The Value and Risk of Creating an Enterprise Architecture

Introduction
There is both value and risk associated with the establishment of an EA program in an
enterprise. On the value side, EA has the unique capability to bring together views of strategy,
business, and technology that allow an enterprise to see itself in current and future operating
states. EA also supports the modeling of different future operating scenarios, which may help the
enterprise survive (or thrive) as it responds to changes in the internal and external operating
environment, some of which can be unexpected. Additionally, an EA program establishes an
integrated set of IT resource planning, decision-making, and implementation processes that can
better identify and resolve performance gaps across the enterprise.

Home Architecture Analogy: A set of comprehensive blueprints for building a home takes an
architect a fair amount of time and money to create. Without them though, any construction
that occurs is an uncoordinated activity, and the home that results may not function properly.

On the risk side, creating an EA for an entire enterprise can be time-consuming, costly,
and disruptive to business services. Also, developing detailed EA documentation that covers
strategy, business, and technology within each area of the enterprise can be time consuming and
costly. Hiring and/or training architects and supporting analysts is one element of the cost.
Another cost element is the time it takes line of business managers and support staff away from
their normal work. Finally, the cost of EA documentation tools and on-line repositories has to be
factored in as well. Further, there is the risk that the EA will not be used by stakeholders if they
do not buy to the concept of EA or its perceived value.
On the value side, EA is unique in its ability to promote enterprise-wide thinking about
resource utilization. EA replaces the systems-level approaches to IT resource development that
have characterized the last several decades, and has left many enterprises with stovepipe and/or
duplicative IT resources. EA promotes the development of more efficient enterprise-wide
common operating environments for business and technology, within which more capable and
flexible business services and systems can be hosted. This in turn makes an enterprise more agile
and able to respond to internal and external drivers of change, which promotes greater levels of
competitiveness in the marketplace.
The benefits should outweigh the costs of doing an EA, or the program should not be
established. In the Case Study example, if an EA program helps DMC’s executives find a combined
solution to two sets of business and technology requirements, then a significant amount of
money can be saved. Multiply this by several of these situations each year, and the EA program
may very well pay for itself. Further, EA helps to identify existing duplication in functional
capability, which can generate additional savings. Finally, EA documentation helps to identify
current and future performance gaps that may not be otherwise realized, which enables the
enterprise to be more proactive and cost-efficient in addressing solutions.
The Value of EA
The value of EA is that it enhances resource-planning capabilities and supports better
decision making. This is accomplished through communication improvements in respect to
current and future resources. Ideas are conveyed more rapidly while differences in
interpretations and misunderstandings are reduced.
The value of EA is that it enhances resource-planning capabilities and supports better
decision making. This is accomplished through communication improvements in respect to
current and future resources. Ideas are conveyed more rapidly while differences in
interpretations and misunderstandings are reduced.

Improved Planning
EA enhances both top-down and bottom-up approaches to planning. Top-down planning
begins with considerations for strategy and business, which are enhanced by the holistic
perspectives of the enterprise that EA provides. Bottom-up planning is also enhanced, as EA
coordinates what would otherwise be disparate and separate program-level planning activities.
EA also enhances strategic planning as it helps to bring together multiple perspectives of business
and technology at various levels of the enterprise. Finally, EA supports program and project
management by providing a baseline of reference documentation for business alignment,
standards, and configuration management.

Decision-Making
EA improves decision-making by providing comprehensive views of current capabilities
and resources, as well as a set of plausible future operating scenarios that reveal needed changes
in processes and resources (see Chapter 8 for additional details on future scenarios). By having
an online EA repository of information that is updated at regular intervals, decision-makers have
real-time access to higher-quality information at various levels of detail. In that the EA program
links to other areas of resource governance (e.g., capital planning, project management, and
security), decision-makers can obtain coordinated information on operations, support, and
development activities. Chapters 10 and 11 provide additional details on the relationship
between EA, capital planning, project management, and security.

Communications
EA improves communication throughout the enterprise by providing a regularly updated
baseline of integrated information on strategy, business, and technology. Also, the EA program
and implementation methodology bring standardized approaches and terminologies for the
development and management of enterprise resources. This standard EA language and
methodology is especially helpful in large, complex enterprises that are geographically dispersed,
and which may have multiple social and work cultures that have promoted different ways of
doing things. EA should not stifle the creativity that cultural diversity can bring, but should
augment and enhance that creativity by improving the alignment of business and technology to
the strategic goals and initiatives of the enterprise. The old saying is that “a picture is worth a
thousand words.” Having an on-line repository of EA information is like having a 24x7 gallery of
electronic documents and drawings that can be useful in a variety of activities throughout the
enterprise. It is tremendously valuable if the members of an enterprise can electronically call-up
the same set of EA reference materials at financial planning meetings, research and development
seminars, sales and marketing reviews, and daily operations and support activities. With an
updated repository of EA materials available, meetings can convey greater amounts of
information in shorter periods of time, achieving higher levels of understanding based on a
common set of EA terms and information.

