How Should EA Be Funded – And What Impact Does That Have On EA Value?

Alex Cullen
Vice President, Research Director
November 16, 2010

Recently I participated in a roundtable discussion by members of Forrester’s EA Council on “Getting Strategic In A Tactical World.” Members talked through the challenge of maintaining a strategic focus when the IT (or business) organization was very tactical and of getting the enterprise architecture function to have the right balance of tactical and strategic activities. “Strategic/Tactical Focus” is one of the dimensions of the Archetypes of EA that Forrester has written about, including in this blog, and the balance between tactical and strategic is a key factor in how the larger organization views EA’s relevance as well as the support it provides to EA. 

One of the participants, who headed a team of more than 50 architects, asked the others, “How is your department funded – as overhead operations or as part of the project investment budget?” The person who asked this question said that his organization is more than 70% funded out of the project budget. Others responded with a range of 100% operations to 100% project-based. The comments around these different funding mixes were very interesting (all comments paraphrased):

“It’s easier to justify the size of my team if the funding is tied to the amount of project investments we are making.”

“Investment funding levels are too variable – two years ago we cut way back, now we’ve ramped way up. If my team size was a factor of investment funding, we wouldn’t be prepared for the amount of investment we are making now.”

“EA funding as part of ongoing operations budget makes us look like overhead. I don’t want architecture to look like some sort of overhead.”

“The IT areas with the project budgets expect my team to work on their problems. This drives a tactical focus.”

One participant even offered the observation that, if the architecture team is funded from project budgets, there are two risks to the success of EA:

  • Project teams try to minimize EA involvement to reduce their cost, or
  • The rationale for centralized architecture gets much weaker – why not just transfer the architects into the project organization?

As this back-and-forth points out, there isn’t one right answer. Forrester – and I expect all our clients – sees that EA’s greatest value arises from the strategic perspective it can provide – and how EA is funded does impact how much EA can invest in shepherding this strategic perspective. I thought the most interesting comment was from one participant:

“I was brought in as part of the centralizing of architecture. I told my CIO that he would not get the benefit of this centralization unless EA was funded as part of a strategic planning bucket. Now, funding for all core EA domains and disciplines comes from our base operating budget – the same one that pays the CIO’s salary.”

How is architecture funded in your organization? If you could change this, what would you do?

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