Gartner caused quite a stir at the Gartner Symposium event in Orlando when they announced that companies are burdened by $500 billion of “IT debt”. This debt represents the accumulated backlog of development activities that haven’t been accomplished in the past 10 years. Increased business pressure and declining IT resources have combined to make it nearly impossible for IT to keep up with the pace of market changes.
That means that new market opportunities can’t be addressed, government regulation can’t be quickly complied with, and companies quickly lose their competitive edge. What’s worse is that it’s not getting better. Demands on IT are snowballing and the cost cutting that has taken place has meant even less capacity. That’s why Gartner piled it on by saying that the backlog will double to $1 trillion by 2015.
To get back in line with what the business demands, IT has to tackle this debt. But it won’t be done by adding new resources; the current economic climate just doesn’t permit it. So, what do industry leaders do? Micro Focus looks at each of the ten best practices for freeing up resources to focus on business priorities.
The Top Ten Best Practices for Cutting Your IT Debt are:
- Top-down application portfolio evaluation: There are quick wins to be had
- Senior sponsorship is essential: This is not an IT issue
- Identify your unique intellectual property: The truth is in there!
- Move to the right platform for your business… not IT
- Preserve and extend the competitive differentiation in your core applications
- Modernize your tooling: Maximize productivity… and relevance
- Build Quality Throughout the Lifecycle: It’s not just about testing
- Collaborate! Stakeholder involvement is critical
- Manage your changes: It’s not just about source code
- An application is for life… Not just for development
We’ll be investigating each of these important best practices in turn, starting with the quick wins to be had from top-down application portfolio evaluation.
Top-down application portfolio evaluation
It’s practically impossible to differentiate between business processes and the applications that automate them, your business and its application portfolio have become so closely intertwined. It is imperative that IT managers maintain a firm control over the applications, but rising complexity in the application portfolio threatens to undermine both the systems and your control of them. They are expensive, inflexible, and unstable, and that means they don’t provide the business value they should.
Application portfolios contain complex relationships between hardware, software, people, and processes that have been adapted over many years. For instance, a Java-based order management system may relay data to a call center’s COBOL application, which relies in turn on a PL/I order fulfillment system on the mainframe.
Over time these systems only grow more complex. New requirements arrive, markets change, business needs emerge, hardware is modified, new programming languages emerge, and architectural standards erode. Portfolios become overloaded with duplicate, redundant, undocumented, and fragile systems that don’t support the business. This rising complexity has significantly negative impacts on the IT organization:
- Development costs rise as previously simple changes require senior development effort
- Development risks increase as changes can disrupt the portfolio in unforeseen ways
- Infrastructure costs rise as operations cannot shut off the hardware that supports inefficient or redundant applications
- Business users can’t get new capabilities because development is busy just trying to keep the lights on
Even more pressing is that the applications are no longer supporting the business. Resources aren’t available to adapt these systems to support new requirements. That must change.
Naturally, IT managers want to focus resources on producing new business services, and not on maintaining existing ones, but the sheer complexity of their portfolio means resources can’t be spared. Even if they could, it’s hard to know where to start. And so, the IT debt continues to accumulate. It’s also no surprise that Application Overhaul activities are delayed. It’s tough to decide where to focus effort. So, where do we go from here? Let’s get some “quick wins” under our belts so we can reinvest in modernization activities that continue to boost flexibility and cut costs.
Application Portfolio Management (APM) offers a path. It is a best practice that helps users intelligently prioritize development and modernization initiatives. APM works by measuring key performance indicators about your portfolio. This data shows IT management where they should focus effort to get the most return for the business. Collecting data from top-level surveys of key stakeholders can provide this quick win. Understanding the value, cost, and risk of applications via browser-based surveys helps you quickly spot unneeded and costly applications. Rationalization of unnecessary business processes and applications can quickly free up significant budget. You can progressively enhance insight into your applications as you focus modernization initiatives on key applications.
But what metrics should we collect? First, take a step back and start with the goals that you want to achieve for IT and business. What metrics you’ll need will come naturally when you take a goal / question / metric approach to understanding the portfolio. These goals come from interplay between IT and business stakeholders in the organization and will likely tie to the most pressing pains you feel now.
Eliminate business processes that are not needed:
This goal is straightforward. There are significant numbers of applications that have been developed for business goals that are no longer relevant. Determining who “owns” a business process and gauging its current need helps you identify and correct waste.
Choose IT projects that are supported by business requirements:
This goal looks at a strategic planning approach and how to ensure that new activities are weighted by their relevance to the business.
Shift development focus from maintenance to innovation:
This goal aims to reduce the cost of supporting existing applications – for instance, through the removal of redundant systems.
