Because of its holistic view of an organization, enterprise architecture and mergers & acquisitions (M&A) go hand-in-hand.
M&A activity, despite or in light of COVID-19, are on an upswing. The Financial Times reported Google, Amazon, Apple, Facebook and Microsoft have made 19 deals so far this year, according to Refinitiv, the London-based global provider of financial market data. This represents the fastest pace of acquisitions and strategic investments since 2015.
Let’s face it, company mergers, even once approved, can be daunting affairs. Depending on the size of the businesses involved, hundreds of systems and processes need to be accounted for, which can be difficult and often impossible to do in advance.
Following these transactions, businesses typically find themselves with a plethora of duplicate applications and business capabilities that eat into overhead and complicate inter-departmental alignment.
These drawbacks mean businesses have to ensure their systems are fully documented and rationalized. This way the organization can comb through its inventory and make more informed decisions on which systems can and should be cut or phased out, so it can operate closer to peak efficiency and deliver the roadmap to enable the necessary change.
Enterprise Architecture Needs a Seat at the Table
IT professionals have the inside track about the connection that already exists across applications and data – and they’ll be the ones tasked with carrying out whatever technical requirements are in order post-acquisition.
But despite this, they’re rarely part of M&A tech strategy discussions and the synergy between enterprise architecture and mergers & acquisitions is overlooked. That should change.
With IT leaders involved from the start, they can work with the CFO and COO teams on assessing systems and providing advice on costs that might not otherwise be fully accounted for, such as systems and data integration.
Additionally, by leveraging mergers and acquisitions tools in the beginning, IT can provide a collaborative platform for business and technical stakeholders to get a complete view of their data and quickly visualize and assess what’s in place across companies, as well as what integrations, overlaps or other complexities exist.
This is why enterprise architecture for mergers and acquisitions is essential.
EA helps organizational alignment, providing a business-outcome perspective for IT and guiding transformation. It also helps a business define strategy and models, improving interdepartmental cohesion and communication.
Enterprise Architecture roadmaps can also be leveraged to provide a common focus throughout the company, and if existing roadmaps are in place, they can be modified to fit the new landscape.
EA aids in rooting out duplications in processes and operations, making the business more cost efficient on-the-whole.
Two Approaches to Enterprise Architecture
The Makeshift Approach
The first approach is more common in businesses with either no or a low-maturity enterprise architecture initiative. Smaller businesses often start out with this approach, as their limited operations and systems aren’t enough to justify real EA investment. Instead, businesses opt to repurpose tools they already have, such as the Microsoft Office Suite.
This comes with its advantages that mainly play out on a short-term basis, with the disadvantages only becoming apparent as the EA develops. For a start, the learning curve is typically smaller, as many people are already familiar with software, and the cost per license is relatively low when compared with built-for-purpose EA tools.
These short-term advantages will be eclipsed overtime as the organization’s EA grows. The adhoc Office tools approach to EA requires juggling a number of applications and formats that can stifle effectiveness.
Not only do the operations and systems become too numbered to manage this way, the disparity between formats prevents deep analysis. It also creates more work for the enterprise architect, as the disparate parts of the Office tools must be maintained separately when changes are made, to make sure everything is up to date.
This method also increases the likelihood that data is overlooked as key information is siloed, and it isn’t always clear which data set is behind any given door, disrupting efficiency and time to market.
It isn’t just data that siloed, though. The Office tools approach can isolate the EA department itself, from the wider business as the aforementioned disparities owed to the mis-matching formats can make collaborating with the wider business more difficult.
The Dedicated Approach
As an organization’s enterprise architecture grows, investing in dedicated EA tools becomes a necessity, making the transition just a matter of timing.
With a dedicated enterprise architecture tool, EA management is much easier. The data is all stored in one place, allowing for faster, deeper and more comprehensive analysis and comparison.
Collaboration also benefits from this approach, as having everything housed under one roof makes it far easier to share with stakeholders, decision-makers, C-level executives and other relevant parties.
Benefits of Enterprise Architecture for Mergers & Acquisitions
While organizational mergers can be fraught with many challenges. they don’t have to be so hard.
Enterprise architecture is essential to successful M&A. EA helps document and manage this complexity, turning all this data into meaningful insights.
