ea & it value

© BAE Systems (insert Home Market) 2011 BAE Systems [INTERNAL USE ONLY/IN STRICT CONFIDENCE] 1

EA Value Propositions

Date/reference/classification

October 2011 V1

From an IT Perspective


Overview of the Value Discussion


Office of the CIO

ConstraintsOn EA Value

Measures of Value

Planning forValue

What is EA?The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example

RelevantExternal

Value Research

ValueWithin aMarket

The EA ValueProposition

EA Value& Investment

Lifecycles

3

The IT Value PropositionConstraints

On EA ValueMeasures of

Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example

RelevantExternalValue

Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&

InvestmentLifecycles

4

Value Perspectives

Within the Enterprise

Outside the Enterprise

FROM:

5

Perspectives Within the Enterprise

Executive Value: Business Control

Enforce: • Standards,• Policies,• Limits,• Consistency

Insight: • Performance,• Analysis,• Forecast,• Simulation

Management Value: Organisational Delivery

Processes:• Repeatable,• Robust,• Efficient,• Effective,• Scalable,• New Capability Levels

Team Building & Enablement:• Communications,• Sharing Knowledge & Practices,• Extended Team Interaction,• Same Payroll, Access Control, etc.• Builds Shared Culture• Access External Innovation

User Value: Consumer Benefits Personal: • Productivity,• Mobility, Flexibility & Home Working,• Ability to Do Job Easily• Access to e-Training

Enable: • Org

Change,• M&A,• New

Business Models,

Tens

ions

& T

rade

-offs

6

Perspectives Outside The Enterprise

Customers:• New Products / Services• Better Buying

Experience• Better Support• Rapid Innovation which

Addresses Their Problems

Talent:• Modern Image• Wider pool of Recruitment

Digital Media:• Reputation• Promotion• Industry Debate

7

IT AlignmentConstraints


Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example


Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&


8

The Nature of Our Business Drives Its Information Priorities

What We Do

Projects Engineering(Incl. IT)

Services

Involves Intensive Use ofInformation. Knowledge & IPR

as well as Communication

Strategic Themes

Home Markets

Cost Reduction

Sectors

New Products

Sustainability

ExternalContext:

DecliningUK/US Spend

IncreasingCompliance

Needs

IncreasingCyberThreat

ITCommodit-

isation

WarFor

Talent

IM&T Issues:Security

Continuity & Risks

InformationGovernance

CollaborationSocialMedia

Mobility,Virtualisation

& Cloud

TransplantingCapability

SolutionSimplification

DomainSpecific

SolutionsAgility &

InvestmentAlignment

CustomerIntimacy

CustomerRequirement

InsightHarvestingIn Service Knowledge

CyberProducts

SustainableIT

IM&T Skills& Sourcing

IM&TReputation

Innovation,SVR &

Partnering

9

What is EA?Constraints


Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example


Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&


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

EA & IT GovernanceConstraints


Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example


Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&


12

Best Practice Suggests IMT Governance InvolvesISO 38500 – IT Governance Standard framework

MonitorDirect

Evaluate

IT Projects IT Operations

Corporategovernance

of IMT

pla

nsp

olic

ies

Per

form

ance

conf

orm

ance

pro

po

sals

Businesspressure

Businessneeds

Underpinned by 6 principles :

ResponsibilityStrategyAcquisition

PerformanceConformanceHuman Behaviour

Redrawn from the standard, with “IT” replacing “ICT”

CoBIT - 5 IMT Governance Practices which complement these principles:

Strategic AlignmentValue DeliveryRisk ManagementPerformance MeasurementResource Management

ITIL & ISO20000 for Service Management which underpin governance implementation.

In the context of overall business governance

Simply put: a framework for appropriate decision making

(to optimise value)

13

Our Picture

EnterpriseArchitecture

Project PortfolioManagement

ApplicationPortfolio

Management

Technical Scope & Content

Dependencies

Standards & Roadmaps

New & ImprovedCapabilities

InformedValue

Judgements

CandidateProjects

ImplementationOf

Design

Value / Benefit

Decisions

DefinedValue

Opportunities

Prioritiesfor

ValueOpportunities

DeliveryOf New Value

& Benefit

Tracking

OngoingMaintenance

& EnhancementOf delivered

Value

Strategy

InvestmentManagement IT Vendor

RelationshipManagement

IT Risk &Opportunity

Management

OperationalProcesses

IT BBS KPIs

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

15

Planning For ValueConstraints


Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example


Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&


16

Planning for Value – Evolutionary Trajectory

Data Processing

Information& Insight

Documents& Messages

Records &Search

Connection& EDI

Communic-ation &

Collaboration

Social

Reputation& Intimacy

1960s

1970s

1980s

1990s

1990s 2000s

2010s1990s

Automation &Control

Agility &Innovation

Loyalty &Responsiveness

EfficiencyStability &

Predictability

EffectivenessSophistication &New Capability

EngagementLearningSurviving

Chaos

Quo Vadis?

© BAE Systems (insert Home Market) 2011 BAE Systems [INTERNAL USE ONLY/IN STRICT CONFIDENCE] 17Date/reference/classification

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 …

Planning for Value

18

Relevant External Value

ResearchConstraints


Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example


Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&



MIT CISR Architectural Standardisation


MIT CISR define 4 stages of Architectural Maturity:

Business Silos Standardised Technology

Optimised Core Business Modularity

LOCALLY OPTIMISED

IT apps serve local needs

IT EFFICIENCY

Technical Standards limit choice and raise

efficiency

OPERATIONAL EFFICIENCY

Standardised data & processes increase

organisational discipline

STRATEGIC AGILITY

Business Processes Plug & Play

increasing agility

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 & APMEnterprise Architecture As Strategy: Creating a Foundation for Business Execution, Jeanne W. Ross, Peter Weill & David C. Robertson


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 …


Implication For Global Companies


Govern / Manage The Business

Do The Business

Support The Business

Market Sector 1

Market Sector 2

Market Sector N

.

