Scene $1$: Possible Need for an EA ProgramThe Danforth Manufacturing Company $($DMC$)$ develops, produces, and sells several lines ofphotovoltaic storage cells $($solar$-$powered batteries$)$ for use in various consumer, business, andaerospace products. Robert Danforth, the President and Chief Executive Officer $($CEO$)$ of DMC$,$has called a meeting of the Executive Committee to review several recent capital investmentrequests. The largest two of these was a request by Kate Jarvis, the Chief Operating Officer$($COO$),$ for a new sales and inventory tracking system and a request by Jim Gorman, the ChiefFinancial Officer $($CFO$)$ to invest in a new cost accounting system. Also invited to the meetingwere Sam Young, the companys first Chief Information Officer $($CIO$)$ who joined the companytwo weeks before, and Gerald Montes, the companys Chief Counsel.Robert Danforth was the last one to enter the executive boardroom. He smiled at his topmanagement team and said, Thank you all for coming by to talk a bit more about severalinvestment requests that came out of our annual planning meeting last month. Sam, you hadntjoined the company yet, so Im particularly interested in your thoughts today. Mainly, I want tobetter understand from the group why our current capabilities are insufficient and how these newsystems will help bottom$-$line performance. Kate, why dont you go first and then well hearfrom Jim.Kate rose and walked to an easel that held several charts and diagrams. Gentlemen, asmentioned at the planning meeting, my request for a new Sales and Inventory Tracking System$($SITS$)$ is based on an insufficient current ability to match inventory and production informationwith customer orders. We are also experiencing excessive turnaround time for orders in theindustrial product lines, as compared to our competition. Our sales representatives in the field arebeginning to lose orders. They cant provide on$-$the$-$spot quotes based on real$-$time checks ofavailable inventory and current pricing. The same goes for our representatives. They are not ableto see when the custom and small job production runs are being scheduled. This would help salesin this high$-$profit area which we will be expanding. Our major competitor fielded thisinformation capability almost a year ago. While I was skeptical at the time about the impact itwould have on their sales, I now believe that its a successful model for them and therefore isgoing to make or break us in the industrial product line.Robert leaned forward. Kate, this sounds quite serious. Even so$,$ from a cost perspective I amconcerned about the return on investment $($Ra I$)$ for SITS. Last month you stated that initial costestimate for the development of SITS was over three million dollars. We have tight budgets forthe next two years have you looked at Ra$!?$ Yes, responded Kate. These charts show thelevel of investment and payback period for SITS, which I estimate to be two years, depending onhow quickly and thoroughly the sales force adopts it$.$ The lifecycle for SITS should be sevenyears, with positive ROI seen in years three through seven, and an average of about twelvepercent per year.Robert turned to Sam, What do you think Sam? Isnt part of the problem here that many of ourinformation systems dont talk to each other? Sam grimaced slightly and said, I think youreright, from what Ive seen in my initial survey of information technology $($IT$)$ capabilities, a lotof our systems were built as individual projects based on what then were unique requirements.We now have some duplication of functionality and evidence of inefficient support for evolvingbusiness processes. Robert responded quickly, Isnt the SITS proposal just more of the same?Perhaps said Sam, Im hearing that Kate wants to integrate information exchanges across thesales, inventory, and production lines of business. This represents a somewhat higher$-$levelapproach to meeting several business requirements.Robert turned to Jim, What do you think about Kates problem? Jim answered with a pensivelook, Well, I agree that we need to address our competitions capability. While our aerospaceproduct line is the most profitable, the industrial product line brings in the most revenue, so therewould be a significant impact on the entire company if we lose market share in the industrialproduct area. Robert then turned to Gerald, So what does the Chief Counsel think? Geraldpaused for a moment and then said, I think that we must act decisively to protect market sharein the industrial product line, but Im not sure that SITS is the answer. You might be rightRobert, the proposal that Kate is making might be more of the same type of technology solutionthat Sam says got us in this situation.Robert leaned back in his chair and said, Before going further on this proposal, lets talk aboutJims investment request. I wonder if there are any parallels. Jim activated the conferencerooms projector and brought up a set of briefing slides. My request is for a cost accountingsystem that would replace the current accounting system. As Robert mentioned, there are tightbudgets the next two years, and having the ability to more readily see spending and profitgeneration within each line of business will help us to manage the budget more effectively. Thissystem is one module of WELLCO a proven commercial enterprise resource planning $($ERP$)$product$.$ We can utilize this product by expanding it if other back office requirements emerge.The cost of the investment is just under $$600,000.$ According to the vendor, the historicalpayback period for this cost accounting module is eighteen months, with an average annual ROIof sixteen percent during the subsequent years.Jim, can this new accounting capability support what Kate is looking for? said Gerald. Jimresponded, The WELLCO module can handle some of the things Kate is probably looking for,including price and volume information in sales, inventory, and production activities, but thismodule is not configured to specifically support all of the information I believe she will need.Can it be modified? Interjected Robert. Possibly so$,$ said Jim, and if not, I would think thatother modules of WELLCO could handle it$.