Enterprise Architecture KPIs that demonstrate the value of EA to the business and IT

One EA group doing business architecture used some key business metrics: number of dispatch per call (based upon technicians dispatched per call to the call centre) and CSO training time (they reduced the number of applications that were used by call centre staff and thus reduced their training time). I liked these because they could have represented the exact same measures in “IT” speak but they didn’t they used concepts that were important to the business.

Here are some other good success stories from Gartner (a great research paper on EA and cost optimisation by Bruce Robertson), sadly IT focussed: 1) A retail company mapped projects to business strategies from EA vision, some had strong linkages (to more than one strategy) and some had no linkage at all. They found the ERP upgrade could be put off so they did indefinitely (>3 years now) and saved > $2M. 2) Lots of rationalisation stories – from 35 unique SAP implementations to 2, estimated savings: 10 million euros annually, 278 sites and Data Centres reduced by 75%, portal consolidation: from 2,000 web sites to 40 hubs, 650 servers eliminated and reduction of ERP staff in shared service centres from 2,400 to 1,200 in 2 years. 3) Some innovation and business savings - added reverse auctioning to e-sourcing, reducing costs by 25% and e-procurement initiative using SAP SRM helped optimise the procurement process, over 10 million euros saved annually.

If you want to measure value think about where to focus your attention – this statistic is very interesting - Average IT Spend in 2007 = 4.1% Revenue, Average IT Spend in 2007 = $12,471 per Employee, Average IT Spend in 2007 = 5.9% Operating Expense What about the other 94.1% of the expenses? Think beyond IT because it has been bled dry – how can you express your EA value in business focussed KPIs?

The biggest challenge you have with EA measurement is that the work architects do occurs before projects are implemented and is often not recognised. Track the involvement of architects in projects prior to implementation – at concept/feasibility phases and then piggy-back on the project KPIs. The global Chief Architect at GM tells the story that he saved the company $3.7 million in his first month on the job. All he did was rationalise their ERP portfolio down to 1 instance of SAP. Now you and I know that this would have been a huge program of change over several years to retire all the old apps and migrate everything onto SAP but he did not care he took credit for the overall saving because it was the EA work that identified this opportunity. This is the type of thinking you need to successfully measure EA – no one will give you credit for your hard work in the early phases of a project lifecycle that generated the success of that project and its relative KPI/ROI. Use concepts like probable cause and pragmatic justification. If you show probable cause that EA directly contributed to the success of a project – take the ROI/KPI of that project as your own – this is pragmatic justification.

Comments

[Ruth]

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Ruth

http://fendisite.com