Enterprise Business Architecture

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Wikipedia EBA Definition

The Enterprise Business Architecture (EBA) is a blueprint of the enterprise built using architectural disciplines to improve performance. It is a formal model representing the business as a manifestation of the strategy. An Enterprise Business Architecture defines the enterprise value streams and their relationships to all external entities and other enterprise value streams and the events that trigger instantiation. It is a definition of what the enterprise must produce to satisfy its customers, compete in a market, deal with its suppliers, sustain operations and care for its employees. It is composed of architectures, workflows and events.1 A value stream is an end-to-end collection of activities that creates a result for a “customer,” who may be the ultimate customer or an internal “end user” of the "value stream." The value stream has a clear goal: to satisfy or to delight the customer.2

Structuring the enterprise around a core set of building blocks, called “value streams”, is one of the key enablers or precepts to enterprise wide integration. The value streams (sometimes called core processes) contain the cross-functional processes and ordered sequence of activities that produce results from functional organizations. The value streams are customer centric and designed around the effective and efficient delivery of results, outcomes, products or services. A capability not afforded by viewing the enterprise in terms of its functions. The values streams are purposeful encapsulations of the results of optimized processes that are connected by the balanced and leveled, inputs and outputs of the processes. You connect and integrate business processes in an architecture model by using the inputs and outputs as the nexus or “causal link.” Ultimately, the results of the value streams are linked to the defined and measurable outcomes of a strategic objective.

Having connected the EBA to the corporate strategy we must continue its integration with any major initiative that is defined in the strategy. The strategic initiative may require process improvement, IT architecture build-out, software development, package software configuration, security architecture analysis and organizational architecture development. The EBA approach lets the business person define all of their requirements and business rules in one model and in terms that business people understand and use. It requires the process analysts, software developers or enterprise architects to extract their information needs from this base of shared knowledge rather than having the business person create different sets of specifications or views for each strategic initiative or project.

The EBA represents the area of convergence or the unification of three major corporate initiatives; Enterprise Architecture (EA) development, Business Process Management (BPM) and Service-Oriented Architecture (SOA) development. You can not simply address one without the other, but you must consider each of these as part of a unified whole, and not as a loosely defined stand alone project. Considering this point of view, you may find the true potential of EA, BPM and SOA is in their unification through the EBA rather than as stand alone corporate initiatives.

References:

1. Ralph Whittle and Conrad B. Mryick, Enterprise Business Architecture: The Formal Link between Strategy and Results (CRC Press 2004), 31.

2. James Martin, The Great Transition: Using the Seven Disciplines of Enterprise Engineering to Align People, Technology, and Strategy (American Management Association 1995), 104.

Enterprise Architecture (EA) has emerged as an area critical to deriving business value from IT investments. EA -- a method of defining and aligning the principal standards that comprise an organization’s technical, application, information, and business-process needs -- is no longer viewed as an esoteric concept that is too complex to implement. Nor is EA still erroneously associated strictly with information technology infrastructure. However, there remain a surprisingly large number of projects that fail to achieve the benefits of EA. Only 52% of such projects realize their intended strategic value.1

Think of EA as a bridge over troubled water, such as:

• Silos of applications
• Post-merger islands of automation
• Service reps opening eight windows to answer a customer’s question
• Managers scrounging for information they need to make decisions
• The loudest voice winning IT project funding decisions

The river of cash flowing through many organizations is being dammed by IT strategies that are not aligned with business goals. EA spans the gap between business goals or strategies and IT resources and assets across the entire enterprise. A properly structured EA leverages an adaptive architecture to speed time-to-market, reduce IT costs, integrate business processes, and create a common standard for how all IT groups use, extend, and manage a company’s IT systems, processes, and people.

