Architecture Architecture - - Driven Modernization 101: Driven Modernization 101: Concepts, Strategies & Justification Concepts, Strategies & Justification William M. Ulrich William M. Ulrich – – Tactical Strategy Group, Inc. Tactical Strategy Group, Inc. www.systemtransformation.com www.systemtransformation.com
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William M. Ulrich – Tactical Strategy Group, Inc. M. Ulrich – Tactical Strategy Group, Inc. Seminar Objectives! Define existing data & application architecture challenges! Introduce
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Seminar ObjectivesSeminar Objectives! Define existing data & application architecture challenges
! Introduce modernization concepts
! Discuss business-driven modernization
! Outline techniques for performing application assessments, integration and transformation
! Describe practical application of these concepts through project-based scenarios
! Introduce enabling tools and technologies
! Help attendees get started
Seminar OutlineSeminar OutlineI. What is Architecture Driven Modernization?I. What is Architecture Driven Modernization?II. Existing Data & Application Architecture ChallengesII. Existing Data & Application Architecture ChallengesIII. Attempts to meet BPM ChallengeIII. Attempts to meet BPM ChallengeIV. Modernization OverviewIV. Modernization OverviewV. Modernization Processes, Techniques & ApproachesV. Modernization Processes, Techniques & ApproachesVI. Modernization ToolsVI. Modernization ToolsVII. Modernization ScenariosVII. Modernization ScenariosVIII. Getting StartedVIII. Getting StartedIX. Selling Management & RDIIX. Selling Management & RDIX. CloseX. Close
Process of understanding and evolving existing software assets Process of understanding and evolving existing software assets for the purpose offor the purpose of!! Software improvementSoftware improvement!! ModificationsModifications!! Interoperability Interoperability !! RefactoringRefactoring!! RestructuringRestructuring!! ReuseReuse!! Porting Porting !! MigrationMigration!! Translation into another languageTranslation into another language!! Enterprise application integrationEnterprise application integration!! ServiceService--oriented architectureoriented architecture
Modernization starts where existing practices fail to deliver Modernization starts where existing practices fail to deliver against business objectivesagainst business objectives
I. What is ArchitectureI. What is Architecture--Driven Driven Modernization (ADM)?Modernization (ADM)?
*Source: ADM.OMG.ORG
II. Existing Data & Application II. Existing Data & Application Architecture ChallengesArchitecture Challenges
!! Existing data & application Existing data & application architectures run in sharp contrast to architectures run in sharp contrast to modern IT disciplines.modern IT disciplines.
!! The challenge is how to leverage The challenge is how to leverage emerging architectures while adjusting emerging architectures while adjusting to critical business requirements & to critical business requirements & changing processes.changing processes.
CIO Legacy Survey*CIO Legacy Survey*
What are the major reasons for keeping the legacy systems your company is currently planning to retain?
!! Still able to support business processesStill able to support business processes 54.4%54.4%!! Still reliableStill reliable 49.749.7!! Staff available to support themStaff available to support them 44.344.3!! Still more cost effective than alternativesStill more cost effective than alternatives 41.641.6!! We do not have the budget to make any changes 36.9We do not have the budget to make any changes 36.9!! Still able to support strategic goalsStill able to support strategic goals 36.936.9
Still relevant and reliable* CIO Insight – December 2002
CIO Legacy SurveyCIO Legacy SurveyIf you are currently migrating or planning to migrate off any of your current legacy systems in the next year, what are the main reasons?
!! Meet new strategic goalsMeet new strategic goals 65.2%65.2%!! Legacy systems can’t support business processesLegacy systems can’t support business processes 59.959.9!! Legacy systems can’t support current strategic goals 56.1Legacy systems can’t support current strategic goals 56.1!! New systems would be more cost effective 48.5New systems would be more cost effective 48.5!! Legacy systems provide poor interoperability 41.7Legacy systems provide poor interoperability 41.7
Migration / transformation plans
* CIO Insight – December 2002
Existing Data & Application Existing Data & Application ArchitecturesArchitectures
!! Numerous languages and platformsNumerous languages and platforms!! 200 billion lines of Cobol (60% of total)200 billion lines of Cobol (60% of total)!! Haphazard design and stovepipe Haphazard design and stovepipe
architecturesarchitectures!! Segregated functionality and data structuresSegregated functionality and data structures!! Layers of middleware and data warehousesLayers of middleware and data warehouses!! WebWeb--based interfacesbased interfaces
Poorly Integrated Information ArchitecturesPoorly Integrated Information Architectures
Business processes, applications and data mirror stovepipe information governance structures.
Existing Business Processes
Existing Data & System Architectures
Existing Organizational Governance Structures
! Major telecommunications company cancels package implementation effort - 360 person years / no deliverable
! Insurance company cancels 12 year project having spent $199 million - no results / no deliverables
! $10 million banking application development project is canceled - no deliverables
! 3 year old, C-based client/server system must undergo major re-engineering effort - no cohesive design
! Countless other stories
Real World SymptomsReal World Symptomsof the Legacy Challengeof the Legacy Challenge
Bottom Line: Aging Architectures Bottom Line: Aging Architectures Impede Ability to Deliver Business ValueImpede Ability to Deliver Business Value
!! 85% of IT projects: late or never delivered*85% of IT projects: late or never delivered*!! Only 9% of IS projects come in on time or within budget*Only 9% of IS projects come in on time or within budget*!! ERP projects: years to implement, canceled 35% of the time ERP projects: years to implement, canceled 35% of the time
& rarely fully deployed*& rarely fully deployed*!! $16.5 billion is spent annually on systems that users never $16.5 billion is spent annually on systems that users never
see (Information Week)see (Information Week)!! Management believes “quick & easy” solutions can solve Management believes “quick & easy” solutions can solve
complex IT challengescomplex IT challenges
* Standish Group International
IT & Business Challenges Drive IT & Business Challenges Drive Modernization RequirementsModernization Requirements
EmergingInformation
Technologies
New ITArchitectures
ChangingBusinessModels
ChangingIndustryModels
•The Internet•Collaborative tools•Java, XML, HTML•New platforms•Integration tools•Open systems
Architecture•J2EE and .Net•Component reuse•Web Services•Integration architecture•Agile methods
•E-Business•Deregulation •Globalization•Loss of intermediaries•Supply chain integration•Economic weakness
In a Nutshell…In a Nutshell…Current Business RequirementsCurrent Business Requirements
!! Reducing timeReducing time--toto--market for new products and market for new products and services services
!! Shifting to a customerShifting to a customer--driven philosophydriven philosophy!! Streamlining transaction flow across supply and Streamlining transaction flow across supply and
distribution chainsdistribution chains!! Creating flexible information systems to achieve Creating flexible information systems to achieve
business agilitybusiness agility!! Adapting systems to changing business processesAdapting systems to changing business processes
III. Attempts to MeetIII. Attempts to MeetBPM ChallengeBPM Challenge
!! New tools & technologies New tools & technologies !! New development techniquesNew development techniques!! But, have these advancements helped?But, have these advancements helped?