It helps alignment by providing a business-outcome perspective for IT and guiding transformation. It also helps define strategy and models, improving interdepartmental cohesion and communication.
Roadmaps can be used to provide a common focus throughout the new company, and if existing roadmaps are in place, they can be modified to fit the new landscape.
erwin Evolve is a full-featured, configurable set of enterprise architecture and business process modeling and analysis tools. Use erwin Evolve to effectively tame complexity, manage change, and increase operational efficiency.
Architect Everything: New use cases for enterprise architecture are increasing enterprise architect’s stock in data-driven business
As enterprise architecture has evolved, so to have the use cases for enterprise architecture.
Analyst firm Ovum recently released a new report titled Ovum Market Radar: Enterprise Architecture. In it, they make the case that enterprise architecture (EA) is becoming AE – or “architect everything”.
The transition highlights enterprise architecture’s evolution from being solely an IT function to being more closely aligned with the business. As such, the function has changed from EA to AE.
At erwin, we’re definitely witnessing this EA evolution as more and more as organizations undertake digital transformation initiatives, including rearchitecting their business models and value streams, as well as responding to increasing regulatory pressures.
This is because EA provides the right information to the right people at the right time for smarter decision-making.
Following are some of the top use cases for enterprise architecture that demonstrate how EA is moving beyond IT and into the business.
Top 7 Use Cases for Enterprise Architecture
Compliance. Enterprise architecture is critical for regulatory compliance. It helps model, manage and transform mission-critical value streams across industries, as well as identify sensitive information. When thousands of employees need to know what compliance processes to follow, such as those associated with regulations (e.g., GDPR, HIPAA, SOX, CCPA, etc.) it ensures not only access to proper documentation but also current, updated information.
Data security/risk management. EA should be commonplace in data security planning. Any flaw in the way data is stored or monitored is a potential ‘in’ for a breach, and so businesses have to ensure security surrounding sensitive information is thorough and covers the whole business. Security should be proactive, not reactive, which is why EA should be a huge part of security planning.
Data governance. Today’s enterprise embraces data governance to drive data opportunities, including growing revenue, and limit data risks, including regulatory and compliance gaffes.
EA solutions that provide much-needed insight into the relationship between data assets and applications make it possible to appropriately direct data usage and flows, as well as focus greater attention, if warranted, on applications where data use delivers optimal business value.
Digital transformation. For an organization to successfully embrace change, innovation, EA and project delivery need to be intertwined and traceable. Enterprise architects are crucial to delivering innovation. Taking an idea from concept to delivery requires strategic planning and the ability to execute. An enterprise architecture roadmap can help focus such plans and many organizations are now utilizing them to prepare their enterprise architectures for 5G.
Mergers & acquisitions. Enterprise architecture is essential to successful mergers and acquisitions. It helps alignment by providing a business- outcome perspective for IT and guiding transformation. It also helps define strategy and models, improving interdepartmental cohesion and communication.
In an M&A scenario, businesses need to ensure their systems are fully documented and rationalized. This way they can comb through their inventories to make more informed decisions about which systems to cut or phase out to operate more efficiently.
Innovation management. EA is crucial to innovation and project delivery. Using open standards to link to other products within the overall project lifecycle, integrating agile enterprise architecture with agile development and connecting project delivery with effective governance.
It takes a rigorous approach to ensure that current and future states are published for a wider audience for consumption and collaboration – from modeling to generating road maps with meaningful insights provided to both technical and business stakeholders during every step.
Knowledge retention. Unlocking knowledge and then putting systems in place to retain that knowledge is a key benefit of EA. Many organizations lack a structured approach for gathering and investigating employee ideas. Ideas can fall into a black hole where they don’t get feedback and employees become less engaged.
When your enterprise architecture is aligned with your business outcomes, it provides a way to help your business ideate and investigate the viability of ideas on both the technical and business level.
Enterprise architecture (EA) benefits modern organizations in many ways. It provides a holistic, top down view of structure and systems, making it invaluable in managing the complexities of data-driven business.
Once considered solely a function of IT, enterprise architecture has historically operated from an ivory tower. It was often siloed from the business at large, stifling the potential benefits of the holistic view it could have provided.
