Building Business Capabilities and Improving the Application Landscape
1. Balance Decision Making: Top-down for business capabilities; bottom-up effective landscape
2. 3 Categories are used for building the IT budget: Assign metrics that drive prioritization based on business outcomes
3. New projects should balance new capability with business risk
4. Improve landscape: accelerate time to market
5. Improve landscape: budget for high availability of critical applications and improve runtime performance
6. Improve Landscape: Strive to reduce business risks caused by application vulnerabilities
7. Improve Landscape: Prepare for dynamic staffing models
8. Improve landscape: Reduce applications support cost
9. Break Fix
2. 2
The application
landscape
drives the value
that business
partners
place on IT
ADM accounts for 34% of IT
budgets. Most organizations
tend to assume that the cost of
ADM can only grow over time
due to rising labor costs and the
increasing complexity and
number of applications.
Claudio Da Rold, Gartner
Strategic and business savvy thinking
is required from IT leadership.
Decisions regarding application
landscape have a long-term impact.
While SaaS solutions are getting more
press, on-prem and cloud-based
applications still dominate the
landscape.
Customer facing applications
continue to increase
Application landscape is becoming
complex overtime
Rapid business model evolution is putting
pressure on IT to quickly deliver new
capabilities while maintaining high
availability.
Software, IT consulting, and
system integration costs are the
second largest IT spend category,
and is expected to grow by 7.1%
in 2015 and 9.2% in 2016;
making it clear that on-premise
software development is still
much needed.
Forrester, The Global Tech Market
Outlook For 2015 To 2016
34%
ADM
IT Budget
3. 3
Application
budgeting
requires
collaboration
There is an
opportunity for IT
to demonstrate a
strategic and
business focus
Business partners care about two aspects of IT
budgets:
How much will it cost?
What capabilities will be delivered?
Business partners are heavily engaged in the
decisions regarding development of new applications.
IT leadership must continue to maintain and improve
the existing application landscape.
IT generally communicates
improvements to these existing
applications in technology terms
which the business does not
relate to.
Refocus discussion on all applications (new and
existing) to delivering business outcomes.
Change the landscape conversation to
correspond to company and business priorities .
Connect IT metrics for the application landscape
to these business priorities.
Drive conversations and decisions against the
application landscape based on business
.priorities
Leverage IT metrics and analytics
for planning & budgeting
Current Situation Change the Conversation
4. 4
Multiple parties
are involved in
application
budget
discussions
Conversations are held within IT and business teams as well as across
the organizations. Decisions and recommendations are made in a variety
of ways within the organization causing confusion and lack of clarity.
A well defined framework is required to align the needs with IT budget decisions.
IT BUSINESS
PARTNERS
IT Teams
Functional Experts
IT Leadership
CIO
Functional Heads
Key Stakeholders
Business
Leaders
C-Suite
5. 5
Establish the strategic
business priorities of the
organization.
Determine focus for the
development of new
capabilities.
Leveraging metrics like “Total
Quality Index” and “Lines of
Code or Function Points” –
prioritize improvements against
the current application
landscape.
1 Balance Decision Making
Top-down for business capabilities
Bottom-up effective landscape
Larger sections represent larger
applications while color indicates the
applications Total Quality Index score
6. 6
Prioritize improvements based on
the business needs
Agree on the corresponding IT
metrics that should be improved
Assess development effort for
those metrics
Use historic data
Leverage IT metrics such as
function points, technical size and
total quality to estimate needs
Large projects
(> $200-500K) -- ROI
Enhancements (small projects) --
Agree on total that can be spent
for each portfolio. Use a
checkbook concept
IT Landscape
Improvements
New
Capabilities
Break fix
(keeping the lights on)
Assign metrics that drive
prioritization based on
business outcomes
Gain agreement on what percentage of the IT budget
should be allocated to each of these categories.
3 Categories
are used for
building the IT
budget
2
7. Business and IT need to agree on
allocation of new project between
developing new capabilities and how
much risk the business is willing to
introduce into the applications
landscape.
Establish metrics that will define
success. Then build the IT budget,
scope and timelines that take into
account all metrics. These metrics
include:
IT needs to provide assessment of
current risk already in the
landscape. This should include
metrics such as production risk,
adaptability risk and software
complexity.