IT Attempting to Meet Challenges Using IT Attempting to Meet Challenges Using Traditional ApproachesTraditional Approaches
A conceptual framework for non-invasive integration allows project teams to incorporate integration with modernization options.
•Database synchronization•Web access to legacy data•Data warehouse access
DataIntegration
•EDI & XML data interchange•Trading partner collaboration•External portals•Web Services
B2B Integration
Business Process
Integration
•Internal business process integration•External process integration•Workflow automation
•Web access to legacy transactions•Front-end / back-end application integration•ERP integration
EnterpriseApplication Integration
We have a Host of NonWe have a Host of Non--Invasive Invasive Integration OptionsIntegration Options
But Integration Technology is One But Integration Technology is One More Layer of Legacy ArchitectureMore Layer of Legacy Architecture
!! MessageMessage––Oriented Middleware:Oriented Middleware: Basic middleware that Basic middleware that allows an application to send / receive messages to / allows an application to send / receive messages to / from other applications.from other applications.
!! Data Management Middleware:Data Management Middleware: Facilitates access to Facilitates access to data not natively defined to an application.data not natively defined to an application.
!! Application ServerApplication Server: Multipurpose, Web: Multipurpose, Web--enabled enabled software that facilitates applicationsoftware that facilitates application--toto--application application communication across platforms.communication across platforms.
!! Adapters:Adapters: Custom pieces of code that enable Custom pieces of code that enable middlewaremiddleware--based communication.based communication.
Vendor-driven integration solutions create layers of legacy chaos across information architectures.
Source: Gartner Forecast Newsletter Issue 3, 2001
EAI Architectures can get MessyEAI Architectures can get Messy
But, These ApproachesBut, These ApproachesHave Fallen ShortHave Fallen Short
!! Wholesale application replacement:Wholesale application replacement:!! Too costly, too time consuming and too riskyToo costly, too time consuming and too risky
!! Package applications* Package applications* –– no panacea:no panacea:!! 35% of projects canceled outright35% of projects canceled outright!! Typically deploy only 40% of promised functionalityTypically deploy only 40% of promised functionality!! Only 10% of projects are on time and on budgetOnly 10% of projects are on time and on budget
!! Outsourcing: Only moves problem aroundOutsourcing: Only moves problem around*Who Is to Blame for ERP Failure?, Barry Calogero, serverworldmagazine.com, June 2001
Yet Integration is an IssueYet Integration is an Issue
Because Today’s Business ProcessesBecause Today’s Business ProcessesCut Across Stovepipe ArchitecturesCut Across Stovepipe Architectures
IT must deal with this!
`
Order Entry& Sales
InventoryControl
AccountsReceivableBilling
Shipping &Tracking
Customer Order Functions
Bottom Line is That…Bottom Line is That…
!! Replacement or packages often failReplacement or packages often fail!! No one understands the old systemsNo one understands the old systems!! IT is afraid to shut them offIT is afraid to shut them off!! Time to look at modernizationTime to look at modernization
IV. Modernization OverviewIV. Modernization Overview
!! Bridging the gapBridging the gap!! Standards basedStandards based!! Modernization infrastructureModernization infrastructure
IT Architecture EvolutionIT Architecture Evolution
These four stages of Architecture Evolution.
BuildWebSites
IntegrateWeb withBack-endSystems
ModernizeExisting
Architectures
Webify Legacy
Front-Ends
Modernization: Bridges Gap Between Modernization: Bridges Gap Between Existing & Emerging ArchitecturesExisting & Emerging Architectures
Modernization AlternativeModernization Alternative –– Takes Over Takes Over Where Existing IT Strategies Fall ShortWhere Existing IT Strategies Fall Short
!! Augments or displaces existing IT optionsAugments or displaces existing IT options
!! Enables upgrade, conversion, consolidation, migration and Enables upgrade, conversion, consolidation, migration and related projectsrelated projects
!! Applies a measured, phased approach to meeting IT Applies a measured, phased approach to meeting IT challengeschallenges
!! Utilizes scenarios to ensure a businessUtilizes scenarios to ensure a business--driven approachdriven approach
!! Builds upon solid foundation of production systemsBuilds upon solid foundation of production systems
Modernization Comprised of Three Sets Modernization Comprised of Three Sets of Toolof Tool--Enabled DisciplinesEnabled Disciplines
!! AssessmentAssessment!! Analyzes / exposes application artifacts, data and Analyzes / exposes application artifacts, data and
process flows, architecture and behaviorprocess flows, architecture and behavior!! Stabilization & RefactoringStabilization & Refactoring
!! Structure, rationalize, realign, modularize and Structure, rationalize, realign, modularize and otherwise refactor existing systems otherwise refactor existing systems
!! TransformationTransformation!! Extracts logical data definitions and business rulesExtracts logical data definitions and business rules!! Facilitates reuse of existing extracted artifacts in Facilitates reuse of existing extracted artifacts in
redesign of target architecturesredesign of target architectures
Modernization is Based on a Set of Modernization is Based on a Set of Emerging OMG StandardsEmerging OMG Standards
!! Object Management Group Task Force* on ArchitectureObject Management Group Task Force* on Architecture--Driven Modernization formed in 2003Driven Modernization formed in 2003
!! Efforts focused on creating a standard Knowledge Efforts focused on creating a standard Knowledge Discovery MetaDiscovery Meta--model (KDM) to facilitate metamodel (KDM) to facilitate meta--data data exchange among vendorsexchange among vendors
!! Secondary goal is to bring vendors into compliance Secondary goal is to bring vendors into compliance through common processes & definitionsthrough common processes & definitions
!! Roadmap outlines seven stages of standards development*Roadmap outlines seven stages of standards development*!! Major industry players are participatingMajor industry players are participating
*ADM.OMG.ORG
Business ProcessRetooling Requirements
KnowledgeDiscovery
Meta-Model
Governance StructureConsolidation
Integration Projects
Strategic InformationArchitecture
RequirementsIntegration
Requirements
Multi-dimensional integration requires managing business unit, IT and external integration within the transformation repository.
