What is Enterprise Architecture

Enterprise Architecture is essentially a strategic planning discipline for ensuring that all the strategies of an enterprise are well executed. How should we measure it and how it is performing?

First it’s best to clearly understand what Enterprise Architecture is and who it is for.

Enterprise Architecture bridges the gap between those decision makers who come up with new strategies and objectives and those who are involved in enterprise transformation and investments in change. It is about what the enterprise can do now (baseline capabilities) and what it wants to be able to do in the future (target capabilities).

Enterprise Architecture is all about keeping an organisation robust, viable and continuing to satisfy all its stakeholders in the future, who are interested in the enterprise succeeding and continuing to succeed i.e. the CxOs, Shareholders, Customers, Partners, Suppliers etc.

The Enterprise Architecture deliverables are a conceptual blueprint or Target Operating Model that explicitly defines the mission, vision, strategies, objectives, principles, standards and business capabilities at the strategic level, as well as all the other elements (component types) in the enterprise that define how the business operates. These elements include business functions, business services, business processes, scenarios, value chains, value streams, products, application services, applications, technology and infrastructure and are defined within the following Architecture domains:

Architecture Domain Typical object types in the domain
Market/Environment Supplier, Partner, Shareholder, Stakeholder, Regulator, Customer, Contact, Prospect etc.
Strategy and Motivation Drivers, Mission, Vision, Strategy, Objective, Measure, Metrics, Principle, Standard etc.
Business Business Capabilities, Business Functions (Value Chains), Business Process, Strategic Scenarios (Value Streams), Events, Products, Business Services, Organisation Units, Persons and Roles etc.
Information Business Information, Application Data, Stored data (Databases, Files etc.)
Applications Application Services, Applications (Suites, Packages, Components etc.)
Infrastructure IT Infrastructure (Hardware, Nodes, Networks, Devices, Appliances, Servers etc.Physical Infrastructure (Buildings, Facilities, Vehicles, Machinery, etc.)

Enterprise Architecture also provides several different views of how an enterprise operates and changes, by maintaining a baseline enterprise (operating) model, target enterprise (operating) model(s) and a roadmap of changes to the enterprise’s business capabilities and investments in change ordered within an enterprise transformation roadmap.

Measures and metrics

A large number of organizations use Enterprise Architecture approach in order to plan strategic changes and manage enterprise transformations. Enterprise Architecture is not directly linked to a direct outcome but is usually indirectly related.

One of the major concerns is the failure of many enterprises to actually measure the value of their current or baseline Enterprise Architecture. One is reminded of the old adage ‘What you don’t measure, you can’t manage’. When changes occur as a result of new strategies and target enterprise models, the subsequent enterprise transformation may well be many months or years into the future. Changes are delivered by other groups inside the enterprise or external solution delivery partners. If measures and metrics are not used and actively managed then it becomes rather difficult to compare the old baseline with the new baseline to see what value has been achieved.

Identify the Metrics

The measuring metrics will vary from one enterprise to another. As Enterprise Architecture exists to support the CxOs and decision makers within the enterprise then it is important to define the metrics from their perspective.

Metrics can be identified form a number of perspectives.

Broadly these can be grouped into:

Categories Description examples
Internal (Inside Out) metrics Metrics that measure the internal efficiency of the enterprise’s functions, processes, applications, infrastructure
  • Cost of business processes
  • Business Process efficiency
  • Operating expenses
  • Productivity
External (Outside In) metrics Metrics that measure the way the enterprise operates from the perspective of those stakeholders outside the enterprise.
  • Customer Satisfaction
  • Sales per customer
  • Profits per transaction
Change related metrics Metrics that measure how well the enterprise transformations are being achieved
  • Profits per Investment in change
  • Percentage of the target EA Model that has been implemented
  • Percentage strategies realised

More detailed metrics can defined for each Architecture Domain. Here below is a discussion of some of some potential metrics used for measurement of their enterprise architecture’s value.

CxO’s Metrics

The Enterprise Architecture is by definition the architecture of the enterprise, so the metrics also need to be defined from the enterprise or business perspective. The CEO and other CxOs are responsible for managing the enterprise so the metrics need to be ones that they are interested in and keen to measure. These may include:

  • Completed transactions
  • Revenues
  • Operating expenses
  • Profit
  • Revenue per dollar of operating cost
  • Profit per completed transaction
  • Productivity
  • Profits per investment

The trends and rates of change in the numbers are often more important than the actual numbers.

If the enterprise strategies and therefore the target Enterprise Architecture are not having an effect (directly or indirectly) on the numbers that the CEO is interested in, then the Enterprise Architecture is not being effective.

