Identifying revenue-generating projects

Larger companies execute literally thousands of projects per year. Project sponsors each believe their projects will deliver real value to the business. Otherwise, they would not be sponsoring them. So, if each project actually delivered on its promised return, wouldn't the company experience dramatic growth? Looking at the bottom line at year-end may show moderate growth (4-5%), but the sum total across all projects should have translated to double digit growth. This is a normal "syndrome" for most companies. It stems from lack of a valid set of project metrics at the time funding decisions are made. Chapter 2 spoke of the aligned business. It provided a view into a perfectly run company and also provided a model for measuring IT's impact on the business.

Enterprise Architecture can be the catalyst for changing the way the business measures return on IT-related projects, and also change the way investment decisions are made. By linking the EA repository with the Project Portfolio Management (PPM) system, a new set of metrics are possible. Better project metrics help management make better funding decisions leading to better return-on-investment and higher return-on-assets. The following diagram illustrates how EA and the EPMO work together to deliver higher value to the company:

Identifying revenue-generating projects

As is evident from this diagram, blending information from the project management and IT management areas improves the prioritization process. If management can rely on the predicted ROI of each project, higher-returning projects will be funded (barring other considerations). EA and the Enterprise Project Management Office (EPMO) help by providing a cost basis for the ROI calculations. Of course, IT cannot be responsible for business value (returns on business investment), but having accurate information about IT investment drives a higher business ROI. Much of the cost of business projects today is based on IT investment. Once the link is made between the EA repository and the PPM Database, it is possible to reduce costs by focusing on efficient resource utilization. The next section covers this topic.

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