by Daniel Lambert

I’ve been asked repeatedly “Do you have a business case that precisely measures the benefits of Business Architecture within a corporation?” I’ve been looking for a while now for some kind of business case about Return on Investment (“ROI”) on Business Architecture and I have found nothing yet.

The Holy Grail: Finding the Business Architecture ROI Business Case

I’m not the only one. Jeff Scott[1], who’s a luminary in Business Architecture, has not found any good case study that quantifies the benefits of business architecture and he’s been looking for almost a decade now. Here’s what he wrote recently: “After four years as the business architecture analyst for Forrester Research and four more years consulting with F500 business architecture practices I have yet to see a good case study that quantifies the benefits of business architecture. I fairly regularly hear someone say that ‘so-and-so’ has one but I have yet to see one or even talk with someone who has seen one.[2]”

Creating Enterprise Value from Business Architecture

Many use Business Architecture to induce enterprise value. They identify KPIs that are relevant to a particular strategy related to specific capabilities to calculate ROI Technology Models and Information Models one program/initiative/project at a time among others. A slide deck[3] from IASA demonstrate this very well.

Roy Hunter[4] from Oracle also explains simply how to “define quantifiable benefits and monitor the results. Leverage your success and share the metrics to sell the next line of business lead on the value of Business Architecture.[5]”

But these two examples and many others shows how to measure the ROI of initiatives, not the organization’s business architecture practice itself.

ROI for Enterprise Architecture?

The search for ROI in the Enterprise Architecture space has been going on for a while also. Here’s what was written on a blog discussion about the subject:

“The ROI of EA is not easy to calculate. Successful EA bears fruit over a period of time - often even 5 years. It is possible to measure some aspects of ROI and one could start with what's wrong or can be improved as is evident from your as-is EA view. Measure the cost of IT, for example, or the stability of your platform(s) and technology(s) or the product diversity. Then measure these again to see if they have improved as you progress along your EA roadmaps. Also, measure your stakeholders' satisfaction with what they're getting from EA in the short-and medium term.[6]”

5 years clearly does not cut it. Event 18 months would probably not cut it in many organisations. Strategies evolve and change to quickly to wait even 18 months. There has to be an easier and more universal way of measuring the ROI on Enterprise Architecture, or at least the Business Architecture aspect of it.

Reasons to Use Business Architecture

The are several reasons why Business Architecture can be used. Here are some[7]:

  • Align easily horizontally and vertically strategy views with cohesion to all business units/departments,
  • Measure strategy implementation through capability mappings on a continuous basis,
  • Improve decision making by lowering risk with impact analysis,
  • Increase employee engagement by setting proper boundaries, making it safe and productive for employees to take independent actions and make them more autonomous,
  • Increase operational efficiency, and
  • Increase your agility in both your business and IT execution.

For many of these advantages, we could use a set of specific measurements. Most of these measurements are fairly complicated to gather early on while implementing a business architecture practice within an organization. There has to be a simpler way.

Why Not Simply Measure Time Savings?

A young Certified Business Architect[8] from a wealth management company recently asked me if I had an ROI Excel spreadsheet about Business Architecture. He wanted one simple file that would stick to measuring time savings. In his quest, he’s unlock a simple way of answering a key question about ROI and Business Architecture. I therefore made one[9].

Table 1 – Savings per Business Architect
TSG-full

This Excel file obviously includes many assumptions most of which can be changed and adapted to the specificities of each organization. Here are the main assumptions:

  • There is no way to escape this first assumption. Building initially a business architecture practice within an organization takes at least 6 months, but usually between 9 and 12 months where you need to gather information about capabilities, value streams, information, organization, stakeholders for a few program/initiatives/projects. Obviously, this time frame assumes that you are using an automated tool right away at the beginning that can make all of this possible (not just Excel and Visio files). Otherwise, this timeframe is going to be much longer and you’ll only be scratching the surface once its time to deliver your initiatives.
  • Business Architects will save time creating the necessary artifacts/tables/diagrams for all involved stakeholders in the initial initiatives as shown in Table 1[10] above.
  • Business Architect will publish and make available their dynamic business architecture model on the web or in print at regular intervals (weekly ideally) to all Business and IT professionals involved with the initiatives. Too many Business Architects today in the name of their freedom and independence absolutely want to stay the gatekeepers of their Business Architecture model, a behaviour that to often jeopardizes the ROI of their practice.
  • By making the dynamic Business Architecture model available, business and IT professionals will stop wasting time gathering the information and lower the number of agile iterations before delivering outputs as shown in Table 2[11] below.

