Lectura 2.5 don t-just_maintain_busin

For: Application
Development
& Delivery
Professionals

Don’t Just Maintain Business
Applications, Raise Business
Responsiveness
by Paul D. Hamerman, Randy Heffner, and John R. Rymer, June 18, 2013
Key Takeaways
Your Continuous Improvement Strategy Must Encompass Four Categories
Of Application Change
The newest and most powerful type of application change is business empowerment:
giving businesspeople the ability to directly change an application with minimal IT
involvement. The other three are application enhancements and integration, planned
and unplanned maintenance, and version upgrades for off-the-shelf applications
(including SaaS).
Business Empowerment Is Often Available Out Of The Box
Whether it’s visual tools to adjust the user interface or built-in tools for deep
customization of process flows, business rules, and data schema, off-the-shelf
applications (both on-premises and SaaS) increasingly come with empowerment tools.
And if they don’t, you can use traditional middleware or new productivity platforms to
add it on.
Architecture Is As Important For Continuous Improvement As It Is For Big
Transformation Projects
Enhancement projects can have a limited scope and a get-it-done-now character that
can lead to sacrificing architectural integrity and building up technical debt. Instead,
translate your architecture strategy for enhancement teams; pay close attention to teams’
architecture skills and to reviewing the architecture approach for each enhancement.
Examine New Options For Application Maintenance And Learn New
Lessons For SaaS Upgrades
For the maintenance of on-premises off-the-shelf applications, new options like
managed maintenance services and third-party support are emerging. For SaaS, it’s
a myth that no work is required for upgrades: Your teams must review, understand,
and potentially react to what’s coming -- and you’re on a forced march to the upgrade
deadline.

Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA
Tel: +1 617.613.6000 | Fax: +1 617.613.5000 | www.forrester.com

For Application Development & Delivery Professionals

June 18, 2013

Don’t Just Maintain Business Applications, Raise Business
Responsiveness
Continuous Improvement: The Business Applications Playbook
by Paul D. Hamerman, Randy Heffner, and John R. Rymer
with Mike Gilpin and Nasry Angel

Why Read This Report
While big projects such as delivering new off-the-shelf or custom-built applications help your organization
achieve excellent business outcomes, sustaining these outcomes requires that your applications keep
changing. Application development and delivery (AD&D) pros need a continuous improvement strategy
to manage a constant stream of changes ranging from enhancement projects to periodic upgrades of offthe-shelf applications (both on-premises and software-as-a-service [SaaS]). To achieve this, firms often use
business process management (BPM), business rules, and other approaches to make applications easier to
change — including direct change by businesspeople. As the continuous improvement report of Forrester’s
business applications playbook, this research provides best practices for application delivery teams as
they plan their strategy for continuously delivering the highest business results from their organization’s
application base.

Table Of Contents

Notes & Resources

2 Your Business Outcomes Need Continuous
Application Improvement

Forrester spoke with dozens of client
companies via inquiries to understand their
application concerns and challenges. We
also analyzed survey data from Forrester’s
Forrsights Software Survey, Q4 2012.

7 Balance Business Empowerment With
Integrity Safeguards
10 Don’t Allow Ongoing Enhancements To Build
Up Technical Debt
12 Create A Well-Oiled Machine For Planned
And Unplanned Maintenance
13 Adopt Sustainable Practices For Application
Upgrades
recommendations

18 Build Continuous Improvement For
Responsiveness And Results

Related Research Documents
Digital Business Design Is The New
Integration
November 8, 2012
Optimize Application Strategy To Generate
Business Value
May 30, 2012
Increase Business Flexibility By Embracing
Future Trends
May 24, 2012

© 2013, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available
resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar,
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Don’t Just Maintain Business Applications, Raise Business Responsiveness

Your Business OUtcomes Need continuous application improvement
One of the perennial complaints directed at application delivery teams is that they spend too much
effort on maintenance and not enough on delivering new functionality (see Figure 1). Similarly,
top IT software investment priorities tend to focus more on rationalization and upgrades than on
innovation (see Figure 2). Like a building or a car, which require regular maintenance to offset the
wear and tear of constant use, your applications need regular maintenance to keep up with business
and technology change — but whatever you spend on maintenance now, it would be better if you
spent less. While you do need to impose a certain amount of discipline and hygiene, such as staying
current on patches and upgrades, the good news is that your continuous application improvement
strategy can incorporate options that not only reduce maintenance costs but also open new avenues
for business responsiveness.
Continuous application improvement is what happens between major delivery projects like
implementing new off-the-shelf software or building new custom applications. Day-to-day
operations keep your applications and your business running, while continuous improvement
constantly adjusts your current application landscape so that it meets new requirements while
delivering better and better business outcomes. Continuous improvement also keeps business
outcomes from being degraded by unresolved application maintenance issues.
Figure 1 Half Of IT Software Budgets Go Toward Maintaining The Status Quo
“In 2013, approximately how much of your firm’s software spending will go to
new initiatives and projects versus ongoing operations and maintenance?”
New custom-developed
software solutions
25%

Ongoing maintenance
49%
New software licenses
26%
Base: 854 enterprise IT decision-makers
Source: Forrsights Software Survey, Q4 2012
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© 2013, Forrester Research, Inc. Reproduction Prohibited

Source: Forrester Research, Inc.

