Article

Business Value of Enterprise Architecture –

Why CEOs should Recognize and Empower their EA Departments
Key Takeaways from the McKinsey & Company and Henley Business School EA Survey
Oliver Bossert, Len Fehskens, Sharm Manwani, and Jan Sokalski

Abstract
Recent research on IT’s future value proposition (Khan et al. 2017) revealed that both business and IT leaders expect IT
to play a new role in companies’ strategic directions. The focus of IT will shift from supporting the creation of business
value to value-generating, technology-based business innovation and digital initiatives. Yet, it is recognized that IT today
struggles to perform – just 12% of research participants believe IT organizations are “highly effective” at leading digital
initiatives.
The Enterprise Architecture (EA) Survey by McKinsey & Company and Henley Business School finds that EA can enable
digital transformation while reducing business and IT complexity. Therefore, if set up well, it can become a strategic
function. CEOs who recognize and enable the full potential of their EA departments can position their organizations for
successful digital innovation. This article builds on the EA Survey results to position EA, firstly in its role, secondly in its
value to the CEO, and finally in how to increase its contribution.

close and ongoing partnerships at the highest

EA AS AN ORGANIZATIONAL FUNCTION
There are many misconceptions about the definition and
functional role of Enterprise Architecture (EA). As a term,
Enterprise Architecture is sometimes, wrongly, used
interchangeably with both IT Architecture and Solution
Architecture. For the EA Survey, we defined the role as:
Improving the performance of enterprises by enabling
organizational levels and span functions, including
architecture, applications, and infrastructure. EA
engages with multiple stakeholders from suppliers to C-
level executives, but best practices indicate that the
most frequent interactions are with business
responsibles and business demand IT roles (Figure 1).
Which stakeholder groups do you interact with most?
Sum of answers of top 5

them to take a holistic and integrated view of their Business responsibles 77

strategic direction, business practices, information flows,
and technology resources (Bernard 2012). Business demand IT roles 76

It is this breadth of mission that distinguishes EA from an Other architecture colleagues and groups 73

organization’s IT and Solution Architecture. EA often Project portfolio management 66

leads to and may incorporate Solution Architecture, for
example, but its scope of capabilities is much broader. CXO level executives and strategy department 60

To achieve the “holistic and integrated view” described Application development 54

above, the EA function should seek to align the Infrastructure and operations 43
organization’s business and IT perspectives. We have
worked with many EA departments during a large Suppliers 24

number of digital transformation engagements. In

combining this experience with the results of our EA Figure 1: EA Departments Interact Most Often with
Survey, we have distilled the practices and approaches Business Roles
of successful EA departments in both alignment efforts
and organization set-up. Implementer of Artifacts

Committed to Partnerships Alongside these relationships, the EA department

pursues its objective of business-IT alignment by
At its core, EA has the power to align an organization’s creating and managing architectural representations –
business and IT functions, but its success depends on also known as artifacts. The survey reveals that process

Journal of Enterprise Architecture Article 1 © October 2017 Association of Enterprise Architects

maps and user stories are usually the most detailed How EA team capacity is distributed ?
Average allocation of capacity, %
artifacts, with some 35% of participants having over 50
such artifacts at least at levels 2/3. Some 40% of Operating tasks within
participants focus the usage of process and capability architecture
(e.g. solution 43
maps on the most important areas (with some level 2 architecture)
artifacts), and half of participants leverage capability
maps as a primary grouping for delivering milestones in Strategic planning
the target architecture. Artifacts are rarely used only 21
activities
(e.g. operating model
within IT to make decisions. Most commonly they are target architecture)
used in discussions with business including joint
business and IT decision-making.
35
Recognized as Beneficial
Other tasks outside
core architecture topics
In companies where the business-IT connection has
become well established, EA is perceived as highly To what extent are you…
beneficial, and as a department it gets the credit for % of participants that answered High or Very High

achieving the alignment. Specifically, 70% of our survey

participants rate this benefit that EA brings as high or
Modeling today’s
very high. architecture
29