Table 2 – Savings per Business and IT Professionals Involved in Initiatives
TSG-full

ROI, IRR and Sensibility Analysis

The Excel file that I’ve sent to the young Certified Business Architect showed an ROI of between 9 and 12 months and an IRR of 301% over a 5-year period. I’m sure that he’s going to adapt the assumptions that I have included in the Excel file to the reality of his own organization. Odds are that IRR will probably be higher.

The Excel file also makes a sensibility analyses on the savings and benefits of Business Architecture over 5-years that could occur with programs/initiatives/projects for 2 scenarios. Again, the numbers can be adapted for any organization as shown in Table 3[12] below.

Table 3 – Benefits of the Business Architecture Practice Based on the Expected % of Savings
TSG-full

In Scenario 1 of this example, if you are comfortable that the Business Architecture practice can provide 6% of savings in your 5-year long Initiatives, you should not hesitate and build your business architecture. In Scenario 2, things are more complex to understand. The costs of initiatives in scenario 2 are concentrated in the first 2 years and afterward it drops to a fraction of what it was in year 2. So in the first 2 years, with only 6% savings in cost initiatives, Business Architecture pays off. Afterward, only costs savings higher then 14% will justify the Business Architecture practice.

Conclusion

While this ROI is mainly focused on time saving, unless you do not have a significant amount of Programs/Initiatives/Projects planned for the next 5 years and unless you are not ready to use collaborative tools that can easily enable the dynamic design, regular modifications and publications of the business architecture model of your business at regular intervals, business stakeholders and IT professionals in your company stand to benefit greatly from the daily use of an easily accessible business architecture model developed by Business Architects. This fact is even more true if you take into account the other reasons of using Business Architecture mentioned earlier in this article in the section entitled “Reasons to Use Business Architecture”. Those other aspects can be part of enhanced ROI analysis as your business architecture practice matures.

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[1] Here’s Jeff Scott’s LinkedIn profile: https://www.linkedin.com/in/tjeffscott.
[2] Quote from the article entitled “What Are Business Architecture’s Quantifiable Benefits?” published by Jeff Scott on March 21, 2016 on Accelare’s web site.
[3] The IASA slide deck is entitled “Creating Enterprise Value from Business Architecture” published by the IASA on LinkedIn SlideShare in August 27, 2014.
[4] Here’s Roy Hunter’s LinkedIn profile: https://www.linkedin.com/in/royhunter1.
[5] Read this article entitled “Using Business Architecture to Drive IT/Business Alignment” written by Roy Hunter on Oracle’s website in January 2011.
[6] The blog discussion is entitled “Is it possible to calculate ROI for Enterprise Architecture?” published on ICMG World’s website. The discussion/question is initiated by Girish Sharma and answered by Anton Venter.
[7] This list is derived from the slide deck entitled “Business Architecture Basics” made for the Metro State University by Daniel Lambert on LinkedIn Slide Deck on January 21, 2016.
[8] Here's the webpage describing the Certified Business Architect (CBA)® Program: http://www.businessarchitectureguild.org/default.asp?page=cert.
[9] The ROI Excel file is available by simply writing an email to info@biz-architect.com.
[10] This table and the ROI Excel file is available by writing to info@biz-architect.com.
[11] This table and the ROI Excel file is available by writing to info@biz-architect.com.
[12] This table and the ROI Excel file is available by writing to info@biz-architect.com.