!! Recognition of legacy valueRecognition of legacy value!! Process for assessing existing architectures Process for assessing existing architectures
and capturing, reusing and migrating and capturing, reusing and migrating existing software artifactsexisting software artifacts
!! Process for analyzing, designing, building Process for analyzing, designing, building and deploying target architecturesand deploying target architectures
!! Software that facilitates and integrates Software that facilitates and integrates modernization and development processesmodernization and development processes
First, Recognize that Old Systems First, Recognize that Old Systems Contain Business ValueContain Business Value
!! Old systems do many of the right things Old systems do many of the right things (i.e. rules), but not how users want them (i.e. rules), but not how users want them done or in the timedone or in the time--frames required (i.e. frames required (i.e. architecture)architecture)
!! Newly deployed systems and packages omit Newly deployed systems and packages omit valuable business rulesvaluable business rules
!! ERP and EAI have not fully addressed these ERP and EAI have not fully addressed these issuesissues
What Organizations Require to What Organizations Require to Enable Modernization Enable Modernization
!! Philosophical shift that recognizes:Philosophical shift that recognizes:!! Value of existing systems to a businessValue of existing systems to a business
!! How phased transformation is more prudent than an allHow phased transformation is more prudent than an all--oror--nothing replacement approachnothing replacement approach
!! ROIROI--driven commitment to incorporate driven commitment to incorporate transformation into all system projectstransformation into all system projects
!! Modernization support infrastructure that can be Modernization support infrastructure that can be deployed across an enterprisedeployed across an enterprise
Shift from “From Scratch” Development Shift from “From Scratch” Development Philosophy to Phased ReusePhilosophy to Phased Reuse
!! Replace “throwaway” philosophy with Replace “throwaway” philosophy with “reuse” philosophy“reuse” philosophy
!! Shift from an “all or nothing / go for broke” Shift from an “all or nothing / go for broke” approach to a phased deployment approachapproach to a phased deployment approach
!! Seek lower risks, higher returns and faster Seek lower risks, higher returns and faster delivery through phased delivery strategydelivery through phased delivery strategy
Existing Systems Reuse Should be BuiltExisting Systems Reuse Should be Builtinto Application Reinto Application Re--Design ProcessDesign Process
InformationArchitecture
Business ProcessModel
Business models represent as-is &reengineered business processes
Design models depict businessprocesses to be automated
Existing systems: input to redesignprocess & source of reusable data& business rules
Design Models
Mapping existing architecture to requirements and reusingexisting software artifacts and behaviors in new development projects.
The Value of a Modernization The Value of a Modernization FrameworkFramework
Source: COMSYS / USRM
Measurement & MetricsMeasurement & Metrics
!! Metrics support analysis and planning of modernization Metrics support analysis and planning of modernization projectsprojects
!! Range from simple counts to more complex scoresRange from simple counts to more complex scores
!! EXAMPLES: EXAMPLES:
!! Total # batch jobs in systemTotal # batch jobs in system
!! # Data Elements in current system in common with # Data Elements in current system in common with data elements in ERP systemdata elements in ERP system
!! Function points, McCabe, Halstead, etc.Function points, McCabe, Halstead, etc.
!! Total integration pointsTotal integration points
ADM Assessment Approach: Decomposition ADM Assessment Approach: Decomposition Scheme Can be Represented in RepositoryScheme Can be Represented in Repository
InterfaceInterfaceInterface
BusinessRule
BusinessBusinessRuleRule
Module containsModule containsProgramProgram
Program uses InterfaceProgram uses InterfaceInterface is used by ProgramInterface is used by Program
System containsSystem containsApplicationApplication
Interface is used by Interface is used by Business ProcessBusiness Process
Business ProcessBusiness Processuses Interfaceuses Interface
Program containsProgram containsBusiness RuleBusiness Rule
Business Unit performs FunctionBusiness Unit performs FunctionFunction is performed by Business UnitFunction is performed by Business Unit
Business Rule is defined Business Rule is defined in Programin Program
Bus. RuleQuery
Bus. RuleBus. RuleQueryQuery
ProjectProject--Level MappingLevel Mapping
ProjectProject--level repository facilitates tracking of business data andlevel repository facilitates tracking of business data andrules back to physical system artifacts and target requirements.rules back to physical system artifacts and target requirements.
System
Sub -system
Jobstep
On - linetransition
Load Source
RecordElement
Attribute
File
Database
FunctionBusinessrule
Procedure
Field
Event
Entity
Menu /Screen
Third Party
BusinessUnit
Business processBatch
job
Object /component
System
Sub -system
Jobstep
On - linetransition
Load Source
RecordElement
Attribute
File
Database
FunctionBusinessrule
Procedure
Field
Event
Entity
Menu /Screen
Third Party
BusinessUnit
Business processBatch
job
Object /component
Example of Repository’s Role in Example of Repository’s Role in Modernization ScenarioModernization Scenario
AnalystInterface
Modernization tools
Existing Systems
12
43
1
21 3
Pension
22 13
Insurance
Payroll
Distributedinterface
Integrateddatabase
Integrated application
Target Systems
Used for analysis, planning, redundancy identification, consolidation mapping & post-project documentation
Integration solutions must assess fragmentation impacts between business units and IT while considering the impact of interim integration layers.
Fragmentedbusiness
governancestructures
Fragmentedbusiness processes& workflow
Fragmented data& applicationarchitecture
Interimintegration
middlewarelayers
Modernization must Address Complex Modernization must Address Complex Dimensions of Architecture ChallengeDimensions of Architecture Challenge
ModernizationModernizationGeneral Planning Guidelines General Planning Guidelines
!! Define business strategy and IT requirementsDefine business strategy and IT requirements!! Create and / or identify target architectureCreate and / or identify target architecture!! Define project(s) parameters and ROIDefine project(s) parameters and ROI!! Map existing environment against target Map existing environment against target
requirements and related architecturerequirements and related architecture!! Build plan to assess, capture or migrate, upgrade, Build plan to assess, capture or migrate, upgrade,
reuse and / or deactivate legacy componentsreuse and / or deactivate legacy components
V. Modernization Processes, V. Modernization Processes, Techniques & ApproachesTechniques & Approaches
V. I Application AssessmentsV. I Application AssessmentsV. I I Application Stabilization & Refactoring V. I I Application Stabilization & Refactoring V. I I I Application TransformationV. I I I Application Transformation
"Provides baseline for developing modernization options"Establish scope and boundaries for cross-application projects"Key to establishing clear requirements and strategy
• Current systems summary
• Current physicalsystems to currentfunctions matrix*
• Current physicalsystems to targetfunctions matrix
• Current systems inter-relationship DFD*
• Functional mappingsummary
• Current data storesdescription*
• Current data storesto current systemsmatrix*
• Current data stores to target entity typesmatrix
• Data mapping summary
• Current to target enterprise architecture summary• Architecture transitioning & impact summary
• Suggested modernization project options
• Current physical systems inventory
• Current physical systems attributes / metrics
• Current to target technical architecture variances
• Strategic Information Plan defines strategic architectures• Modernization Plan defines how to achieve it
Strategic InformationSystems Architecture
ArchitectureTransition Strategy
Modernization Plan identifies path forward
Information Systems Architecture• Business Architecture• Data Architecture• Technical Architecture• Define model driven, implementationindependent design
Integrated Human Resources System• Finalize top-down designs• Collapse redundant functions / data • Transition functions/data to client/server• Phase deactivation of legacy systems
Review / Acquire Accounting Package• Assess underlying package functionality• Migrate / collapse redundant legacy data• Effect shut-down of legacy systems
Phased Transition to New Billing System• Stabilize existing applications• Develop integrated client/server design• Assess current systems• Employ phased migration to target
architecture
Modernization Options
Tasks include consolidation, migration, redesign and redeployment activities.
