel (e.g. the Internet domain), a specific business process or function (e.g. Sales), a specific stakeholder group, a technology stack, or any other coherent grouping deemed relevant from a business perspective. 

Another important reason to use the enterprise architecture is the enterprise-wide view it provides. Especially relating portfolios to the organizational strategy is a goal many CxOs have. Aligning the different disciplines ensures coherent and effective management on a strategic, business and technical level. 

You can use your enterprise architecture to compare different views of the organization, for example to conduct an impact analysis or do a cost calculation for different investment alternatives, since these views are based on the same underlying model. To illustrate this, consider the following example: A software vendor offers a monitoring application to its customers. Its basic functionality is monitoring the performance of other applications such as websites. It is, however, possible to purchase additional functionality that allows programming robots for performing composite monitoring. This enables monitoring whether, for example, logon functionality of a website is working properly. The application portfolio manager sees this as one application, which should be managed as a whole. However, the project portfolio manager considers the implementation of this as two distinct projects. For application and project portfolio managers to integrate their management decisions, they need to have a consistent view on the application landscape. Using the enterprise architecture as an agreed-upon underlying model, ensures consistent and, therefore comparable, views across disciplines. 

Towards successful EPM

So far, we discussed which ingredients are needed to make portfolio management a success, but  accomplishing this is no sinecure. It is highly important to conduct a thorough design phase, in which stakeholders and their goals and concerns are identified, portfolios are defined that are aligned with these goals, and a valuation model is designed that addresses the concerns of these stakeholders. In other words, it is important to think about what you want to manage and for whom you are doing this. 

The stakeholder concerns are then addressed in dashboards that visualize portfolio scores of the applicable metrics in an intuitive manner. Dashboards are a powerful way of addressing such concerns in a direct way. An effective dashboard shows the relevant information in a clear, intuitive and understandable manner.

After designing your EPM approach, you can operationalize your plans and inventory the assets and change initiatives, analyze the value they have and make (investment) decisions using the designed dashboards.

Outlook

This series of blogs is structured as follows:

• We start the series with an in-depth discussion of the way in which organizations can use their Enterprise Architecture as a solid basis for Enterprise Portfolio Management.
• In the next blog, we discuss how you can implement a successful EPM approach in your organization. We demonstrate how concerns of stakeholders can be addressed effectively through well designed dashboards by following the EPM cycle. 
• We conclude this series by showing how EPM is used in practice through an elaborate case study. 

The next blog will discuss how to use your EA for portfolio management. In the meantime , if you are interested in reading a more in-depth discussion, please, download our whitepaper on Application Portfolio Management. For any questions, please, send an email to: l.bodenstaff@bizzdesign.com

The Museu Nacional d’art de Catalunya is one of the most impressive museums in all of Barcelona. Not only because of its impressive collection of late medieval art, also because of the majestic location: the Palau Nacional is an Italian styled palace with large staircases, fountains etcetera. Unfortunately, part of the balustrade of one of the staircases has crumbled and fallen apart. Guess what was used to fix it…

As many of us have experienced when we were younger, pretty much anything can be made out of LEGO™ bricks. Generation after generation has been inspired to build impressive buildings, vehicles, landscapes and so on.

 

 

 

 

Using LEGO

Part of the appeal, no doubt, is the fact that these LEGO bricks have become so universal and maximize creative re-use: everything fits with everything else, and the only limit on what can be built is your own imagination. As the following examples show, some people take this to the extreme:

• A miniature of the Beijing Olympics stadium
  
   
• The infamous Millennium Falcon from Star Wars
  
   
• An actual telephone pole in Brazil
  

There are many ways to go about being creative with LEGO’s. Some of us rely on the instruction manual and build things exactly as designed. For budding architects, however, the fun is in thinking outside the box.

LEGO and Enterprise Architecture

Many enterprise architects face similar challenges, albeit on a different scale. Here the trick is not to combine brightly colored LEGO’s, but to figure out an effective combination of processes, data, and systems to achieve the goals of the enterprise. Aspects such as “standardization” and “integration” also play an important role in this case as described by (Ross et al., 2006):

Process standardization has the advantage of efficiency: doing the same things in similar ways across the enterprise. Similarly, process integration – typically through data – has the advantage of using a single view of the world which can be used to build a unique offering for customers. Of course, some people want both…

The operating model gives enterprise architects the option to set a course for the enterprise in terms of (requirements for) integration and standardization in the context of the goals of the enterprise.

Some food for thought: with LEGO’s there seems to be a natural progression to go from “build as specified” to “experiment”. What does that mean for enterprise architects? Can we expect more (agile) architectures, loosely based on some form of blueprint in ArchiMate?
And what does that tell us about the future of our enterprises?

Challenges for the LEGO company

Recently, a lot has been written about the (change in) strategy for LEGO (e.g. here and here). Where the success of LEGO initially came from standardization of bricks and the way they interconnect, it seems that an interesting change of direction was required: differentiation. By offering customers more choice (e.g. the movie-related theme, the ninjago theme) as well as leverage the digital revolution (with e.g. iPad apps), the brand managed to spark the imagination of a large customer base. 

