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SPOTLIGHT ON IT PLANNING
Are CIOs Getting Value from EA Anymore?
BY AUDREY MICKAHAIL
We recently released our annual
IT Budget Benchmark results
and found yet again that IT
spending on maintenance is roughly 60%
of overall IT expenditure whereas innovation and business opportunity compose
only one-third. As we have shared essentially this exact same finding across the
years, CIOs have repeatedly expressed
difficulty in shifting spending to new
investment opportunities. They commonly cite that they struggle to keep the cost
of maintaining the legacy portfolio from
consuming the IT budget and crowding
out more value-add investments.
So, what is your enterprise architecture
(EA) group doing to help? It should support the twin goals of efficiency and
responsiveness by working with the
enterprise to support business change, but
too few companies—as in the examples
below—have been able to accomplish this.
A Common Member Story
Jim recently took the CIO position
at a financial services company that
has more than doubled in size over
the past five years. While some of
the growth has been organic, much
of it came from a series of acquisitions the firm has made. This period
of rapid growth and expansion has
been loosely governed, but as the
firm’s growth started to slow, Jim
was hired to examine and reduce
IT’s unsustainable cost structure.
Jim is facing the daunting task of
simplifying a highly complex, redundant portfolio of assets, and that’s
just what he knows about.
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CEB IT Quarterly Q4 2013
A Common Member Story
The third CIO in four years, Gloria was
promoted from her position leading
the infrastructure group to running all
of IT. Her new challenges are to enable
the business to experiment with technology to better market to customers
and to modernize an aging IT portfolio
in her highly competitive, low-margin
retail enterprise. Throughout her
20-year career at the company, she
has seen these investments repeatedly
deferred. In recent years, many of the
systems have become deeply strained,
consuming ever-increasing resources
just to maintain as store sales have
increased. With aggressive expansion
plans on the horizon, Gloria can no
longer put off modernization, nor can
she afford the cost or risk of a big-bang
approach. Now she must navigate a
path between patching and maintaining the existing portfolio and investing
in the costly—and potentially risky—
overhaul that eluded her predecessors.
inefficiency in the long term, it will compromise responsiveness. Effective EA
groups understand these trade-offs and
manage them.
TAKE ACTION1
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What these representative CIOs have in
common is the challenge of building and
maintaining an IT portfolio that is costefficient and responsive to business needs.
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Even if it were financially possible to do
so, IT can’t achieve true responsiveness
by simply fulfilling requests as quickly
as possible. Ultimately, if IT reacts in the
short term without regard for increased
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Craft a shared and precise view
of EA’s mandate. Use our EA (Re)
Charter Template.
(CEB Enterprise Architecture
Leadership Council)
Define a limited set of stakeholderoriented services. Review Offering
EA as a Service.
(CEB Enterprise Architecture
Leadership Council)
Measure your EA team’s
effectiveness. Take our Enterprise
Architect Effectiveness Diagnostic.
(CEB Enterprise Architecture
Leadership Council)
Cascade strategic imperatives
into architecture. Review
Architecting for Business
Outcomes.
(CEB Enterprise Architecture
Leadership Council)
Access to these resources is only available
to members of CEB Enterprise Architecture
Leadership Council. Please e-mail Architecture.
[email protected] if you would like
to learn more about this content..
SPOTLIGHT ON IT PLANNING
Responsiveness and
Efficiency Are Mutually
Reinforcing
In too many organizations, what EA perceives as its mandate is not what CIOs
really need from it. In our representative
member stories, the overwhelming cost of
maintaining legacy technologies prevents
Gloria and Jim from investing in differentiating uses of technology. Traditionally,
CIOs turned to EA for help reducing total
cost of ownership (TCO) of the IT portfolio. EA then set technical standards
and enforced them to steward enterprise
resources.
But in today’s complex business technology environment, IT does not have the
last word in technology decision making.
In this context, EA’s traditional IT standard-setting and governance approaches
are not just ineffective, they’re misguided. Because EA can’t impose its will,
understanding and aligning to business
imperatives is an essential part of EA’s
mandate and the best path to efficiency.
Unfortunately, too many enterprise architects are ill prepared for increased levels
of engagement. Typically, they are raised
in IT and trained in abstract frameworks.
They look at the IT portfolio as a puzzle
to be solved, isolated from the context of
business need. As a result, EA focuses on
half of its mandate—standardization—at
the expense of the more critical half—
alignment and responsiveness. We believe
this misunderstanding is at the heart of
why so many CIOs express frustration
with EA and why 28% of EA groups have
been disbanded or demoted since the
beginning of 2012.
Retool EA for Engagement
If Jim and Gloria are going to manage
cost and efficiency over time while also
maintaining higher levels of responsiveness to their businesses, they will need
EA. But they need enterprise architects to
recognize that business alignment is their
job. Here are seven specific guidelines for
getting value from EA.
1. Treat business architecture as
foundational, not aspirational.
Business architecture, and specifically
business capabilities, is the best tool for
understanding business needs and priorities. Invest early in establishing a common
language for IT–business alignment, as
opposed to working “up the stack” from
Infrastructure, to Applications, and so
on, as EA groups have historically done
(Figure 1).