“In a world of rapid change, the Enterprise Architecture is real, has significant benefits, and is more important now than ever2. EA is worth a C-level discussion. A high-level grasp of EA may go a long way toward finally achieving that business/IT alignment that always seems to be on the horizon.”3 Progressive organizations realize Enterprise Architecture is not marketing hype or a buzzword. A solid EA methodology helps answer basic questions such as:

• How can the company create a road map for change?
• Is the IT portfolio adaptive, efficiently managed, and is it capable of supporting the organization’s strategic goals?
• Could new or different technology, like Service Oriented Architecture (SOA), help reach business goals better, faster, and cheaper?

IT investments represent a significant part of most companies’ budgets. Even so, there is an alarming failure to create business value in the majority of companies. As illustrated in the following statistics from DM Review – organizations are simply not attaining value from their IT investments at acceptable risk levels.

• 84% of companies do not do business cases for their IT projects, or they do them on only a few key projects
• 57% of companies perceive they are balancing the pressures of cost cutting and IT effectiveness
• 52% of the projects realized strategic value4

Every organization faces the harsh reality of doing more with less. However, most businesses lack the flexibility, adaptive planning, portfolio management, performance measurements, and processes necessary to properly manage their IT spending. Research5 identifies these problems as chronic:

• 83% of companies are unable to adjust and align their budgets with business needs more than once or twice per year;
• 72% of IT projects are late, over budget, lacking in functionality, or never delivered;
• of the 28% successful projects, 45% were over budget and 68% took longer than planned;
• 54% of the projects realized strategic value, and so
• Out of 11 projects only 1 or 2 will deliver strategic value at plan and budget.

Their efforts are often frustrated by inconsistent performance measurement, siloed applications and systems, no adaptive planning, no portfolio view of projects, and slow and painful cost or ROI analysis. Despite these startling realities, IT management and architects are expected to justify the business value of IT as well as:

• Achieve alignment with corporate vision
• Demonstrate the flexibility to adjust priorities in rapidly changing environments
• Balance resources and investments across different parts of the business
• Establish realistic cost- and risk-control mechanisms
• Employ good decision-making processes
• Achieve compliance with best-practices and regulatory requirements
• Deliver faster time to market
• Respond rapidly to provide new competitive capabilities

Meeting these expectations is where EA is essential. “Consulting firm Meta Group Inc. says companies that embrace EA spend 30% less on IT and are more adaptive and make better decisions.”6 The top reasons organizations are using EA, in order of importance are:

• To support decision making
• Manage the IT portfolio
• Deliver road maps for change
• Support systems development
• Manage complexity and reduce cost7

Not “boiling the ocean” is essential to building a practical Enterprise Architecture. Managing the different dimensions of EA is an iterative process that ultimately migrates your current systems to a future architecture where there are:

• few, if any redundant systems,
• faster time to market for new initiatives , and
• substantially lower maintenance costs.

Developing an EA strategy that aligns with business strategy is an important first step. However, making EA real and practical requires that your IT Project Portfolio Management (PPM) processes use project selection criteria that are also aligned with both of these strategies.

As illustrated in Figure 1, connecting EA to IT PPM requires a cascading process of business alignment as described below:

• Enterprise Strategic Intent
• What are you trying to accomplish across the enterprise?
• Have you established your critical success factors?
• Enterprise Business Objective
• What are the requirements that support those objectives?
• What is the architecture that is going to allow you to fulfill those objectives?
• What are your Key Performance Indicators (KPIs) as you begin those objectives?
• How do you measure successful completion of the objectives?
• Business Unit Objectives / Requirements

(business alignment processes)

• Using business intelligence and competitive intelligence, what will you measure to gauge the successful completion of objectives?
• What business value will be created?
• What are the gaps between your current capabilities and future capabilities?

The Enterprise IT Plan Are you using performance scorecards to measure the business value from EA and to measure the performance of your IT portfolio? Which policies are you enforcing?

The IT Roadmap How are you going to execute that high-level plan? What capabilities are you going to deliver back to the enterprise? What resources and assets are available, and which must be created and when? How will new capabilities be introduced to the business units to assure adoption?

