What is the Value of Architecture In collaboration with Microsoft Architect Insight Conference What is the Value of Architecture Drive the Debate Andrew L Macaulay Global Head of Architects Community March 2006 © 2004 Capgemini - All rights reserved

Agenda Introduction Issues Facing Business How Can Architecture Help? What Does Service-Oriented Architecture Add? Critical Success Factors Summary Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Introduction What is the true value of architecture? Cost Reduction? Risk Reduction? Improved Business/IT Alignment? Improved Business (and IT) Agility? And how does the culture and behaviour of an organisation affect the outcome? To answer these questions, we need to understand … What we mean by Architecture What we mean by Value And how we might start measuring Value Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Architecture means different things to different people Enterprise Architecture Business Architecture Security Architecture Enterprise Governance Architecture Enterprise Solution Architecture Information Architecture Enterprise IT Architecture Enterprise IT Information Systems Architecture Enterprise IT Technology Infrastructure Architecture Software Architecture, Network Architecture, Storage Architecture… Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Aligning Business Strategy and Project Delivery Enterprise architecture represents the desired future state of the business & IT landscape Enterprise Architecture Transition Roadmap (As-Is to To-Be) Business Strategy Roadmap represents the “route” to realising strategic business & IT goals and the EA vision IT Strategy Enterprise Business & Information Architecture Are the target architecture & defined standards still “fit for purpose”? Influence choice & timing of projects to ensure progress along the roadmap towards the EA vision Is the EA roadmap still taking us where we want to go? Enterprise Architecture Governance Enterprise IS & IT Architecture Business & IT Project Prioritisation & Planning Are projects getting expected value from the architecture? Ensures “project level” architecture work is properly planned & costed Enterprise architecture establishes and sets the standards by which solutions should be architected, and provides guidance across the project delivery lifecycle Is the architecture being complied with in the way we want? Project Delivery Lifecycle Project Initiation & Start-up Business Case Project Mandate Project & Stage Plans Project Execution Project Closure Transition to Run Solution Outline Solution Design Build/Test Cycle Deploy Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Value is also measured from an individual viewpoint Increasing Business Advantage Increasing Business/IT Alignment Improving IT/Project Effectiveness Reduced IT Complexity Reducing Cost of IT CEO  CIO CFO IT/System Manager Business Manager Indicative Example Only Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Issues Facing Business Today www.capgemini.com © 2004 Capgemini - All rights reserved

Many Business Drivers – Often Conflicting Cost reduction More value from IT More flexible IT Cheaper solutions and faster Reduce project failures Integrated and interoperable information services Better service from SOE/SOA solutions Guarantee of Quality Compliance … Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Typical Current State – Project-focused Silos There is rarely an alignment of functional requirements across business units and even less often alignment with service level and other non-functional requirements across the business Business or Organisation Business Unit A Business Unit B Business Unit C Business Unit D Processes optimised for specific BU requirements result in considerable overlap and redundancy 70% of IT projects fail to deliver their expected results because of this ‘silo’ mentality With increased complexity and integration of function, cost of change and maintenance is increasing Business processes Business processes Business processes Business processes Functional Requirements Version 1 Functional Requirements Version 2 Functional Requirements Version 3 Functional Requirements Version 4 Infrastructure and Governance Infrastructure and Governance Infrastructure and Governance Increasing complexity = increasing £££ for each change Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

IT Landscapes often locked in a ‘vicious circle’ Continual business improvement and new initiatives are inhibited by IT due to the slow and costly nature of implementing change Things have been made worse by projects attempting to deliver in an isolated fashion to bypass inhibitors – but this has only resulted in further constraints for subsequent projects in the medium term CxOs often cannot understand why relatively straightforward business changes are costly, risky and slow to implement Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

How Can Architecture Help? www.capgemini.com © 2004 Capgemini - All rights reserved

The Four Quadrants of Enterprise Architecture Value Expand IT Reach Increase Business Agility You can collaborate more effectively than your competition with your customers, suppliers and partners through your IT You can continuously adapt your business more quickly and with lower risk than your competition by changing your IT Increase Value Increase Project Success Reduce IT Cost You can significantly improve your success with your investment in IT-enabled business projects You can deliver new IT solutions and manage your existing IT services at lower cost than your competition Reduce Cost Copyright © 2006 Capgemini - All rights reserved March 2006

Where Does the Value Come From? Business Strategy and Goals Increased Understanding of the Business can drive Reducing complexity of IS & IT systems Enabling consolidation of servers Enterprise Architecture Capability and Governance Holistic View of Business & IT Systems Reducing project risk Reducing Costs Improving Project Success Enterprise Architecture Technology and Systems Roadmaps Integrating existing systems easier Value to the Business More Reactive to Business Change Project Portfolio Management Consistent (or Managed) View of Non- functional Req Availability and reuse of shared services Enabling Competitive Advantage Innovating & leveraging new technologies Solution Architectures Design with Knowledge of Context and Enterprise Copyright © 2006 Capgemini - All rights reserved March 2006