Return on Investment
Structural quality metrics
Leverage internal metrics or use
benchmarks from external
sources such as CAST
Risk assessment of portfolio
through rapid software risk analysis
and business survey.
New Projects should balance
3 new capabilitywith business risk
7
8. 4
Time to market is becoming one of the
most important needs of business.
Digital Transformation is making it a
table stake.
Leveraging IT metrics like
Changeability and Technical Debt as
indicators of these factors will improve
Time to Market.
Identify the applications in the
landscape that will be modified in next
3-5 years to support business
priorities .
Dedicate a pre-defined portion of the
budget to improve Changeability and
Technical Debt of these applications.
Leveraging the IT metrics, monitor
progress over time.
Two factors impacting time to market
are:
Ability to add new features quickly.
Addressing existing defects or
issues in the code
8
-$18.8m
TECHNICAL DEBT
Since March 6, 2013
2.91
1 2 3 4
CHANGEABILITY
Improve
Landscape:
Accelerate Time
to Market
BUILD
BUDGET
SELECT
APPLICATIONS
IDENTIFY
DRIVERS
ESTABLISH
BUSINESS
NEED
9. 5
9
Application availability has direct
impact on revenue.
Significant push in Digital
Transformation is around customer
facing applications – now application
availability impacts brand reputation.
Factors that impact availability are
efficiency bottlenecks, scalability
issues, and software engineering
flaws.
At times, IT loses its right to be at the
table as a strategic partner if it
cannot deliver a minimal level of
availability in business operations.
Identify the applications that sit in the
ecosystem for major initiatives for
the next 3-5 years and/or have
availability and performance issues.
Build budgets to improve the
robustness and efficiency of these
applications.
3.67
1 2 3 4
ROBUSTNESS
1.81
1 2 3 4
EFFICIENCY
Improve Landscape
Budget for high availability of critical applications
and to improve runtime performance
BUILD
BUDGET
SELECT
APPLICATIONS
IDENTIFY
DRIVERS
ESTABLISH
BUSINESS NEED
10. 6
BUILD
BUDGET
SELECT
APPLICATIONS
IDENTIFY
DRIVERS
ESTABLISH
BUSINESS NEED
Unexpected disruption to business can
significantly decrease profitability. IT
should proactively address the risk of
disruption.
Two major factors of business risk are
Security Breach and Application
Operational Failure.
Security assessments needs to focus
on the application’s architecture,
design and code.
Software engineering
flaws introduce risk
of failure.
Two IT metrics for
identifying applications
with this risk are
Security &Critical
Violations.
Identify applications that have low
efficiency and high critical violations.
Select applications whose security
score is below the acceptable
threshold.
Build budgets to improve security
score and that decrease critical
violation of those applications.
Monitor how critical violations are
being removed.
10
2.84
1 2 3 4
SECURITY TOP 5 RISKIEST APPLICATIONS
By Efficiency Score
Applications
Financial
Dream Team
BIO
Firmware
Big Ben
2.35
1.79
2.02
3.03
1.96
839
228
74
65
61
Efficiency Critical Violations
CRITICAL VIOLATIONS
Since March 6, 2013
Improve Landscape
Strive to reduce business risks
caused by application vulnerabilities
11. 7
In the rapidly changing business
landscape, IT needs to be more
effective and nimble in its staffing.
Effectiveness can include:
on-boarding new staff, cross training
teams and enabling different
sourcing models.
Application metrics that can be used
for improving the effectiveness are:
Transferability
Application team productivity in
terms of technical size or
functional size support by FTE
Use these metrics to align budget to
applications that require staffing
variability.
BUILD
BUDGET
SELECT
APPLICATIONS
IDENTIFY
DRIVERS
ESTABLISH
BUSINESS NEED
11
Improve Landscape
Prepare for dynamic staffing models
3.24
1 2 3 4
TRANSFERABILITY
45,892
FUNCTIONAL SIZE
OMG-Compliant Automated FPs
9.6m
TECHNICAL SIZE
Lines of Code
12. 8
The costs to maintain applications
are rising annually
Major drivers of applications support
costs are:
Performance and availability of the
application
Manual intervention or support
Monitoring to ensure batch jobs are
running and associated interventions
Application issues cause additional
work for IT teams increasing cost and
distracting from new development
Leveraging IT metrics like Critical
Violations as a leading indicator will
improve application support costs
Identify applications with high critical
violations and align budget to
improve.
