Description
Technology investment includes the motivation for and management of investments in technology. The technology investment portfolio is part of a larger portfolio of investments in business changes, and is driven by the need to improve one or more performance measures of the business as a whole based on a cascade of required changes identified by tools such as a Balanced Scorecard and Strategy Map. Technology investment includes methods and processes for aligning technology investments to business changes, determining the value contribution of a technology investment, and the overall management of an investment portfolio.
Overview
Money spent on information technology (IT) is either expense (money spent to operate and maintain the existing IT environment) or investment (money spent to change the IT environment to improve some performance measure for the business. This capability focuses on investments. The starting point is the motivation for investing in IT, which always starts with the need to improve one or more performance measures of the business as a whole. The business invests in business change, usually including process and/or organization changes, which may require investment in IT. Thus, an IT investment is always a component of some larger investment in business change. The specific investments required by the business can be identified using a planning tool such as the Balanced Scorecard or Strategy Map.
The set of IT projects can be viewed and managed as a set of IT investments. Taking this view will always ensure that IT projects are aligned with the needs of the business. Projects are prioritized in relation to their relative contribution to the overall investment in business change, including cross-project dependencies. Thus, it is no longer strictly necessary for every IT project to have a positive return on investment, so long as the larger business change has a positive effect on the performance of the business. This is a major change in how IT investments are viewed and managed.
This capability covers the ability to identify potential investments in IT and on methods to manage the IT investment portfolio as part of a larger business investment portfolio.
The business architect is uniquely positioned to evaluate the overall business change and determine the IT investments necessary to support it. Further, the function of business architecture is responsible for managing the overall investment portfolio, including investments in IT. While business architects do not own the investment portfolio, they own the processes used to select, value, and manage the investments that go into the portfolio. This includes participation in the budgeting process since the need for capital investment is driven by necessary changes to the business, not just investments in IT.
As a practical matter, it often falls to the business and enterprise architects to review projects as they are proposed for addition to the portfolio. In many companies, the results of this process is a set of wish list items for either business or IT leaders, and have little relationship with the investment needs of the business. With this progressive view of technology investment, project proposals are graded and ranked according to their contribution to business change goals as determined by the business change investment portfolio. In addition, projects that are required to maintain the current state of operation should also be included. Managing this pipeline in this way can be controversial, requiring that an architect draw on all of their stakeholder management skills.
Proven Practices
- Articulate and demonstrate why an investment management approach to selecting business change and technology projects is superior to typical methods that simply prioritize a wish list
- Use investment management skills and practices to optimize an overall investment portfolio
- Ensure that selected business change and technology projects reflect the investments necessary to move the business towards a state in which it is capable of achieving its strategic goals
- Ensure that risks are identified, analyzed, and mitigated to minimize the potential disruption to the business
Sub-Capabilities
Technology Support of Business Process
A business process, process step, or activity can be manual, supported by technology, or fully automated. The business architect, in consultation with the technical architects, must determine the optimum level of technology support for each process step or activity given the business environment, competitive priorities, and the capabilities of the IT organization.
| Iasa Certification Level | Learning Objective |
|---|---|
| CITA- Foundation | - Learner will be able to list and describe the three ways technology can be used to support a business process step or activity |
| - Learner will be able to describe the criteria used to determine the level of technology support for a business process step or activity | |
| - Learner will be able to classify business process steps and activities into categories requiring a similar level of technology support | |
| - Learner will be able to apply levels of technology support to business process steps or activities | |
| CITA – Associate | - Learner will be able to analyze a business process to determine the sub-units that need technology support (these may be discrete steps or groups of steps or activities) |
| - Learner will be able to combine the results of this analysis into requirements for technology architects using an accepted standard approach for defining requirements | |
| - Learner will be able to evaluate results of technology support against the needs of the process steps or activities | |
| CITA – Professional | - Learner will be able to appraise the needs of a business process as a whole and optimize the overall level of technology support for the entire process |
| - Learner will be able to coordinate with business analysts, software architects, solution architects, information architects, and infrastructure architects to design the optimum solution for supporting the business process given the tradeoffs in the business and technology domains | |
| CITA – Distinguished | - Learner will be able to synthesize new methods for providing technology support to business process |
| - Learner will be able to adapt technology support for one process to the needs of another to enhance the reuse of technical assets | |
| - Learner will be able mentor less experienced architects in the skills required for this capability | |
| - Learner will be able to optimize technology support to business processes across the enterprise |
Project Selection
A portfolio of business change investments consists of both business change (e.g. process improvement, training, or reorganization) and technology projects. Managing both as a single portfolio ensures that investments in technology remain aligned with investments in business changes. The goal of project selection is to ensure that the optimum mix of projects are funded and implemented to move the company towards the state necessary to achieve its strategic goals.