$ Sam, help me out with this one if you can. Samresponded, I know that WELLCO is one of the leading ERP products designed to support manyfront and back office functions. It might be possible to get enough functionality to support bothJims and Kates requirements. I am concerned that we are still looking at requirements from aprogram$-$level and systems$-$level viewpoint. $..$ essentially bottom$-$up planning. Wouldnt thecompany benefit more from a more strategic approach that evaluates requirements and proposedsolutions across the entire enterprise in the context of our strategic goals?The group was silent for a moment, and then Gerald spoke. Our annual planning retreat iswhere most of the companys strategic planning happens. We look at our current strategic goalsand initiatives. We look at what changes are needed to keep us competitive. As you saw from themeeting last month, new proposals are also surfaced during the retreat and then followed$-$up on$.$That is to say if they merit consideration for funding and implementation. Sam asked, Is theresome model of the enterprise that is used to support these discussions? Well, if you mean ourannual business plan, we have that said Jim. More than that said Sam, A model of strategy,business, and technology that enables you to see what we have now and what is planned for thefuture. Something that gives us the ability to play with the model to see what other futureinvestment and operating scenarios would look like. We dont have anything as fancy as thatsaid Kate, Though a model like that would have helped me analyze what we could do to helpthe field.Robert stood up and walked to the window. Sam, you are new to the team, but sometimes afresh look at a situation can provide valuable insights. What I believe you are telling us is that welack a true top$-$down, strategy$-$driven capability to surface requirements and solutions is thatright? Yes responded Sam. DMC is not alone. Many companies have the same problembecause they still support program$-$level decisionmaking. We tend to let it occur in a relativevacuum with few overarching goals and standards to guide analysis, planning, documentation,and decision$-$making. I am going to propose that both Kates and Jims proposals be reviewedthrough a different lens, that of an enterprise$-$wide architecture. If we had this type of model, wecould see current capabilities, future requirements, and gaps in our ability to meet thoserequirements. We could also see duplicative current capabilities and future solutions. From whatI have heard at this meeting we may have some overlapping requirements which probably shouldnot be met with separate solutions if we are to optimize our financial and technology resources.Interesting said Robert. Sounds like a silver bullet, and I am wary of those said Gerald.Robert spoke again, Sam, would an enterprise$-$wide architecture really help us$?$ If it is doable,thats great, but why havent we heard about it before? I know there are no free lunches andwhere is the ROI in such an architecture? Kate added While I appreciate the idea, I dont havetime to wait for the entire company to be modeled, I need a new capability now.Well, said Sam. You are right, establishing an enterprise architecture will not be free and itwill take time. Fortunately there are approaches being used by the public and private sector thatsupport the modeling of requirements and solutions in a standardized way between multiple linesof $.$business, which are referred to as architecture segments. So$,$ as each segment is completed itadds to the architecture as a whole. By treating Jims area as the companys financial segment,and Kates area as the production segment, we can just address these areas first, thereby reducingthe time for completion of the architecture part of the larger project that may implement acombined solution. We can do this by modeling only those strategic drivers, business services,and technology solutions that apply to those two segments. Eventually though, for thearchitecture to be the most valuable to DMC$,$ the entire company should be modeled in itscurrent state, and several possible future states.As far as ROI, continued Sam, that is more difficult to pinpoint since the cost of doing theanalysis and mode ling depends on the amount of existing information and the degree ofcooperation that is achieved with stakeholders. By the way, these stakeholders include ourexecutives, managers, and support staff. But lets say that a top$-$down architectural analysisreveals that there are common requirements between Kate and Jim, and we can meet thoserequirements either through adding functionality to SITS or by buying several more modules ofthe commercial WELLCO product, and doing some customization. We potentially could saveseveral hundred thousand dollars, or perhaps millions of dollars compared to doing SITS andWELLCO separately all of which become ROI from the architecture effort. You probablyhavent heard about enterprise architecture because when a company is doing it well, it canbecome a strategic asset that makes the company more efficient and agile. That type of capabilityis normally not broadcasted.So whats the downside? asked Gerald. Enterprise architecture tends to be viewed as a hostiletakeover by program managers and executives who have previously had a lot of independence indeveloping solutions for their own requirements said Sam. Also, architecture brings a newlanguage and planning processes, which like any type of change can be seen as threatening tothose involved and therefore may be resisted. Strong executive sponsorship and stakeholderinvolvement can overcome much of this.Sam, the architecture approach seems to make sense, but I am not completely sold yet saidRichard. Lets do a pilot project. I want you to work with Kate and Jim and bring me a plan andbusiness case within two weeks to develop the part of an architecture for DMC that addressestheir current capabilities and stated future requirements. Well use this as the test for whether wewant to go forward with an enterprise$-$wide architecture. Thank you all for your time today, seeyou in two weeks.Exercise:Read this case study carefully and summarize in a critical way by highlighting these points:$1.$ The company background$\mathrm{.}2.$ What are the requirements of the company?$3.$ What is there current environment?$4.$ What are the problem which they realized?$5.$ What strategy or solution is decided at the end?