June 18, 2013


3


Figure 2 Software Investment Priorities Favor Rationalization Over Innovation
“Which of the following initiatives are likely to be your IT organization’s top
software priorities over the next 12 months?”
High priority

Critical priority
Support business requirements
and corporate growth

45%

Update/modernize key legacy applications

24%

Consolidate or rationalize enterprise applications

48%

19%

Upgrade packaged applications to a newer release

50% Rationalization

16%

Increase our use of business intelligence, analytics,
and decision support tools and services

47%

18%

Invest in mobile applications for
employees, customers, or partners
Use custom development for better
business support and/or differentiation

46%

42%

16%

38%

14%

38%

Increase our use of software-asa-service (cloud applications) 12%

36%

Expand use of Agile software
development and processes 10%
Embed social (social media, social networks,
chat, etc.) into our business processes 7%
Outsource application support and maintenance 5%

Innovation

30%
26%
21%

Base: 1,176 enterprise decision-makers
Source: Forrsights Software Survey, Q4 2012
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Prepare For Four Major Categories Of Continuous Application Improvement . . .
Although there is a vast array of different ways to change and improve applications, Forrester has
identified four broad categories of continuous application improvement:

■ Application configuration and change through business empowerment. Vendors of off-the-

shelf applications and SaaS services now provide a wide range of tools that allow businesspeople
to directly change the way an application works with minimal or no involvement of application
delivery teams. The available tools vary widely, but the primary options are application
configuration property sheets, user interface (UI) customizations, social computing and
collaboration facilities, business reporting and analysis tools, business rules, hierarchy models


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like organization charts, and business process authoring tools. Custom-built applications can
incorporate similar mechanisms.1 Also consider complementing your business apps with a
new productivity environment that empowers your business experts and analysts.2 Whatever
options you employ, build business controls into your continuous improvement strategy so that
businesspeople configuring the apps directly do not inappropriately affect business operations.

■ Application enhancements and integration projects. No amount of configuration by

businesspeople will eliminate the ongoing need for technical people to make application
changes. For both custom and off-the-shelf applications, this has traditionally included such
items as reports, interfaces, customizations, and extensions/enhancements (RICE). For both
mandatory enhancements (e.g., to meet new regulatory requirements, which may also carry
arbitrary and fixed deadlines) and discretionary enhancements, your continuous improvement
strategy must manage the process of deciding whether, when, and how to implement each
change. The “how” carries particular risks in that — if done through an ongoing series of
tactical, patchwork enhancements — an application can lose its architectural integrity and
become a maintenance nightmare.

■ Planned and unplanned maintenance. Through regular updates (e.g., tax tables), security

patches, and emergency fixes, both custom and off-the-shelf applications maintain robust and
accurate operations. As part of your continuous improvement strategy, the challenge is to be
sure that resources are available when maintenance must be done and that business operations
are not disrupted (or are only minimally disrupted) in the process.

■ Version upgrades for off-the-shelf applications (including SaaS). Version upgrades of off-

the-shelf applications are often one of the most difficult aspects of a continuous improvement
strategy. As an electronics firm that we spoke with found, even SaaS application upgrades —
which, the hype claims, are transparent — require careful assessment and planning for setting
up new features or preparing guidance on how to use new functions. This is even more the case
if the SaaS vendor gives you zero control over upgrades, thus placing you on a forced march to
an upgrade deadline. That said, upgrades to on-premises applications typically require more
work and planning than SaaS upgrades, making it appropriate to carefully consider the cost and
value of the upgrade. And if you have modified the applications, on-premises upgrades are all
the more difficult and expensive.

. . . And Use Transformation And Discontinuity To Enable Continuous Improvement
In addition to the four categories of continuous improvement, two major types of transformation
and discontinuous improvement — major custom development projects and major conversions
to a big new off-the-shelf application — can notably affect your strategy for continuous
improvement because:


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■ Transformation projects can increase the potential for direct change by businesspeople.
You can reduce the strain on continuous improvement resources by including business
configurability and change in your evaluation process for off-the-shelf applications or by
building business rules or other dynamic capabilities into custom applications.

■ Strong architecture can make continuous improvement easier. By thoroughly assessing

off-the-shelf applications’ architectures before you acquire them and by designing custom
applications for change via good architecture practices like layered design, process management,
service-oriented architecture (SOA), and embedded analytics (to track improvement metrics),
you can reduce the effort and time required to analyze, design, and implement enhancements
and extensions (see Figure 3).

■ Designing for high availability can reduce continuous improvement’s operational impact.

Good architecture and careful deployment planning and design can also improve your ability to
implement continuous improvement with zero or little downtime, depending on the design of
the off-the-shelf or custom application.

The challenge facing AD&D pros who want to excel at continuous application improvement is to
establish a stable set of organizational structures, skills, processes, governance, and technology
to accommodate a fluctuating and sometimes chaotic flow of improvement initiatives. Even
when you have stable structures for continuous improvement, discontinuous improvement
may well upset the apple cart, requiring changes like restructuring application support teams to
accommodate a major new off-the-shelf application. If a new application includes functionality
for custom configuration by businesspeople, it may require changes to implement, support, and
govern self-service application change.


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Figure 3 Architecture Prepares For The Four Major Categories Of Continuous Improvement
Discontinuous
application improvement

Major conversions to
off-the-shelf software

Continuous application improvement

Empower business people
to directly change
applications.

1

Keep enhancements and
integration on track with
your architecture.

2

Business applications
Architect and
design for change

Off-the-shelf
(on-premises)

Off-the-shelf
(SaaS)
3

Major custom
development projects

Keep up to date with
patches and security fixes.

4

Custom

Plan, budget, and
prepare for regular off-theshelf software upgrades.