IT Portfolio Management What are the decision criteria used to choose which projects to fund and when? When do you kill a project because it will not achieve the hurdle rate for ROI? What is the appropriate mix of high risk/high return to low risk/low return projects?

One of the greatest areas of confusion in these PPM decision criteria is how to measure business value. When looking at how companies make money, their River of Cash™, there are only five ways that IT projects can impact business value:

• Increase Revenue
• Reduce Costs
• Improve Process Efficiency
• Mitigate Risks
• Preserve Sustainability

Evaluating business value creation within EA or SOA initiatives is the new challenge for architects, CIOs, and any good technologist. It is just not what they have been trained to do, and there are few tools or methodologies that bridge this gap between business impact analysis and technical impact analysis.

A new role, the Enterprise Business Architect, has emerged as someone skilled at using EA to do business alignment and business transformation. Very few organizations have an Enterprise Business Architect permanently on staff. Companies that are focusing on deriving measurable business value from IT investments will find coaching or mentoring by an external Enterprise Business Architect expedient to achieving the following results while they build this capability internally:

• Rapid time to market
• Doing more with less
• Deliver competitively differentiating capabilities
• Substantially lower IT costs

When a company is starting to adopt EA or integrating Service Oriented Architecture (SOA), starting Project Portfolio Management (PPM) or more effective Performance Management, an Enterprise Business Architect becomes an indispensable team member for business alignment of these IT initiatives.

Enterprise Business Architects help clients by:

• Bridging strategic growth goals to the systems and processes needed to realize those goals.
• Analyzing technology alternatives to select the ones that produce the best risk/returns balance.
• Assuring that during system development, even as EA becomes more complex, our clients can still quickly make critical project, development, and funding decisions.
• Implementing adaptive planning processes and tools which accelerate planning and execution.
• Employing change adoption techniques to ensure that the people who will use new systems and processes are ready and their behaviors/work will produce the desired business value.

Getting true value from EA, SOA, and PPM initiatives can be frustrating, unclear as to where to start, and overwhelming when listening to the software vendors’ guidance on “business cases” and what to do.

The demands on IT to create measurable business value, better decision making, and to do so faster and at lower costs force the need for managing your IT resources as Enterprise Architectures. Enterprise Architects working with a new role, Enterprise Business Architects, are responsible for bridging a company’s business needs and goals into IT capabilities that will:

• Increase Revenue
• Reduce Costs
• Improve Process Efficiency
• Mitigate Risks
• Preserve Sustainability

For example, a company may commit to using Service Oriented Architecture (SOA) as a means of integrating siloed applications to accelerate time to market and reduce costs. The Enterprise Business Architect works with the Enterprise Architect to translate the business strategies, goals, and objectives into architectural and development environment requirements that:

• Create actionable architecture
• Eliminate waste and redundancy
• Enable adaptive planning
• Define key criteria in the PPM selection process
• Span the life cycle of SOA

EA is critical to any business transformation initiative and can deliver tremendous business value. However, EA is an evolutionary process that enables business transformation and that cannot be approached as solely an IT or technical initiative. EA is proven to achieve the desired results, and there are methodologies and software that make EA a workable and practical initiative for companies that are committed to getting greater business value from IT.

Further Reading 1 “IT Portfolio Management,” Bryan Maizilish and Robert Handler (John Wiley & Sons, Inc., 2005)

2 “IT Portfolio Management,” Bryan Maizilish and Robert Handler (John Wiley & Sons, Inc., 2005)

3 “Tech and the City,” CIO.com

4 “Enterprise Architecture – The Value Proposition,” DMReview

5 “IT Portfolio Management,” Bryan Maizilish and Robert Handler (John Wiley & Sons, Inc., 2005)

6 “Techs and City,” CFO.com

7 “Trends in Enterprise Architecture 2005: How Are Organizations Progressing?” The Institute for Enterprise Architecture Development