The ProjectThe Project--Level AssessmentLevel Assessment
" Assess long-term business and information plans" Identify the best modernization strategy to meet short
and long-term information requirements" Eliminate "guess work" typically involved in IT
planning efforts" Establish phased, cost effective modernization plan
Three sets of tasks are basis for integration and modernization projects. Relies on enterprise assessment.
ArchitecturalAssessment
FunctionalAssessment
TechnicalAssessment
Meta-Data, Metrics, Documentation & Plan
Technical assessment inventories and documents existing systems environments, data usage and program flow.
Technical Assessment
EnvironmentalAnalysis
ProcessAnalysis Data Definition
Analysis
Documentation
DatabaseDefinitions Source Code
Reviews
Subject Matter Expert Discussions
Technical AssessmentTechnical Assessment
Metrics Documentation
" Current system flows, user views and data utilization summary" Architecture summary metrics" How systems are constructed and interrelate
General SystemArchitectureAssessment
Data AccessLayer
Assessment
PresentationLayer
Assessment
ApplicationArchitecture
Summarization
Architectural AssessmentArchitectural Assessment
Functional AnalysisFunctional Analysis
• Current system, bottom up planning level models• Multiple current system, integrated models• Integrated top down / bottom up models• Functional conformance metrics
User BacklogRequirements
Analysis
Data ArchitectureAnalysis
FunctionHierarchy Analysis
BusinessFunction / Entity
Analysis
Functional Assessment: Gap Analysis
• Assess the potential for data & behavioral reuse• Determine % of target existing in current systems• Determine % of target to be developed from scratch
CurrentSystem
TargetSystem
GAP Analysis GAP Analysis
CURRENT SYSTEM TARGET SYSTEM
Interviews
Mapping
Interviews
Current-to-target data mapping extracts bottom-up data usage to create or validate target data models.
EntitiesRetained by
Target
EntitiesNot Mapped
Top-DownAnalysis
Entitiesby System
Existing Documentation
IdentifyUnique
& RedundantEntities
Legacy Data
Records &Elements
Current System Models
CurrentCurrent--toto--Target Data MappingTarget Data Mapping
Program-to-function mapping helps determine level of legacy application conformance to target architecture.
CurrentPrograms
CurrentFunctions
TargetFunctions
PROGRAM 1
PROGRAM 2
PROGRAM 3
FUNCTION 1
FUNCTION 2
FUNCTION 3
FUNCTION 4
FUNCTION 5
FUNCTION A
FUNCTION B
FUNCTION C
FUNCTION D
FUNCTION EMANUAL
NoNoMapMap
Program / Function GAP AnalysisProgram / Function GAP Analysis
Reverse requirements tracing abstracts application functionalityReverse requirements tracing abstracts application functionality by by tracking user views back into the source code. tracking user views back into the source code.
Source: USRM / Comsys
Reverse Requirements Tracing of Logical ProcessesReverse Requirements Tracing of Logical Processes
Current-to-target functional analysis maps legacy programs, processes and functions to target architecture functional definitions.
PROGRAM SOURCE CURRENT PROCESS CURRENT FUNCTION TARGET FUNCTION
Mapping functions to program source modules
Purchasing
Purchasing
Purchasing
Purchasing
Purchasing
Sending/Receiving
Sending/Receiving
Inventory
Inventory
Inventory
Manufacturing
Manufacturing
Manufacturing
Sending/Receiving
Sending/Receiving
Manufacturing
Manufacturing
Select vendor / product
Change vendor / product
Roll off vendor / product
Order supplies
Pay vendors
Track vendor shipments
Disperse supplies
Maintain supply stock
Maintain supply stock
Request supplies
Ship corporate products
Ship corporate products
Manage materials
Manage materials
Request supplies
Create products
Create products
PU300200
PU300200
PU300200
PU300520
PU500000
SR774200
SR600350
INV08040
Manual
INV00100
SR400100
SR400200
MA906600
Manual
MA665000
MA240030
MA240050
Program / Process / Function MapProgram / Process / Function Map
ThreeThree--way vs. Twoway vs. Two--way Mappingway Mapping
Data Definition RationalizationData Definition Rationalization
• Simplifies system-wide data tracing and analysis• Externalizes data usage and representations• Eliminates definitional redundancy and inconsistency• Facilitates many strategic migration efforts
LiteralExternalization
Field & RecordSize Expansion
Physical DataUpgrade
Data NameRationalization
Data DefinitionMigration
Field & Record Size ExpansionField & Record Size Expansion
!! Expands business data and related definitionsExpands business data and related definitions!! Includes physical data and all definitions of Includes physical data and all definitions of
that datathat data!! Examples: area codes, bar codes, dollar Examples: area codes, bar codes, dollar
amounts, datesamounts, dates!! This is a businessThis is a business––driven initiativedriven initiative
Field ExpansionOption
Combined Rationalization / Field Combined Rationalization / Field Expansion ViewExpansion View
ExistingSource
CompositeRecord
NewSource
FieldExpansion
Trace
ApplyDescriptive
Names
DataDefinitionAnalysis
PropagateComposite
CompositeField
Expansion
SecondaryTrace &
Propagation
ExpandFields
ReviewAnalysis
BuildComposite
Literal ExternalizationLiteral Externalization
!! Finds embedded business dataFinds embedded business data!! Places it into user Places it into user –– modifiable tables or modifiable tables or
• Isolates logic into new modules• Supports functional modularity• Simplifies maintainability for large programs• Supports redundancy reconciliation and re-aggregation
Obtain / AccessSlicing
Analysis
SelectSlicingCriteria
PerformSlice
Review Results& Repeat
as Required
Perform QualityReview &Validate
Slice byProcedure
Range
Slice byReportCriteria
Slice byComputation
Variable
Slice byTransaction
Criteria
Slice byStatementSelection
Current System Re-aggregated System
FunctionA
FunctionA
FunctionC
FunctionD
FunctionB
Function A
Function C
Function B
Function D
FunctionB
Functions can be split out and recombined to modularize application functionality.
