Enterprise architecture management (EAM) can bring about order and stable operation at minimum cost. But not unless EAM itself becomes faster and nimbler and utilizes agile methods. This has become especially evident in the coronavirus crisis. A new path to this objective: Lean EAM.
The current crisis has cast a spotlight on an IT element that had taken a back seat to other topics in recent years: enterprise architecture management (EAM). But the pressure of having to respond flexibly and on short notice to new requirements has clearly revealed that companies of almost every size are laboring in a confusing jungle of IT solutions while IT landscapes often continue to grow out of control. Some companies are choking on the sheer volume of applications and can no longer see the forest for the trees.
EAM is struggling with a bad image
On average, companies with a turnover of more than one billion euros per year can be expected to use 650 applications. The companies in the largest ten percent may be dealing with as many as 3,400 applications simultaneously. But now, in the crisis, it has become clear that if you don't know what applications have what benefit for what business department or process, you will not be able to rationalize and reduce costs no matter how great your need.
Why is that? Hasn't EAM produced the benefits that enterprise architects claimed would result? The establishment of clearer structures and greater stability as well as uniform standards and methods in the IT landscape? EAM’s reputation has suffered from poor performance, expense, and cancellations of EAM projects. The complaints: overwhelming, too complex, too expensive, and too slow. The classic EAM procedures have often proved to be too cumbersome and are no longer able to meet the new requirements in companies. Studies assume that the majority of EAM projects have failed or fallen dormant.
Flexible and fast IT architecture required
The demand for modernization of applications based on lean IT oriented to business and customers continues to grow. Anyone who does not react flexibly and quickly to new competitive situations or who takes too long to introduce innovations to market will miss out on business opportunities – or will be overtaken left and right by the competition. The old monolithic IT heavyweights can no longer keep up with this pace – and yet greedily gobble up huge sums of money. In some companies, they consume up to 80 percent of the budget.
Digital transformation and the crisis have brought it to light: it’s high time to clean house. And organizations can use EAM not only to clean house, but to determine whether and how IT can actually support the business strategy and processes effectively and securely at optimal cost. IT managers criticize the lack of transparency in the IT landscape. More than 80 percent of those surveyed for a LeanIX study stated that they needed more transparency for effective management of complexity, prevention of application errors, and avoidance of IT downtime.
Modular, lean EAM tool from the cloud
Lean EAM is a new approach for the fast, agile, and successful implementation of EAM projects. Based on the SaaS application LeanIX, lean EAM offers a modular solution that companies use to obtain an overview of their existing applications within just a few days. Once this analysis has been completed, applications can be quickly classified as either critical for business or dispensable.
The evaluation of the application portfolio is based on four perspectives that go beyond the straightforward criterion of operating costs. How well do the applications mesh with the overall infrastructure from the technical standpoint? How can business strategic planning be implemented using the existing applications? How well do applications match processes, users, or usability from a functional point of view? And how high is the total cost of ownership, i.e., investment, operating, and scaling costs?
Designing the future IT portfolio
Obtaining transparency as to which applications are a good fit with the overall architecture is dependent on this general overview. For example, lean EAM may show that the costs of an application were above average, but its cost-benefit ratio is also above average thanks to special functions and low operating costs. IT departments can combine analyses of this nature with the lean EAM approach as a foundation for the design and sustainable transformation of the future IT portfolio.
Experience from numerous lean EAM projects indicates that enterprise architecture projects can be implemented in around 15 days provided they have been prepared for transformation and are backed by monitoring of the IT architecture. After a short pre-check of the current situation and the introduction of the tool, companies can start with the inventory and the needs analysis after only five days of consultation. As far as the IT is concerned, all the obstacles to digitalization will have been eliminated. From the IT perspective, the next crisis will be more easily mastered.
Savings potential in the millions of euros
During a LeanIX study, 87 percent of the responding companies stated that investments in enterprise architecture had actually reduced IT costs by an annual average of around $2.3 million per $1 billion in revenue, assuming an IT budget of 5 percent of total revenue. Even more is possible. A large German bank has estimated that, during a strategy implementation, €800 million in bank IT operations could be saved simply by harmonizing its IT infrastructure.
When done properly, IT can enable and secure growth, meet compliance requirements, and reduce complexity. Cost savings well into the double-digit percentage range can be realized. Experience from successful EAM projects reveals that license optimization can save up to 30 percent of license costs. More than 20 percent of applications can be switched off. IT project costs are reduced by at least ten percent and operating costs by around 20 percent, and vendor consolidation reduces the total cost of ownership of applications by about one-fourth.