Business Value of Architecture- driven IT Infrastructure.

IT Pressures Felt by Most Businesses Today

How do we respond more quickly to business requirements? Flexibility Interoperability

How do we get more for our IT dollar? Reduce IT operating costs Minimize capital investment Deliver more “new” capabilities for less

How do we manage complexity in IT? Maintain skills for multiple technologies Enforce standards and compliance

Source: Accenture I.T. Spending Survey

Today’s ITDesired IT

The Agile Business

30%New Capability

70%Sustaining &

RunningExisting

Capability

45%New Capability

55%Existing

Capability

IncreasesValue Creation

DecreasesMaintenance &

Delivery

Do More With Less: but HOW?

With Infrastructure that is driven by Technology Architecture

Enterprise Architecture Framework

Strategy

BusinessProcess Applications Information Infrastructure

BusinessArchitecture

ApplicationPortfolio

InformationArchitecture

TechnologyArchitecture

Source: META Group

Buildings:• Models & Concepts• Blueprints• Bills of Material• Building Codes• Workmanship Standards

IT Systems:• Frameworks & Models• Patterns• Standards & interfaces• Buy Lists• Qualities (metrics)

PC

Laptop

Server

Mainframe

Router

DataDataData

Backbone Network Architecture

LAN

Server

Source: Forrester

What is architecture? “a system’s fundamental organization, embodied in its components, their relationships to each other and the environment, and the principles guiding its design. IEEE Standard 1471-2000

• Would you build a house without architecture? Then why Infrastructure?

Does your Infrastructure look like this?

…if so, you need architecture

How does Technology Architecture help? Tool for Risk Management• Architecture is based on requirements• Architecture helps you to make decisions• Translates IT decisions into business consequences

Tool for Project Management• Classic” project management focuses on time and

money -Functionality pays the price• Architecture guards the functionality

• “Design authority”• Architecture gives insight into the consequences of

decisions as they impact on the requirements

Planning Tool• Provides early insight into all relevant items• Helps to analyze the consequences of decisions• Develops standards and guidelines

Architecture Matters

“If the Federal Government continues to do what we have done (i.e. build non-architected solutions), we will continue to get what we have (i.e. a non-interoperable, expensive, and ever challenging tangle of data, applications, and technology)”

- Federal CIO Council

Source: Federal EnterpriseArchitecture Framework V1.1

JetBlue“Some people say airlines are powered by jet fuel,but this airline is powered by its IT infrastructure”

- President Dave Barger

WalMart“Accelerated growth could not have been achieved without our state-of-the-art computer systems”

- WalMart ISD

State Street“the architectural review process adds value by identifying issues before they impact a project.” - Amy Gutschen, SVP IT

NASDAQ“Highly scaleable infrastructure handles 1.8 billion real-time messages per day and 50K trades per second”

- TIBCO

IT Architecture as Competitive Advantage

IT Infrastructure

Best Practices of Leaders“Drive simplicity and flexibility throughout the technology environment by setting architectural standards and closely scrutinizing the true costs and benefits of exceptions.”

“Tackle complexity by reducing the number of technologies and platforms they deploy and by designing architectures to increase the flexibility and ease of implementation.”

“Take into account commercial aspects such as industry standardization and the likely future support of technologies because of the enormous costs of obsolescence.”

Source: McKinsey

The MIT Study: Leaders have ‘High Capability’ IT Infrastructure Analyzed 180 electronically based business

initiatives in 89 top performing enterprises

Common thread among leaders: “IT Architecture & Standards”

Spending focused on achieving competitive advantage

Highly robust and flexible infrastructure

Organization skilled at employing technology to support business value

Frozen in the past

In the Abyss

Leading

Competitive

Mainframe based application portfolio

Little flexibility

Ops and maintenance dominate budget

Ineffective new development

Too many technologies & inconsistent policies

Distributed computing environment - robust & simple

Effective new development

Source: McKinsey

Where Are You?