Modernization options include data and business rule capture, Modernization options include data and business rule capture, consolidation, redesign, validation and redeployment.consolidation, redesign, validation and redeployment.
data entities & attributes• Reconciliation of inconsistent data
usage• An understanding of legacy to target
data migration requirements
Consolidating topConsolidating top--down and bottomdown and bottom--up data models produces a higher up data models produces a higher quality data architecture and increases likelihood of project suquality data architecture and increases likelihood of project success.ccess.
Building a High Integrity Data ArchitectureBuilding a High Integrity Data Architecture
Functional Mapping Process• Expand I/A functional decomposition• Expand I/A current to target mapping• Complete current to target gap analysis• Develop integrated functional
decomposition & CRUD matrix
Top Down Inputs• I/A Functional Decomposition• Logical Data Model• I/A Functional Mapping
source code components• Identification of reusable I/O• Integrated functional structures
& data / functional matrix
Logical Functional Mapping ProcessLogical Functional Mapping Process
Functional DerivationFunctional Derivation
!! Functional analysis now extends to the Functional analysis now extends to the business logic / business rule levelbusiness logic / business rule level
!! Requires extraction, filtering, packaging and Requires extraction, filtering, packaging and analysis of business logicanalysis of business logic
!! Services as basis for validation of target Services as basis for validation of target functional models and other scenariosfunctional models and other scenarios
Business Rule Derivation: Extending Business Rule Derivation: Extending Functional DecompositionFunctional Decomposition
!! Business Logic: Bounded set of conditional and Business Logic: Bounded set of conditional and imperative statements that relies on and directly imperative statements that relies on and directly or indirectly impacts business dataor indirectly impacts business data
!! Business Rule (Systems View): Description of Business Rule (Systems View): Description of how a business workshow a business works
!! The Challenge: Capturing and filtering business The Challenge: Capturing and filtering business logic to achieve business rule candidates logic to achieve business rule candidates
Business Rule Derivation: Logic Capture, Business Rule Derivation: Logic Capture, Filtering, Packaging and AnalysisFiltering, Packaging and Analysis
!! Capture: Process of capturing logic blocks that Capture: Process of capturing logic blocks that serves as business rule candidatesserves as business rule candidates
!! Filtering: Eliminating nonFiltering: Eliminating non--business logicbusiness logic!! Packaging: Putting logic into a context that Packaging: Putting logic into a context that
makes sense to business and design analystsmakes sense to business and design analysts!! Analysis: Categorizing, leveraging and reusing Analysis: Categorizing, leveraging and reusing
captured business rulescaptured business rules
Cobol Business Rule CandidateCobol Business Rule CandidateB9000B9000--POSTPOST--8000.8000.
* CALCULATE CURR AND OUTPUT ACCOUNT BALANCE TO POSTING SUSPENSE * CALCULATE CURR AND OUTPUT ACCOUNT BALANCE TO POSTING SUSPENSE VSAMVSAMPERFORM B9050PERFORM B9050--CALCCALC--MONTHLYMONTHLY--CHARGES THRU B9050CHARGES THRU B9050--EXIT.EXIT.
IF DDACCTIF DDACCT--ACCTACCT--SRVCSRVC--CHGCHG--FL NOT = “W” AND “G” AND “X”FL NOT = “W” AND “G” AND “X”
IF HEA1010AIF HEA1010A--ACCTACCT--BAL = ZEROBAL = ZERO
Rules can be reused as-is or as basis for legacy redesign.Source: Netron, Inc. 2002
Non-Business Logic Non-Business Logic IdentificationSyntactically dead code Logic never executed regardless of data values.
Semantically dead code Logic not executed based on setting of data values.
Program initialization Logic that initializes element or record area values.
Input / output logic Code accessing physical data. Includes call, read, write and other I/Ostatements.
Output area build Logic that moves data to screen and report work areas.Status checking Tests directly after I/O commands checking communication or other
status codes.Error handling Imperative logic that invokes exception reporting or module
termination based on status code results.Data manipulation Database or file manipulation logic.
Environmental logic Manages security, homegrown technology, date handling or similarroutines.
Extraneous logic Redundant conditionals, mutually exclusive tests or similar routines.
Business Logic Must be Filtered From NonBusiness Logic Must be Filtered From Non--Business LogicBusiness Logic
Filtering guidelines help analysts separate business from non-business logic – a key step in rule derivation.
Extracted & Packaged Business LogicExtracted & Packaged Business Logic
System / Application Name: Accounting / Accounts Receivable
Program Name: PGREG117
Paragraph Name: REGION-VALIDATION
Data Element Search Argument: Element = REGION-CODE
Logic:IF REGION-CODE NOT = ZEROAND ACCOUNTING-CLEARANCE NOT = ZERO
ADD WS-VALIDATION-AMT (WRK-SUB) TO RGN-TOTAL (IE-REGION).
Logic Analysis Leads to Reusable Logic Analysis Leads to Reusable Business Rule CandidatesBusiness Rule Candidates
System / Application Name: Accounting / Accounts Receivable
Program Name: PGREG117
Paragraph Name: REGION-VALIDATION
Business Rule: REGION VALIDATIONPrecondition: REGION CODE is not a Zero (i.e,. a valid REGION)Trigger: ACCOUNTING CLEARANCE is not a Zero
(i.e, a valid CLEARANCE)Postcondition: REGIONAL ACCOUNTING TOTAL
is increased by VALIDATION AMOUNT
IF DDACCT-ACCT-SRVC-CHG-FL NOT = “W” AND “G” AND “X”
MOVE WS-TOT-MONTHLY-CHARGES TO HEA1010A-SRVC-CH-DFR-HLD.
Business Rule Mapping to Target Business Rule Mapping to Target ArchitectureArchitecture
In this example, Account Balance is the query item with rules as follows:- Find all ACCT-BALANCE & related variables- Capture rule back to first “IF” & down to end of test.
Business rules will be based on queries from top-down architecture team.