Managing Risk
Risk is related to uncertainty, and in applied form is the potential source(s) for the failure
or underperformance of a program or project. The management of risk involves lowering or
eliminating the uncertainty that desired outcomes will not be realized. There are several types of
risk that relate to the implementation and maintenance of an EA program, including:
Financial. Implementing an EA involves establishing current and future views of enterprise
resources, an EA Management Plan, and updates to this information at regular intervals. Like any
implementation project, establishing the initial set of EA information will require start-up funding
that is more than what will be required for the periodic updates. Even after the EA is established,
cuts in an EA maintenance budget can severely affect the program, to the point of making the EA
information eventually become of little or no use if it becomes too out of date.
Lack of Acceptance. EA represents a new way of looking at enterprise resources by
providing an integrated view of strategy, business, and technology that supports the
consolidation or reengineered of these resources to produce additional value. Former
approaches to program management that supported systems level planning will be replaced with
EA level planning that is promoted through the EA program. This will most likely create some
tensions between program level stakeholders, EA stakeholders, and other affected groups.
Loss of Key Personnel. EA is an emerging area of professional practice that requires
architects, analysts, developers, and programmers. Each of these skill sets is important to the
program and the loss of members of the EA team with those skills can create delays in program
implementation, as well as effect implementation costs.
Schedule Delays. As with all implementation projects, the documentation of current and
future EA views as well as the creation of the initial EA Management Plan is approached as a
project that has milestones and a specific schedule for completion. Delays to the schedule can
come from many sources and depending on the point at which a delay occurs during EA
implementation, and how long the delay is, the effect can go from being negligible to being
catastrophic for the EA program.
Documentation Tools. One of the greatest challenges for a Chief Architect is to develop
current and future views of the EA that are rich in detail, easy to access, and which can support
modeling and decision-making types of queries. The capabilities of EA tools and supporting
applications at present are such that intuitive and informative “management views” of EA
information are difficult to produce with these tools. Further, because more than one software
application is normally required in an EA program, tool integration is an issue that must be dealt
with. As new commercial tools are introduced a Chief Architect has to consider what the effect
will be on overall documentation if that product does not integrate with other tools.
Mitigating Risk. Risk mitigation plans and activities reduce the likelihood that sources of
risk will emerge and negatively impact a program such as EA. Actions that mitigate risk (lower
uncertainty) include strengthening executive support for the EA program, solidifying budgets, not
being the first adopter of EA tools and documentation techniques, ensuring there are trained
back-ups on the EA team, and using a detailed EA implementation methodology to guide the
overall program. Additionally, basic program management skills address potential problems of
key personnel turnover, cost and schedule overruns, performance issues, and stakeholder
acceptance. Overcoming issues related to technology compatibility among EA products is
achieved through the use of commercial tools that are based on open standards, and which are
mature and have significant market share. Risk identification and mitigation is not a one-time
activity, it is an ongoing management review item that will assist in making an EA program
successful.

