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3 Strategic Challenges Enterprise Architecture Can Help Navigate In an Economic Recession

7 Apr 2020

by Magnulf Pilskog

Enterprise Architects are charged with designing and tuning the Architecture of the Enterprise, including both Business and IT Architectures, to solve problems and meet business imperatives in both good times and bad. But what about when the times are really bad?

Being able to give your CIO the necessary insight to make quick decisions when needed is paramount in uncertain times. And when both organizational survival and people's livelihoods are at risk, helping your exec stakeholders navigate to the least-worst option is essential. 

Because while no responsible CIO willingly cuts jobs when they can cut projects and servers, it's easy to miss opportunities to cut non-essential spending without a sound understanding of the landscape.

This means having the situational awareness that is required to make timely decisions, using dynamic data from the whole ecosystem that's meaningfully communicated to all key stakeholders.

Here are 3 of the most critical strategic questions that Enterprise Architects (EAs) can help answer when facing an economic crisis:

Strategic Question 1: Are We Prepared for an Extended Economic Downturn?

Your CIO is potentially tasked with proactively taking a hard new look at their operating expenditure and investments, preparing for the worst. It’s no longer about what we can do to win in our market, but what the organization can do to keep the lights on so we can start winning when things normalize.

This is the worst-case scenario for any organization. But, being prepared to answer the above question is something that any organization should be able to answer at any time.

How Enterprise Architecture can help navigate this: 

First, evaluate where the business stands today:

a. Start by getting an overview of all applications, vendors, and the operational expense (Opex)

b. Map applications to critical business capabilities and functions that are must-haves

c. Identify the must have-dependencies for the critical functions (includes departments and people)

d. Look at contracts that are expiring, send negotiation candidates to procurement

e. In hard times, focus on applications with duplicating capabilities. Do you need 3 project management solutions now?

Then plan for the future

f. Where are the opportunities to save costs in the future?

g. Can we get more agility by moving to the cloud so we can scale up and down depending on our infrastructure needs?

h. Can, or should we transition to SaaS that can give us better remote working capabilities?

 

Application Portfolio Management (APM) is one of the most fundamental assets in your toolbelt to help answer the above. The traditional rigid frameworks for looking at this simply won’t cut it anymore. It’s crucial for the business to be able to use the most up to date data from across the whole ecosystem, for confidence insight at speed.


Based on best practices from our customers and extensive experience across industries and geographies, Ardoq’s APM use case was designed to enable exactly this. Read more about APM here.

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Strategic Question 2: What Are the Most Important Business Problems That Technology Is Solving for Us?

The answer to this question is tough. How do you rate it? How do you justify which business problems are essential for the organization? It depends on a whole lot of things.

You need a systematic approach for mapping what you have and what you need - but also how systems, processes, and even people factor in.

With a data-driven approach to Enterprise Architecture, this question can be better answered based on facts and the data you already have.

How Enterprise Architecture can help navigate this: 

While APM allows you to bring insight on where IT investment will impact the most, Business Capability Modeling (BCM) enables you to calculate the risk, cost, and complexity across the business model by looking at how systems, processes, and people are connected.

The quickest way to get this picture, with the most relevant data from across the organization, is Ardoq’s BCM use case, which brings the flexibility and agility that traditional frameworks can’t match.

Alongside APM and BCM, there are some additional high-level strategies you can use to pursue this from a data perspective. 

Mapping revenue streams towards the total costs of a business capability can help identify the business problems that are the most important to work on based on net profit.

In Ardoq, you can utilize dynamic calculated fields that traverse the graph to map out the overall cost of having one revenue stream paying for the direct and indirect cost, to see if this still holds. 

One interesting observation here is that revenue streams that have fueled investments into certain parts of your application portfolio might have taken an unreasonable burden on shared investments. 

If you try to remove cost by removing business capabilities and their revenue stream that’s using shared applications/integrations, other business capabilities that capitalize on that shared infrastructure may no longer be able to defend its cost. So be sure to double-check your numbers.

This also gives you an opportunity to look at new investments that might increase performance, increase revenue streams’ potential by using shared infrastructure and its associated cost.

Now might be the perfect time to actually invest (if you can) because you can get better deals and be ahead of the curve when things do normalize.

Strategic Question 3: Do We Have Assets That We Can Sell, or Will We Be Stronger If We Merge With Another Company?

There might be scenarios where your organization needs to sell divisions or merge with another company.

If you’re using a data-driven approach to Enterprise Architecture, the quicker you can show a roadmap to separate the systems and processes belonging to that division, the faster the due diligence goes, and the quicker you’ll help the organization get paid.

If you’re merging with another organization and you can show with data how you plan to do things, the stronger your negotiating position: You can present a plan while the other party is still scrambling to find answers. You have created much more value in a due diligence phase because you’ve reduced perceived risks in a merger.

How Enterprise Architecture can help navigate this: 

A data-driven Application Portfolio Management (APM) approach, combined with Business Capabilities Mapping (BCM), gives you that insight. You’ll know which shared infrastructure needs to be carved out and which processes or persons to involve when you have questions. 

You can plan for how to enable integration, instead of asking, “can we even do it?” 

Confidently Navigate Change

Change is continually happening, regardless of being driven by global health emergencies, economic recession, acquisition, or mergers (M&A). 

If you can answer the questions above, you’re doing a better job than most, and you’re creating situational awareness. You’re enabling your organization to live to fight (and hopefully, thrive) another day.

Magnulf Pilskog

Co-founder and CPO at Ardoq

  

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