CEB CIO Leadership Council

CEB Enterprise Architecture Leadership Council

ARE CIOs GETTING VALUE FROM EA

ANYMORE?
More than two-thirds of the total IT budget is committed
to maintenance and mandatory expenses, leaving little room
for business opportunity investments and innovation. How
can CIOs drive cost-efficiency while improving responsiveness?
Diagnosing EA Effectiveness
Is

there a shared and precise view of EAs mandate in your organization?

Has

EA defined a limited set of stakeholder-oriented services?

Does

your EA team have the skills and competencies needed for effectiveness?

Does

your chief architect understand your organizations strategic imperatives?

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com

ARE CIOs GETTING VALUE FROM EA ANYMORE?

Are CIOs Getting Value

from EA Anymore?
We recently released our annual IT Budget Benchmark
results and found yet again that IT spending on
maintenance is roughly 60% of overall IT expenditure
whereas innovation and business opportunity
comprise only 33%. As we have shared essentially
this exact same finding over the years, CIOs have
repeatedly expressed difficulty in shifting spending
to new investment opportunities. They commonly cite
a struggle to keep the cost of maintaining the legacy
portfolio from consuming the IT budget and crowding
out more value-add investments.
So, what is your Enterprise Architecture (EA) group
doing to help? They should support the twin goals
of efficiency and responsiveness by working with the
enterprise to support business change, but too few
companies have been able to accomplish this.

What these fictionalized, but

representative, CIOs have in
common is the challenge of
building and maintaining an IT
portfolio that is both cost-efficient
and responsive to business needs.
Even if it were financially possible to do
so, IT cant achieve true responsiveness
by simply fulfilling requests as quickly
as possible. If IT reacts in the short term
without regard for increased inefficiency
in the long term, they will ultimately
compromise responsiveness. Effective
EA groups understand and manage
these trade-offs.

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A Common Member Story

Jim recently took the CIO position at a
financial services company that has more
than doubled in size over the past five years.
While some of the growth has been organic,
much of it came from a series of acquisitions.
This period of rapid growth and expansion
has been only loosely governed, but as the
firms growth started to slow, Jim was hired
to examine and reduce ITs unsustainable
cost structure. Jim is facing the daunting task
of simplifying a highly complex, redundant
portfolio of assets, and thats just what he
knows about

A Common Member Story

The third CIO in four years, Gloria was
promoted from her position leading the
infrastructure group to running all of IT. Her
new challenge is to enable the business to
experiment with technology to better market
to customers and to modernize an aging IT
portfolio in her highly competitive, low-margin
retail enterprise. Throughout her 20-year
career at the company, she has seen these
investments repeatedly deferred. In recent
years, many of the systems have become
deeply strained, consuming ever-increasing
resources just to maintain as store sales
have increased. With aggressive expansion
plans on the horizon, Gloria can no longer
put off modernization, nor can she afford
the cost or risk of a big bang approach. Now
she must navigate a path between patching
and maintaining the existing portfolio, and
investing in the costlyand potentially risky
overhaul that eluded her predecessors.

Responsiveness and
Complexity Reduction
Are Mutually Reinforcing
In too many organizations, what EA perceives as its
mandate is not what CIOs really need from it. In our
representative member stories, the overwhelming
cost of maintaining legacy technologies prevents
Gloria and Jim from investing in differentiating uses
of technology. Traditionally, CIOs turned to EA for
help reducing total cost of ownership (TCO) of the IT
portfolio. EA would then set technical standards and
enforce them in order to steward enterprise resources.
But in todays complex business technology
environment, IT does not have the last word in
technology decision making. EAs traditional IT
standard-setting and governance approaches are not
just ineffective, theyre misguided. Because EA cant
impose its will, understanding and aligning to business
imperatives is an essential part of EAs mandate and
the best path to efficiency.
Unfortunately, too many enterprise architects are
ill prepared for increased levels of engagement.
Typically, they are raised in IT and trained in abstract
frameworks. They look at the IT portfolio as a puzzle
to be solved, isolated from the context of business
need. As a result, EA focuses on half of its mandate
standardizationat the expense of the more critical
halfalignment and responsiveness. We believe this
misunderstanding is at the heart of why so many CIOs
express frustration with EA and why 28% of EA groups
have been disbanded or demoted since the beginning
of 2012.

Take Action
Is there a shared and precise view
of EAs mandate in your organization?
See EA (Re)Charter Template
Has EA defined a limited set of
stakeholder-oriented services?
See Offering EA as a Service
Does your EA team have the
skills and competencies needed
for effectiveness set?
See Enterprise Architect
Effectiveness Diagnostic
Does your chief architect understand your organizations strategic
imperatives?
See Architecting for Business
Outcomes

Retool EA for
Engagement
If Jim and Gloria are going to manage cost and
efficiency over time while also maintaining higher
levels of responsiveness to their businesses, they
will need EA. But they need enterprise architects to
recognize that business alignment is their job. Here
are seven specific guidelines for getting value from EA.

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ARE CIOs GETTING VALUE FROM EA ANYMORE?

1. Treat business architecture as foundational,

not aspirational.

2. C
 larify EAs mandate and remove
distractions from that goal.

Business architecture, and specifically business

capabilities, is the best tool for understanding business
needs and priorities. Invest early in establishing a
common language for IT-business alignment, as
opposed to working up the stack from infrastructure
to applications and so on, as EA groups have
historically done (see figure below).

One of our members, a shipping company, found itself

with excess shipping capacity following the 2008
downturn. They wanted to bring costs in line and
address ITs solution delivery speed.

Instead, begin top-down by prioritizing business

capabilities and the business outcomes that are most
critical to your companys business strategy. Dont be
exhaustive. Map the enterprise broadly, but get just
granular enough to surface investment and cost-saving
opportunities and to resolve prioritization conflicts.

