How to measure Enterprise Architecture
16 June 2013
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:
|Internal (Inside Out) metrics||Metrics that measure the internal efficiency of the enterprise’s functions, processes, applications, infrastructure||
|External (Outside In) metrics||Metrics that measure the way the enterprise operates from the perspective of those stakeholders outside the enterprise.||
|Change related metrics||Metrics that measure how well the enterprise transformations are being achieved||
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.
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
- Operating expenses
- Revenue per dollar of operating cost
- Profit per completed transaction
- 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:
|Descriptive Metrics||About what happened when a contact, prospect or customer engages with the enterprise||
|Perception Metrics||What did the contact, prospect or customer think about what happened||
|Outcome Metrics||What will the customer do as a result of what happened||
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 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?
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?
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.
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:
- Viability (ability to remain viable in a changed environment)
- Flexibility (ability to automatically adapt when unexpected external changes occur)
- Agility (Ability to adapt to changing business needs)
- Ease of integration
- Amount of reuse
- Support for innovation
- Service level
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.