Monday, April 27, 2020

Apply Balanced Scorecard Approach to Measure Business Architecture Performance

The role of Business Architecture is to design and manage the digital business that can respond to multidimensional factors impacting business model, operations, and reputation.

 As the digitized business ecosystem becomes hyper-connected, over-complex, and interdependent, organizations all face fierce competition and an ambiguous digital environment with "VUCA" reality. Business Architecture (BA) should play a critical role in designing and managing future businesses that become truly proactive and move up the organizational maturity level.

The scope of BA is broad. To measure and monitor the effectiveness and performance of the BA, organizations can use the performance monitoring framework such as a Balanced scorecard which includes the following perspectives:

Cost reduction by standardization and resource consolidation: The business management systems have an architecture, an effective business architecture helps to manage business complexity and optimize the organizational cost significantly to better compete in a global marketplace. The challenge is to have visibility and traceability between costs and the assets consuming those costs. The cost optimization metrics include such as forecast benefit, project cost (hard dollar & soft dollar), benefit/cost projection, a calculation of the cost to fix structural quality problems, etc. When selecting the right set of metrics to evaluate BA for cost optimization, ask whether the metrics can reveal anything meaningful for the identified purpose, and ensure the management buy-in for the metrics collection processes. BA performance can be assessed objectively via its cost reduction and complexity management efforts.

Improvement in business efficiency by process optimization: Business Architecture is more than a "hint of the business process." It contains most of the time, all primary business processes, and their interrelation or interconnectivity. The process-oriented BA perspective enables business management to make continuous improvement by system optimization and process streamlining. The goal of optimization is to eliminate unnecessary complications but improve the overall business capability management maturity, with better timeliness of reporting to tune operations and reduce waste. To measure BA effort in business efficiency means a way to measure how well you are doing in terms of available resources and budget. At some point in the enterprise evolution, business effectiveness and efficiency are also correlated specifically when the organization reaches its capacity.

The exploitation of opportunities by bringing innovation and research: The business ecosystem keeps evolving when the company broadens its scope and consumes resources of all types; authority, when the business architecture becomes stable and competition for leadership and profits within the ecosystem gets brutal and renewal, when continuing innovation must take place for the organization to thrive. BA enables continued strategic renewal through orchestrating cross-functional collaboration and the differentiated business competency in the business ecosystem. Measure BA’s effort to explore the business growth opportunities by facilitating and monetizing innovation, and providing a balanced focus on achieving both short term and long term objectives.

Solving business problems (merger, divestiture, expansion of business in new market/regions, new products, etc): Problems that arise in organizations are almost always the product of interactions of parts, never the action of a single part. Business Architecture is a strategic problem-solving tool for corporate leaders to gain a systematic understanding of business relationships, ecosystems, market dynamics, interconnectivity, and orchestrate the organizational interrelationship between people and processes. To assess BA effort to solve prioritized problems, the main emphasis is in doing better pre-work, such as defining the measurement and the "success criteria," take consideration of the range of options, rather than the traditional "jump to solution" problem-solving method. The evaluation of problem-solving effectiveness with BA as a great tool is to ensure the real problems have been fixed and cause the least side effect as possible.

Enforcing governance to ensure an operational model of the enterprise is aligned for its vision: Governance can begin with a framework (such as BA) and a set of policies to be put in place, depending on the nature, scale, and complexity of the organization, to gain an in-depth understanding of one's risks and conduct. Evaluate BA as a governance enabler is to assess how effectively BA can be used to raise visibility and awareness for many things that are captured at the different levels of the organization, as well as how mature the governance should be handled and prioritized in such a manner that they're inherent in the way without negatively impacting the working flexibility to ensure clear and concise information to key decision-makers.

The role of Business Architecture is to design and manage the digital business that can respond to multidimensional factors impacting business model, operations, and reputation. The balanced scorecard approach to measure BA helps to set metrics, understand business results, make decisions, and assessing the business progress. Classically, BA delivers value from a long-term strategic alignment perspective. Increasingly, Business Management expects BA to have a clear calculation of ROI, and get both some quick wins as well as long term benefits.


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