Quantifying EA Program Value

How to translate value to the bottom line is one of the biggest question’s executives and
Line of Business (LOB) managers have about EA programs. Building a business case that includes
an alternatives analysis, cost-benefit analysis, and return on investment calculation is the primary
measure for evaluating the contribution to profitability and/or mission success (see the example
Business Case in Appendix A). Many aspects of EA value can be quantified, including the following
areas:
Shortening Planning Cycles. EA can help shorten planning cycles by providing a robust
repository of on-line information regarding current and future processes and resources. While
EA does not replace strategic planning or business process improvement activities, it does
enhance them through contribution of useful information that that would otherwise be gathered
separately.
More Effective Planning Meetings. EA information allows for the presentation of a
common baseline of planning and reference information. It reduces ambiguity and increases
levels of common understanding.
Shorter Decision-Making Cycles. The time it takes to gather and crosswalk strategy,
business, and technology information is greatly reduced by having a repository of EA information
that was developed through the use of a logical framework and archiving method. Decision-
making processes can be streamlined to reflect the availability of this new resource of integrated
baseline information. Improved Reference Information. By using an EA documentation
framework and implementation methodology, information on processes and resources is
gathered in a standardized method using the same tools and applications. Additionally, the
method for storing the information is coordinated through the use of the on-line EA repository,
which requires the use of standardized data and document formats. This in turn creates the
ability to perform queries for information across otherwise disparate activities and resources. It
also supports a more robust data mining and business analysis capability.
Reduction of Duplicative Resources. One of the greatest contributions an EA makes to an
enterprise is aiding the visualization of the value that current resources provide, where those
value areas overlap, and where performance gaps exist. For example, duplicative data represents
low-hanging fruit ready for elimination through the implementation of the future architecture.
Subsequent improvements might then focus on the introduction of new technologies and
improvements in efficiency.
Reduced Re-work. By approaching the planning and execution of new resources in a
holistic manner, potential re-work that might have been created through individual program level
initiatives (containing duplicative and/or conflicting capabilities) can be avoided. Also, rework is
reduced through the use of a step-by-step EA methodology and framework that call for standard
approaches to documentation that are based on mature modeling and analysis techniques.
Improved Resource Integration and Performance. EA promotes integration through the
planning and utilization of resources on an enterprise-wide basis. EA also helps to compare
current and future requirements for business and technology, in order to identify performance
gaps and solutions. This result is contrasted with stovepipe program-level inputs to provide
incremental improvements within individual LOBs.
Fewer People in a Process. EA supports business process reengineering (BPR) and
business process improvement (BPI) activities by encouraging planning in the context of both
enterprise-wide crosscutting requirements and particular LOB requirements. Quantifying this
includes the elimination of parts of a process that are repetitive. Also, streamlined processes that
use resources more efficiently can equate to position requirement reductions and payroll
savings.
Improved Communication. EA helps to promote a common language and central
approach that can reduce misunderstandings of resource requirements and potential solutions.
This can reduce re-work. Whole processes may require repetition due to misunderstandings of
different interpretations of requirements and/or solutions.
Reduction in Cycle Time. EA can help an enterprise to reduce the time it takes to plan,
develop, implement, and retire resources within its business and technology operating
environment. By using an EA methodology and framework (see Chapters 4 and 5), each resource
is evaluated from the same holistic strategy, business and technology viewpoint, and is
documented using the same set of EA tools and techniques. Further, EA compliments capital
planning and program management reviews of completed projects so that the ‘lessons learned’
can be applied to subsequent efforts. In this way, the enterprise can improve efficiency and
reduce the amount of time it takes to implement similar resources. For example, using an
integrated enterprise architecture/capital planning/project management approach to selecting,
controlling, and evaluating investments in web sites, the enterprise will be more effective and
efficient in implementing each subsequent web site, and can avoid creating duplicative
capabilities.

Quantifying EA Program Costs

The cost of EA should be approached from a program lifecycle view that centers on phases
for implementation, maintenance, and refreshment. One way to estimate EA program costs is to
look at each area of the EA implementation methodology and identify the direct and indirect
costs to accomplish each of the steps. In general, this would include the following:
• EA program administration and other enterprise administrative tie-ins
• Salary/benefits for a Chief Architect and EA team staff
• Meetings, facilities, materials, and support for stakeholder planning sessions
• Computers, applications, and web developers to establish the EA repository
• Interviews and materials to document EA current views
• Future scenario planning sessions with stakeholders
• Interviews and materials to document EA future views
• Development and documentation of the EA Management Plan
 • Purchase, use, and refreshment of EA modeling applications and computers
• Regular (e.g., annual) updates to EA documentation and the online repository

The cost of establishing an initial version of the EA will be more than the cost of updating
and maintaining it, due to the direct and indirect costs associated with establishing new EA
processes and capabilities, and gaining stakeholder support. The full lifecycle cost of the EA
program should be established and presented to the EA program sponsor, so that there is a clear
understanding of the one-time costs for implementation of the EA and the ongoing costs for EA
maintenance and refreshment activities.
As with any program, this budget picture should be baselined relative to the EA program
activities that are approved by the sponsor, so that any approved changes to the scope of those
EA activities are accompanied by a change to the budget. If this is not done, the EA program may
evolve to a position of being responsible for too much relative to the resources it has available.
In that EA is an advanced analytic type of activity, most of the cost of developing and maintaining
EA documentation will be the cost of labor for trained architects. The second largest cost area
will be the supporting technology (hardware, software, web applications, databases, EA tools,
etc.). The other major cost area will be the facility costs for the EA team’s work area and meetings
with stakeholders. Those who do EA (in total or in part) for a living work under a variety of job
titles, including Chief Architect, Solution Architect, Systems Architect, Data Architect, Network
Architect, Security Architect, IT Consultant, Management Consultant, and a number of related
analyst titles. Furthermore, there tends to be a set of classifications for senior, mid-level, and
junior positions for many of these jobs. From an informal survey of EA salaries in 2012 conducted
by the author, a senior enterprise architect’s position can command over $100,000 per year.10
Midlevel positions (3-5 years of experience) can earn in the range of $60,000 to $80,000.00 per
year, and the junior positions for beginning architects can earn in the range of $40,000 to $50,000
per year.
As expensive as this seems, the cost to outsource these positions is even greater. The
industry average for one work year is about 2,060 hours (this is Monday-Friday 8-hour days and
accounts for time away for holidays and personal time off). Some federal government contract
labor rates for the outsourcing of a Chief Architect and/or Senior Consultant position are over
$200 per hour, which translates to over $412,000 per year. The rate for mid-level EA professionals
can range from $125 to $175 per hour, so at the upper end of this range the outsourcing of one
of these positions can cost over $360,050. The rate for junior EA professionals can range from
$55 to $85 per hour, and at the upper end of this range the cost of outsourcing can be over
$175,100.
This significant level of cost for EA labor has caused some enterprises to pause in
considering the implementation of an EA program. However, when the potential savings
generated by the EA program are factored in, there can be a very high return on investment,
especially in enterprises where EA can reduce duplicative capabilities and help identify common
solutions to otherwise separate requirements. With costs for information systems in the many
millions of dollars, the consolidation of even a few of those systems can make the EA program
more than pay for itself, as well as enable the enterprise to re-direct the funding from duplicative
resources to other business requirements.
Linking Strategy, Business, and Technology
For EA to support an enterprise holistically, it must link strategy, business and technology.
EA is most effective when it simultaneously supports top-down executive planning and decision-
making across the enterprise and bottom-up management planning and decision-making within
each LOB. In this way, EA helps to ensure that strategy drives business and technology planning.
From a business perspective EA provides the context and purpose of business activities by
ensuring technology is implemented only after business requirements are identified. From a
technology perspective, EA provides the strategy and business context for resource planning. This
can be critical when working with multiple organizations to create common resources (i.e., supply
chains) or in merging / acquiring organizations into one enterprise.

