Getting Real Value From Enterprise Architecture in the Financial Services Industry

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Getting Real Value From Enterprise Architecture
in the Financial Services Industry

• Mary Knox

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Todays Financial Services MarketplaceIs
Characterized By
Needed Road map Directions Signposts Pl
anning
Enterprise Architecture Fills This Need
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Strategic Planning Assumption

• Of financial service providers,80 percent will
  have formal enterprise architecture initiatives
  by year-end 2004 (0.7 probability).

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Key Issues

• 1. Why is enterprise architecture critical for
  todays financial institution?
• 2. What specific business and IT value does
  architecture provide to financial institutions?
• 3. How can architecture initiatives be aligned
  with the business to achieve architectural value?

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Key Issues

• 1. Why is enterprise architecture critical for
  todays financial institution?
• 2. What specific business and IT value does
  architecture provide to financial institutions?
• 3. How can architecture initiatives be aligned
  with the business to achieve architectural value?

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Heterogeneous Business Needs,Common Foundation
Financial Services Initiatives
Percentage rating as high technology priority(6
or 7 on a 7-point scale)
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Strategic Planning Assumption

• Flexible, interoperable information architectures
  will be a necessity for financial service
  providers by year-end 2005 (0.8 probability).

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Progressive Impact of Latency Reductionon
Infrastructure and Architecture

• Connectivity without control
• Nonlinear processing
• Source-neutral data availability

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New Emphasis, New Requirements
Traditional Emphasis Few Parties, Single
Systems, Defined Responses
Channels
Core Transaction System
Alert
Big Deposit
Call Customer
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Enterprise ArchitectureForum and Framework

• Enterprise architecture ideally provides the
  settingand structure for the generation and
  governance ofrules for connectivity and shared
  understanding across (and beyond) the enterprise.

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Critical Architectural Success Factors Driven by
Business Change
Traditional
Emerging
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Key Issues

• 1. Why is enterprise architecture critical for
  todays financial institution?
• 2. What specific business and IT value does
  architecture provide to financial institutions?
• 3. How can architecture initiatives be aligned
  with the business to achieve architectural value?

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Architectural Value Synergy Between Cost and
Revenue Goals
Architectural Standards
Consistency
Cost Containment
Revenue Enhancement
Sharing/Reuse

• Operational efficiency
• Rationalization
• Seamlessintegrity

• Customer attraction/retention
• Better decision making
• Time to market

ReducedLatency
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Architecture Is Strategic Expand Focus to
Revenue and Future Value
Revenue Generation
Current
Future
Cost Reduction
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Architecture Provides Business Value Compliance
With Architecture Delivers More
Percentage of respondents rating these results as
significant benefits of their architecture
initiative
Improved Ability to ShareInfo. Across Enterprise
Improved Ability to ShareFunctional
ComponentsAcross the Enterprise
Lower Development Costs
Reduced Time to Marketfor New Applications
0
20
40
60
80
100
Ratings of 6 or 7 on scale of 1 to 7, with 1
being no benefit and 7 being a great benefit
Source Preliminary results of Gartners LADS
2003 survey of banks and investment managers,
2Q/3Q03
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Strategic Planning Assumption

• Sharability will overshadow cost reduction as the
  primary driver of architecture initiatives in
  FSPs by 2004 (0.7 probability).

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Key Issues

• 1. Why is enterprise architecture critical for
  todays financial institution?
• 2. What specific business and IT value does
  architecture provide to financial institutions?
• 3. How can architecture initiatives be aligned
  with the business to achieve architectural value?

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Nacional Financiera Theory Meets Reality
The ChallengeFragmented IT environment out of
sync with the business strategies.

• The Results
• Projects with low business strategicvalue IDd
  and dropped, resulting in30 IT budget savings
• Service levels and operational efficiency
  improved, despite reduced spending
• Project performance managementenables business
  value of IT creationand communication

• Significant Factors
• Senior business managementrecognition of ITs
  strategic value
• Assignment of jointprocess responsibility
• Committee of System Planningand Evaluation with
  businessand IT representation

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Depoliticize Architecture Empower a Neutral
Party to Balance Business and IT Value
CEO
Lines of Business
CIO
LOB 1
CTO
LOB 2
Technical Architecture
LOB n

• Information
• Technology
• Highly standardized
• Nonredundant
• IT metrics

• Business
• Heterogeneous
• Functional silos
• Individual goals

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Neutrality Is Particularly Critical in
Decentralized IT Environments to Deliver Sharable
Value
CEO
Strategic Planning
LOB 1
Enterprise Architecture
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Strategic Planning Assumption

• One-third of decentralized IT environments in
  financial serviceswill be overseen by a neutral
  unit by year-end 2005 (0.7 probability).

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Documented Architecture Gets Clout
Documented architecture exists ...
Gartner research and client interactions
demonstrate that most FSPs are documenting
architecture at an enterprise level.
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Extend Architectural Specifications Beyond
Technology Guidance to Deliver Business Value

• Description of current environment
• HW/SW general guidelines
• Specific buy lists

Traditional Architecture Focus - Items associated
with IT efficiency
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Act On Your Bounds of Control and Influence to
Obtain Maximum Value
ITInfrastructure
BusinessApplicationsand Data
Partners
External Shareholders
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An Executive Mandate is the Most Effective Means
of Gaining Architectural Compliance
Percentage of respondents using the following
methods to ensure or encourage architectural
compliance
Executive Mandate (such as CEO)
Required Sign-Off of Design Spec.
Periodic Check During Development
Educate Business
Low/No Noncompliant (NC) Support
Higher NC Development Cost
Higher NC Ongoing Support Cost
Arch. Rep. on Development Team
Bus. Rep. on Architecture Committee
0
20
40
60
80
Source Preliminary results of Gartners LADS
2003 survey of banks and investment managers,
2Q/3Q03
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Recommendations

• Make enterprise architecture the centerpiece of
  delivering IT value
• Concentrate on intersections
• Tread cautiously on others home turf dont
  force conformity
• Be open to influence its a two-way street
• Enable alternatives
• Assign costs Make conformity attractive
• Demonstrate benefits
• Quantify business value Emphasize user
  efficiency
• Neutralize bargaining grounds
• Leverage third-party experience Reinforce
  sponsored standards
• Avoid internal politicized models
• Publicize positive results
• Turn successes into increased buy-in

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Getting Real Value From Enterprise Architecture
in the Financial Services Industry

• Mary Knox

28
Getting Real Value From Enterprise Architecture
in the Financial Services Industry

• Mary Knox