ADM Analysis Tool•Business Rule description is mapped
to Business Rule Query•Rule can then map to Process
VII. Modernization ScenariosVII. Modernization Scenarios
!! Scenarios depict practical application of Scenarios depict practical application of transformation discipline, tools and strategiestransformation discipline, tools and strategies
!! Scenarios have a businessScenarios have a business--driven project focus driven project focus and are typically delivered in phasesand are typically delivered in phases
!! Case studies reflect actual project resultsCase studies reflect actual project results
!! Large IT portfolio, difficult to navigateLarge IT portfolio, difficult to navigate!! Legacy systems poorly documentedLegacy systems poorly documented!! CrossCross--functional / crossfunctional / cross--application project application project
being proposedbeing proposed!! Outsourcing plan proposedOutsourcing plan proposed
Issues:Issues:
Strategy:Strategy:!! Document crossDocument cross--functional applications and functional applications and
relation to business functions in relevant relation to business functions in relevant business units using repositorybusiness units using repository
!! Systems and programs hard to change and Systems and programs hard to change and understandunderstand
!! Poorly structured, designed source programsPoorly structured, designed source programs!! Data definitions redundant, and hard to Data definitions redundant, and hard to
understandunderstand
Issues:Issues:
Strategy:Strategy:!! Analyze and cleanup volatile programs and Analyze and cleanup volatile programs and
systemssystems
Application Improvement ScenarioApplication Improvement ScenarioConvert, stabilize, structure, and/or slice selected modules in highly modified systems
Rationalize data definitions across systems of interest – determined during assessment
Data Definition Rationalization
Process
Interim GUI data design effort
Strategic data modeling effort
Rationalized source code
Converts source code to new language or language level with run time environment
Scenario III. LanguageScenario III. Language--toto--Language Language Conversion Conversion
Scenario IV. Platform Migration Scenario IV. Platform Migration Objective: Convert applications to new language and / or run time platform. Scenarios can be performed separately or together.
Scenario III:
Migrates application to new hardware and / or operating system
Scenario IV:
Rehosting ScenarioRehosting Scenario
! Current platform obsolete or inaccessible! Shared / relational databases require redesign! Preference is to not rebuild - but to stay in code
based environment
Issues:
Strategy:! Develop and implement phased migration plan
Rehosting Scenario ProcessRehosting Scenario Process
Finalize Code BasedClient/Server System
Develop AssessmentProposal
Assess MigrationRequirements
Finalize Code BasedMigration Plan
Prepare Systems forCode Based Migration
Stabilize ApplicationCode
Standardize SystemWide Data Definitions
Remodularize SelectedSource Code
Finalize Client/ServerDesign
Redesign & ImplementSource Programs
Build Client/ServerMigration Plan
SOURCE: TSRM / JAMES MARTIN & CO.
Host based system is redesigned to the extent required to move it to Web-basedenvironment - includes relational redesign of data structures.
!! Existing systems are not conducive to WebExisting systems are not conducive to Web--based access and ebased access and e--business requirementsbusiness requirements
Issues:Issues:
Strategy:Strategy:!! Build frontBuild front--end with backend with back--end connectivity to end connectivity to
address user requirementsaddress user requirements
Integration via XML Case StudyIntegration via XML Case Study
!! Situation: Manual reporting from frontSituation: Manual reporting from front--end to legacy backend to legacy back--endend!! 2525--year old MVS/CICS/390 systemyear old MVS/CICS/390 system!! WebWeb--based Java Applet interface through Oracle Databasebased Java Applet interface through Oracle Database!! Reports generated by frontReports generated by front--end Webend Web--based systembased system!! Data manually reData manually re--keyed into MVS Backkeyed into MVS Back--end end
!! Relativity Solution:Relativity Solution:!! Knowledge Mining of business logic establishing connectivity betKnowledge Mining of business logic establishing connectivity between ween
mainframe and Websphere frontmainframe and Websphere front--end end !! Developed “Mediator” to determine 3270 or Web callsDeveloped “Mediator” to determine 3270 or Web calls!! “Mediator” enabled XML data stream flow from Web, translated int“Mediator” enabled XML data stream flow from Web, translated into o
BMSBMS!! Transaction message sent back in XMLTransaction message sent back in XML
Source: Relativity
Batch to Online ClaimsBatch to Online ClaimsProcessing Case StudyProcessing Case Study
!! Situation: Largest health insurance contract in nation Situation: Largest health insurance contract in nation serving 50% of government employeesserving 50% of government employees!! 2020--year old IBM S/390 mainframes, VSAM, DB2, year old IBM S/390 mainframes, VSAM, DB2,
3 million lines of code3 million lines of code!! Claim processing nightly Claim processing nightly –– batch systembatch system
!! RelativityRelativity Solution:Solution:!! Links mainframe to thinLinks mainframe to thin--client w/ web front endclient w/ web front end!! IBM MQ messaging, WebSphere, Java Server PagesIBM MQ messaging, WebSphere, Java Server Pages!! Online, realOnline, real--time accesstime access!! Restructured COBOL, new JavaRestructured COBOL, new Java--based programsbased programs
Source: Relativity
Re-aggregation slices input/edit/validation logic and creates standaloneroutines to be ported to workstation environment
Note: Transaction I/O handling is emulatedby new client environment
Linking Web FrontLinking Web Front--End via HostEnd via Host
Scenario VI. Services Oriented Scenario VI. Services Oriented Architecture (SOA) TransformationArchitecture (SOA) Transformation
Objective: Create a framework for constructing and interlinking back-end systems with the goal of making applications more agile.
Identify, extract,document & publishservices within SOA
framework
Existing applicationsRepository identifying
reusable services
SOAFramework
SOA Transformation RoadmapSOA Transformation Roadmap!! Excavate data meaning & business functionality Excavate data meaning & business functionality
from systems of interestfrom systems of interest!! Stabilize, standardize & structure code as Stabilize, standardize & structure code as
requiredrequired!! Rationalize and (optionally) redesign Rationalize and (optionally) redesign
application dataapplication data!! ReRe--aggregate systems to isolate data access, aggregate systems to isolate data access,
users interface, business logicusers interface, business logic!! Incorporate results into SOA frameworkIncorporate results into SOA framework
Redesigned Data & Modularized Systems Redesigned Data & Modularized Systems Serve as SOA Building BlocksServe as SOA Building Blocks
Order Customer Data InventoryData Data
Data & application architecture designed around functional components
• Applications decompose into single function modules (i.e. services)• Business logic is isolated from I/O and user interface functionality
Common OrderModules Common Customer
Mgmt. Modules
Sub-modules
Sub-modules
Common InventoryMgmt. Modules
Sub-modules
Sub-modules
Sub-modules
Sub-modules
Common DistributionModules
Sub-modules
Sub-modules
Scenario VII. Scenario VII. Data Architecture MigrationData Architecture Migration
Objective: Consolidate, cleanse, redesign & migrate existing data structures to relational database. Refactor applications as required.