Linking EA and Strategy

The EA framework and methodology organizes EA documentation in a way that allows
strategy to influence business and technology planning and decision-making. This is important
especially in the documentation of future EA views. By first identifying what changes are
anticipated in strategic goals and initiatives, subsequent documentation of business activities and
technology resources can be completed in such a way as to promote alignment, efficiency, and
effectiveness. Documenting strategy involves the identification of goals, initiatives, and outcome
measures.
Strategic Goals. These are the primary objectives of the enterprise. Strategic goals
typically require several years to accomplish. Changes in strategic goals are made in response in
internal and external business and technology drivers and/or changes in laws and regulations.
Strategic Initiatives. These are the business and technology activities, programs, and
projects that enable accomplishment of strategic goals, such that they can effect the
fundamental direction of the enterprise.
Strategic Measures. These are outcome measures that identify when a strategic initiative
has successfully met a strategic goal. Outcome goals define when an enterprise is accomplishing
its mission… when it ‘wins.’

Linking EA and Business Planning

As is reflected in the design of the EA framework, strategy creates business requirements
and technology supports solutions for meeting those requirements. EA documents three primary
issues at the business level: Supporting Strategic Goals. Touch points between strategic
initiatives and business activities need to be clearly documented. Not all business activities are
strategic, and it is important to distinguish in the EA documentation between those that directly
link to strategic initiatives and those that provide general support functions for the enterprise.
Documentation of Business Activities. Documenting the creation and delivery of business
products and services is important in supporting Business Process Improvement (BPI) and
Business Process Reengineering (BPR) projects, and in documenting business activities to show
inputs, outputs, outcomes, and other elements of influence regarding each business process. It’s
also important to identify how business processes are linked to one another.
Identifying Supporting Technologies. Analyzing business requirements and activities can
reveal critical supporting technologies (e.g. marketing activities require sales trend analysis data,
and a manufacturing process requires various types of resources including raw materials,
facilities, labor, computers, data, and/or robotics). EA helps to identify and document these
supporting technologies.
Linking EA and Technology Planning
Technology is a type of resource that enables information and other resource flows to
support the creation and delivery of business products and services, which in turn enables the
achievement of strategic goals. It is important that technology not drive business and strategy
planning, especially in resource-constrained enterprises, where the expense of duplicative non-
strategic technologies cannot be afforded. Bottom-up planning (e.g. where technology is the
catalyst for change) is a viable use of EA; however it’s not the normal process for resource
implementation. It’s more important for the enterprise to understand its primary directions and
priorities, plan necessary business activities, and then identify the supporting resources,
including IT.

Summary of Concepts
This chapter provided a detailed discussion of the value and risk of establishing an EA
program. A clear articulation of the business case for EA is needed to obtain executive
sponsorship and resources for EA program implementation and maintenance. Quantifying the
areas of value that the EA program will contribute is important, and those include improved
communication, planning, and decision-making. A total lifecycle approach to estimating costs is
used to differentiate the one-time direct and indirect costs associated with program start-up and
initial EA documentation from the ongoing costs of EA program management and documentation
updates. Comparisons were made in the area of EA labor costs between in-house salaries and
the expense of paying for external EA consulting support. In concluding the discussion of EA
value, the linkage between EA, strategy, business, and technology was shown.