SECURITY

SaaS

Configure,
don’t customize
On-premises

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Craft Your Continuous Improvement Strategy Around Business Outcomes And Agility
It’s easy for people to think of ways that applications can be better, and the potential deluge of
enhancement requests poses a problem for your continuous improvement strategy: How do you
decide which improvement opportunities to act on? It’s good to wade through the deluge and
prioritize the ones that seem most important, but just because a proposed improvement seems
important doesn’t mean that it is important. The electronics firm has process owners quantify the
benefits using a role-focused, Scrum-like storyline: “As a [role], I want to be able to [new capability]
so that [new outcome]. I know this is done when [measured result].” There are two lessons buried in
this approach:

■ Look across applications at the business capability. The electronics firm entrusts process

owners, not application owners, with enhancement prioritization and analysis. Although one
major application may embody much of the process, the process owners analyze requests from a
business-centric perspective, not an application-centric perspective.


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■ Decide based on improvements to business outcomes. As part of process owners’ proposals

to pursue enhancements, they must identify specific ways that business outcomes will be
improved. Not all business outcomes can be measured precisely, and with a continuing stream
of improvements, it may be difficult to determine which actual improvements came from which
enhancements, yet the discipline of articulating how specific outcomes will be improved forces
process owners to sift out nice-to-have requests from truly important ones.

In previous research, Forrester identified a focus on business outcomes and business capabilities
as central to an organization’s business technology future.3 Within a continuous application
improvement context, “business outcomes” include:

■ Financial and nonfinancial outcomes. The three primary financial statements — balance

sheet, cash flow, and statement of operations (income statement) — are the starting point for
analyzing continuous improvement opportunities. Just as important are nonfinancial outcomes
like customer satisfaction, business agility, and process cycle time, which tend to function as
indicators of your organization’s future financial outcomes.

■ Business and “business of IT” outcomes. Application upgrades and maintenance are often

difficult to justify because they deliver few, if any, improvements to business outcomes that
are visible to businesspeople. In such cases, a clear understanding of IT cost and business risk
(e.g., unpatched application failure) may tip the scales by making clear that, as IT is part of the
business, improving IT’s business outcomes improves overall business outcomes.

Continuous improvement of business applications and business outcomes also requires managing
the people aspects of change, which is the discipline of change management. Using a three-phased
approach, the organization must get ready for change, make it happen, and reinforce the changes as
the new normal.4
BALANCE BUSINESS EMPOWERMENT WITH INTEGRITY safeguards
Business outcomes are determined both by strategy and tactics, and the business empowerment aspects
of your continuous improvement approach can help greatly in connecting the two. For example, a
strategy to raise revenue through dynamic pricing requires the tactical ability to change pricing rules
and decisions as needed. When pricing rules are locked away in code, only developers can change
them. Thus, the businesspeople responsible for tactical execution often struggle to access and change
the data, processes, and functions they need as they implement business change. Businesspeople take
two actions to cope with this situation, both of which are application delivery nightmares:

■ Build “rogue IT” applications. The nightmares of rogue IT are known all too well. They

include Excel spreadsheets containing out-of-date derivatives of corporate data, unscalable PC
databases managing important data sets, team sites containing sensitive data but running in
unprotected public cloud services, and idiosyncratic custom applications built by contractors.


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■ Add impossible projects to the IT backlog. Impossible projects are those that are too small

for overloaded application delivery teams to ever get to. These projects fester on the project list,
feeding businesspeople’s distrust of AD&D’s ability to deliver. The problem is exacerbated when
a strategy like dynamic pricing is not accompanied by dynamic applications, because it creates a
new application change request every time the business develops a new pricing rule.

As business cycles shrink, the need for continuous application improvement has become not just
the source of application delivery nightmares, but also a barrier to business innovation and results.
Any business innovation — both small ones like discount policy changes and big ones like new
business processes — requires software to implement. Innovations must occur in time to grasp the
opportunity or prevent the risk at hand. Who better to act in time but the business experts on the
front lines? Equipped with the right tools, data, and guardrails, business experts can make tactical
changes faster and more effectively than application delivery teams can.
Business Expert “Development” Is Inevitable And Attainable . . .
Your continuous improvement strategy must recognize this reality and harness the application
delivery that businesspeople will continue to perform. Make rogue IT legal by guiding and
managing it.5 There have never been better facilities for application delivery teams to do so than
there are now. Application delivery teams now have two major options for empowering business
experts to make changes to major applications:

■ Off-the-shelf applications increasingly expose configuration and extension tools. Many of

these tools are now accessible to businesspeople, not just professional developers. Salesforce.
com’s visual tools to configure its built-in customer relationship management (CRM) functions,
including tenant permissions, set the bar for this generation of tools years ago. Even better,
some off-the-shelf applications provide tools that allow deep customization of process flows,
business rules, and even schemas by business experts. In general, the newer the application, the
better its extensibility tools for business experts to make changes — and for application delivery
pros to manage those changes.6

■ Rules, process, and “productivity” platforms externalize business expert customization.

Some firms customize their off-the-shelf applications by not customizing them; they use
external environments that are better than off-the-shelf applications at managing fast-changing
logic. Business rules and BPM platforms have a long history in this role. Both business rules
and BPM platforms provide tools appropriate for business experts, testing, and deployment
environments that allow for rapid changes.7 More recently, customers have used “new
productivity platforms” from vendors like Cordys, Mendix, Microsoft (SharePoint), and
OutSystems in a similar role. These products are highly productive for building new front-office
processes, collaboration sites, and information workplaces — much more so than the typical
off-the-shelf application managing transactional data. Some of these applications are built by
business experts working outside of application delivery.


