Enterprise Architecture ROI

Explore The Enterprise Architecture Toolkit

There are three major benefits of architecture, from the most tactical to the most strategic:

1. Cost reduction and technology standardization
2. Process improvement
3. Strategic differentiation

Each of the three has its own stakeholder group and justification strategy.

A cost-savings justification is the most tactical approach, and often brings significant return on investment (ROI) for Enterprise Architecture. Within the larger strategy of cost savings, sub strategies focus on technology standardization and efficiencies, skills leverage and the potential for the retirement of aging and high-cost systems and platforms.

The reduction of technical risk and complexity are also benefits of this overall approach. The keys to a successful justification are to specifically enumerate the costs to be saved as objectives, a demonstration of these savings as actual deliverables and showing them as the work of the Enterprise Architecture team. The key stakeholder for cost reduction (return on investment) is usually the IS organization.

In this approach, it is important to be careful about not assigning to architects the role of “design police.” Although standardization can bring efficiency, it is easy for enterprises to move into a diminishing returns pattern with this goal, and inhibit organizational creativity. There are ways of looking at the question of standardization and cost control that can provide sufficient flexibility for example, using maturity

assessments and Magic Quadrants criteria to provide some level of project flexibility while still encouraging an overall level of standardization.

The second major area of justification is in business process improvement, looking inward within the business organization and the supporting applications space. Here, the stakeholders are business owners, typically divisions within the enterprise. In this model, sufficient, but contained, areas are re-architected to achieve process improvement. Examples are the retirement of multiple parallel systems, improving workflow over a given time, ease of use or profit opportunities, creating single points of system entry that ease process flow, and increasing application integration among departmental systems to re-envision the links among applications and systems.

The third major justification strategy is based on strategic initiative, and would include efforts toward moving the enterprise within its value network (your closest supply chain partners and key customer segments) to the real-time enterprise (RTE). The key stakeholders are often corporate and strategic stakeholders. These architectural efforts are usually created to respond to or anticipate new business

drivers, significant industry upheaval, new competitive pressures or major changes in the roles of key players in the value network. Here, the enterprise senses that an investment in architecture pays off in new ways of thinking about the business, new customer segments and major new competitive strategies.