Conventional Wisdom
of Architecture Practice
Maturity

Forestalling business architecture

development makes it harder to
attain business alignment.

To address these challenges, EA rebranded itself E&A

for Exception Minimization (i.e., standardization
and cost-efficiency) and Acceleration of Delivery
(i.e., improving speed-to-market of new solutions by
identifying SDLC improvements and new technologies
that enhance solution quality).
EA leadership created a service mind-set around
these distinct objectivesone that was reinforced with
metrics that emphasized outcomes (e.g., number of
acceleration projects completed and their estimated
value) rather than inputs (e.g., number of artifacts
created or standards set). This step clarified what
EA does and does not do (e.g., solution architecture).

Architecture Layers

Business

The Basis for Supporting

Business Outcomes

Fully established operational

requirements set the tone
for planning, execution, and
functional management.

Information

Building up from IT
dictates a planning
cadence based on
technology lifecycles
and constraints.

Systems

Technology

Source: CEB analysis.

EAEC6899013SYN

Technology architecture
balances standardization
and efficiency with the
operational needs of the
business.

3. Triage EA engagement.

4. Focus on consumables, not deliverables.

The EA group in another member company, a financial

services firm, disproportionately invests its time in the
highest-value business capabilitiesthe parts of the
business that make the company competitive. Since
EA groups are small (2% of information technology
FTEs, on average) and the use of technology so
pervasive, EA cannot plan and govern the IT portfolio
comprehensively, much less provide the same focus on
all business capabilities. Use business capabilities as a
lens through which to allocate EA resources, ensuring
architects prioritize the initiatives that drive business
growth. This ensures that the most strategic initiatives
are supported, rather than the ones that are the most
expensive, or even simply those that are technically
complex. Once that prioritization is set, establish and
stick with a clear engagement model for determining
which initiatives EA needs to be involved with, and in
what capacity.

Too many EA teams feel they need to capture all the

IT assets currently used and end up spending far too
much time on an exercise that has low visibility and
often questionable value. EA should limit investment
in the current state documentation. One of our
members, a professional services firm, calls this
approach moving from deliverables to consumables.
Rather than creating massive, impenetrable documents
that were difficult for others to make sense of, EA
identified consumability by non-EA stakeholders as the
standard for production.

Possible EA Roles on a Program

Engagement
Role

Partners

Advisors

Aides

Observers

Objective

Percentage
of EA Time

Extend the enterprise

architecture to support
major business change:

Product launches

Market expansions

Major technology
changes

60%

Advise solution
architects in
implementing the
existing enterprise
architecture in
ambiguous situations.
Provide backup
support to solution
architects who rely
primarily on self-service
architecture guidelines.
Avoid getting in
the way of local or
experimental programs
that have no or very
limited architectural
impact.

Source: CEB Member Organization; CEB analysis.

25%

%52

14%

%51
%06

1%

5. M
 ake targeted investments in strategysetting and project engagement.
For the future state, focus on a few key, businessrelevant areas, and keep the direction high-level. Much
of what will be required will need to be determined
along the way, rather than anticipated. Keep your plans
current by identifying a set of business-driven triggers
that would force plans to be revisited.
In most organizations, EA should have a limited
solution architecture role while also maintaining
awareness of realities on the ground. EAs solution
design activities should be limited to areas of emerging
technology for competitive business capabilities where
organizational learning and speed are necessary.
Otherwise, EA can become consumed with project
work and neglect its strategic duties.
6. T
 reat standards enforcement as a public
health issue (i.e., preventative medicine),
rather than a law-enforcement activity.
EA cannot enforce standards through fiat, so it must
rely instead on socializing the practice and benefits
of architecture, as well as including SMEs on delivery
teams in standard setting and reference architecture
development. Focus on articulating and disseminating
good architecture principles for use by delivery
teams. Enable business partner decision making by
identifying likely pitfalls in technologies they obtain
independently. One of our members, an energy and
utilities company, does this by showing sponsors what
success looks like through lightweight scorecards
focused on not only architectural success factors but
business success factors as well.

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ARE CIOs GETTING VALUE FROM EA ANYMORE?

7. Develop EAs engagement skills.

A European insurance member realized that, for the highest-value business capabilities, technical expertise is
inherently less valuable than a generalist skill set that enables the organization to quickly interpret demand, gauge
market opportunities, and design and prototype potential solutions. Business engagement skills such as influence
make all the difference between effective and ineffective architects.

Enterprise Architect Skill Set Comparison

Traditional EA Skill Strength

Knowledge of technology trends,

industry developments, business
capabilities, and the competitive
landscape are especially valuable.

Progressive Skill Emphasis

Skill range is from 0 to 5
where 0 = no experience
and 5 = expert.

Information Synthesis
5
4

Influencing and
Communication

Business
Architecture
3

When working on a crossdisciplinary team in a dynamic

environment, EA needs to
liaise with diverse stakeholders.

Infrastructure
Architecture

User Experience
Design

User experience design is

critical for mobile apps to
gain traction.

Application
Architecture

Integration
Architecture

Strategic Planning
Source: CEB Member Organization; CEB analysis.

Closing Thoughts
The nature and tools of EA are changing. CIOs need the support of an architecture practice that can manage
the cost and responsiveness of the IT portfolio. Contact us to learn more.

Contact CEB to Learn More

EAEC6899013SYN

+1-866-913-8101

CIO.Support@
executiveboard.com

www.cio.executiveboard.
com

CEB CIO Leadership Council

CEB Enterprise Architecture Leadership Council

2013 The Corporate Executive Board Company. All Rights Reserved.

EAEC6899013SYN