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. . . But Requires Two Foundations To Work Well
Neither of these two major options for business expert empowerment is rogue IT; both enable
business expert development in an environment managed by an application delivery team. Still,
close attention to governance and work processes is required for business experts to play a
productive role within your continuous improvement strategy:

■ Governance both empowers and protects. Some of the application changes that businesspeople

make with these tools are localized and won’t threaten either the integrity of business operations
or the application and the data it manages. Because UI and reporting configurations don’t
change data, they won’t corrupt applications — although they could corrupt business operations.
But deeper changes — to process flows, business rules, and user permissions, for example —
can compromise both business operations and application integrity and so must be actively
governed. The foundation of governance is change ownership: Which subject-matter experts
can make which changes? How are those business changes validated, tested, and/or approved
for implementation? What approvals are needed before a change goes live? Business change
ownership, then, drives application architectures, change-management procedures, tooling, and
tracking/auditing facilities.

Your governance policies must be backed by a managed platform. Look for products that
give application delivery the ability to centrally manage the deployment and operation of
applications and/or customizations made by businesspeople. At a minimum, you need the
ability to shut off bad modifications and roll back to the prior state. Ideally, the vendor will
provide even greater visibility and control over all application changes.

■ Just like you, business experts won’t work for free. It’s one thing for a business expert to

donate time every now and again to a software project, but you can’t build a strategy on pro
bono work. Organizations that incorporate business experts into their software delivery
strategies make designing and delivering solutions part of those people’s jobs. For example, a
client shifted responsibility for defining and implementing new dynamic pricing rules directly
to its pricing team in marketing from its application delivery organization. Organizations using
Agile development processes often change subject-matter expert responsibilities to include time
on software delivery project work.

Use Discontinuous Improvement Projects To Promote Business Empowerment
Business empowerment can improve business responsiveness and push your continuous
improvement strategy miles ahead, but it requires preparation. Most importantly, preparation
comes in times of discontinuous improvement as your teams either evaluate and select off-theshelf software that has built-in business empowerment or build empowerment into custom-built
applications using BPM, business rules, productivity platforms, and other technologies. Once your
applications have an empowerment foundation, ongoing enhancement can enable and extend it. To
target and govern business empowerment:


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■ Identify business change pressure points. Set priorities for business empowerment by

identifying and analyzing key business pressure points where persistent problem areas demand
flexibility and responsiveness. For one pharmaceutical firm we spoke with, the monthly sales
compensation process was the pressure point. One way to identify new empowerment priorities
is by monitoring enhancement projects and asking whether an appropriate empowerment
mechanism could have prevented the need for the project.

■ Assess the risks of empowerment. Having identified a business empowerment opportunity,

analyze the risks of direct business change before implementing it. Identify the ways that business
might be disrupted if a process or rule is incorrectly changed. Identify whether and how a change
can be tested before it goes live. Identify how a change can be quickly reversed if it does cause
problems. Based on the analysis, set the boundaries within which business empowerment is safe.

■ Build in the process for changing the process. As you implement an empowerment-enabled
mechanism, design not only the business process itself, but also the process for changing
the process. Design and build appropriate business controls for change, such as reviews and
approvals before a change goes live and audit trails to track what changes were made by
whom and when. The pharmaceutical firm built controls for changing sales compensation
worksheets into its process, as well as the ability for approvers to delegate approval rights
when they are on holiday.

Don’t Allow ongoing enhancements to build up technical debt
A major continuous improvement challenge for enhancement projects is that their typically limited
scope and get-it-done-now character can lead to sacrificing architectural integrity in the name of
time-to-completion. Three major manifestations of this problem are:

■ The tyranny of today causes blindness to the future. While it is important for developers to

find the fastest path to deliver today’s desired enhancement, it is also important that developers
on future enhancement projects have a fast path for their deliveries. When today’s projects
take shortcuts that impair your applications’ architectural integrity, tomorrow’s projects can be
forced into either additional cost remediation efforts or more shortcuts that increase the size of
your technical debt and push it farther into the future — until the day of reckoning comes.

■ Even small changes can negatively affect architecture. Junior developers are often assigned to

minor enhancements and break-fix efforts. This is a reasonable starting place for them, yet their
inexperience may mean that they are less aware of the potential to violate your well-defined
architecture. For example, if they don’t realize the importance of SOA business services, they may
insert a new line of business logic in the UI instead of in the business service, causing problems for
future users of the service. And it’s not only junior developers who can make such mistakes.


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■ Proliferation of SaaS-based point solutions can lead to tactical integration. Many SaaS

applications are smaller point solutions that aim to do one thing well. Forrester talks to
organizations where this dynamic leads to a proliferation of many point solutions, each
with its own unique integration requirements and challenges. Although quick-and-dirty
integration may keep all the application silos in sync, the efficiency of your business users and
processes may become fractured across the silos. For example, a given user role may have to
log into four separate applications to get one task done or process handoffs may fall into the
cracks between the silos.

What do these and other manifestations of tactical enhancement issues mean? Architecture
governance is just as important to your continuous improvement strategy as it is to your major
transformation projects.
Connect The Work Of Each Enhancement Team To A Governed Architecture Strategy
Protecting the integrity of your architecture is particularly important for your investments in
business empowerment and application flexibility. To build architecture governance into your
continuous improvement strategy:

■ Translate your architecture strategy for continuous improvement teams. Transformation

projects typically engage all layers of your application architecture, but enhancement and
maintenance projects may engage only a subset. Analyze the intersection between each team’s
continuous improvement scope and your architecture strategy and ensure that each team is
appropriately skilled. For example, a legacy mainframe team may need to know all about your
service design strategy so it can correctly expose SOA services and APIs from legacy applications
while needing to know virtually nothing about your mobile or business rules strategies.

