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CIO Corner

Boundaryless Information Flow is Real and Relevant

Boundaryless Information Flow to Manage Our Safety

EA, Business Agility, and Boundaryless Information Flow

Enterprise Architecture: Return on Investment

Deciding on Open Source

Managing the Flow

Certification - A Part of a Virtuous Circle

Directories - If There Were No Directories I Couldn't Find IT

Boundaryless Information Flow & Enterprise Architecture

Thinking Strategically about Certified Products

Architecture: Make IT Work for You

Open Source and Standards

Architecture: An Essential Tool for the CIO

What Keeps CIO Awake

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CIO Corner with Terry Blevins

Enterprise Architecture: Return on Investment

What is a decision worth? Just think about it for a second. Do you put a price on decisions? I believe you do, even if it’s not the way you think. We judge decisions - the decision to buy a used car vs. a new car is likely to be judged as a “bad” decision if the used car breaks down and costs a ton of money to fix. A decision to build a solution based on an open component may be judged as “good” if the component provides competitive advantage through flexibility down the road. In both cases an element of the future is required to judge a decision.

This concept is consistent with the view of Gartner Group’s analyst Jorge Lopez that enterprise architecture should not be evaluated based on Return on Investment, but rather based on Return on Assets. In the article "Return on Enterprise Architecture: Measure It in Asset Productivity Companies" Mr. Lopez points out the need to look to the future when he describes that the effects of enterprise architecture "may not be readily apparent for perhaps another five years." He further argues that ROI misses the point in assessing the value of investments in enterprise architecture. Return on Assets is a strategic alternative."

I agree with this viewpoint, and add that enterprise architecture itself shouldn't have a measurable ROI, just like an enterprise architecture doesn't deliver system performance or deliver reliable data securely and on time. Enterprise architecture is a means to an end and the end is about the assets within the enterprise that deliver measurable value. What enterprise architecture does is help you make decisions that are designed to improve the productivity of your business through the effective and efficient use of information technology. When you focus on Return on Assets, it helps you focus on the right things for your enterprise architecture effort.

We should not just think about servers, applications, and networks as assets, we need to think about other areas to fully realize business benefit. Return on information assets is an area that deserves your attention; after all servers, networks, and other IT components are merely there to process information or pass information around. Information is the real asset for which you should seek a return. This should drive an enterprise architecture to guide decisions so that information quality improves, information redundancy is optimized, information repurposing is standardized, and information is managed as a core asset of the enterprise.

Taking the above viewpoints also helps you choose the right enterprise architecture tools. Selecting an enterprise architecture tool that focuses on technology without the context of business processes, business productivity, and business value is a “bad” decision. An enterprise architecture tool that doesn't explicitly address information as an asset should also be suspect. The Open Group's TOGAF Architecture Development Method is one such tool that helps you create enterprise architectures that improve your Return on Assets.

OK - so if you want some numbers: One of our case studies says it all: "the strategies embodied in the architecture lead to enormous savings, not in measured terms of hundreds or thousands, but rather millions of dollars." According to a report from Corporate Executive Board Research, John Hancock realized a US$6.25 million savings on redundancies discovered through enterprise architecture. Dow realized US$300 million in new revenue as a result of implementing new projects identified by the enterprise architecture work. And Key Corporation realized 20% reduction in application maintenance resulting in a 1st year savings of US$7 million.

Enterprise architecture will provide you and your organization with a return, just make sure that your first decision is to do it, and the next is to do it with the right tool. Email t.blevins

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