Sequestration Planning May Illuminate Value Engineering via Enterprise Architecture
By Ted McLaughlan on Aug 06, 2012
Whether you’re dusting off the existing EA artifacts, or need to take a very rapid, optimized route to constructing initial enterprise IT models, the driving principle at this time will be rapid, absolute reduction in complexity with a clear line-of-sight to cost savings. “Complexity” here simply refers to an inefficient or needlessly detailed volume of time and resources applied to deliver IT solutions – time spent re-engineering processes, building redundant interfaces and monitors, installing hardware & software in a piecemeal fashion.
Driving complexity, and therefore introducing cost savings, out of engineered systems is the central tenet of “Value Engineering” – “the optimization of a system’s outputs by crafting a mix of performance (function) and costs”. Essentially, deliver the same capabilities with better value by driving down the cost to build and/or operate. Section 52.248-1 of the FAR (Federal Acquisition Regulations) describes the “Value Engineering Clause” that is inserted into many large Federal IT contracts – enabling the contractor to propose changes to the system being developed (i.e. a “Value Engineering Change Proposal”, or VECP). If the proposal is accepted, the actual or collateral savings derived by the government (through cost modification to the contract) can be shared with the contractor. It’s a win-win opportunity for the government, system beneficiaries and the contractor community to discover and propose engineering changes that will lower costs, yet still deliver the same or better results.
Many VECPs are submitted for technology assets – i.e. contained systems that may work better when newer, less-costly components are substituted…like missile systems or electronic devices. This may be because the contractor typically is the sole source of knowledge and research concerning how to optimize and build the components, the “value” and function of the asset is very clear (i.e. it’s delivered and explodes on target) and constant innovation is a demand of the environment. VECPs are also submitted for IT systems and programs, though it’s much more difficult to identify and propose the specific cost savings or cost avoidance that might result – since IT systems are frequently dependent upon many external or interfaced elements, vendor products and processes.
An EA-centric review of a program or line-of-business IT investment may quickly yield insight that would lead to specific value engineering opportunities, and therefore reductions in IT costs. For example, a particular set of information may be created, shared and recreated across several systems, using different processes, datastores and technologies. An segmented EA approach driving down from the particular business, process and information domains, may quickly illuminate targets of opportunity for database or interface consolidation – and therefore potential consolidation of supporting technologies (i.e. storage, networking, processors). This may lead to optimized technical operations and business process performance, which can be clearly mapped back to the Enterprise Architecture to validate that governance and mission requirements are (still) met, cross-enterprise risks are mitigated, and IT investment portfolios and procurement activities are properly adjusted or re-aligned.
With this kind of information, a VECP could be constructed that very clearly proposes both program-specific and collateral (i.e. across the rest of the enterprise) savings resulting from introduction of state-of-the-art consolidating technologies (for example, pre-integrated, self-contained and consolidated database engineered systems, perhaps cloud-enabled). At the very least, an EA view can help identify and prioritize targets of opportunity for Value Engineering that may become part of an effective and timely sequestration response – both before and after such an event, and in fact as part of the annual capital planning and investment control (CPIC) processes.