Instead, begin top down by prioritizing
business capabilities and the business
outcomes that are most critical to your
company’s business strategy. Don’t be
exhaustive. Map the enterprise broadly,
but get just granular enough to uncover
investment and cost-saving opportunities
and resolve prioritization conflicts.
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CEB IT Quarterly Q4 2013
Figure 1: EA Prioritization Framework
Conventional Wisdom of
Architecture Practice Maturity
orestalling business
F
architecture
development makes
it harder to attain
business alignment.
Architecture Layers
Business
Information
uilding up from IT
B
dictates a planning
cadence based on
technology lifecycles
and constraints.
Systems
Technology
Source: CEB analysis.
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The Basis for Supporting
Business Outcomes
ully established
F
operational
requirements
set the tone for
planning, execution,
and functional
management.
Technology
architecture balances
standardization and
efficiency with the
operational needs of
the business.
SPOTLIGHT ON IT PLANNING
2. Clarify EA’s mandate and
remove distractions from that goal.
One of our members, a shipping company, found itself with excess shipping
capacity following the 2008 downturn. It
wanted to bring costs in line and address
IT’s solution delivery speed.
To address these challenges, EA rebranded itself E&A for Exception Minimization
(i.e., standardization and cost efficiency) and Acceleration of Delivery (i.e.,
improving speed-to-market of new solutions by identifying SDLC improvements
and new technologies that enhance solution quality).
EA leadership created a service mindset about these distinct objectives, one
that was reinforced with metrics that
emphasized outcomes (e.g., number
of acceleration projects completed
and their estimated value) rather
than inputs (e.g., number of artifacts
created or standards set). This step
clarified what EA does and does not do
(e.g., solution architecture).
3. Triage EA engagement.
The EA group in another member
company, a financial services firm, disproportionately invests its time in the
highest-value business capabilities—the
parts of the business that make the company competitive. Since EA groups are
small (2% of information technology
FTEs, on average) and the use of technology so pervasive, EA cannot plan
and govern the IT portfolio comprehensively, much less provide the same
focus on all business capabilities. Use
business capabilities as a lens through
which to allocate EA resources, ensuring
architects prioritize the initiatives that
drive business growth. This ensures the
most strategic initiatives are supported,
rather than the ones that are the most
expensive, or even simply those that are
technically complex. Once that prioritization is set, establish and stick with a
clear engagement model for determining
which initiatives EA needs to be involved
with, and in what capacity.
4. Focus on consumables,
not deliverables.
Too many EA teams feel they need to
capture all the IT assets currently used
and end up spending far too much time
on an exercise that has low visibility and
often questionable value. EA should limit
investment in current state documentation. One of our members, a professional
services firm, calls this approach moving
from deliverables to consumables. Rather
than creating massive, impenetrable
documents that were difficult for others
to make sense of, EA identified consumability by non-EA stakeholders as the
standard for production.
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CEB IT Quarterly Q4 2013
5. Make targeted investments in
strategy setting and project
engagement.
For the future state, focus on a few, key
business-relevant areas, and keep the
direction at a high level. Much of what will
be required will need to be determined
along the way, rather than anticipated.
Keep your plans fresh by identifying a set
of business-driven triggers that would
force plans to be revisited.
In most organizations, EA should have a
limited solution architecture role, while
also maintaining awareness of realities on
the ground. EA’s solution design activities
should be limited to areas of emerging
technology for competitive business capabilities where organizational learning and
speed are necessary. Otherwise, EA can
become consumed with project work and
neglect its strategic duties.
6. Treat standards enforcement
as a public health issue (i.e., preventative medicine), rather than a
law-enforcement activity.
EA cannot enforce standards through
fiat, so it must rely instead on socializing
the practice and benefits of architecture,
as well as including SMEs on delivery
teams in standard setting and reference
architecture development. Focus on
articulating and disseminating good
architecture principles for use by delivery
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teams. Enable business partner decision
making by identifying likely pitfalls in
technologies they obtain independently.
One of our members, an energy and
utilities company, does this by showing
sponsors what success looks like through
lightweight scorecards focused on not
only architectural success factors but also
business success factors.
7. Develop EA’s engagement skills.
A European insurance member realized
that for the highest-value business capabilities, technical expertise is inherently
less valuable than a generalist skill set that
enables the organization to quickly interpret demand, gauge market opportunities,
and design and prototype potential solutions. Business engagement skills such as
influence make all the difference between
effective and ineffective architects.
Closing Thoughts
The nature and tools of enterprise architecture are changing. CIOs need the
support of an architecture practice that
can manage the cost and responsiveness
of the IT portfolio.
About CEB
CEB is the leading member-based advisory company. By combining the best practices of thousands of
member companies with our advanced research methodologies and human capital analytics, we equip
senior leaders and their teams with insight and actionable solutions to transform operations.
This distinctive approach, pioneered by CEB, enables executives to harness peer perspectives and
tap into breakthrough innovation without costly consulting or reinvention. The CEB member network
includes more than 16,000 executives and the majority of top companies globally.
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