Customer experience metrics

One of the biggest contributions to Enterprise success and profits is the overall customer experience and satisfaction. There are three categories of Customer experience metrics:

Category Description Examples
Descriptive Metrics About what happened when a contact, prospect or customer engages with the enterprise
  • Call and email volume
  • Average call time
  • Calls lost
  • Website visits
  • Average transaction values
  • Average calls per customer
Perception Metrics What did the contact, prospect or customer think about what happened
  • Customer satisfaction with their experience
  • Goal completion rate
  • Complaint resolution rate
Outcome Metrics What will the customer do as a result of what happened
  • Likelihood of recommending
  • Likelihood to purchase
  • Actual purchases made
  • Returning customers
  • Churn rates
  • Value provided

These metrics measures how happy a customer or prospective customer is with the enterprise’s value proposition (their products and business services). What value is provided to the customer? This measure is becoming common with value based pricing approaches. How easy is it for the customers to do business with you? Do the enterprise business services provide for the needs of the customer’s own internal processes? Customer Satisfaction can be increased by better communication with them through their preferred channel, so a measure of Customer communications (messages and interactions, social media) can be useful.

Cost Benefit

Cost/Benefit ratio to measure the value of any new or changed business capability. This is used to compares the amount of money spent on the transformation (costs) to the amount of money that is being saved after the implementation of the changes (Benefits). These metrics are often measured in terms of money, but in fact the benefits may be non-monetary values such as increased sales, improved customer satisfaction, reduction of risks, increased flexibility, and improved platform for future change.

Productivity and Effectiveness

CEOs will be concerned with the effects of Enterprise Architecture and new investments on production, efficiency and effectiveness. Metrics in this area can focus on:

  • Reducing time to market for new investments in change
  • Integrating and improving business processes across the enterprise (including with partners)
  • Improving the ability to integrate data and interfaces across the enterprise (including with external partners)
  • Improving the ability to reuse business functions, business processes and application services
  • Increasing agility, flexibility and ability to rapidly change in the event of new strategic scenarios occurring
  • Increasing standardization
  • Reducing the time taken to develop solutions by maximizing reuse of enterprise architecture models

Governance and compliance

Enterprise Architecture ensures that the strategies of the enterprise are realised.

How many business capabilities are being created, updated or removed? What capability increments are being turned into investment proposals and providing the mandates for new programmes and projects? How many capability increments are being delivered by the solutions that have been subsequently designed and developed? How well are the solutions in compliance with the target enterprise architecture model?

Knowledge

The Enterprise Architecture function will create a well-populated repository of knowledge about the current state of an enterprise and its planned future state vision. The enterprise Architecture models provide a knowledge base for CEOs, CxOs and other decision makers that provides answers to their questions. In essence an enterprise architecture model needs to be designed to answer all their potential questions. How well does it achieve that?

These questions can be about gaps, impacts, dependencies, probabilities of success and failure, risks, costs etc. One of the major concerns of Enterprise Architecture is to reuse the knowledge, information and data as required by various processes and applications throughout the enterprise. Metrics can include the percentage completeness of this knowledge base. How easily and readily available is this knowledge throughout the enterprise to those stakeholders who need it?

A Common Vision of the future state

The whole purpose of Enterprise Architecture is to align investments in change with the strategies for the future of the enterprise. The target Enterprise Architecture Model is the target operating model that provides a common vision for all parts of the enterprise, including internal business units and external partners. How complete is this model and all the associated diagrams and documentation? Is it readily available?

Enterprise Transformation

The target enterprise architecture model will reduce the time it takes to conduct a particular enterprise transformation, implement new and changed business capabilities and reduce solution design and delivery time and development costs by maximising reuse of the enterprise level models. It will provide standard components and ensure maximum reuse of them across the whole enterprise. Over time the enterprise architecture will ensure faster development, fewer failures and better alignment to strategic enterprise level requirements and continual improvement.

Qualities

The Enterprise Architecture is often focused on improving or enabling various characteristics and qualities in the future.

Metrics can be based on these qualities can include:

  • Efficiency
  • Robustness
  • Reliability
  • Viability (ability to remain viable in a changed environment)
  • Flexibility (ability to automatically adapt when unexpected external changes occur)
  • Complexity
  • Agility (Ability to adapt to changing business needs)
  • Adaptability
  • Ease of integration
  • Amount of reuse
  • Support for innovation
  • Service level
  • Quality
  • Accuracy

In conclusion

Enterprises need to measure Enterprise Architecture by how well it improves the performance of the whole enterprise, meets its business needs, and supports its strategies and investments in change.

