The ArchiValue Project

23 Nov

Whilst commenting on a post made by Lucid21 a few weeks ago, I came across the term Enterprise Architecture Valuation. Enterprise Architecture can be defined as, “Design or ‘blueprint’ of a business that depicts the components of a firm employed in its operations, interrelationships of those components, information flows, and how each component supports the objectives or the strategy of the enterprise.” (Business Dictionary: 2012). The concept was explored by Dutch authors Buschle, and Quartel, (2011), along with an extension of the Bedell method as a means of evaluating investment in IT. I examined the article as I found their critique of Bedell’s approach interesting, however I wanted to find more information on architecture valuation.

My research led me to the work carried out by Dutch Company, “Novay”, who have proposed the , “Archivalue project”, which they provide as a service to companies who wish to evaluate investment in IT. The project offers a, “concrete method for IT portfolio valuation”. The company put forward the case for IT as a value centre and stress how viewing IT as cost has stifled innovation. Excessive budgets used to maintain legacy system has resulted in a failure to accept new IT projects that may facilitate current business practice or create new opportunities. Therefore Novay urge companies to see the different types of Value IT brings to a company. “Organizations can classify their business goals and decide which and how well IT contributes to these goals.” They offer the following as frameworks whereby investment in IT project can be evaluated.

Figure 1.1 “The ArchiValue Framework”

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“The bottom layer represents the usage of Enterprise Architecture as a foundation for valuation.” The first column represents how the “EA” currently supports the business. The third column represents the desire future, in which the IT which supports the business activities are improved. Projects are carried out to reach this to-be column, through doing this “the value of IT is increased”.

“The middle layer represents the valuation of IT and project portfolios.” Based on the value given to current projects decisions can be made to align IT with the strategic goals of the company. These result in a change to existing portfolio which changes the portfolio of the future, Portfolio to-be.

“The top layer represents the usage of a valuation profile that reflects the business strategy.” Each value centre (Service, Investment, Cost, Profit) is associated with one or more business goals whereby a valuation technique can be created. “Depending on these criteria different valuation techniques may be selected to analyse IT with respect to these criteria. Distinct IT budgets may be allocated to each value centre and the specific valuations that result from the analyses.”

Figure 1.2 “Project Portfolio Management”

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Figure 1.2 displays ArchiValue’s approach to management. According to the framework, the approach consists of two stages, leading toward IT portfolio valuation. It follows the Deming cycle, which can be defined as, “A continuous quality-improvement model in which a sequence of the four repetitive steps (plan, do, check, and act) comprise a feedback loop that allows a business manager to identify and correct deficiencies.” (The American Heritage Dictionary of Business Terms: 2010) As you can see from the diagram the first stage is concerned with IT portfolios. Following the Deming cycle, the valuation profile is planned by defining goals, valuation criteria, and performance indicators to evaluated progress. Under the ‘Do’ step the performance indicators are measured . They are then checked against the desired or ideal values that have been defined in the valuation profile. the results determine actions that will be taken to bridge gaps. “Typically this involves the definition of change goals and the design of a ‘to-be’ situation with higher valuation scores.”

The second stage shows how to manage the implementation of the proposed changes. The plan stage valuates the proposed projects. The projects are introduced and the results of the implementation of these project are checked against the goals that were laid out in the planning stage.

The ArchiValue project offers a lot by way of evaluation and support to Organizations.  Do you think this model achieves it goal of helping IT managers and architects to get a grip on the costs and benefits of IT? Do you think this model is an effective way of measuring IT value? Should this valuation be carried out to determine whether or not to invest in IT that may bring about new business opportunities?

Link to full information leaflet: https://doc.novay.nl/dsweb/Get/Document-114777/SII%20-%20ArchiValue%20-%20flyer.pdf

Photo Credits: Novay

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One Response to “The ArchiValue Project”

  1. lucid21 November 28, 2012 at 1:25 am #

    Hi Ronnoc90..Interesting blog! You successfully described the archivalue framework very well in relation to its three layers. I also found Buschle and Quartels article interesting in the combination of the enterprise architecture with an extension of the Bedell method in order to be used in the modern environment. One of my recent blogs “the evolutionary nature of IS evaluation methods/models” relates to this slightly in that there is a never ending process of additional new methods being proposed, criticised and updated the same way the Bedell method has been extended and combined with the enterprise architecture.

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