Using Enterprise Architecture to drive successful IT portfolio management
Kosta Hahladakis, Enterprise Architect at Reserve Bank of New Zealand.
Kosta Hahladakis, Enterprise Architect at Reserve Bank of New Zealand.
IT portfolio management is the process by which an organization governs and plans investment in its Information Technology (IT) assets with the aim of ensuring that spend is delivering value and meeting strategic outcomes. It would be expected that investment decision-making and prioritization would be well-informed and robust. However, in my experience, I often see organizations rely on tactical and reactionary thinking to prioritize and fund initiatives. This is where Enterprise Architecture can play a critical role in informing IT portfolio management. Enterprise Architecture is uniquely positioned to add a strategic approach to technology investment as the overseer of an organization's technology.
In simplistic terms, Enterprise Architecture considers the gaps between current system capabilities and desired business capabilities to identify opportunities to move technology, people, and process closer to achieving business goals. One of the roles of Enterprise Architecture is to capture and manage the state of the organization's IT landscape, that is, the make-up of its IT assets. Often decision-makers and executive teams have poor visibility of what IT assets the organization holds, the condition of those assets and the capabilities they support. By better understanding the IT landscape, executives can make informed decisions about their IT programs and what to focus on – whether it is modernizing legacy systems, leveraging modern technologies, or reducing the total cost of ownership.
To provide insights into the state of the IT landscape Enterprise Architecture maintains the Enterprise Systems Catalogue. The catalogue captures the definitive list of IT assets and services owned or consumed by the organization. Granularity is vital here – the level of detail needs to be appropriate for making planning decisions rather than operational management and maintenance. Systems are identified, communicated in non-technical business terms, and mapped to business capabilities. With modern architecture and data visualization tooling, this raw data can be turned into a coherent and accurate picture of an organization's IT landscape to answer fundamental questions such as What systems do we have, and how do they support our business?
With an authoritative catalogue of IT systems, attention can now turn to assess the condition of the IT landscape. There are various techniques that can be applied, but at their core, most focus on evaluating two important dimensions - (1) Business Fit – Is the system continuing to meet business needs? and (2) Technical Fit – Is the system technically sustainable and viable? Enterprise Architecture engages with business teams, and IT teams to capture the necessary information to answer these questions. Important considerations for technical fit include supportability and reliability and for business fit, user experience and features. The data is added to the Systems Catalogue, and the data visualization tools mentioned previously are used to build a "heat map" view of the IT landscape highlighting key risk areas.
With a good understanding of the IT landscape, Enterprise Architecture can now go about identifying gaps where systems are no longer fit for purpose or are obsolete. Gaps are turned into architecture roadmaps that outline the steps to re-align technology to support business capability. Retain, replace, and contain decisions are made. Working closely with the project office and business teams, roadmaps are translated into initiatives, and work items scoped out.
The organization has now defined an IT portfolio program of work and is in a much better position to make informed investment decisions by prioritizing capabilities based on risk and value to the organization. Insights gained through the enterprise catalogue, architecture assessments and roadmaps are used to determine what risk areas to address or new capabilities to build. Priorities can then be set by using criteria such as business criticality, time criticality, size, and risk reduction. Key to this is ensuring that initiatives are aligned to and enabling wider business outcomes. The organization can focus on those initiatives that represent the best value in meeting operational or strategic needs instead of making ad hoc decisions or funding "pet projects."
Good IT investment management does not finish after portfolio initiatives are prioritized. The funded initiatives must now be monitored to ensure they are delivering the value they promised. Often it is this governance activity that is most closely associated with Enterprise Architecture. The hard work which has gone into identifying gaps, setting roadmaps, and establishing work programs is overlooked. As has been shown, Enterprise Architecture is in a unique position to guide and support IT portfolio planning and investment by bringing together insights of the IT landscape, awareness of organization outcomes and technology expertise. By taking an Enterprise Architecture approach to IT portfolio planning, organizations can move beyond just solving the "here and now" and put in place enduring solutions that meet strategic outcomes.
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