Business Architecture

23 March 2013

Tom Graves recently participated in an Open Group TweetJam on Business Architecture. You can read about the results of this at http://weblog.tetradian.com/2013/03/20/opengroup-on-bizarch/

Unfortunately I didn’t hear about this in time to participate but I thought I’d record my own thoughts here.

The questions were:

  1. How do you define Business Architecture?
  2. What is the role of the business architect? What real world business problems does Business Architecture solve?
  3. How is the role of the business architect changing? What are the drivers of this change?
  4. How does Business Architecture differ from Enterprise Architecture?
  5. How can business architects and enterprise architects work together?
  6. What’s in store for Business Architecture in the future?

How do you define Business Architecture?

Business Architecture is one of the primary domains within Enterprise Architecture. It deals with the architecture of the business, ideally from a business perspective and is expressed in business terminology.

It should not really be considered a separate discipline from Enterprise Architecture but often is by those who persist in misunderstanding that Enterprise Architecture is only about IT and not about the whole of the enterprise.

Business Architecture deals with the structure and design of how an enterprise operates, makes money or delivers value, how it organises itself in order to provide products and business services to its customers, clients and consumers. It should be expressed independently of how the business architecture will be mapped to the underlying application architecture and infrastructure architecture, but is more connected to the business/contextual view of the information/data architecture and will include the organisation architecture.

Business Architecture is centred on the business and the business strategy, not on IT or on the IT Strategy and should not be considered just a source of requirements for IT projects (which is the impression that TOGAF gives of Business Architecture).

In general Business Architecture includes the following deliverables:

BizArch deliverables
A Business Architect is primarily concerned with supporting and advising the senior executives, providing advice and guidance, and influencing decision making for the Business Architecture domain.

 

What is the role of the business architect? 

As a specialised type of Enterprise Architect, they are in a leadership role, close to business management working for the CxOs to evaluate and elaborate possible future strategic scenarios.

They have a responsibility to guide, recommend and oversee the realisation of the business strategies identified by the CxOs, but they don’t control the business strategy or make the actual investment and strategic change decisions.

What real world business problems does Business Architecture solve?

As a type of Enterprise Architect, a Business Architect deals with strategic change, business transformation activities concerning topics such as:

  • Ecommerce changes
  • Consolidation
  • Cost reduction
  • Process improvement and efficiency
  • New organisation design
  • Mergers & Acquisitions
  • Reuse of shared services
  • New markets
  • Regulatory and legal changes

One should not forget that, by definition, an Enterprise Architecture model covers everything about the enterprise including the environment and market which it operates in, its Business Strategies, its Business Architecture as well as the rest of the Enterprise Architect domains.

How is the role of the business architect changing? What are the drivers of this change?

The role of a Business Architect is becoming much more distinct than it has been. many organisations are maturing their enterprise architecture functions that were previously just centred on IT architecture and are now specifically introducing a Business Architect role.

How the Business Architect role differs from other roles such as a Business Analyst, Business Change manager, Business Transformation Manager etc. is still playing out. I discussed this to some extent in a previous blog post – The difference between a Business Architect and a Business Analyst.

Another current difference is that a Business Architect is often closely associated with the Business units (and perhaps reports to a business line manager of sorts) and therefore is seen as being on the ‘Demand’ side of a business, whereas the rest of the Enterprise Architects (including IT Architects) are often lumped into the IT department and therefore are seen as being on the ‘Supply’ side. In theory, the Enterprise Architects, including Business Architects, should only ever be on the ‘Demand’side and not seen as part of IT. They should report to the CxOs, ideally seen as part of a CEO Office.

How does Business Architecture differ from Enterprise Architecture?

A Business Architect is a type of (a ‘real’) Enterprise Architect. Business Architecture is a sub domain of Enterprise Architecture.

EA domains

How can business architects and enterprise architects work together?

Of course they can. The distinction in the question is artificial anyway, since a Business Architect is just a type of Enterprise Architect that specialises in the Business Architecture domain.

But in reality many organisations do have an unfortunate  tendency to make up their own interpretation of what these roles actually are.

What’s in store for Business Architecture in the future?

We will see more and more Business Architecture roles in the future as organisations mature their enterprise architecture strategy and capabilities, and they realise that they need to get to grips with their business model and how it is realised. They will need Business Architects to help them do that.

Business Architecture

For most enterprises embarking on large scale strategic planning and business transformation programmes it is all about staying robust, viable and efficient, continuing to deliver good outcomes and value to their customers/consumers/clients in the future. Enterprises should be wanting to stay competitive and efficient and beat the competition.
If the enterprise is to succeed, it must make strategic decisions and investments in change based on a thorough architectural gap analysis/impact analysis that is only possible with business architecture as a key part of their enterprise architecture function.

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