Monitor support cost and critical
violations to assess the impact of
investment
BUILD
BUDGET
SELECT
APPLICATIONS
ESTABLISH
BUSINESS NEED
IDENTIFY
DRIVERS
12
CRITICAL VIOLATIONS
9,793
CRITICAL VIOLATIONS
Since March 6, 2013
Improve Landscape
Reduce applications support cost
13. 9
13
Break Fix
or keeping the lights on
Traditional approach for developing
break fix budget is based on
historical data. Adjustments are
then made based on factors that
recently impacted the application
landscape such as deployment of
new applications or release of major
enhancements.
The break-fix budgets should also
consider applications metrics such as:
Technical size
Functional size
Total Quality Index
As these metrics are improved, the
break fix budgets can be decreased
in more systematic way.
For initial budget use both historic
data and these metrics for
establishing a baseline.
45,892
FUNCTIONAL SIZE
OMG-Compliant Automated FPs
9.6m
TECHNICAL SIZE
Lines of Code
14. Demand for IT enabled capabilities is increasing
and at the same time there is an expectation that IT
becomes more of a strategic business partner.
Budgeting to improve the application landscape
sets the tone for how technology leadership is
partnering with the rest of the organization and its
perceived value to the company.
The budget process should be looked upon as an
opportunity by the technology organization to
demonstrate how they are becoming a strategic
partner in the era of digital transformation.
The easy part is around defining what new
capabilities needs to be built. The hard part is
getting an agreement on appropriate investments
for improving the application landscape which will
ensure that the company is positioned for long
term growth.
In this document, we focused on helping our
readers by presenting a framework on how to
assess the needs for application landscape
improvements. Those needs have to be assessed
from the business imperatives perspective such as
time to market and then tied to IT metrics.
This will provide a structured way for collaboration
on budgeting between technology teams and
business partners while the IT metrics can be for
internal planning, monitoring, reporting, prioritizing
and communication.
14
Summary
15. Saad Ayub is a senior information
technology executive who has led IT
organizations and provided technology
consultation within the financial,
telecom, media, education, publishing
and healthcare industries. His passion
is to leverage emerging technology and
transform IT/business organizations
that will result in a significant impact
on business results. He has driven
various digital transformations and
formulated new business models.
Saad has a wide range of experience
from technology leader to
management consulting and applied
research. Most recently, Saad was
SVP, Chief Information Officer,
Scholastic Inc. Prior to Scholastic, he
worked as a divisional CIO at The
Hartford and Aetna. During his tenure
at McKinsey & Company, he worked
with clients on technology strategy and
transformation of IT organizations. He
has worked as a research scientist in
the field of Artificial Intelligence at GE
Corporate Research & Development
and built consumer facing software
products at GTE Labs.
Saad has been a speaker on a number
of IT leadership topics at various
conferences. He has published
numerous papers in the field of
Artificial Intelligence. Saad has been
named one of the Premier 100 IT
Leaders by Computerworld magazine.
He has a BSc in Computer Engineering
from METU, Ankara, Turkey, a PhD in
Computer Science and an MBA from
RPI, Troy, NY.
Saad Ayub
15
About the Author
16. About
CAST
CAST is a pioneer and world leader in Software Analysis and Measurement,
with unique technology resulting from more than $120 million in R&D
investment. CAST provides IT and business executives with precise
analytics and automated software measurement to transform application
development into a management discipline. More than 650 companies
across all industry sectors and geographies rely on CAST to prevent
business disruption while reducing hard IT costs. CAST is an integral part
of software delivery and maintenance at the world’s leading IT service
providers such as IBM and Capgemini.
Founded in 1990, CAST is listed in NYSE-Euronext (Euronext: CAS) and
services IT intensive enterprises worldwide with a network of offices in
North America, Europe, and India.
www.castsoftware.com
contact@castsoftware.com
16