Monday, May 01, 2006

Financial Model For Architecture

The Question

Should Architecture have a budget of its own? If you give Architecture all the money and power, they tend to spend it all building ivory towers and inventing wonderful architectures that only live on Visio diagrams, while the rest of Technology is busy delivering 'tactical' solutions on a shoe-string. This means that no architectural considerations are taken into account when building solutions. If projects have all the money, then they want the quickest, cheapest solution - they don't care about building the architecture. It isn't looking good for architecture.

Creating a balance

The only way to ensure that projects are delivered quickly and cheaply, but also to architectural standards is to create a balance of power. Architecture can take advantage of economies of scale. They care about the infrastructure, the non-functionals - I see these in the horizontal plane. Projects care about delivering capabilities, the functionals - I see these in the vertical plane. Their primary concerns are orthogonal - they usually appear to be in conflict, but they are actually supporting each other. What we need is a way for architecture to be able to invest in the infrastructure in a way that supports the projects.

The Financial Model

No project wants to take on the financial burden of being the first one to use a new, expensive piece of hardware or software that every other project is going to come along and use for free. Therefore they will avoid using the most architecturally sound solution on the grounds of cost and time-to-market. I propose a financial model, where architecture has a virtual budget. They can invest in whatever infrastructure they want, but at the end of the year they have to break even.

An Example

They initially get into debt by investing in a centralised customer database, because they know that there is a project in the propositions pipeline that will need this capability. It costs them £80,000, and they have it up and running as the project enters its implementation phase. They only charge the project £20,000 because they expect to have at least 5 other projects that will need to use it. In addition, they are making the project more efficient because they don't have to take on all the work to deliver a solution to store customer data.

Reasons Why

This solution is basically speculation in the infrastructure market. Architecture is the only department that can take a long term view. It needs to be able to invest in the infrastructure, because nobody else has responsibility for delivering it. However, they need to have a reason to invest in the right things at the right time to support projects, otherwise they will do what they want without consideration for project delivery. If the financial model forces them to work hand-in-hand with the projects, and encourages the projects to consider the best architectural solutions, the balance is there to ensure that effective, architecturally sound systems are build in support of project delivery.

1 comment:

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