Strategy-focused architecture investment decisions

A. Ivanovic

Research output: ThesisPhd Thesis 2 (Research NOT TU/e / Graduation TU/e)

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Abstract

The thesis considers how a systematic approach for evaluating architecture investments can lead to decisions that are driven by business preferences rather than by personal incentives. A decision to invest in software-architecture requires systematic evaluation of the trade-off between strategic long-term benefits of architecture on the business and short term investment. It typically is a decision that is difficult to explain and quantify. In this sense, it is not surprising that such a decision is often driven by personal incentives or strong leadership of deciders, architects and managers, leading to suboptimal decision-making process in the organization. This PhD thesis proposes a way in which to support the decision to invest in architecture by linking the architecture improvements to the business strategy and taking into consideration the human aspects. We follow the iterative study design process including several real-life case studies, multiple interviews, and an experiment. In the first case study, we investigate how practitioners make a decision on architecture investment with a focus on how the decision process can be improved in industrial practice. To support the decision process in an objective way, we propose to use arguments based on real options theory. The evaluation by practitioners disclosed that including such economics of architecture is necessary but not sufficient for decision making. To better understand the information needs for decision making we conducted field interviews on the kinds of information that architects and managers need. In a subsequent experiment we tested whether which kind of information is actually used in decision making. As expected, the professionals tend to use just a few information types for decision making. However, our results suggest that additional quantified information was used by participants with longer development experience and under time pressure. Based upon the experimental findings we propose a concept to quantify the customer value of architecture. Despite the positive evaluation, the practitioners asked for further improvements to translate the architecture changes directly to the economic value. Ultimately, based on the findings from the preceding studies we propose a comprehensive approach to support objective architecture decision making; we label it Strategy-focused Architecture (StArch). Adopting strategic management tools, strategy map and balanced scorecards, we provide step-by-step guidance to assess the economic benefits of architecture improvements aligned with the strategic business objectives.
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
  • Department of Industrial Engineering & Innovation Sciences
Supervisors/Advisors
  • Snijders, Chris C.P., Promotor
  • America, P.H.M., Copromotor, External person
Award date24 Mar 2011
Place of PublicationEindhoven
Publisher
Print ISBNs978-90-386-2452-5
DOIs
Publication statusPublished - 2011

Fingerprint

Investment decision
Decision making
Evaluation
Experiment
Decision process
Managers
Incentives
Business strategy
Trade-offs
Business objectives
Time pressure
Software architecture
Strategic management
Strategy map
Information needs
Management tools
Design process
Economic value
Economics
IT strategy

Cite this

Ivanovic, A. (2011). Strategy-focused architecture investment decisions. Eindhoven: Technische Universiteit Eindhoven. https://doi.org/10.6100/IR708956
Ivanovic, A.. / Strategy-focused architecture investment decisions. Eindhoven : Technische Universiteit Eindhoven, 2011. 163 p.
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Ivanovic, A 2011, 'Strategy-focused architecture investment decisions', Doctor of Philosophy, Department of Industrial Engineering & Innovation Sciences, Eindhoven. https://doi.org/10.6100/IR708956

Strategy-focused architecture investment decisions. / Ivanovic, A.

Eindhoven : Technische Universiteit Eindhoven, 2011. 163 p.

Research output: ThesisPhd Thesis 2 (Research NOT TU/e / Graduation TU/e)

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AB - The thesis considers how a systematic approach for evaluating architecture investments can lead to decisions that are driven by business preferences rather than by personal incentives. A decision to invest in software-architecture requires systematic evaluation of the trade-off between strategic long-term benefits of architecture on the business and short term investment. It typically is a decision that is difficult to explain and quantify. In this sense, it is not surprising that such a decision is often driven by personal incentives or strong leadership of deciders, architects and managers, leading to suboptimal decision-making process in the organization. This PhD thesis proposes a way in which to support the decision to invest in architecture by linking the architecture improvements to the business strategy and taking into consideration the human aspects. We follow the iterative study design process including several real-life case studies, multiple interviews, and an experiment. In the first case study, we investigate how practitioners make a decision on architecture investment with a focus on how the decision process can be improved in industrial practice. To support the decision process in an objective way, we propose to use arguments based on real options theory. The evaluation by practitioners disclosed that including such economics of architecture is necessary but not sufficient for decision making. To better understand the information needs for decision making we conducted field interviews on the kinds of information that architects and managers need. In a subsequent experiment we tested whether which kind of information is actually used in decision making. As expected, the professionals tend to use just a few information types for decision making. However, our results suggest that additional quantified information was used by participants with longer development experience and under time pressure. Based upon the experimental findings we propose a concept to quantify the customer value of architecture. Despite the positive evaluation, the practitioners asked for further improvements to translate the architecture changes directly to the economic value. Ultimately, based on the findings from the preceding studies we propose a comprehensive approach to support objective architecture decision making; we label it Strategy-focused Architecture (StArch). Adopting strategic management tools, strategy map and balanced scorecards, we provide step-by-step guidance to assess the economic benefits of architecture improvements aligned with the strategic business objectives.

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Ivanovic A. Strategy-focused architecture investment decisions. Eindhoven: Technische Universiteit Eindhoven, 2011. 163 p. https://doi.org/10.6100/IR708956