.

.

TheSame

Everywhere

Standardise By SectorLocalise

CustomerFacing

Capabilities

Share &Standardise

ByGeography

Issue: requires political will and appropriate ownership structureto achieve

22

Value Within A MarketConstraints


Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example


Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&


23

Market Model – we all swim within at least one “market sea”

Owners& Regulators

Competitors

CustomersSuppliers

Govern / Manage

Do

Support

The Business

??

ExploitCompetitorWeaknesses

ImproveCustomerExperience /Value

NewProduct /

ServiceOpportunities

New Capabilities /InnovationOpportunities

LeverageSupplierCapabilities& Capital

Common IndustrySolutions(cost reduction& customer convenience)

ReduceOverheads /ComplexityOf Compliance& Reporting

Use: Engagement Map,

SWOT & PESTFor each relationship

To identify Trends, Big Rules & Opportunities

LookFor

IndirectCustomer

Value Too

24

The EA Value PropositionConstraints


Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example


Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&


Process Fit Improvement;

Obsolescence Management;Simplification;

Re-use.

Adaptability

Technical Project Content is Known;Technical Dependencies Are

Identified;Security Risks Are Addressed;

Continuity Is Addressed;

Dependable Value Delivery

IT Can Articulate Strategy and its Relevance;Stakeholders Understand Issues;

Analysis Deepens Understanding;Impacts of Business Changes Are Clear

Need for Confidence in Solutions

IT Strategy Addresses Business Value with Integrated Solutions;

Innovation Drives Competitiveness;IT Investment Areas Targeted Rationally;

IT Contributes to Business Strategy

Business Strategy, Priorities and NeedsDrive IT Strategy

25Date/reference/classification

Benefits of Enterprise Architecture

BusinessAlignment

Understanding & Communication

Risk Reduction

Optimisation

Business Driver Value Outcome

26

EA Value & Investment

LifecyclesConstraints


Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example


Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&


27

Based on a Presentation by Chris Potts

Value

LifecycleIdea Appraisal Implement Harvest Retire

EA

PMSD

InvestmentAppraisal

Strategy

Based on a Presentation by Chris Potts, Author of “FruITion” and “RecrEAtion”, at Troux 360, 2011

28

Measurement of ValueConstraints


Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example


Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&


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 accountAverage 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

30

Constraints on EA ValueConstraints


Value

Planning forValue

What is EA?

The ITValue

Proposition

EA & ITGovernance

IT AlignmentBAE

Example


Research

ValueWithin aMarket

The EA Value

Proposition

EA Value&


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).

© BAE Systems (insert Home Market) 2011 BAE Systems [INTERNAL USE ONLY/IN STRICT CONFIDENCE] 32Date/reference/classification

Supplemental- Where do we start /- Which techniques practices do it for us

33

The Nature of Value

Pre requisites which give us the right to trade

e.g. Security & Compliance with export controls

Do Things whichProtect the Business

e.g. Risk Mgt, Security, Business Continuity

Avoid things whichErode Value

e.g. avoid: unnecessary complexity,duplication of investment or activities,nugatory investments

Deliver things which add value

e.g. support programmesprovide control & insightautomate processes,respond quickly

Seek new sources of Value

e.g. New markets,New ProductsService Innovation

The ValueStaircase

Helps IdentifyBusiness Value

Streams

CSFs

Objectives

34

For Each Value Stream

ValueStream

Objectives

CSFsCSFs

Solution OptionsWhich enhance

enablers and limit inhibitors

Identify the EA Activities &

practices, & EA solutions which help

IT (& other)Services &

Assets:Systems

DataInfrastructure(other assets)

ActivitiesWhich deliver value

Are affected by

Have realisation

Are addressed by

Are addressed by

As well as continuously design

an optimised architecture for the

assets, oversee asset choices & review legacies

N.B. only some f the activities & solution options concern EA, many are business activities and business solutions supported by services and assets

35

Prioritise According to Need & Level of Opportunity

Business Cycles

Cost cuttingRationalisation

Focussing

New MarketsProduct Innovation

Acquisition

De-Centralisation Centralisation

Businesses respond to changes in their marketplacesas well as in leadership. This means that value stream priorities

Are constantly changing. EA needs to prioritise in line with these changesAs well as avoiding over focus on one area (i.e. don’t flog dead horses)

36

Enterprise Architecture Layers

• Market & Business Models• Legislation & Trends• Stakeholder Agenda & Strategy

• Organisation & Control• Processes• Locations

• Applications• Data & Knowledge• Events

• Networks• Systems Software• IT Equipment

• Products• Branding• Turbulence

• People• Skills• Facilities

• Behaviour• Materials• Flows

• Transport• Technologies• Assets

IndustrialEnvironment

Business

System

Infrastructure

LAYER

• Positioning• Reinvention• Performance

• Partners• Boundaries & Services• Flexibility

• Enablement• Security & IPR• Responsiveness

• Scalability• Innovation• Obsolescence

ENTERPRISE SYSTEMS ARCHITECTURE

SECTORSPECIFICS

ENTERPRISE ARCHITECTUREKEYISSUES

Ca

pa

bili

ties

& S

ecu

rity

Ma

na

ge

me

nt

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