Presentation to the Corporate IT Forum EA focus group on EA Value - Dec 2011

1. EA Value Propositions
October 2011 V1
From an IT Perspective
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2. Office of the CIO
Overview of the Value Discussion
The IT IT Alignment
EA & IT
Value BAE What is EA?
Governance
Proposition Example
Planning for
Value
Relevant
Value EA Value
External The EA Value
Within a & Investment
Value Proposition
Market Lifecycles
Research
Measures of Constraints
Value On EA Value
© BAE Systems (insert Home Market) 2011 BAE Systems [INTERNAL USE ONLY/IN STRICT CONFIDENCE] Date/reference/classification 2

3. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
Measures of Constraints
Value On EA Value
The IT Value Proposition
3

4. Value Perspectives
FROM:
Within the Enterprise
Outside the Enterprise
4

5. Perspectives Within the Enterprise
Insight:
•Performance,
•Analysis,
•Forecast,
•Simulation
Executive Value: Business Control Enable:
•Org Change,
Enforce: •M&A,
Processes:
•Standards, •New Business
Tensions & Trade-offs
•Repeatable, Models,
•Policies,
•Robust,
•Limits,
•Efficient,
•Consistency
•Effective,
•Scalable,
•New Capability Levels Management Value: Organisational Delivery
Team Building & Enablement:
•Communications,
•Sharing Knowledge & Practices,
•Extended Team Interaction,
•Same Payroll, Access Control, etc. User Value: Consumer Benefits
•Builds Shared Culture
Personal:
•Access External Innovation
•Productivity,
•Mobility, Flexibility & Home Working,
•Ability to Do Job Easily
•Access to e-Training
5

6. Perspectives Outside The Enterprise
Customers:
Talent: • New Products / Services
• Modern Image • Better Buying Experience
• Wider pool of Recruitment • Better Support
• Rapid Innovation which
Addresses Their Problems
Digital Media:
• Reputation
• Promotion
• Industry Debate
6

7. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
Measures of Constraints
Value On EA Value
IT Alignment
7

8. The Nature of Our Business Drives Its Information Priorities
Transplanting
Capability
What We Do Strategic Themes
Solution
Home Markets Simplification
Domain
Specific
Cost Reduction Solutions
Projects Engineering Services Agility &
Investment
(Incl. IT)
Alignment
Sectors
Customer
Intimacy
New Products Customer
Requirement
Insight
Involves Intensive Use of
Information. Knowledge & IPR Sustainability Harvesting
In Service
as well as Communication Knowledge
Cyber
External Declining
Increasing Increasing IT War Products
Compliance Cyber Commodit- For Innovation,
Context: UK/US Spend
Needs Threat isation Talent SVR &
Partnering
IM&T Issues: Sustainable
IT
Security Mobility,
Information Social IM&T IM&T Skills
Continuity Collaboration Virtualisation
Governance Media Reputation & Sourcing
& Risks & Cloud
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9. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
Measures of Constraints
Value On EA Value
What is EA?
9

10. What is Enterprise Architecture?
Enterprise Architecture is the Practice of applying high level Design
techniques to a Business’s overall Organisation and Technology
Assets;
This is an essential Governance Practice;
It is applied to Planning for Business Change, Managing the Creative
Aspects of Business Change and the On-going Exploitation of
Existing Assets;
IT adopts Enterprise Architecture to integrate its Governance with that of
the other functions within a business and to provide a framework for
technical decision making.
EA & Governance are both concerned with Value

11. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
Measures of Constraints
Value On EA Value
EA & IT Governance
11

12. Best Practice Suggests IMT Governance Involves
ISO 38500 – IT Governance Standard framework CoBIT - 5 IMT Governance Practices
which complement these principles:
Corporate
Business governance Business
needs
pressure of IMT Strategic Alignment
Value Delivery
Evaluate
Risk Management
Performance Measurement
Direct Monitor Resource Management
proposals
conformance
Performance
policies
ITIL & ISO20000 for Service
plans
Management which underpin
governance implementation.
In the context of overall business
IT Projects IT Operations
governance
Underpinned by 6 principles :
Responsibility Performance
Simply put: a framework for
Strategy Conformance appropriate decision making
Acquisition Human Behaviour (to optimise value)
Redrawn from the standard, with “IT” replacing “ICT”
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13. Our Picture
IT Risk &
Defined
Strategy Value Opportunity
Opportunities
Management
Enterprise
Priorities
Architecture
for
Value Implementation Standards
Opportunities Of & Roadmaps
Design
Technical Scope Informed
& Content
Dependencies
Value
Judgements
IT BBS
New & Improved KPIs
Capabilities Application
Project Portfolio
Portfolio
Management
Value /
Candidate
Management
Benefit
Decisions Projects
Ongoing
Delivery Maintenance
Investment Of New
Value
& Enhancement
Of delivered
Management &
Benefit
Value IT Vendor
Tracking
Operational Relationship
Processes Management
13