The question, of course, is: what’s next? Here are two tips / things to consider:

1. Get the attention of the business market: a lot of organizations have discovered that ‘serious gaming’ is ‘serious business’. We see a lot of organizations experiment with simulation sessions which could be an ideal audience.
2. Impressionist LEGO: rather than delivering a complete and detailed LEGO-blueprint, give each customer a kit with bricks as well as a diagram in “impressionist style”. Perhaps this can be combined with a competition: who builds the coolest structure, given the content of the box?

If you have questions, or other thoughts about the use of LEGO: drop me a note at b.vangils@bizzdesign.com , or leave a comment below. Thanks!

In my previous blog post on Enterprise Architecture at BiZZdesign in 2014, I described how the true value of architecture lies in its relationship with other disciplines within the enterprise.

We identified five major areas where EA touches these other disciplines: 

1. Realizing the enterprise strategy. 
2. Supporting strategic investment decisions. 
3. Fostering enterprise agility. 
4. Leveraging technological opportunities.  
5. Controlling risk and ensuring compliance. 

​What I did not address in that blog post, was the coherence between these areas. Let us now zoom in on the first three of these and see how they are related.

Capability-based planning

An important instrument in realizing enterprise strategy is capability-based planning. Business capabilities are a pivot between strategy and realization. On the one hand they provide a high-level view of the current and desired abilities of an organization, in relation to the organization’s strategy and its environment. On the other hand, they comprise various elements (people, processes, systems, and so on) that can be described, designed and realized using enterprise architecture approaches.

Enterprise portfolio management

The central position of business capabilities and their recognizable level of granularity makes business capabilities an ideal focal point for investment decisions. Based on your enterprise strategy, you decide which capabilities need to be developed. You can consider the set of capabilities of your enterprise as a portfolio, and allocate your budgets based on the business value of these capabilities. In our whitepaper on portfolio management, you can find some of our ideas on managing various asset portfolios. These techniques apply equally well to managing a portfolio of capabilities.

Capability-based planning helps you in developing and improve the necessary resources of your organization. Enterprise architecture offers an integral approach for realizing these developments and improvements as a coherent whole. Modeling capabilities in relation to the rest of your EA, of course using the ArchiMate modeling language, is one of our current R&D topics. More on capabilities, capability mapping, capability modeling and capability-based planning will follow in future blog posts.

From project to value stream

Modern approaches to realization are doing away with the classical project and waterfall ways of thinking. (As an aside: thinking in projects is a major cause for the disappointing performance of many IT organizations; more on this will follow in another blog post). Those modern methods use a life-cycle and value-stream perspective. The assets that make up your enterprise are managed across their entire life cycle, doing away with the artificial distinction between ‘development’ and ‘maintenance’. 

Furthermore, the realization activities are organized as value streams, using the flow-based way of thinking from approaches such as Lean. Continuous delivery by agile & DevOps teams provides a steady stream of business value, in close interaction with the customer and other stakeholders.

Focus on business value and outcomes

Aligning these value streams with the business capabilities mentioned before, gives you a clear, business-driven focus for allocating your investment budgets. Capability-based portfolio management lets you prioritize these investments in a well-founded way. 

Iteratively assessing, refining and realigning this portfolio every few months helps you to keep doing  the right things. Instead of finishing the last drop of project budget in gold-plating a result, you can decide to re-allocate budget to initiatives that create more added value. Such a value-driven, integrated and cyclic approach delivers business outcomes in rapid iterations. This increases the speed with which your organization can respond to its environment and hence improves its business agility.

Towards value-driven enterprise architecture

A value-driven approach to enterprise architecture plays a central role in all this. It supports portfolio management with the analyses needed to determine the expected value, cost and risk of various initiatives. It provides the necessary input for prioritizing and planning changes to your business and IT landscape. It gives you program-level coordination across value streams to realize these changes in a coherent manner, and it fosters reuse of valuable knowledge and assets. Finally, it allows you to track the realization of the expected benefits across the business and IT landscape, and hence to correct your course if necessary. 

Next to this value orientation, the flow-based mindset outlined above should also be adopted by architects. By delivering a steady stream of analyses and changes in a ‘think big, act small’ way, they can help the organization realize a long-term vision one step at a time. 

All of this gives us a more detailed picture of the right-hand side of the previous figure, as shown below. Here, you see how enterprise architecture helps you ‘connect the dots’ between strategy and operation. In this way, enterprise architecture truly becomes the bridge between the strategic direction of the organization and its day-to-day operations and change processes.

First steps

A first step you can take is to create a high-level overview of the important business capabilities of your organization. Such a capability map is very helpful in finding out what is really important and where the added value of your enterprise can be found. By googling ‘business capability map’, you will find many examples to inspire you. 

Secondly, you might have a critical look at your current investment decision making. What are the information needs of the decision makers, and are they catered for? If not, what could you do with the information you already possess, for example in your architecture models, to help them? Providing such management information is a great way to increase your visibility and added value as an architect.

Outlook

In future blog posts, we will discuss many of the topics mentioned above. We will go into business capabilities, capability maps, and capability-based planning, and the use of ArchiMate to model these. Portfolio management and its relations to capability-based planning and enterprise architecture is another topic we will address. 

Furthermore, we will describe the use of architecture and the changing role of the architect in the context of agile development methods. Of course, your EA practice itself should also focus on the value it adds. In another blog series, we are currently addressing the use of Lean practices in EA. Stay tuned for more on this.

Finally, enterprise architecture can contribute to the agility of your information systems landscape itself. More on that will also follow in this blog series.

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