What good can architecture be if it does everything but does not add business value? If the architecture is successful in 90% of the enterprises, but will not add any value to the enterprise in question, will the business executive approve or provide money for it? The ideal architecture is the one that adds business value to an enterprise rather than becoming an expense.

This article has two parts, the initial discussion is about what is to be done in order to enable an architecture to add business value. This part analyses the reason to align architecture with business strategy, executing the architecture in the same tempo of business and have a strong foundation for execution

The second part explains about the tangible and intangible values that an well aligned architecture can bring to the business. Tangible benefits include business agility, innovation, Better IT governance and cost benefits. Intangible includes organisation and human capital development.

Part I. What is to go into designing the architecture that adds business value

1.1 Align Architecture to the business strategy
“A company will only spend money on IT that directly supports its business strategy and operational effectiveness” [3]
Business strategy is the means by which an enterprise will achieve the business goals. Architecture should be aligned with the business strategy. Achieving alignment means choosing the right IT investments, building them in the right way and implementing it at the right time to achieve the business synergy and the business goals being sought[2]. The realization of business strategy takes place over long, multi-year periods of time. This is especially true when the strategic goals include profound change or new business models. So it is of profound importance for the architect to articulate the strategic implications of the architecture so that people at all levels of the business understand how the IT architecture supports their strategic decision making and guides the organization to its stated objectives

The Enterprise Architecture should be the information, process and technology manifestation of the enterprise business strategy.

1.2 Architecture should be executable and should be executed in the same tempo of business.
The architecture should be both buildable and runnable in the current enterprise. It might be the best architecture (latest and greatest) architecture ever built, what is more important is whether it can be executed in this organization.
In order to add business value, more than it being executable, it should be executable in the same tempo of the business execution. Architecture should enable business execution. If the tempo of the execution could not batch that of business, it will not be adding much value.

1.3 Foundation for execution should be the core of the architecture
Foundation for execution is the IT infrastructure and digitized business processes automating a company’s core capabilities [1]. The foundation for execution should be identified and the architecture should be built around it. The systems that comprise of these core capabilities should be robust, secure and highly available.
Once the core capabilities are implemented and reliable, it will free up the management attention from fighting fires on lower value activities, giving them more time to focus on how to increase profit and growth. It also provides a platform for innovation.
Research has found that Companies with a solid foundation for execution has higher profitability, faster time to market and lower it costs.

Part II Values that a well aligned architecture can add to the business

2.1 Business Agility and innovation
Enterprises live in a high change world where advantage goes to the most agile organizations, not just the most efficient one. More over enterprises should be continuously agile. It is an ongoing process, not just an occasional event.
When the architecture continuously “evolve” with the organization it is more probable to become brittle. We do have more than one methodology to handle change without making the system brittle, but that will become a very expensive task both in terms of time and money.
When the architecture is built around the foundation for execution, the core stands strong and all the changing needs of the business can be built around it.
Any changes that are needed to be done to the core capabilities can still be done during a periodic architectural review.
with agility comes innovation. With a strong system in place which can provide the expected information in the shortest turn around time, developing new ideas and systems to support those ideas can be delivered faster.
More over as architecture succeeds in reducing the amount of time and money spent on IT operations, the redeployment of both human and financial IT assets to innovation creates new value for the enterprise.

2.2 IT Governance and Portfolio Management
How can governance and portfolio increase business value? How can architecture play a role in it?
Let us consider architecture as the blueprint, IT project portfolio management stewards the collection of IT investments that build the blueprint, IT governance ensures that people make the right decisions to correctly populate the portfolio, and the approval process inherently includes a review of architectural correctness and adherence.
Now if the architecture is not aligned with the business strategy, IT governance and portfolio management can result in investment and projects with very little strategic importance.
At the highest levels, good architecture provides a fundamental basis for decision making as a part of the enterprises IT governance processes. Architectural requirements serve to define and prioritize the most important projects in the IT project portfolio. As the architecture defines the IT components and capabilities required to reach the organization’s strategic goals, the projects that spawn from the architecture align with business strategy and focus on building the most important capabilities to exploit the best business and technology opportunities

2.3 Cost Reductions and Efficiencies
A sound architecture helps to reduce costs by enabling systems consolidation and increasing IT investment leverage. With a common architecture, investments in standardized infrastructure can be reused across many projects and applications. Standardization helps drive cost efficiency by reducing the number of disparate platforms to support, which, in addition to reducing the numbers of vendors and contracts, provides a direct impact on the efficiency of the IT organization as the staffing model becomes more tightly aligned with the corresponding technology architecture. With a standardized architecture, the IT organization delivers a greater number of projects through its ability to leverage previous investments, reducing or eliminating the need to make core infrastructure investments for business-driven initiatives. Additionally, a strategically aligned EA creates efficiencies in IT operations and systems management, reducing costs in these expensive IT areas.
Clarity regarding the contents of the IT portfolio serves to eliminate redundant assets and create visibility into software application over licensing or under-licensing, reducing either direct costs or liabilities. Driven by the standards and policies spawned from architecture, CIOs more easily see investment overlaps in the IT project portfolio that can significantly reduce redundant IT investments, positively influencing capital budgets available for IT investments or redeployment elsewhere in the organization.

2.4 Payback from Architecture Investments
With a strategically aligned architecture in place, most of the IT project portfolio can shift to business-facing projects where there is a higher payback. In addition to the direct savings from systems and IT portfolio consolidation and IT staffing model alignment, a significant part of the payback from architecture investments generally comes from the reduced cost of subsequent business facing projects.

2.5 Outsourcing.
Enterprises look to outsourced services for adding the value. Outsourcing by its nature causes a shift of systems knowledge away from internal staff to the services provider. Without the blueprint of a solid architecture, an organization runs the risk of losing control of the enterprise view on IT. When the number of service providers increase, it will also exponentially increase the difficulties coordinating multiple service providers.
A good architecture facilitates outsourcing via clear system and service boundaries, resulting in an enhanced ability to multi-source across a variety of outsourcing vendors while maintaining project and architectural control in-house.
Solid architecture becomes a requirement for organizations wishing to leverage outsourcing, especially given the trend toward multi-vendor outsourcing, which requires greater clarity in service level boundaries, delivery hand-off points, and enterprise-wide coordination.

2.6 Organizational and Human Capital Development
One of most powerful outcomes of a solid architecture is its positive impact on the development of the IT organization and the individual IT professionals. Because architecture defines the future-state of information technology in the organization, it creates a set of goals for both the IT organization and its individual staff members to target. Required organizational capability, individual skills, and career development plans become much clearer, and gaps between existing skills capabilities and required skills capabilities in the future become apparent. This clarity and visibility into future skills and staffing requirements give the IT organization and other areas of the enterprise, the roadmap for skills and career development, hiring plans, and strategic sourcing decisions. The future-states of the architecture clarify which functions are more commodity-like (becoming candidates for outsourcing) and which functions are more strategic and warrant inhouse development of skills and talent. Given that skills development and acquisition and staff retention are long-term challenges, the visibility provided by a clear architecture becomes invaluable.

One of the key responsibilities of an architect is to continuously communicate to all stakeholders how the architecture adds value to the business. As discussed above these value can be both tangible and intangible. Both these values have to be communicated aprpriately.

[1] Enterprise architect as strategy – Creating a foundation for business execution, Harvard business school press
[2] CIO best practices – Enabling strategic value with information technology, Wiley
[3] From Business Strategy to IT Action – Right Decisions for a Better Bottom Line, Wiley