Monday, 19 November 2012

Enterprise debt

Following on from the earlier post on Technical Debt, there exists a similar concept for the enterprise - "Enterprise Debt".

Enterprise debt follows the exact same parallels with financial debt. You may have inefficient business processes, duplicated business processes, manual processes or a myriad of problems with your Enterprise Architecture. These problems constitute a tax on your business but this costs may be justified. Duplicated business processes might allow different business units to start or move in parallel. Inefficient or manual business process might be justified because you have not had time to improve them or automated them, yet they perform a critical function. You might be happy, in the short or medium term, to pay the interest on these debts to keep your enterprise functioning.

Of course, as before, you must take care not to go bankrupt. Should your enterprise debt exceed your capacity to pay down the interest, your business is finished.

One of the goals of an Enterprise Architecture initiative should be to identify your enterprise debt and seek to reduce it. An ongoing Enterprise Architecture program should also identify new enterprise debt and ensure that it is justified i.e. the "tax" that it incurs brings a larger long term benefit.

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