| Iasa Certification Level | Learning Objective |
|---|---|
| CITA- Foundation | - Learner will be able to describe the difference between business change projects and technology projects |
| - Learner will be able to explain whether and how a technology project is associated with a business change project | |
| - Learner will be able to infer technology projects that might be necessary to support a business change project | |
| CITA – Associate | - Learner will be able to classify a project proposal as business change or technology |
| - Learner will be able to combine business change and technology projects into coherent sets of investments | |
| - Learner will be able to analyze projects of both kinds to assess the degree of alignment with the strategic goals of the business | |
| CITA – Professional | - Learner will be able to apply portfolio management techniques to assess how well a project fits the needs of the business |
| - Learner will be able to argue the relative benefits of specific projects of both kinds | |
| - Learner will be able to assess and select among a set of possible technology approaches to support a given business change project | |
| CITA – Distinguished | - Learner will be able to compare and contrast various approaches to technology projects to best meet the needs of the business in both the short and long terms |
| - Learner will be able to assess the value of the entire investment portfolio in terms of the degree to which it is aligned with changes required in the business | |
| - Learner will be able to argue for changes that are necessary, but not requested, including identifying dependencies and securing their inclusion in the portfolio |
Managing Investment Risk
Like any investment portfolio, there is risk to be managed. In addition to external risk due to business condition changes and such, there is the execution risk – the ability or inability of a company to actually implement the changes required. Using skills from the Risk Management capability, business and enterprise architects continually identify, assess, and mitigate both kinds of risk. One of the major tools available to business and enterprise architects for identifying and analyzing risks is scenario-based planning.
| Iasa Certification Level | Learning Objective |
|---|---|
| CITA- Foundation | - Learner will be able to list and describe the various forms that investment risk might take |
| - Learner will be able to differentiate between external risks and execution risks | |
| - Learner will be able to list and describe possible ways to mitigate or avoid different kinds of investment risk | |
| CITA – Associate | - Learner will be able to assess a risk and estimate both its likelihood and potential impact |
| - Learner will be able to analyze the risks for an entire portfolio and rank them using one or more appropriate risk ranking schemes | |
| - Learner will be able to identify several ways to mitigate a given risk and explain the relative benefits of one over the others | |
| CITA – Professional | - Learner will be able to identify and analyze external and execution risks relevant to a specific project |
| - Learner will be able to formulate multiple mitigation approaches for each risk | |
| - Learner will be able to use scenario-based planning as a risk management tool | |
| - Learner will be able to write scenarios using one of the previously developed scenario pattern | |
| CITA – Distinguished | - Learner will be able to create mechanism to ensure external and execution risks are identified, assessed, and mitigated |
| - Learner will be able to mentor others in identifying risks | |
| - Learner will be able to evaluate risk analysis to determine its completeness and effectiveness | |
| - Learner will be able to judge the relative value of various mitigation techniques and rank them in order of effectiveness | |
| - Learner will be able to teach the use of scenario-based planning as a risk management tool | |
| - Learner will be able to create new scenario patterns as necessary |
Resources
Books/Articles:
Potts, Chris, FruITion: Take IT With You, Bradley Beach, NJ: Technics Publications, LLC, 2008.
Potts, Chris, RecrEAtion: Realizing the Extraordinary Contribution of Your Enterprise Architects, Bradley Beach, NJ: Technics Publications, LLC, 2010.
Schwartz, Peter, The Art of the Long View: Paths to Strategic Insight for Yourself and Your Company, New York, NY: Doubleday, 1991.
Author
Scott Whitmire
Research Manager/Systems Architect, The Mayo Clinic Chair, IASA Board of Education
Scott Whitmire is the research manager and systems architect for the Neurosurgery Research Lab at the Mayo Clinic in Phoenix, Arizona. He has over 30 years of business change and software development experience, including serving as lead architect on a number of major applications. His interest in software engineering and architecture began over 20 years ago as he became frustrated with the state of the systems on which he worked as well as those he had built. He has built or designed applications and entire lines of business for several industries, including aerospace, health care, manufacturing, professional practice management, financial services, wholesale, retail, and telecommunications.
Mr. Whitmire is the Chair of the Iasa Board of Education and serves on the Iasa Board of Directors. He is one of the original members of the Curriculum Committee, is one of the initial authors of Iasa’s definitions of software and infrastructure architecture, led the committee’s efforts to define business architecture as an architecture specialty, and is the primary author of Iasa’s Business Architecture curriculum.
Mr. Whitmire is a Senior Member of the IEEE, an Iasa Fellow, and CITA-P. He has served on many CITA-P certification boards, and is an Iasa mentor. He has published one book (so far), Object Oriented Design Measurement, and numerous papers, articles, and presentations. He is a frequent instructor for Iasa and speaker at Iasa chapter and global events.