Focused on Strategy Modeling future/

64
target architectures
Finally, successful EA does not only support operational
tasks; it is also forward-looking and engaged in strategic- Defining how to
52
level activities. Over 60% of participants reported that close the gaps

their EA departments have a “high” or “very high” focus

on modeling the target architecture (Figure 2b). That Figure 2: EA is Engaged in Solution Architecture but also
focus on strategy is influenced by the resources EA Commits to Future Strategy
departments allocate to it. On average, 43% of EA
capacity is dedicated to operating tasks (like Solution What level of disruption to the organization do you expect over the next 2-3 years
from the following sources?
Architecture), with more than a third of EA capacity % of participants that answered High or Very High
focused on other non-Solution Architecture activities
(Figure 2a). This gives on average one day per New emerging technology
63
workweek for strategic planning activities (e.g., operating trends such as cloud computing

model or target architecture definition) to facilitate

involvement in strategy-level discussions with Industry disruptions such as
60
digital business models
executives. Strong stakeholder engagement and
effective use of artifacts are vital to maximize this time.
New governance, compliance
38
and legal requirements
WHY EA SHOULD BE ON THE CEO RADAR
Digital has become a cross-industry priority for the New IT processes
30
such as agile and DevOps
majority of enterprises. Its importance is also evidenced
by our survey results, as 60% of participants expect high
or very high disruption to the organization from digital Figure 3: The Majority of Participants Expect Significant
business models. At the same time, 63% expect the Disruption from Tech Trends and Digital Business Models
same level of disruption from new, emerging technology
trends such as cloud computing (Figure 3). As we have Here are the most important ways that an appropriately
shown in the first section, a strong EA department can set-up and run EA function can support a digital
be a bridge between business and IT, thus enabling an transformation and support the success of new digital
organization to realize its strategic goals more efficiently business models.
through a more meaningful use of technology.

Journal of Enterprise Architecture Article 2 © October 2017 Association of Enterprise Architects

 How do you rate the benefit EA
contributes to time-to-market
EA Can Help Reduce your IT Effort Average products offered to customers Sum of answers High and Very high, % of
Number of products population
One of the core tasks of the EA department is to +200% 18
EA does not
+35pp
Integration is
contribute to 56 more than 20% of
manage IT complexity. We found that ease of integration Digital

EA does
the effort

Integration is less
is a good indication of how complex the IT landscape is. contribute to
Digital
than 20% of the
effort

Our survey offers quantitative evidence that managing

complexity influences how much companies spend on 6 21

integration. If you don’t reduce the number of point-to-

point connections, reduce the number of interfaces
p < 0.05 p < 0.05
(especially non-standard ones), and manage the
portfolio of applications, you will spend more on Companies who see EA’s contribution to
Digital seem to translate managing IT
integration. complexity into business outcomes, at least
in terms of number of products offered to
customers
On average, companies need to allocate 38% of their IT
effort to integration. However, this allocation of effort can Figure 5: Businesses Leveraging EA in Digital Offer 3x
range from 20% (1st quartile performers) to 50% (3rd More Products
quartile) (Figure 4).
EA Enables Additional Value by Bringing Business and IT
Integration can constitute between 20-50% of IT effort
Together
How much of your IT effort goes on integration (processes, applications, etc.)
% of IT effort
As a function, EA is very well positioned to bring the
+12pp 50
business and the IT functions together with additional
benefits as our survey findings clearly show.
38

+30pp When business is aware of the role and capabilities of

-18pp
the EA function it can leverage it to establish a stronger
20
connection to IT and thus realize more value. We found
that companies in which EA continuously improves
standards for all architectural layers, including business
Achieving best-in-class
complexity architecture, are able to achieve stronger business and
management might
mean reducing your
IT alignment (Figure 6). Their use of architectural
1st Average 3rd quartile IT effort by 30pp representations, such as capability or process maps,
quartile
helps make smart decisions about delivering new
Figure 4: Top Performers Manage to Spend only a Fifth of business solutions more efficiently.
their it Effort on Integration
How do you rate the benefit EA contributes on the following aspects?
% o population that answered Very high
EA Can Translate Managing IT Complexity into Business
Participants who continuously improve
Outcomes standards for all architecture layers,
Business IT alignment
including business architecture
including digital
We have observed that good management of IT transformation ranked Rest of participants

complexity can translate into better time-to-market. Once Very High

complexity is under control, business requirements can
be delivered quickly as development does not need to
26
focus so much on solving complex integration problems.
Shorter time-to-market enables more agility in product +23pp
management. Companies that are able to effectively
leverage the power of EA in their digital initiatives are 49
able to offer more products to their customers
(Figure 5a). Furthermore, the benefit of reduced
complexity is seen in significantly improved time-to- Figure 6: Using EA to Drive Continuous Architecture
market (Figure 5b). Improvements Strengthens Business-IT Alignment