Now, the growing importance of EA is reflected in its evolving position in the business. Instead of being considered just a function of IT, EA now plays a leading role in bridging the gap between IT and the business.
The practice has evolved in approach, too. In the past, enterprise architecture has played a foundational, support role – largely focused with “keeping the lights on.”
Today its scope is more progressive and business outcome-focused to identify opportunities for growth and change.
As a matter of fact, Gartner has said that EA is becoming a “form of internal management consulting” because it helps define and shape business and operating models, identify risk and opportunities, and create technology roadmaps to suit.
Analyst firm Ovum also recognizes EA’s evolution, referring to today’s EA as AE, or “architect everything,” further demonstrating its newfound scope.
Top Three Enterprise Architecture Benefits
Of course, enterprise architecture can’t sit at the strategy table without results. Following are what we believe to be the top three benefits of enterprise architecture:
1. Manage complexity
Modern organizations are a complicated mesh of different systems and applications of varying degrees of importance and prominence.
The top-down, holistic view of an organization provided by enterprise architecture means that organizations are more able to efficiently and confidently assess such assets. For example, impact analysis might identify areas where an organization can streamline its tech stack and cut costs.
It might uncover redundancies where multiple applications address the same process.
Alternatively, impact analysis might find that a seemingly less prominent application is actual integral to operations in circumstances where leadership are considering phasing it out.
In short, enterprise architecture helps business and IT leaders capture, understand and articulate opportunities, challenges and risks – including security.
2. Supporting the creation of actionable, signature-ready EA deliverables
As well as assessing an organization’s current capabilities, the holistic, top-down view provided by enterprise architecture also helps identify gaps.
A better understanding of its enterprise architecture means an organization can make more informed investment decisions. Of course, this means organizations have a better understanding of what they should invest in.
However, it also helps them better understand when, as more pressing concerns can be identified and roadmaps can be created to reflect an organization’s priorities.
This approach helps an organization meet its current operational demands and opportunities, whilst navigating and mitigating disruptions. It can also ensure it does this in accordance with the longer-term strategic vision of the organization.
3. Increasing agility and speeding time to value
In the era of rapidly evolving technology and rampant – often disruptive – digital transformation, the need for enterprise architecture tools is abundantly clear. Organizations with a healthy understanding of their enterprise architecture are better equipped to evaluate and implement new technology in a timely and efficient manner.
EA tools accelerate analysis and decision support for alternative investment, rationalization, and optimization opportunities and plans and for assessing risk, change and the impact on the organization.
Maturing Enterprise Architecture
To reap such benefits of this new approach to EA, many organizations will have to work to mature their practices.
To be effective, business outcome-focused enterprise architecture needs to be consistent. It needs to be communicable and discernible. It needs to be up to date and accurate.
For many organizations, these standards have been impossible to meet as their enterprise architectures are burdened by the use of systems that were not built for purpose.
Basic visualization tools, spreadsheets and even word processors have typically played stand-in for dedicated EA solutions. The non-purpose-built systems lacked the industry standards needed to accurately capture and align business and IT elements and how they link together.
Additionally, collaboration was often marred by issues with outdated, and even disparate file versions and types. This being due to business’ lacking the systems necessary to continuously and methodically maintain models, frameworks and concepts as they evolve.
Therefore, a key milestone in maturing a modern enterprise architecture initiative, is developing a single source of truth, consistent across the enterprise. This requires the implementation of a dedicated, centralized and collaborative enterprise architecture tool, be that on-premise, or via the cloud.
Of course, such a tool should cover enterprise architecture’s legacy capabilities and expectations. Those include support for industry standard frameworks and notation, the ability to perform impact analysis and the streamlining of systems and applications.
But to mature the practice, organizations should implement an EA tool with a shared, centralized metadata repository and role-based access.
It should have the ability to share an integrated set of views and information on strategy, business capabilities, applications, information assets, technologies, etc., to help provide stakeholders with a thorough understanding of the enterprise.
Once this milestone has been met, organizations can really begin to enjoy the benefits of enterprise architecture, in the modern, data-driven business context.
If the benefits of enterprise architecture would help your business, and you’d like to be the next erwin EA success story, try erwin’s enterprise architecture and business process modeling software for free.