How many ways can we justify for the Return of Investments for any projects?
This is in principle a business question. Do you know how much is your solution worth?
Contrary to common belief, the same solution is worth differently to different prospect. Solutions, unlike products, are meant to solve a set of challenges faced by the organizations. They cannot be treated as commodities because they are not. Every prospect has its own unique challenges, and therefore can only be addressed differently.
There are three different ways any solution can help an organization:
1. It helps the prospect generate revenue
2. It helps the prospect save cost
3. It helps the prospect to be compliant with statutory requirements
We, must first understand where our solution stand in these three categories.
A solution that helps the organization generate revenues is typically the easiest to sell. A projection of revenues vs the TCO will usually suffice. Take the recent Sport Betting case in Malaysia - it is something that will generate revenue for Ascot Sports and this system is sure to generate more revenue for the organization.
A solution that helps an organization optimize it resources can be justified by looking at how much cost it can save the organization in the long run. Most of the systems emphasizes on automation falls into this category. For example, a E-Form solution may help an organization shorten the processing of its application from 3 days to 30 minutes. An BPM solution typically falls into this category.
The third category of solution helps an organization to be compliant with the statutory regulations. If the law says so, you must do it. If the auditors ask for you, you must prove that you have the records. Some example of solutions are Record Management Solutions or Enterprise Content Management Solution fall into this category.
All these three type of solutions require an in depth planning to leverage on an Enterprise Architecture as all of them require the few characteristics in my earlier post - security, audit trail, business intelligence, etc. The most beautiful things about this is an established EA can be shared across many applications within an organization.
Is it easy to justify for ROI?
No - it requires in depth knowledge of the business and where the revenue is coming from.
Yes - it only requires in depth knowledge of the business and where the revenue is coming from.
More on this topic later.
Showing posts with label Enterprise Architecture. Show all posts
Showing posts with label Enterprise Architecture. Show all posts
Sunday, June 6, 2010
Saturday, June 5, 2010
How to justify for the ROI of Enterprise Architecture
I was invited to be one of the panelists for the ITARC 2010 Malaysian Chapter, and the topic in discussion was How to justify the ROI for Enterprise Architecture. Wow, a huge one!
I still remember during the dot.com boom, every single company wanted to develop some system for some part of their business operations. Some applications were meant to promote the company image, some to generate more revenue, and some to make the operations more efficient.
An IT-literate organizations may have developed tons of applications like this. Email application, Document Management Application, Applications for Finance Department, Applications for Marketing Department, Applications for Support Department, etc, etc.
Fast forward to a few years later.
The same IT-literate organizations realize that these applications are all working in silo. They do not integrate well with each other. The irony is that the same applications that were meant to create efficiency is now causing inefficiency - as users are required to login to multiple systems, copying contents from one and pasting to another in some cases, in order for them to complete their jobs.
If we look deeper into the nature of enterprise applications. They all share the same characteristics to some extent:
1. Security - Authorization, Authentication
2. Audit Trail - Non-repudiation
3. Workflow or processes - The business operations part of the process
4. Interface
5. Reports/business intelligence
If all these silo applications have been planned and built on an infrastructure that make use of, Microsoft Active Directory Services or some directory services that can be integrated with LDAP, suddenly users are not required to login to multiple systems in order for them to do work.
And if the applications were built on a framework with a powerful BPM engine, applications development could be shortened from months to week. All software developers would agree that business process is the most time consuming portion of the entire software development exercise.
If we can somehow consolidate all these silo applications on an enterprise-wide framework, suddenly inter-department collaboration becomes so much easier. Instead of building up walls, a properly designed enterprise architecture actually breaks them down.
And because of that, the time to market has been shortened from months to weeks, or even days.
How much edge would it give the organization if it is able to adapt to the market demand faster, and as a result create a new product faster? Can the projected revenue cover for the cost of the enterprise architecture?
More on ROI later.
I still remember during the dot.com boom, every single company wanted to develop some system for some part of their business operations. Some applications were meant to promote the company image, some to generate more revenue, and some to make the operations more efficient.
An IT-literate organizations may have developed tons of applications like this. Email application, Document Management Application, Applications for Finance Department, Applications for Marketing Department, Applications for Support Department, etc, etc.
Fast forward to a few years later.
The same IT-literate organizations realize that these applications are all working in silo. They do not integrate well with each other. The irony is that the same applications that were meant to create efficiency is now causing inefficiency - as users are required to login to multiple systems, copying contents from one and pasting to another in some cases, in order for them to complete their jobs.
If we look deeper into the nature of enterprise applications. They all share the same characteristics to some extent:
1. Security - Authorization, Authentication
2. Audit Trail - Non-repudiation
3. Workflow or processes - The business operations part of the process
4. Interface
5. Reports/business intelligence
If all these silo applications have been planned and built on an infrastructure that make use of, Microsoft Active Directory Services or some directory services that can be integrated with LDAP, suddenly users are not required to login to multiple systems in order for them to do work.
And if the applications were built on a framework with a powerful BPM engine, applications development could be shortened from months to week. All software developers would agree that business process is the most time consuming portion of the entire software development exercise.
If we can somehow consolidate all these silo applications on an enterprise-wide framework, suddenly inter-department collaboration becomes so much easier. Instead of building up walls, a properly designed enterprise architecture actually breaks them down.
And because of that, the time to market has been shortened from months to weeks, or even days.
How much edge would it give the organization if it is able to adapt to the market demand faster, and as a result create a new product faster? Can the projected revenue cover for the cost of the enterprise architecture?
More on ROI later.
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