Application development without = Failure

Technology Architecture

Good Technology Architecture Focuses on Infrastructure as well as Applications

TraditionalArchitecture

s

Architecturesfor the Future

By default

IT-driven

Application focus

Cost-savings and control

Buy lists

By design

Business-driven

Infrastructure focus

Revenue-gen and efficiency

Alternatives

Source: Gartner

Define Enterprise

Architecture

High Capability IT Infrastructure

Technology Architecture

Building Blocks

Sources: Gartner, Meta, Giga, MIT

Start EA Planning

Formalize - Implement: Focus on:

1. Drives business alignment

2. Use a framework or your own process

1. System Concepts

2. Principles

3. Rules

4. Patterns

5. Interfaces & Standards

1. Scaleable

2. Reusable

3. Interoperable

4. Sustainable

5. Secure

6. Reliable

Good Architecture means:

Questions CEOs & Executives must ask:

Define Enterprise

Architecture

High Capability IT Infrastructure

Technology Architecture

Building Blocks

1. Do we have an EA planning process?

2. How do we know it’s working?

1. Do we have formalized & agreed upon Technology Architecture?

2. Is this in line with business objectives?

3. How do we know?

1. Are we reducing IT operating costs through IT Infrastructure investment? ROI?

2. What architectural standards, platforms & patterns maximize agility and interoperability?

3. Which will help us compete on productivity growth?Source: The Arnold Group

What Benefits Leaders Reap from Architecture-driven IT Infrastructure Investments1. Lower IT Operating Costs

1. Giga: implementing Architecture yields 20% savings in annual IT operating budget

2. Gartner: Architecture can provide savings of 10% to 20% of infrastructure costs

3. Giga: non-standard technology architecture increases costs by 10% & time by 25%

2. Increased Strategic Agility1. Gartner: Enterprise IT Architecture gives 30%

improvement in ability to deal with changing external drivers.

2. MIT: Correlated top performers with high capability IT infrastructure & standards

3. Increased Productivity 1. Forrester: 40% productivity gap between leaders and

laggards in IT investment

1. Lower IT Operating Costs with Enterprise IT Architecture

Reduce Capital Outlays Consolidation of hardware Consolidation of software licenses Volume purchase agreements

Reduce Support Costs Shared know-how Less training Fewer and easier upgrades Fewer diagnosticians Less vendor administration Less product evaluation Faster implementation

Enable Superior Operations Software distribution Backup and recovery System software management Software asset management Test and validation Help Desk

Improve System Management Capacity planning Performance management Fault management Security management Configuration management Performance measurement

Source: Gartner

2. Increased Strategic Agility & Growth

Interoperability GE: Well-architected IT infrastructure enables them to

integrate so many diverse businesses so well.Source: CIO Insight

Scalability Dell: Flexible architecture and IT Infrastructure allowed them

to grow dramatically … and plan for another doubling.Source: Forrester

Faster Time-to-Benefit/Faster Time-to-MarketFedEx Ground: ‘Poster child’ for the Agile Enterprise; enteredground delivery market to become #2 in 12 months.

Source: Fortune, Information Week Cross-boundary Security

H&R Block: Uses secure, integrated architecture to avoid overtaxing partners, staff, and the IRS.

Source: H&R Block

3. Increased Productivity

• Technology-driven productivity gap is widening 1. 1975 productivity gap between average firms and tech

leaders was 15% -- rising to 40% by 20002. Architecture and IT Infrastructure are key components *

• Tech-cautious firms are losing competitiveness1. Leaders get productivity and profit results by outspending

their competitors on new IT projects by more than 60%2. Productivity leaders are consolidating their industries3. Architecture and IT Infrastructure are key components *

Examples:1. CEMEX – FY 2001 profits of 16% compared with competitors'

3% as a result of technology and IT infrastructure investments

2. Dell - Compaq vs. Dell -- produces only 8% more revenues than Dell with 75% more assets and 85% more employees

Source: Forrester, The Arnold Group*

You Can’t Wait …

Benefit ExampleAction

CVS tracks in real time. Competition is stuck with too many track shoes.

Deploy Flexible, StandardizedInfrastructureServices

Interoperability with Value Chain

Create ‘High Capability’IT infrastructure

Strategic Agility

FedEx soars. Competition is grounded.

Develop Enterprise & Technology Architecture Competency

Return on Assets

WalMart writes the Book. Competition is in Chapter 11.