As the annual corporate budgeting season begins, we find ourselves again fielding client inquiries about the role that EA should play in this annual rite. Like many such EA best practice questions, there is the EA purist answer and then there are the many variations of more practical answers.
In an ideal world, enterprise architecture should have little to do directly with the annual budgeting process, per se, but instead be feeding the portfolio planning process. We “inform” that process, which should be complete before the budgeting process begins. The analysis of strategy and business capabilities enables the creation of a holistic enterprise architecture future state, and the comparison to current state charts a forward-looking roadmap and transition strategies. That work provides the list of potential major investments, supplementing the list of projects that is the typical starting point for the investment process. The budgeting process systematically transforms that list of “potential” investments into those that can be achieved in the next planning cycle based on available funds, resources, risks and business priorities. EA’s role is to impartially analyze the list of potential investments and guide the organization through the implications of various scenarios.
From a practical standpoint the reality is rarely that straightforward. For example, there often isn’t a portfolio planning process distinct from the budgeting process. What the organization can afford, therefore, is a dominant constraint before strategic or even tactical outcome can be thoroughly analyzed. The EA team must never be arm’s-length if our mission is to impact the choice of projects and guide the evolution toward the desired future state.
Another reality is that, in many organizations, the future state is rarely well-formed. As such, most EA teams must leverage the opportunities provided by projects already on the list. Being active in the budgeting process is a fail-safe to learn about business opportunities they might not have seen, to gain new insights into the priorities of the organization, and to discover paths that will help bring potential future states into focus.
There are other answers to the EA role in budgeting question as well, not the least of which is dealing with management expectations. How far enterprise architects should engage, and at what level, is situational and we’d be happy to discuss offline with anyone that is interested.
Remember, EA should not be constrained by the list of funded projects but should focus on reconciling long and short-term interests. We should never confuse or stifle the “out of the box” thinking that EA should provide with the realities of short-term investment and implementation decisions. EA involvement in the budgeting process is probably too late in the overall investment decision-making continuum, but it can be a good place for the EA team to ask the questions that would demonstrate the need for more proactive and broader planning in the future.