In the first post of our six blog series about "How to succeed at Enterprise Architecture", we will be addressing how Enterprise Architects can sell the value of next-generation Enterprise Architecture within an organization.
Remember that you can always download our free EA Success Kit to get an in-depth view of this topic here.
The value of EA might not be immediately obvious to a large part of your organization, sometimes not even to your CIO. You need to be able to demonstrate its value – some even say that you should sell first and architect later. Your CIO usually cares about three things: saving money, increasing innovation levels and decreasing risk. EA can help him achieve all three, you just need to convince him of its value. Let’s start by helping the organization to save some serious amounts of cash:
Reduce Costs
According to Gartner, companies with a strong EA foundation have 25% lower IT costs. This is no surprise because EA can help to uncover previously untapped sources of savings, some of which we have listed below. We are focusing on a few quickwin activities here that will help you to realize savings as fast as possible:
Rationalize your applications
Phase out obsolete applications and consolidate applications. It is possible to reduce costs by 15% by eliminating redundant applications without affecting quality and business value. This will not only save you license costs but also decrease costs for support and maintenance.
Analyze your applications by Business Capability and User Groups. Use your Application Matrix with Business Capabilities and User Groups to look at your applications and configure it to view the functional fit. You will be able to identify support gaps and redundancies in your application landscape. It may make sense to agree on global standards across your locations and phase out non-standard applications. By rating the technical and functional fit of your applications you will be able to identify applications that are not up to the job and do not meet technical requirements. Focus on divesting those while also keeping an eye on their business criticality to make sure you do not switch off applications critical to the business without a successor in place.
According to a case study by McKinsey, in an assessment of their application portfolio one retail bank was able to find more than 50 unused applications to decommission, 150 redundant applications to consolidate, 800 point-to-point interfaces to put on an integration platform and 400 applications to connect with a data integration platform.
Application rationalization can be the basis for other cost savings activities, such as software license optimization, application retirement or server consolidation with various levels of complexity and duration.
Consolidate your vendors
A global study of the Everest Research Institute with a focus on a company’s external IT services found out that fewer suppliers bring down the total cost of ownership (TCO) of applications annually between 22 and 28 %. While Gartner found out that it is possible to save up to 30% on software licensing costs alone by optimizing them.
Enterprise Architecture can provide important input on user groups and user numbers for IT use across the organization. Use your EA Inventory to analyze who your vendors are and how much you are spending with them and pass this information on to your procurement. You will easily be able to identify opportunities where vendors can be consolidated or where procurement can negotiate better rates, as you can see how much you spend with them in total. Also, as Enterprise Architect, you are ideally positioned to analyze the impact of any changes to the vendor landscape. Provide consolidation scenarios that address functionality issues from swapping IT components and reconcile any interdependencies. Work closely with your procurement department to ensure an effective vendor selection going forward and do not forget about the changes in support and training that come with a change in vendor and product.
Save time on documentation
It is harder to put a figure on how much is saved by freeing time otherwise spent on searching for ITrelated information. But studies estimate that by using an EA tool, a significant reduction is possible and even more time is saved on documentation and preparation of reports by using state-of-the art reports that are always up-to-date. Another benefit of having an EA tool in place is that everyone can be given access to relevant IT information, so time is saved distributing the information. Staff can also collaborate straight in the tool, directly in the relevant context. According to McKinsey, organizations can raise the productivity of workers by 20-25 % using social technologies. A searchable record of knowledge can reduce by as much as 35% the time staff spend searching for information. You will be able to start projects faster because all the relevant information is already in place, which means significant savings in staff and consulting time and costs. Considering that a single IT consultant will cost a minimum of €20k per month, this adds up very quickly.
And do not underestimate the benefits of documentation – losing knowledge can be costly business. Employees can leave your company taking their knowledge of systems with them. If you have no proper documentation, costs can quickly spiral out of control. Billions are estimated to be lost every year due to knowledge drain.
Reduce Risks
Avoid IT security incidents
A shocking example of how a runaway IT risk incident can have a catastrophic impact is what happened to the airline Comair, a subsidiary of Delta Air Lines. One busy December, Comair’s crew-scheduling system failed because it was only capable of handling a certain number of changes a month. The system abruptly stopped functioning, leaving nearly 200,000 passengers stranded throughout the US in the run-up to Christmas. Revenue losses as a direct result of this incident are estimated at about US$20 million.
An up-to-date EA inventory gives you information on all your applications including the technologies they are based on. This helps you assess which applications might be at risk because underlying IT components are no longer supported and lets you keep track of your technology standards. Incidents that happen because of unsupported technology components on average will cost companies around €600.000.