Existing data file/ database formats
Rationalizeddata structures
Refactoredapplications
Relationaldata model
Physicaldata design
Physicaldatabase
Data cleansingprocess
Data Architecture Data Architecture Migration ScenarioMigration Scenario
!! Data is scattered, redundantData is scattered, redundant!! Data does not conform to business needsData does not conform to business needs!! Data inaccessible to Web applicationsData inaccessible to Web applications
Issues:
!! Identify relevant data and approachIdentify relevant data and approach!! Design new data architectureDesign new data architecture!! Capture, refine, consolidate and migrate dataCapture, refine, consolidate and migrate data!! Perform phased migration and adjust applicationsPerform phased migration and adjust applications
Strategy:
• Rationalized views used to create integrated, relational database• New database may reside on host or in client/server environment
Target Data Model
Rationalized DataStructures
Relational ModelingRefinements
Data ArchitectureData Architecture Migration ConceptMigration Concept
Re-aggregation slices input/edit/validation logic and creates standaloneroutines
Remodularization
• Isolate I/O functions• Isolate data access / presentation logic•Modularize functions based on
functional assessment
Modularized System
Monolithic System
Isolated / Consolidated I/O& Functions
Data Architecture Migration:Data Architecture Migration:Functional ModularizationFunctional Modularization
Scenario VIII. Application Scenario VIII. Application & Data Architecture Consolidation& Data Architecture Consolidation
OEDist
ProInv
•Integrate, automate common processes •Consolidate & redesign cross-functional data•Migrate baseline systems to new architecture•Identify & consolidate redundant logic•Create & phase in reusable modules
Consolidated data &application architecture
OE Inv DistPro-cure
IntegratedRelationalDatabase
Consolidation tasks
OEDist
ProInv
OEDist
ProInv
OEDist
ProInv
Existing Applications
Objective: Consolidate multiple redundant or related systems into a common data & application architecture.
TRANSFORMATION STEPSStep 5 Redevelop person management sub-system
Step 6 Transform base payroll functions
Step 7 Transform base pension functions
Step 8 Transform base insurance functions
Step 9 Finalize target functionality / deploy integrated system
TargetArchitecture
Architecture
"Personnel System Example"
Phased Consolidation: Phased Consolidation: One Application From ManyOne Application From Many
Existing Applications
Business Unit 1
Business Unit 2
OEDist
ProInv
•Integrate & automate common processes across business units•Consolidate & redesign cross-functional data•Migrate baseline systems to new architecture•Migrate & consolidate subsequent business unit applications under new architecture•Web-enable selected user interfaces as required
Objective: Create non-operational, consolidated view of data & make this data available to business users in ad hoc formats.
Integrated, rationalized,relational view of
abstracted data
Data Integration / Data Warehouse Data Integration / Data Warehouse ScenarioScenario
!! Users find data inaccessible, hard to decipherUsers find data inaccessible, hard to decipher!! Save data stored across multiple systems, Save data stored across multiple systems,
databasesdatabases
Issues:Issues:
Strategy:Strategy:!! Extract and consolidate relevant data and make Extract and consolidate relevant data and make
it accessible to endit accessible to end--users, customersusers, customers
Data Integration / Data Warehouse ScenarioData Integration / Data Warehouse Scenario
Develop IntegratedGraphical Front-End
Develop AssessmentProposal
Assess Current SystemMeta-Data
Build User DataQuery Plan
Rationalize Cross SystemData Representations
Rationalize DataRepresentations
Finalize IntegratedData Architecture
Complete Front-end& Server Design
Deploy User DataQuery Capability
Build Graphical UserInterface Plan
SOURCE: TSRM / JAMES MARTIN & CO.
Selective migration / integrationof cross-functional data
End user access to cross-functional data
Data Warehouse ConceptData Warehouse Concept
• Data definitions are rationalized across systems of interest• Composite views are used as basis for integrated extract database design
• Rationalized data views used to create integrated, relational extract database• Extract database may reside on host or be downloaded to client environment• Extract programs are developed to load & refresh extract data
Integrated Data Modelto Support Host Resident
Queries
Rationalized LegacyComposite Records
Relational ModelingRefinements
Developing WarehouseDeveloping Warehouse
Data Warehouse: Data Warehouse: Data Extraction ProcessData Extraction Process
1995 TSG, Inc. All Rights Reserved
Extraction & consolidation routines (in-houseor commercial tools) must also purify extractdata as defined during target attribute model
!! Current systems not meeting business needsCurrent systems not meeting business needs!! Packages under reviewPackages under review
Issues:
Strategy:!! Assess package candidate inabilityAssess package candidate inability!! Map selected package to legacy environmentMap selected package to legacy environment!! Perform phased package deployment and Perform phased package deployment and
legacy deactivationlegacy deactivation
Package selection and replacement options can leverage or ignore legacy architectures. Option 5 uses the legacy architecture as the baseline for the new application as an alternative to licensing and implementing a package.
Objective: Create a repository of reusable components.
Data / RuleConsolidation
Component Reuse ScenarioComponent Reuse Scenario
!! Desire to move legacy functions to Web servicesDesire to move legacy functions to Web services!! Need to consolidate and reuse legacy functionalityNeed to consolidate and reuse legacy functionality
Issues:
Strategy:!! Define target architectureDefine target architecture!! Perform phased legacy consolidationPerform phased legacy consolidation!! Migrates to componentMigrates to component--based environmentbased environment!! Deploy Web servicesDeploy Web services
Component Reuse TasksComponent Reuse Tasks
!! Address redundancy and reuse issuesAddress redundancy and reuse issues!! Perform consolidation as neededPerform consolidation as needed!! Select, extract and componentize rulesSelect, extract and componentize rules!! Deploy under servicesDeploy under services--based architecturebased architecture
Component Reuse Scenario Case StudyComponent Reuse Scenario Case Study
!! Situation: 30Situation: 30--year old inventory management system year old inventory management system supporting 91 bases worldwidesupporting 91 bases worldwide!! 6000 people accessing Unisys 2200 mainframe daily6000 people accessing Unisys 2200 mainframe daily!! 1.6 million lines of code, maintenance became unfeasible1.6 million lines of code, maintenance became unfeasible!! After 3 years’ efforts, offAfter 3 years’ efforts, off--thethe--shelf software delivered only shelf software delivered only
27% functionality27% functionality
!! RelativityRelativity Solution:Solution:!! Analysis and Knowledge Mining used to remove unused Analysis and Knowledge Mining used to remove unused
code and extract COBOL business rulescode and extract COBOL business rules!! Java components generated from extracted COBOL Java components generated from extracted COBOL
business rulesbusiness rules
Source: Relativity
Scenario XII.Scenario XII. ModelModel--Driven Architecture Driven Architecture TransformationTransformation
Objective: Migrate existing applications to an environment in which systems are maintained in models.