■ Assess flexibility requirements when scoping enhancement requests. Update enhancement

request templates and scoping processes to explicitly ask about patterns of business change and
the need for flexibility. Ask whether similar enhancement requests have been made in the past
or might be needed in the future. Ask how businesspeople might benefit if they could make the
enhancement themselves in the future. Examine methods of business empowerment that they
might use to implement the enhancement, particularly those that you already use in connection
with the affected applications.

■ Explicitly state and review the impact on architecture in requirements statements. As you

assess and prioritize enhancements, explicitly include statements of architecture impact in the
scope statement for each enhancement. For example, for changes to a business process, designate
how the requirements should be implemented in the face of BPM changes, business rules engine
changes, updates to SOA services and APIs, data virtualization changes, database changes, and so
on. Better yet, if you have a body of implementation patterns, specify the patterns to be used. Get a
second pair of eyes, such as a solution architect, to review and approve the approach.


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■ Tune enhancement governance to the skills of each team. For teams with a proven track

record of strong leadership on your architecture strategy, less review and governance will
be required. For junior developers, who are often assigned to maintenance projects to gain
experience, careful mentoring is appropriate.

Create a well-oiled machine for planned and unplanned maintenance
The ongoing maintenance of business applications consumes significant IT resources: IT spending
for ongoing maintenance and operations of applications averages 48.5% of companies’ software
budgets.8 Typically, with off-the-shelf applications, the vendor provides certain maintenance
services via a software maintenance agreement. Firms typically view this contract, which covers bug
fixes, compliance updates, on-call technicians to help resolve problems, enhancements and version
upgrades, software management tools, and educational materials, as an insurance or risk mitigation
investment. Older and highly customized applications, however, are often not supported by a vendor
maintenance agreement.
Whether the software is covered by vendor maintenance or not, the IT organization is left with a
substantial job to keep the applications running smoothly. This includes tasks such as applying
and testing the software updates provided by the vendor; tuning the applications for performance;
maintaining multiple software instances for production, testing, and user training; managing
application security; and implementing configuration changes request by business users.
Internal App Maintenance Is Becoming Less Desirable In View Of Outsourced Options
Currently, many IT business application organizations are using or seeking alternatives to
maintaining applications internally. Why? Some organizations find it difficult to recruit and
retain qualified staff with technical skills in specific off-the-shelf applications; workloads may
be intermittent or irregular, making it difficult to effectively utilize staff; and outsourced and
offshore service providers may save costs. In addition, companies may not want to staff application
maintenance functions for certain internal administrative applications, such as finance, HR, or
procurement, preferring to dedicate more resources to customer-facing and mission-critical
operational applications. The primary alternatives to maintaining internal on-premises applications
are SaaS, outsourced managed services, and third-party maintenance, each of which has different
implications for IT workloads and business user impact:

■ SaaS shifts maintenance workloads to the software vendor. Adopting SaaS usually means

switching application vendors, but not always. Some applications built for on-premises
deployment can be shifted to a SaaS subscription service with the software vendor itself (or,
in some cases, to a third-party service partner). A key consideration in SaaS is the cadence
and control of software updates (including enhancements).9 Because the software vendor is
managing the application for multiple clients, the vendor, not the customer, typically controls


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and manages the update frequency. The SaaS alternative has the most impact in terms of
reducing IT maintenance workloads but limits your control of the application in terms of
customization and upgrade timing.

■ A managed service outsources app maintenance but retains ownership. In a managed

services contract, a third-party service provider hosts and manages the applications; the
customer usually retains ownership of the software license and vendor maintenance
agreement. The benefits of such an outsourcing arrangement vary: Firms may save significant
amounts of money when the service provider is more efficient and spends less on labor
(e.g., offshoring) or when cloud-based virtualization (e.g., Amazon Web Services) lowers
infrastructure costs; hosting has benefits like increased security and reliability; and service
providers give access to staff with critical skills. Managed services contracts often do not
include upgrades, meaning that the owner typically must deal with the same technical debt
challenges of on-premises deployment.

■ Third-party support replaces the vendor maintenance contract. A third-party support (TPS)

arrangement replaces maintenance services provided by the software vendor, including breakfix support and compliance updates. Typically, this arrangement provides substantial cost
savings compared with vendor maintenance, but it does not include software enhancements and
version upgrades (which can only be supplied by the software vendor). Maintenance contracts
are a highly profitable revenue stream for software vendors, and TPS is a threat to this revenue
stream. Intellectual property considerations, vendor lock-in strategies, and ongoing litigation
have limited the availability of TPS services in the market.10

Adopt Sustainable Practices For Application Upgrades
Keeping pace with application vendor enhancement streams is an ongoing challenge for most
companies. Based on hundreds of client inquiries over the past several years, we have found that the
vast majority of off-the-shelf application customers of SAP, Oracle, Infor, and other vendors are not
on the latest release — in fact, they’re often two or more releases behind the current one. The more
releases a firm misses, the less sustainable its applications become; upgrade costs rise as releases
are skipped and higher levels of customization creep in. Application vendors typically discontinue
support of older releases, increasing the risk of platform obsolescence. Customers on older releases
have a lower propensity to upgrade, for several reasons: They lack the resources to invest in the
upgrade project; high levels of customization make an upgrade impractical; and upgrades become
more difficult when releases are skipped (e.g., due to schema and architectural changes). Application
customers on older releases also recognize that vendor maintenance agreements have diminishing
value (if their release is still supported at all) and may opt out of renewing rather than paying for
unused upgrades and minimal support.