14. Joint Interactive Planning (IT & Business) Leads to Results
From Gartner Paper “Realizing the Benefits of Project & Portfolio Management”
PPM benefits – Other sources:
!0% improvement on ROI - from review of architectural dependencies and coherent alignment - Alfabet white papers Achieving ROI on Enterprise Architecture and Using Enterprise Architecture to
Achieve Effective IT Cost Management
20% reduction in costs from eliminating duplication and low priority projects can be obtained without adverse affect - “IT Portfolio Management Step-by-Step”, Bryan Maizlisch and Robert Handler,
Wiley 2005
Up to 40% reduction in project spend from the pre-budget position - Best Practices in IT Portfolio Management - MIT Sloan Management Magazine, Spring 2004, Mark Jeffrey & Ingmar Lelireid
14

15. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
Measures of Constraints
Value On EA Value
Planning For Value
15

16. Planning for Value – Evolutionary Trajectory
Quo Vadis?
Efficiency Effectiveness Engagement
Stability & Sophistication & Learning
Predictability New Capability Surviving
Chaos
Automation & Agility & Loyalty &
Control Innovation Responsiveness
Communic-
Information Records & Reputation
ation &
& Insight Search & Intimacy
Collaboration
1970s 1990s 1990s 2010s
Data Documents Connection
Social
Processing & Messages & EDI
1960s 1980s 1990s 2000s
16

17. Planning for Value
Apply some principles:
- All EA work should be driven by the pursuit of Value:
- Do what we do today better
- Do New Things (well)
- Remove Waste
- Only make architectural decisions when we need to
- Model in Detail when it meets today’s/next day’s needs
- Present in terms of value outcomes
Suggestions on process are in the supplemental slides (at the end)
Some Clues about where to look for Value …
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18. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
Relevant External Value Measures of
Value
Constraints
On EA Value
Research
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19. MIT CISR Architectural Standardisation
MIT CISR define 4 stages of Architectural Maturity:
Business Silos Standardised Optimised Core Business Modularity
Technology
LOCALLY IT EFFICIENCY OPERATIONAL STRATEGIC AGILITY
OPTIMISED EFFICIENCY
IT apps serve local Technical Standards Standardised data & Business Processes
needs limit choice and raise processes increase Plug & Play
efficiency organisational increasing agility
discipline
Executive Satisfaction
= 2.0 (out of 5) = 2.7 = 3.5 = 3.8
Relative IT Spend
= 100 = 85 = 75 = 120
N.B. this fits with claims of up to 25% running cost reductions from EA & APM
Enterprise Architecture As Strategy: Creating a Foundation for Business Execution, Jeanne W. Ross, Peter Weill & David C. Robertson
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20. Complexity Optimisation
Source: The Global Simplicity Index 2011
10.2% - the hidden cost of complexity
By Simplicity & Simon Collinson (Warwick
Business School)
Based on:
1. The no & variety of components in the
organisation
2. The interrelationships between the
components
3. The pace of change of these relationships
Note: none of the components are IT based …
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21. Implication For Global Companies
The
Same
Everywhere
Govern / Manage The Business
Do The Business
Standardise Market Sector 1
By Sector
Localise Market Sector 2
.
Customer .
Facing .
Capabilities Market Sector N
Share & Support The Business
Standardise
By
Geography
Issue: requires political will and appropriate ownership structure
to achieve
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22. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
Measures of Constraints
Value On EA Value
Value Within A Market
22

23. Market Model – we all swim within at least one “market sea”
Owners
& Regulators
Reduce
New Overheads / New
Capabilities /
? Innovation
Complexity Product / ?
Of Compliance Service
Opportunities & Reporting Opportunities
Govern / Manage
Improve
Do Customer
Suppliers Experience / Customers
Leverage Support
Supplier Value
Capabilities The Business Look
& Capital
For
Common Industry Indirect
Solutions Customer
Use: (cost reduction Exploit Value
Engagement Map, & customer Competitor Too
SWOT & PEST convenience) Weaknesses
For each relationship
To identify Trends, Big Competitors
Rules & Opportunities
23

24. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
Measures of Constraints
Value On EA Value
The EA Value Proposition
24

25. Benefits of Enterprise Architecture
Business Driver Value Outcome
IT Strategy Addresses Business Value with
Integrated Solutions;
Business Strategy, Priorities and Needs
Innovation Drives Competitiveness;
Drive IT Strategy Business IT Investment Areas Targeted Rationally;
Alignment IT Contributes to Business Strategy
IT Can Articulate Strategy and its Relevance;
Stakeholders Understand Issues;
Need for Confidence in Solutions Understanding &
Analysis Deepens Understanding;
Communication Impacts of Business Changes Are Clear
Technical Project Content is Known;
Risk Reduction Technical Dependencies Are
Dependable Value Delivery Identified;
Security Risks Are Addressed;
Continuity Is Addressed;
Process Fit
Improvement;
Optimisation Obsolescence
Adaptability Management;
Simplification;
Re-use.
Date/reference/classification
25

26. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
EA Value & Investment Measures of
Value
Constraints
On EA Value
Lifecycles
26

27. Based on a Presentation by Chris Potts
EA
Value SD
PM
Strategy
Investment
Appraisal
Lifecycle
Idea Appraisal Implement Harvest Retire
Based on a Presentation by Chris Potts, Author of “FruITion” and “RecrEAtion”, at Troux 360, 2011
27

28. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
Measures of Constraints
Value On EA Value
Measurement of Value
28

29. Outcomes not Artefacts
Each business should have some strategic KPIs which reflect its performance
The trends and relationships of these can be examined to determine the trend in
UNIT PERFORMANCE. This gives a clue about either whether EA is needed or
alternatively it is succeeding.
Examples:
EBITDA / Revenue,
Annual Unit Management Cost per customer account
Average time to market for new products
IT and EA value is ultimately measured in these terms
Other BBS style measures can also be used to facilitate diagnosis of
- Where EA should focus next
- How EA can improve its own effectiveness
29

30. The IT IT Alignment
What is EA & IT
Value BAE
EA? Governance
Proposition Example
Planning for
Value
Relevant EA Value
Value The EA
External &
Within a Value
Value Investment
Market Proposition
Research Lifecycles
Measures of Constraints
Value On EA Value
Constraints on EA Value
30

31. Constraints on EA Value
Forrester’s EA Archetypes Model
Does being outside the top right corner of the Model reflect:
(a) Limitations in IT Executive Imagination/Knowledge?
(b) Lack of a Business Strategy to align with?
(c) Failure of a Business to prioritise structural integration?
(d) Response to economic / business cycles?
(e) The reputation of IT within a business?
Constraints:
• Top Team dysfunction
• Lack of £s / resources
• Continuous rapid M&A
• Continuous change of CEOs (and direction)
• Immature IT team
• Market turbulence / No time to focus on the future
• Reporting to the wrong Executive / at the wrong level
• Where IT is in its relationship cycle with the rest of the Business
Gartner analyses suggest that high performing businesses are engaged with IT to manage for value.
IBM Research presented in the IBM Systems Journal in the 1990s stated that IT Strategy cannot deliver results
If a business does not have a coherent business strategy (explicit or implicit).

32. Supplemental
- Where do we start /
- Which techniques practices do it for us
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33. The Nature of Value
e.g. New markets,
Seek new sources of New Products
The Value
Value Service Innovation
Staircase
Helps Identify e.g. support programmes
Business Value Deliver things which add provide control & insight
Streams automate processes,
value
respond quickly
e.g. avoid:
Avoid things which unnecessary complexity,
duplication of investment or activities,
Erode Value nugatory investments
Do Things which e.g. Risk Mgt, Security,
Protect the Business Business Continuity
Pre requisites which give e.g. Security & Compliance with export controls
us the right to trade
33

34. For Each Value Stream
As well as
Identify the EA
continuously design
Activities & practices,
an optimised
& EA solutions which
architecture for the
help
Value assets, oversee
Stream asset choices &
review legacies
Have realisation
Are addressed by
Objectives
Objectives Activities IT (& other)
Which deliver value Services &
Are affected by Assets:
Systems
Are addressed by Solution Options Data
Which enhance Infrastructure
CSFs
CSFs enablers and limit (other assets)
CSFs
inhibitors
N.B. only some f the activities & solution options concern EA, many are business activities and business solutions supported by services and assets
34

35. Prioritise According to Need & Level of Opportunity
Businesses respond to changes in their marketplaces
as well as in leadership. This means that value stream priorities
Are constantly changing. EA needs to prioritise in line with these changes
As well as avoiding over focus on one area (i.e. don’t flog dead horses)
De-Centralisation Centralisation
New Markets Cost cutting
Product Innovation Rationalisation
Acquisition Focussing
Business Cycles
35

36. Enterprise Architecture Layers
ENTERPRISE ARCHITECTURE
KEY
LAYER SECTOR ENTERPRISE SYSTEMS ISSUES
SPECIFICS ARCHITECTURE
Industrial •Products •Market & Business Models •Positioning
Environment •Branding •Legislation & Trends •Reinvention
•Turbulence •Stakeholder Agenda & Strategy •Performance
•People Capabilities & Security Management •Organisation & Control •Partners
Business
•Skills •Processes •Boundaries & Services
•Facilities •Locations •Flexibility
System •Behaviour •Applications •Enablement
•Materials •Data & Knowledge •Security & IPR
•Flows •Events •Responsiveness
Infrastructure •Transport •Networks •Scalability
•Technologies •Systems Software •Innovation
•Assets •IT Equipment •Obsolescence
36