Journal of Enterprise Architecture Article 3 © October 2017 Association of Enterprise Architects

The corollary confirmed by the survey is that in Average number of services
#
Average reuse of services
Percentage
companies where business is not aware of EA’s function EA does not EA does not
and capabilities: +470% 188.0
contribute to
Digital +66% 48
contribute to
Digital

EA does EA does
Overall adherence to guidelines is lower, as EA is contribute to
Digital
contribute to
Digital
not given sufficient authority to enforce compliance
There is no capability or process model in place –
29
business does not leverage these powerful artifacts
to realize business value
There is no benefit capturing in place – business
and IT are not well connected, and companies miss
33.0
EA’s ability to implement a benefit capturing
process, which is able to measure both
project/business as well as IT benefits p < 0.05 p < 0.05
There is a lack of the right talent to cope with
business and technology challenges, and it is less Figure 8: When EA Clearly Contributes to Digital the
likely that EA is modeling the future – as business is Number and Reuse of Services Increases
more disconnected from IT, the strategic future
HOW TO ENABLE EA AND SUPPORT ITS
goals are communicated less efficiently between
CONTRIBUTIONS
the two siloes and, as a result, EA focuses its
activities on the status quo Our survey clearly demonstrates the tangible
contributions that a properly set-up EA function can
EA Can Facilitate Digital Transformations make in an organization. These are some of the best
practices and actions to take in order to improve the
A digital transformation often means an organizational contribution of EA.
“open-heart surgery” – accessing and altering the core of
an enterprise’s IT and business portfolio. We have Establish Standards to Reduce Integration IT Effort
demonstrated the benefits of a properly set-up EA
function; digital leaders also recognize EA’s positive Managing IT complexity is key to reducing the effort that
contribution. Our research shows that companies EA has to expend on integration. We define complexity
experiencing the highest digital transformation success as the number and variety of IT landscape entities and
are more likely than others to see EA’s benefits to both the connections between them along four measures:
IT (e.g., improving integration and standardization) and
business processes (Figure 7). Total number of entities (i.e., interfaces,
applications)
How do you rate the benefit EA contributes to..
% of population that rated High and Very High Number of different kinds of entities (e.g., how
Digital leaders (within many interfaces of the same type are maintained?)
or beyond industry)

Rest of participants
Total number of connections between entities (e.g.,
IT benefits integration/ Business process
number of services, interfaces, point-to-point
standardization benefits connections)
Number of different kinds of connections between
63 37 entities
+27pp +23pp
Our survey clearly shows that organizations with fewer
90 60 interfaces and applications as well as a lower share of
point-to-point connections have lower-than-average
p<0.05 p<0.05
integration costs (Figure 9).

Figure 7: Digital Leaders Recognize the Impact of EA on

Business and IT

A good example of an IT benefit supporting

transformation is service management of services – one
of the core enablers of digital through adding and
reusing functionality. Digital leaders leverage EA to
achieve much more efficient services management than
the rest of the survey participants (Figure 8).

Journal of Enterprise Architecture Article 4 © October 2017 Association of Enterprise Architects