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Upgrade Lag Creates Uncertainty And Variability In Ownership Costs
Cost of ownership is a universal concern among application delivery teams responsible for
managing licensed (on-premises or hosted) enterprise applications. Ownership cost concerns range
from relatively fixed and predictable vendor maintenance fees, internal staffing, and infrastructure
support to the less predictable cost of application upgrades. Application upgrade costs remain the
wild card in the ownership cost picture, because:

■ New application releases occur relatively infrequently. Vendors have released new versions of

off-the-shelf enterprise applications on average every two years. However, leading vendors have
recently modified this to include smaller interim releases (e.g., SAP enhancement packages and
Oracle family or feature packs). This acceleration of releases was intended to make new features
more easily available to customers, but success has been mixed. Without a sustainable or
consistent process for applying new releases, companies fail to keep pace with vendors no matter
what the release frequency. However, the increasingly popular SaaS updating model — where
releases are pushed to all customers multiple times per year — has helped address this challenge.

■ Release adoption stays optional. In the world of licensed on-premises software, application

upgrades are optional — at least until release support deadlines become a factor. The optional
nature of upgrades means that neither IT app professionals nor business stakeholders plan and
budget for them on a regular basis; therefore, upgrade costs are usually not factored into the
ongoing costs of ownership.

■ Upgrade costs vary widely, making it difficult to estimate. Typically, enterprise application

upgrades involve significant IT projects that often require outside assistance. Estimating the cost
of an upgrade involves a number of variables, including the level of customization; whether prior
releases were skipped; the extent of new functionality to deploy; the stability of the new release;
and the impact on integration with other systems. The finance department and IT leadership
usually require elaborate planning and justification before funding major upgrade projects.

Configure Your Business Applications, But Don’t Customize Them
Off-the-shelf business applications are designed to be inherently adaptable and flexible, but this
flexibility can be a double-edged sword when it leads to higher levels of customization. Off-the-shelf
applications provide business flexibility by multiple means, each with different pros and cons:

■ Configuration capabilities meet most business requirements. A variety of configuration

capabilities enable customers to set up applications without technical customization. These
include on/off switches for features, table-driven parameters and formulas, workflow or process
models, UI preferences, user-defined fields, reports, and interfaces. For traditional on-premises
applications, the configuration is relatively technical and is generally controlled by application
delivery professionals with specialized training in the application.


June 18, 2013


15


■ Customization capabilities add business flexibility but lead to upgrade inflexibility. Because
most off-the-shelf application vendors allow customer access to native development tools,
customization is common and sometimes extensive. Many companies have learned the hard
way that extensive customization leads to difficult and expensive upgrades. Customization best
practices include documentation trails and isolation of custom objects from the off-the-shelf
code base. Vendors and systems integrators (SIs) also may have tools to manage and migrate
customizations.

■ Extending applications fills bigger gaps. Customers and SIs are able to extend some off-the-

shelf applications to meet customer-specific and industry-specific requirements above and
beyond the supported application functionality. In a best-case scenario, add-ons are available
through the vendors’ ecosystems or app stores. Extension is different than customization in
that it adds new modules or layers to the underlying application rather than modifying the
application itself. Application vendors that provide architectural extensibility via components
and layering, as well as via platform-as-a-service (PaaS) have an advantage over those which
require rewriting lower-level program code.

Off-the-shelf application customization is often not a choice but a necessity. However, firms must
use customization as judiciously as possible to minimize both implementation costs and risks
and long-term ownership costs associated with upgrades. Application selection also helps to limit
customization challenges, not only by finding applications with the best fit but also by selecting
software with higher levels of flexibility and configurability. Forrester expects future business
applications to be inherently more flexible and less technical to configure as a result of the evolution
of business application architectures (see Figure 4).11


June 18, 2013


16


Figure 4 The Evolution Of Business Applications
Today

Future

Extension, customization,
and integration across functional silos

Composed of multiple custom and
off-the-shelf business applications, their
components, and business
metadata/parameters

Business apps

Client-specific apps

(more)

Claims management

Retail POS

Core banking

(more)

HR

ERP

CRM

Business process
components

Vertical

Horizontal

87361

User interface
design

Modeling
tools

Business metadata
parameters


Keeping Licensed Applications Current Requires A Dedicated Effort
Companies should endeavor to keep licensed applications current where customization is not an
issue and where the business value justifies this effort. For example, most firms can make a case to
keep compliance-driven applications (e.g., payroll, benefits, and accounts payable) up to date as
standard operating procedure. Also, dynamic technology drivers may dictate the necessity to keep
applications current with vendor release schedules. For example, rapidly evolving mobile application
capabilities need to be updated more frequently to avoid compatibility risks.
As a strategy to make business application software more sustainable, clients should consider a
proactive updating strategy. Making a commitment to keeping applications perpetually up to date
presumes that there will be no debate about the business justification of each release, rather than
attempting to make a business case for upgrading each time. It avoids the cumulative impact of
skipping releases, where costs escalate and upgrades become more complicated with each skipped
release. Updating the applications more frequently, therefore, means that each individual upgrade,
patch, or enhancement package will be less disruptive and less expensive to apply. In order to
manage a proactive business application updating program:


June 18, 2013


17


■ Pay close attention to the frequency, timing, and quality of releases. Many software customers

elect to delay the adoption of new releases until other customers have done so — usually six to
12 months after the announced general availability release date. Delaying updates of complianceintensive products, however, may not be an option, given government-imposed compliance
deadlines. In any case, vendors usually isolate compliance patches from enhancement versions.