Understanding the Different ‘Types’ of Value Small % decrease in costs frees significant % increase in ability to invest Architecture can enable Business Benefit Compliance What you have to do to be in business Cost What you have to do to run your business Compet- itiveness Improved responsiveness to Business Change Increase flexibility within the Business and IT Innovation/leveraging of new technology Reduced costs of environment Increased project success Reduced project risk Leverage new capabilities for competitive advantage Reduced costs Spend Based on Maslow's Hierarchy of Needs Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Taking a Holistic View of the Architecture WHY? Contextual Information Systems Technology Infrastructure Business Information Security Governance WHAT? Conceptual HOW? Logical WITH WHAT? Physical Integrated Architecture Framework, version 3.9, Copyright © 2000-2006 Capgemini Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Architecture Maturity/Culture Affects Delivery of Value Level Reduced Cost/Risk Biz-IT Alignment Added Value -1 Not Needed Not Understood 1 Appreciated £ 2 Product Standardisation ££ 3 Strategy Development 4 Architecting Projects £££ 5 Enterprise Architecture Development ££££ 6 Enterprise Architecture Service Indicative Only Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Where Does Service-Oriented Architecture fit? Moving to a Services view of the world … Fosters reuse Enables flexible Orchestration rather than fixed process Allows you to leverage virtualisation and consolidation Traditional organisation Tightly coupled processes/systems Stovepipes - Integration “spaghetti” Services organisation Loose coupling of processes/systems Service Webs - Standard Interfaces TO Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

SOA Delivering Business and IT Value Externally created Value through more efficient market interaction Service-Oriented Enterprise Internal Value created through process redesign Service-Oriented Applications Internal Cost Reduction by shared resources Service-Oriented Infrastructure Mobility License cost savings Process based Platform Rationalisation Storage Area Networks Server Virtualisation Grid Computing Security Web Services Business Intelligence Management tools Development Tools Service Orientated Architecture Mobility Event Driven Real Innovation ………… etc Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Measuring Value (Quantitive and Qualitative) Examples £ Reduced Project Risk and Complexity Reduction in project over-runs both in terms of cost and time without reduction of required scope Improved Project Success Measure around quality of solution; the delivery on-time and within budget Cost Control and Improved ROI Measuring ROI of projects over time – there is, however, an investment cost to start this (building reusable services) Reduced Costs for Business As Usual Operational costs of the IT estate to reflect the total cost of ownership and does not just shift (hide) costs elsewhere Facilitate Delivery of IT Strategy Progress in the delivery and sustaining of the IT Strategy, which itself will be delivering Value through IT  Improved Business Requirements This should become visible through better development metrics around faults due to incorrect requirements Better Alignment with Business Quality-related feedback from the business, for example through annual surveys Increased Agility & Competitiveness IT seen as an enabler and partner with the business and not just a cost and constraint on the business Improved Business Knowledge Measure through effect, with the business becoming better connected, business units able to see themselves in context Copyright © 2006 Capgemini - All rights reserved March 2006 © 2004 Capgemini - All rights reserved

Case Study: National Assembly of Wales £500k avoided cost in one year joining up projects and delivering common requirements as corporate services rather than siloed functionality Currently predicting over £2m of avoided integration cost across 3 projects by taking an enterprise view early in the project lifecycle The are indications (although not fully quantified yet) from projects that have worked independently to meet siloed needs, that the cost of ignoring the Architecture are orders of magnitude higher than aligning to the Architecture Copyright © 2006 Capgemini - All rights reserved March 2006

Capgemini Research: Added Value of Architecture Used Six Sigma methodology for analysis Work to date summarises the first results of the research of benefits of architecture and other factors on project results. A sample is shown on this page The results are based on a survey of 30 projects. Currently developing revised figures based on between 100 and 300 A 95% confidence level is used to test the significance of our hypothesis Role of Project Architecture Role of IAF Copyright © 2006 Capgemini - All rights reserved March 2006

Summary www.capgemini.com © 2004 Capgemini - All rights reserved

Critical Success Factors for Enterprise Architecture Connect Deliver Developing an EA Capability is a major change programme that will not happen in a few months (acknowledge/plan for this) Strong executive sponsorship from within IT and Business Work collaboratively with both business and IT as partners Regular targeted communication with both the Business and IT, effectively driving a Marketing Plan Understand key stakeholders and communicate specifically with them Make your success and value visible A common language/framework and approach, with supporting tools if appropriate A clear governance model over projects/Solution Architectures, including sufficient Authority A pragmatic approach so that you can delivery some results early and you are not seen as just an ivory tower doing strategy stuff Architecture is a living thing. Use feedback from projects to learn and track the changing priorities and goals in the business Copyright © 2006 Capgemini - All rights reserved March 2006

Critical Success Factors for Solutions Architecture Governance Approach Work collaboratively with both business and IT as partners Leverage and conform to the Enterprise Architecture Work under the right level of EA governance and provide the right level of solution governance to the design/engineering teams Reuse services and infrastructure wherever possible and appropriate A common language/framework and approach with supporting tools, if appropriate Solution Architects with the correct mix of Business and IT skills, and subject-matter-specialists available, maybe through a ‘T-model’ A pragmatic approach, knowing where to focus and when to stop (when it is ‘good enough’) Copyright © 2006 Capgemini - All rights reserved March 2006

Summary Enterprise Architecture is a journey The business change to implement the capability, the evolution of the Architecture itself, the cycle of awareness to acceptance to adoption of the approach, the change it can foster in the business … Governance, Authority and Sponsorship are critical Getting a governance model that reflects the corporate culture but can deliver the goods, together with the authority and support are critical for EA to be able to function – and then deliver value Communication is key As with Architecture as a whole, communication of the EA function, the Architecture and the value is something that needs to become business as usual Value is ‘in the eye of the beholder’ Value can come in many forms - never forget that you must understand the business context, culture and stakeholders to be able to really demonstrate value Copyright © 2006 Capgemini - All rights reserved March 2006

Andrew L Macaulay andrew.macaulay@capgemini.com www.capgemini.com © 2004 Capgemini - All rights reserved