 Lower than average
integration cost
Companies with less complex IT landscape spend less on application integration…
Point to point connections
Share of p2p connections
Applications
# of applications
Interfaces
# of interfaces
62 694
-65%
-73%
245
17
p < 0.05 n.s.
Figure 9: More Services and Fewer Point-to-Point
Interfaces Lead to Lower Integration Costs
We have observed that complexity of the IT landscape is
often more of a governance issue than an IT issue.
Therefore, establishing and enforcing architectural
standards and policies is critical in management and
reduction. Companies with EA departments that work on
continuous improvement of standards are able to better
manage dependencies and more efficiently ensure
architectural compliance of implementation (Figure 10).
To what extent does your EA function do the following activities?
% of population
Rest of
participants
Ensure architecture
Manage dependencies compliance
marked as fully done of implementation
25
+37
62
Figure 10: Continuous Improvement of Standards by EA
Drives Better Management of Dependencies and
Implementation Compliance
However, EA departments need to be able to prioritize
and focus standards and policies on the areas that
matter and not focus their attention on defining
standards in non-differentiating areas. While standards
help manage complexity, it is also important that an
exception process be established. One of the most
relevant uses of applying standards and exception
processes is in the service domain. A strong and
practical set of principles will facilitate a service-
orientation and tame the increase in IT landscape
complexity. A standard set of governing principles can
enforce the reuse of existing services and define the
best practices in case new ones need to be created. If
business or IT would like to break the rule and leverage
a “quick and dirty” solution (thus risking complexity
Journal of Enterprise Architecture Article
Higher than average
integration cost increase), a clear exception process would require them
to clearly prove the value of such a solution (i.e., to
present a strong business case).
2,242.0
Leverage EA in Search of the Complexity “Sweet Spot”
With standards and policies in place, the EA function can
further reduce IT complexity toward positive business
-77%
outcomes, and the decommissioning of applications is
part of optimizing complexity. To make the
decommissioning decisions that get them to optimal
522.0 numbers, successful organizations use
process/capability models as a common tool within
business functions (p<0.001) and within IT functions
n.s.
(p<0.01) to make decisions. By using these tools to
optimize complexity, EA can shorten the time-to-market
and increase the number of products for customers.
Large numbers of participants in our survey use
capabilities as, for example, artifacts to deliver target
architecture milestones. However, our experience shows
that not many organizations are able to fully leverage
their potential beyond IT complexity reduction and
business alignment. Organizations with the best EA
departments are able to use capability maps to also:
Increase speed of innovation by better
management of project portfolio and faster
identification of the need to change
Participants who continuously improve
standards for all architecture layers
Foster integration, standardization, and
consolidation of business processes
They are able to do so by applying best practices in the
design of capability maps. The power of capability maps
30 to manage products and structure processes is building
+48 company-specific information on a foundation of more
general, industry-level models. Process models,
78 business strategies, and maps from other company-
specific projects or segments are integrated with
business-level industry process and domain reference
models. This data is combined with IT models where an
industry-level IT reference architecture is refined using
company-specific application landscape data (both
current and target).
Organizations should keep a few design principles in
mind when developing a business capability map. First,
capabilities should be reusable, where common
functionality and data can be applied to multiple
processes. Second, the capabilities outlined within the
map should be unique and sufficiently distinct from one
another. Third, business capabilities should be
structured hierarchically, where each capability is
assigned to exactly one sub-domain. Fourth, capabilities
should have a clear business orientation, meaning that
they are designed to guide the evolution of the IT
application architecture from a business perspective.
5 © October 2017 Association of Enterprise Architects
Create a Framework to Bring Business and IT Together technology, success requires that the EA department
and the entire organization understand the technological
The perception that EA is valuable by both business and enablers and recognize the significance of new
IT is positively linked to continuous architecture technologies as sources of disruption (Figure 13). In
improvement (Figure 11), so making sure that EA is order to accommodate those shifts and enable digital
involved in strategic discussions about business transformations, the EA department needs to be fluent in
architecture as well as IT architecture is a smart move. the technologies, frameworks, and approaches of digital
To facilitate this alignment, a single decision framework natives and be able to apply them within their
to govern IT and business should be established. While organizations.
it is sometimes tempting to manage business and IT
architecture with different frameworks, our research and What level of disruption to the organization do you expect over the next 2-3 years
from the following sources?
experience show that having a single frame of reference % of population
Rest of Digital leaders (within or beyond
is the key to success, and decisions regarding the participants industry)

decommissioning of applications are an element of this New emerging technolgy trends

framework. such as cloud computing

Which expression best describes the perception of stakeholders of your

EA function? 13
Rest of Participants who continuously improve
% of population participants standards for all architecture layers
+37pp
Business perception IT perception
EA helps deliver EA helps deliver
sustainable business sustainable business 50
solutions solutions