■ Institute a disciplined and repeatable maintenance process. This process should 1) evaluate
release timing and quality; 2) assess the business impacts of the new release; 3) rigorously
test the updates to avoid disruption of business execution; 4) migrate the enhancements to
production; and 5) enable business users to assimilate the changes. Alternatively, this process
may be outsourced under a managed services contract that includes upgrade costs. Managed
services contracts for off-the-shelf software, however, do not typically include this provision.

How To Manage SaaS Upgrades When You Don’t Control The Timing
In the case of SaaS version upgrades, which typically occur several times per year, the customer has
little or no control over the timing of the upgrade, but some control over the outcome. A consumer
electronics firm we spoke with said that, although Workday tells them that no IT support is
necessary to perform an upgrade, the firm has found that claim not to be true. Some SaaS upgrades
are delivered in an inactive state; the customer decides whether or not to activate the new features.
But other aspects of new releases, such as UI updates, are automatically visible to the end user.
As an example of the process required, consider salesforce.com’s release notes for its spring 2013
upgrade, which were 132 pages long.12 The notes covered eight separate products — an average of
16 pages per product. For each product, feature changes were characterized as either automatically
visible to users, automatically visible to administrators, requiring setup before becoming visible,
or requiring contact with salesforce to enable. While many of these new features may be simple
for users to understand and use, some may not — so your continuous improvement team must be
prepared to:

■ Review each “immediately available” change to determine if it requires any attention. If

the change is immediately made available to users, they will see it when the upgrade goes
live, so you need to understand whether it 1) is self-explanatory and requires no action; 2)
requires explanation for your organization’s users (e.g., to head off confusion and misuse before
it happens; or 3) will affect any of your organization’s processes and procedures (e.g., a new
quarterly forecasting feature may affect your current forecasting processes).

■ Develop guidance for each feature that needs it. For features that require explanation, your

team must develop and gain consensus with process owners on the guidance to give, as well as
deciding how to effectively communicate the guidance.


June 18, 2013


18


■ Change your processes and procedures as required or enabled. For each feature that does

(or can) affect processes and procedures, you must gain consensus with process owners and
stakeholders on how to adjust. Furthermore, if it is a change that will be immediately available to
users, you must have a rollout plan to ensure that your people are ready when the upgrade hits.

Upgrade policies, processes, quality, and consistency will vary from vendor to vendor; your
continuous improvement strategy must be prepared and have the staffing to march in time with all
of your vendors’ upgrade timelines.

R e c o m m e n d at i o n s

Build Continuous Improvement For Responsiveness And REsults
Each of the four categories of continuous improvement involves a different set of considerations and
requirements, but wrapped around them all is the need for an integrated focus on both today’s and
tomorrow’s business outcomes. Specifically:

■ Take a medium- to long-term view for investing in business empowerment. In many

cases, it’s faster and cheaper to have a technical person hard-code a business change than
it is to implement a new method for business empowerment. However, when the future
portends a series of 10 or 20 hard-coded changes, a bit of pain and slowness to market
today will likely pay back well. Prepare a graph to make this investment equation clearer for
stakeholders to see. If the current enhancement really does have a drop-dead date, negotiate
for funding to immediately backfill with a business empowerment approach once the hardcoded change is done.

■ Streamline governance so enhancements aren’t appreciably slowed. “Governance” is a

scary word because it has often been done poorly. Collaborative, agile governance is the
watchword for continuous improvement. The more that trusted experts are embedded in your
improvement teams, the more leeway teams can have and the lighter your governance can be.

■ Assume that off-the-shelf software must be kept up to date. Judging the business value

of updates, patches, and especially upgrades to off-the-shelf software can be a dicey
proposition. The biggest risk is that, by putting the decision off (an option you typically do
not have for SaaS), you are often making a default decision to not keep the software up to
date. This may seem OK, but eventually you are likely to get in a bind when a critical fix is
needed but can’t be applied because of the backlog of updates that were not applied.

To help make the business value judgments necessary within your continuous improvement strategy:


June 18, 2013


19


■ Connect continuous improvement with business architecture. If your organization has
a strong business architecture initiative, it can provide a view of high-priority business
outcomes for various areas of your business. It may also have solution road maps and
application assessments that can provide a perspective on the strategic value and likely
lifetime of an application that, in turn, can feed prioritization about investments. For
example, if you definitely plan to retire an application in the near term, it becomes
simultaneously 1) of lesser value to spend on architectural improvements to the affected
application and 2) of greater value to use SOA and other means to insulate other
applications from the affected application.

■ Evaluate how business effectiveness gets fractured across application silos. Whether silos

result from proliferation of SaaS solutions, mergers and acquisitions, or poorly managed
application development, it can hurt business outcomes when users must do swivel-chair
integration and process status falls between the cracks. Forrester’s digital business design vision
provides a foundation for carefully considering the tradeoffs between adapting your business
to silos and finding targeted ways to wisely adapt applications to your strategic business goals.13

■ Explicitly focus on business empowerment. It’s a win-win when you can improve

continuous improvement responsiveness and reduce costs by giving control to
businesspeople themselves. But be careful: For business empowerment to deliver its value,
it must enable business decisions and changes that are both important to businesspeople
and within their capabilities to perform effectively. Develop a specific focus within your
continuous improvement strategy on identifying and testing the possibilities.

