Business professionals consider it a mystery that IT can spend 10’s or 100’s of millions of dollars annually with little business value to show for it. Leave aside the fact that Standish Group tells us that almost half of those IT investments are wasted, and further consider that the other half is often spent on technology upgrades and platform migrations. Since IT investments ultimately come from the business, the onus is on the business to drive the reversal of these practices by clearly articulating business objectives and quantifying IT investment priorities based on those objectives.
Business objectives are often vague, lacking business focus and measureable outcomes. As a result, misdirected business funding is often driven by technology trends such as cloud computing, digital transformation, and a revolving list of shiny objects. While these and related targets are worthy of being incorporated into business strategies, technology should not be the main or sole driver of IT investments. Reversing this trend requires clearly stated, measurable, and attainable business objectives.
For example, a company may want to lower loan defaults to a fixed percentage, expedite partner onboarding, rationalize customer product offerings, or streamline customer issue resolution across business units. These and numerous other business objectives often remain unarticulated or unresolved while technology-driven investments dominate IT budgets. Business planning teams should, therefore, be singularly focused on framing business objectives that IT can clearly interpret and leverage to scope and align IT investments and related programs.
While well-articulated business objectives are a critical aspect of focusing and balancing IT investments across technology and business-driven targets, every substantive program and project must additionally be prioritized based on quantitative business and IT impact analysis. The steps to quantifying, prioritizing, and justifying business and IT investment priorities include:
- Associating each business objective with relevant stakeholder value, capability, information, and product specific impacts, as viewed through the lens of the organization’s business architecture
- Cross referencing the impacted value stream, capability, information, and business unit domains to impacted IT architecture artifacts
- Establishing formal metrics to articulate the degree of business and IT architecture misalignment and the overall condition and quality of impacted IT assets
- Leveraging the resulting business and IT metric analysis to prioritize programs and projects into high, medium, and low categories, with complete traceability back to corresponding business objectives
- Reevaluating program priorities on a regular basis, including those focused on multiyear programs, to ensure that a business-driven focus remains at the forefront of IT investment planning
Quantitative analysis targeting business-driven IT investment prioritization is based on two sets of metrics. Business / IT architecture alignment metrics establish a direct link between business objectives and gaps in IT architecture’s ability to deliver business value. In addition, IT architecture degradation, or traditional technical debt, metrics provide insights into weaknesses in application, data, and technical architectures. Collectively, these metrics provide a basis for prioritizing business-driven IT investments.
Business / IT architecture alignment metrics provide business and IT a clear perspective on the overall effectiveness and usage context of the business domains and IT assets targeted by candidate business objectives. Consider that these metrics offer insights into how well certain capabilities are performing in context of business units, partners, products, and end-to-end stakeholder value delivery. These metrics additionally provide insights into the scope of business and IT impacts, costs, and return on investment.
For example, reducing loan defaults requires rapid assessment of the state of agreements, customers, partners, payments, financial accounts, and related business objects across one or more value streams. When framed through the lens of business architecture and subsequently mapped to data, application, and technical architectures, planning and investment teams gain transparency into current state business and IT architecture strengths and weaknesses, scope of need and impact, and what it will take to address the loan default challenge from a holistic perspective. This analytical approach additionally enables program management teams to quickly ascertain where certain programs may overlap or be in conflict, allowing those teams to streamline investments across multiple programs.
Business executives can no longer sit idly by while critical business challenges remain unattended or unarticulated, even as IT continues to invest a growing percentage of scarce budget dollars in technology-driven investments. Business performance and business / IT alignment metrics, applied to well-articulated business objectives, establish a missing element in IT budget models and ensure that businesses large and small maximize IT investments to deliver business value year in and year out.
The Art and Practice of Business / IT Architecture Transformation 