•Extract business rules & data definitions•Purge implementation dependent logic•Rationalize/consolidate data & logic as needed•Migrate/merge extracted logic & data definitions into applicable modelsExisting applications
!! Snapshot the enterprise / develop an architecture Snapshot the enterprise / develop an architecture transition strategytransition strategy
!! Objectively gather facts and requirementsObjectively gather facts and requirements
!! Identify hypotheses for various systemsIdentify hypotheses for various systems
!! Build an interim and strategic planBuild an interim and strategic plan
!! Develop a phased migration strategyDevelop a phased migration strategy
GettingGetting StartedStarted: PilotsPilots
! Test drive and refine a selected strategyIntegrate redevelopment task set
! Get the application team on boardVerify tool requirements
! Fine tune validation approach
! Adjust application proposal, contract, workplan and cost justification analysis
Develop and implement a pilot project to:Develop and implement a pilot project to:
IX. Selling Management / ROIIX. Selling Management / ROI
! Maintenance is drawing too many resources
" System reliability is an issue
" Integration requirements exist
" Migration to model driven approach is planned
" Any funded project where existing systems could play a minor or major role
A portfolio list identifying systems, platforms, size, & strategic requirements should be kept as a baseline from which to identify redevelopment candidates
Business Requirements Drive Business Requirements Drive ValueValue--Based ROIBased ROI
!! Reducing timeReducing time--toto--market for new products market for new products and services and services
!! Shifting to a customerShifting to a customer--driven philosophydriven philosophy!! Streamlining transaction flow across supply Streamlining transaction flow across supply
and distribution chainsand distribution chains!! Creating flexible information systems to Creating flexible information systems to
achieve business agilityachieve business agility
Current State of ROI on IT Current State of ROI on IT ProjectsProjects
!! 83% of companies do not track or measure 83% of companies do not track or measure (ROI) on technology projects.*(ROI) on technology projects.*
!! Companies that measure ROI track time Companies that measure ROI track time lines and costs but not value.*lines and costs but not value.*
!! Value must be determined to assess ROIValue must be determined to assess ROI
* Building and Measuring ROI for Application Integration Projects, Julia King, Computerworld ROI, Brainstorm Business Integration Conference, October 29, 2001
ValueValue--Driven ROI PrinciplesDriven ROI Principles
!! Existing data structures and applications are Existing data structures and applications are highly valued information assetshighly valued information assets
!! Application management and maintenance must Application management and maintenance must consider business value consider business value -- not just IT cost reductionnot just IT cost reduction
!! Rewrite, package replacement and integration Rewrite, package replacement and integration projects must consider legacy information assets projects must consider legacy information assets as key ROI factorsas key ROI factors
!! Projects impacting legacy environments should be Projects impacting legacy environments should be cost justified in phasescost justified in phases
ValueValue--Driven ROI Versus TotalDriven ROI Versus Total--CostCost--ofof--Ownership (TCO)Ownership (TCO)
!! TCO breaks down IT spending by application areaTCO breaks down IT spending by application area!! One study showed TCO increasing $2,300 per One study showed TCO increasing $2,300 per
employee after an ERP implementation*employee after an ERP implementation*!! But if revenue increased $10 million as a result...But if revenue increased $10 million as a result...!! ...the resulting annual cost increase of $1.1 million ...the resulting annual cost increase of $1.1 million
(based on 500 IT personnel) would still return an (based on 500 IT personnel) would still return an ROI of $9 million**ROI of $9 million**
*IT Spending Budget Practices Beyond Service Level Agreements, Gartner Inc., www.gartner.com, 2001**Legacy Systems: Transformation Strategies, William M. Ulrich, Prentice Hall, 2002
The Wrong Project Approach The Wrong Project Approach Results in Negative Project ROIResults in Negative Project ROI
!! At Hershey, a $112 million ERP implementation At Hershey, a $112 million ERP implementation resulted in shipping delays and deliveries of resulted in shipping delays and deliveries of incomplete orders*incomplete orders*
!! This, in turn, caused Hershey’s profits to drop This, in turn, caused Hershey’s profits to drop 19% in one quarter*19% in one quarter*
!! Which increases criticality of selecting the right Which increases criticality of selecting the right approach and delivering it in phases approach and delivering it in phases
*Failed ERP Gamble Haunts Hershey, by Craig Stedman, Computerworld, November 1, 1999
BusinessBusiness--Driven Value Assessment Driven Value Assessment Shifts with Economic ConditionsShifts with Economic Conditions
!! In 2000, top spending priorities at financial service In 2000, top spending priorities at financial service firms: customer relations (37%), competition firms: customer relations (37%), competition (18%), cost savings (14%) and efficiency (10%)*(18%), cost savings (14%) and efficiency (10%)*
!! By 2001, priorities shifted to cost savings (32%), By 2001, priorities shifted to cost savings (32%), efficiency (29%), market share (23%) and efficiency (29%), market share (23%) and customer demands / requirements (15%)*customer demands / requirements (15%)*
!! Customers fell in priority while cost saving Customers fell in priority while cost saving priorities increasedpriorities increased*Budget Season is Here: Financial Services IT Spending is in for Big Changes, by John Hagerty, AMR Research, May 2001
!! “Assessing the business value, related costs and “Assessing the business value, related costs and annual projected TCO for a project should be annual projected TCO for a project should be incorporated into a cost model that quantifies ROI by incorporated into a cost model that quantifies ROI by project phase.”*project phase.”*
!! “If a project is put on hold or cancelled due to a shift “If a project is put on hold or cancelled due to a shift in business priorities, that project will have delivered in business priorities, that project will have delivered some value prior to being cancelled.”*some value prior to being cancelled.”*
*Legacy Systems: Transformation Strategies, William M. Ulrich, Prentice Hall, 2002
ValueValue--Based ROI for IT Projects*Based ROI for IT Projects*
*Legacy Systems: Transformation Strategies, William M. Ulrich, Prentice Hall, 2002
! Identify various options to meet a given set of business requirements
! Estimate revenue growth and / or cost savings to be gained from each approach
! Calculate cost of delivering each approach as the implementation cost plus annual operating costs
! Determine “net value” for each option: Subtract project costs from projected annual revenue growth and / or cost savings
Information Asset Management Information Asset Management & Maintenance ROI& Maintenance ROI
!! Application assets must be documented Application assets must be documented whether maintained inwhether maintained in--house or offsitehouse or offsite
!! Proactive upgrade activities can streamline Proactive upgrade activities can streamline delivery of business value or prepare delivery of business value or prepare applications for strategic transformationapplications for strategic transformation
!! Outsourcing / insourcing agreements should Outsourcing / insourcing agreements should incorporate valueincorporate value--added activities added activities -- not just not just cost reductioncost reduction
Transformation Support for Transformation Support for Outsourcing ROIOutsourcing ROI
!! IT cost cutting is currently the driving force IT cost cutting is currently the driving force behind outsourcing initiativesbehind outsourcing initiatives
!! ValueValue--added outsourcing ROI goes beyond added outsourcing ROI goes beyond cost cutting and includes:cost cutting and includes:!! Documenting applications in an open repositoryDocumenting applications in an open repository!! Integrating applications using EAI technologyIntegrating applications using EAI technology!! Upgrading, migrating and / or consolidating Upgrading, migrating and / or consolidating
enterprise data and applicationsenterprise data and applications