An EA solution offers the required support for determining the responsibilities and roles relevant to IT security. Clear responsibilities for Applications, Processes and IT Components can be set up and maintained. Quality mechanisms ensure that the data stays current and will be available in the right context in case of a security audit or incident. Your EA tool can also help you to classify the criticality of the data objects used by your company’s applications. With the help of EA, you can base your technology decisions on reliable, upto-date facts.
Avoid IT outages due to obsolete technologies
Most companies are much better at introducing new technologies than at retiring them. Even government agencies are not immune to this. US Government auditors blasted the Internal Revenue Service (IRS) in 2015 for missing deadlines to upgrade Windows XP PCs and data center servers running Windows Server 2003, both of which have been retired by Microsoft. Nine months after Windows XP fell off Microsoft’s support list, the agency still could not account for 1,300 PCs, about 1% of its total, and so could not say whether they had been purged of the ancient OS. The IRS also had to pay Microsoft for post-retirement support contracts to be provided with critical security updates.
Thanks to your EA Inventory it is easy to keep on top of IT components that are no longer supported and thus signify a risk. In LeanIX you can report on those applications that are at risk because the underlying IT components are out of their lifecycles.
Do not get caught out by compliance issues
Businesses need to comply with many regulations from HIPAA to PCI, GDPR and FISMA. While compliance does cost money and in terms of technology requires an accurate view of applications and technology, the cost of noncompliance is usually higher. As a rule of thumb, experts say that the cost of non-compliance is 2.5 times higher than the cost of compliance.
An up-to-date EA Inventory does not only provide you with reliable data that you can use to document your compliance with regulations. The LeanIX Survey Add-on can also help you to create ad-hoc or regular surveys for the appropriate staff to maintain accurate information about, for example, the use of sensitive data by applications.
Become more agile
Enterprise Architecture can become a driver for innovation across the organization. Free up your mind for innovation: By simplifying efforts for documentation, governance and reporting the business can focus on driving change and making Cloud, Big Data and Digitization a success. Modern development methods like DevOps rely on access to information and reuse of services.
Empower your developers
You can lower the barriers to efficiency by simplifying efforts for documentation, governance and reporting, as you make all information relevant to your organization’s IT landscape available in your EA solution. Document automatically all new services, their lifecycles and interfaces in your IT inventory to achieve compliance with regulatory requirements. New employees also benefit as they have all the information about their IT environment necessary for their onboarding easily available.
At online clothing retailer Zalando’s offices for example, developers work in over 100 small, autonomous teams in a microservices structure. But even independently working teams have to work towards a common goal and need access to information about their IT to be efficient. Zalando uses a team of Enterprise Architects to serve as a link between the various teams and programming languages. They are responsible for filling the gaps and enable the developers to have full responsibility for their software.
Collaborate easily
Break down monolithic structures and engage your staff inside and outside of your IT organization to use the collaboration features of your EA tool. Develop a common language with all stakeholders to avoid misunderstandings and pick up speed. According to McKinsey, nearly 80 % of the senior executives surveyed in a study said that effective coordination across product, functional, and geographic lines was crucial for growth.6 Yet only 25 % of the respondents described their organizations as “effective” at sharing knowledge across boundaries. They also describe the case of an engineering company. An analysis of one of the company’s high-performing groups showed that a small number of construction managers and engineers single-handedly accounted for 35 % of all the collaboration occurring within it. This kind of collaboration dramatically enhanced the group’s ability to deliver expertise. Identifying and building connectivity between specialists in other groups helped the firm to raise its revenue from $80 million to $275 million in a single year.
Lower the “complexity barrier”
Organizations comprise people, organizations, things, processes, goals, policies, rules, events, locations, and so on. For large organizations, it is impossible for people to retain and work with so many variables and bring about meaningful change unless information about them is documented through EA.
If information is locked in people’s heads it is very hard for other staff to make changes, add new product lines or to increase the capacity of systems. When the system is changed to meet a new requirement, errors will often occur in unexpected places as the full information had not been available before the change. This not only increases time to make changes but also makes people reluctant to initiate change. An A.T. Kearney study reveals that companies can increase their EBIT by 3 to 5 percentage points on average with the help of systematic complexity management.
By providing all relevant information in an accessible format in your EA inventory employees can access data about the enterprise and its technology landscape whenever the need arises. Enterprise Architecture can make an important contribution to decreasing the complexity within the enterprise and therefore allowing it to become more agile.
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