■ Adopt a sustainable deployment model to avoid compounded obsolescence. Determine the

appropriate deployment model to enable your organization to continually refresh and improve
the quality and functionality of your application software. Increasingly, SaaS provides the
most sustainable model with its vendor-managed, continuous updating process. Where SaaS
is not an option, consider managed services and hosting arrangements where upgrades are
guaranteed and routinely applied and infrastructure is kept up-to-date by the services provider.

Endnotes
Also consider that, in some situations, the overall application solution may be comprised of a combination
of off-the-shelf application capabilities with custom-built elements, in which case it’s desirable to use the
same mechanisms — the same rules engine, the same BPM layer, etc. — to configure behavior across the
hybrid. Knowing that you want to do this will in turn shape your requirements for these configuration
capabilities in both the off-the-shelf application environment and the associated development tools (which
for a SaaS application would include its associated PaaS).

1


June 18, 2013


20


2

“New productivity platforms” is the name Forrester gave to a collection of application platforms employing
visual tools and very rapid delivery techniques. For a description of these products with examples, see the
November 1, 2012, “The New Productivity Platforms: Your Solution To The AD&D Crunch” report.

Historically, integration has centered on making it easier to live with application silos, but the real problem
is to build a coherent business, even though you may have siloed applications and technology. See the
November 8, 2012, “Digital Business Design Is The New Integration” report.

3

The old foundations of technology strategy — hot tech trends and business plans — have become
inadequate, resulting in technology silos and hard-wired solutions. In a new era of innovation and fluidity,
Forrester believes that business capabilities provide a new and better foundation for technology strategy.
See the September 23, 2010, “Establish Business Capabilities As The Foundation Of Your Technology
Strategy” report.
Business capability maps are central to laying a new and better foundation for technology strategy, leading
toward designing and building business capability implementations, rather than siloed applications. See
the December 17, 2010, “Business Capability Architecture: Use Business Outcomes To Drive Technology
Strategy” report.
We describe an approach to managing the people aspects of continuous improvement. See the September
26, 2102, “Drive Continuous Improvement With Strong Change Management And Employee Training”
report.

4

For a full discussion of this topic, see the January 21, 2011, “Empowering The “Business Developer” report.

5

The configuration tooling that business app vendors provide is evolving beyond parameterization
and coding to become flexible, graphical, and model-based, eliminating coding and making business
applications’ ease-of-change a differentiating capability. See the May 24, 2012, “Increase Business Flexibility
By Embracing Future Trends” report.

6

Forrester has documented cases of business experts managing business rules in various case studies. For
two examples, see the January 5, 2009, “Case Study: Hypo Real Estate Enables Credit Risk Professionals
With Business Rules” report and see the October 3, 2008, “Case Study: California Association Of Realtors
Innovates With Business Rules” report.

7

The mean percentage of 48.5% was across 1,679 respondents; the results were very similar for SMBs and
enterprises (49.0% versus 48.1%, respectively). Source: Forrsights Software Survey, Q4 2012.

8

Redeploying traditionally on-premises systems as SaaS, however, brings into play some architectural
differences from SaaS-native products, such as multitenancy and the mechanics of how the software is
updated. Forrester sometimes refers to this as “near-SaaS.” Near-SaaS is a hosted/subscription model with
dedicated tenancy for each customer.

9

TPS options are currently limited to Rimini Street (services for PeopleSoft, Siebel, J.D. Edwards, Oracle
E-Business Suite, Oracle database, SAP, and Hyperion) and Spinnaker Support (services for J.D. Edwards
and SAP).

10


June 18, 2013



21

Forrester’s vision for business applications is discussed in a report. Conceptual reference architecture is
provided in this document, which highlights advances in flexibility via visual modeling tools. See the May
20, 2012, “Increase Business Flexibility By Embracing Future Trends” report.

11

As of March 8, 2013.

12

Integration is a perennial challenge for application delivery professionals. Vintage, monolithic applications
are hard to deal with, and point solutions abound, including point solutions in the cloud. Traditional
enterprise application integration (EAI) technology helps, but its primary design focus is on technical
connections, not your business. Application delivery teams can deliver more business value by refocusing
integration strategy on the real goal: building a coherent business that can change quickly to achieve and
sustain excellent outcomes. Forrester’s vision for digital business design is an approach to integration that
centers first on sustainable business outcomes and agility, unifying across application silos rather than
merely making it easier to live with them. See the November 8, 2012, “Digital Business Design Is The New
Integration” report and see the November 8, 2012, “How To Implement Digital Business Design” report.

13


June 18, 2013

About Forrester
A global research and advisory firm, Forrester inspires leaders,
informs better decisions, and helps the world’s top companies turn
the complexity of change into business advantage. Our researchbased insight and objective advice enable IT professionals to
lead more successfully within IT and extend their impact beyond
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resources allow you to focus on important business issues —
margin, speed, growth — first, technology second.
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Forrester Focuses On
Application Development & Delivery Professionals
Responsible for leading the development and delivery of applications
that support your company’s business strategies, you also choose
technology and architecture while managing people, skills, practices,
and organization to maximize value. Forrester’s subject-matter expertise
and deep understanding of your role will help you create forward-thinking
strategies; weigh opportunity against risk; justify decisions; and optimize
your individual, team, and corporate performance.

«

Andrea Davies, client persona representing Application Development & Delivery Professionals

Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to
global leaders in business and technology. Forrester works with professionals in 13 key roles at major companies providing proprietary
research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 29 years, Forrester has been making
IT, marketing, and technology industry leaders successful every day. For more information, visit www.forrester.com. 87361

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