37 36
Figure 13: Digital Leaders are More Likely to Recognize
+24 +27
the Disruptive Nature of Emerging Tech Trends
61 63
Digitization most often means a change in the business
model. Our survey shows that in cases of such
innovative projects, where requirements change at fast
Figure 11: In Companies that Continuously Improve
Architecture Standards, Both Business and IT see EA as a pace, companies need to make a change in and
Contributor to Business Solutions improvement to the way they have been operating; i.e.,
introducing or scaling up agile methodologies
Make EA a Digital Transformation Facilitator (Figure 14).
If you apply agile, which are the main decision factors for projects to be
Once complexity is under control (both IT and business) run agile?
and a collaborative business-IT environment has been % of population that indicated yes Rest of Digital leaders (within or beyond
participants industry)
established, EA can become a strong enabler for digital
Project is very innovative and
transformations. We have found that digital leaders many changes to requirements are expected
much more often position EA as a strategic discussion
partner and de-prioritize EA’s connection with suppliers
(Figure 12). 29

+41pp
Which stakeholder groups do you interact with most?
% of population
Rest of Digital leaders (within or beyond
participants industry) 70
CXO level executives and strategy dept.
ranked as #1 Suppliers ranked last

p<0.05
24 24
Figure 14: Digital Leaders Apply Agile when Projects are
+36 +46
Seen as “Innovative” and “Multiple Changes” are
Expected
60 70

We have found that in such cases, digital leaders tailor

p<0.05 their EA approach (Figure 15). Additionally, EA’s core
role of ensuring that IT and business complexity is well
Figure 12: Digital Leaders More Likely to Prioritize EA-CxO managed and maintaining the alignment of and
Interactions connection between business and IT needs to be
Digital transformations are based on innovative tailored to the new way of working. For example, EA
technologies and business models, and it is the role of standards, principles, and escalation paths need to be
EA to navigate their organizations in both areas. In

Journal of Enterprise Architecture Article 6 © October 2017 Association of Enterprise Architects

updated to accommodate new methodologies and
ABOUT THE AUTHORS
technologies.
If you apply agile, what is the role of EA in agile architecture and development?
Oliver Bossert is a Senior Knowledge Expert in
% of population that indicated yes McKinsey’s Frankfurt Office.
Rest of Digital leaders (within or beyond
participants industry)
Len Fehskens is Chief Editor of Journal of Enterprise
EA interaction on agile Agile is managed with a tailored,
is no different from other projects accelerated EA management process Architecture.
Sharm Manwani is Professor of IT Leadership at Henley
80 21
Business School.
+59pp
-60pp Jan Sokalski is a Knowledge Specialist in McKinsey’s
20 80 Polish Knowledge Center.

p<0.05 p<0.05
REFERENCES
Naufal Khan, Jason Reynolds, Christoph Schrey: IT’s Future
Figure 15: Digital Leaders Apply a Tailored EA Approach
Value Proposition, Survey Results, July 2017.
to Agile
Scott A. Bernard: EA3 – An introduction to Enterprise
A NEW VIEW OF EA Architecture (Third Edition), 2012.
We have seen many examples where business and IT
have been unaware of the EA function’s capabilities. EA
departments are still often perceived as a group of
disconnected experts with limited organizational value,
who are holding on to a couple of complex artifacts.
When IT was merely a support function at the end of the
20th century, organizations could get away with not
recognizing EA’s value. Today, however, IT is a strategic
asset in its own right whose value-creating potential is
unleashed when it is aligned with business. EA is
uniquely positioned to bring business and IT together
and manage the complexities of each function for
maximum value. Our experience from the digital
transformation field – backed by the results from the
survey – suggest that CEOs should engage with their EA
departments more often in order to boost IT efficiency,
facilitate the digital transformation, and bring valuable
products and services to their customers.
ABOUT THE EA SURVEY
The EA Survey is an ongoing collaboration between
McKinsey & Company and Henley Business School.
More than 100 companies globally, from multiple
industries have provided us with over 5,000 qualitative
and quantitative data points about their EA functions.
Through finding best practices and quantifying the value
of EA we aim to raise awareness of the importance of
the function, whose benefits we have observed in
multiple client engagements. Visit easurvey.org to join
the effort or to contact the authors for more details.

Journal of Enterprise Architecture Article 7 © October 2017 Association of Enterprise Architects