Cut the risk of business process failure or performance loss:
This goal looks at cutting the complexity of a given set of applications. This is often achieved through architectural improvements and refactoring.
Lower the cost of completing a business requirement:
This goal aims to reduce the effort needed to move a work item through development. This is often addressed by enabling lower cost resources to work on a change.
Lower the cost of IT infrastructure:
This goal looks at ways to cut ongoing costs for hardware and software support costs. In addition to removing redundancy, this goal may aim to move applications to better supported and more economical architectures.
Naturally, your own goals will depend on the specifics of your organization. Collaboration across these various facets of your organization will help to ensure that goal determination is synchronized and sufficiently complete.
We must also consider how the next ten years won’t be any better unless we acknowledge that business, and not IT, is in the driving seat and is ultimately responsible for pushing through the changes we need. Senior sponsorship is going to play a major role, working in harmony with IT to impose the tough love needed for the years ahead.
Gartner analyst, Andy Kyte, defines a first law of Application Overhaul as having ’exactly the right number of applications today… to run the business the way you run it today.’ There are two ways to consider this: any change made to the company’s applications will impact the business, and business change of any significance impacts IT. After all, that’s why we care so much about IT Debt in the first place. While the observations arising from Andy Kyte’s statement may not appear particularly ground-breaking, the implications are actually far-reaching.
Previously, we highlighted the quick wins that application portfolio management discipline can deliver. And it’s true they are there to be had, but only if an appropriate level of executive sponsorship is available to make the hard decisions. The balancing act between innovation, cost-cutting and dealing with IT debt can only be resolved through what Kyte describes as ‘demand-side leadership’.
Significant changes to the application portfolio will free companies of many of their inefficiencies and promote business growth. This ‘Holy Grail’ fuels the constant quest for innovation, but it can also promote dangerous behaviour, such as sacrificing the differentiation within custom-built applications to third-party packaged solutions.
There is often a belief that only a traumatic change in IT will make business process owners take notice and drive through the efficiencies required for growth and cost improvement. For others, changes to the application portfolio open the door to innovation in a more piecemeal manner. While they satisfy legitimate needs for change, these changes often lack clear thought for the existing assets that still need attention and will continue to soak up resources until the day they are retired from duty.
So, instead of seizing the chance for portfolio evaluation and raise questions about the need for change elsewhere in the business, IT tends to focus on satisfying the immediate need. The demand-side stakeholders remain ignorant of the growing burden they represent.
Only through properly engaged senior sponsorship are reviews possible, business processes streamlined, and applications turned off – or put to use beyond the silos in which they have previously been confined. Executive support is essential to proving an effective map to guide IT towards an understanding of where business alignment has been achieved and where value is being delivered.
Interestingly, Gartner asserts that by 2015 new revenue generated each year by IT will determine the annual compensation of most new Global 2000 CIOs. This particular innovation may be the catalyst that drives organisations to achieve true business alignment, and engages senior sponsorship in bringing effective portfolio management to bear in companies whose greatest source of innovation lies within their existing assets. We will be exploring this theme further in the next part of this discussion.
Identify your unique intellectual property
Let’s explore the importance of effective portfolio management within companies whose greatest source of innovation lies within their existing assets.
There are two main considerations to explore in this debate: what are the applications that matter most to your business, and what business components or services offer most business value. While sounding similar, they are important considerations in their own right.
What are the applications that matter to your business?
Gain insight into your real business differentiators. These applications have been developed, usually over time, to perform functions and operations that are unique to you. In this way they give a good indication of your unique way of working.
A military engine support management tool developed by Avio Group, a world leader in the aerospace sector, is a good example of this in action. Following the application migration process, this was the last functioning program left on the mainframe – business critical software designed for military engine maintenance, an area in which Avio Group is highly proficient and had fine-tuned over many years. The company was faced with a dilemma: the application was perfect for its specific job and they didn’t want to change it. However, it would not be possible to replace it with a commercial package and IT management could not justify the maintenance of a mainframe for just one program. The company realized the value to the entire business of this single application and took the decision to re-host it.
It’s a bit like deciding what possessions you’d rescue from your burning house — understanding the applications that you would take with you when you expand or move business reminds you how important they are. The ones you wouldn’t think of leaving behind are the ones that set you apart from your competition.
Looking at what cannot be spared gives you better insight into what adds real value to your business, and therefore needs preserving and investing in. This means that you protect and improve important business processes and ensure they continue to add unique value to the business.
What business components or services offer business value?
This aspect of identifying your IP is much the same as the first, but operating at another level down. Stepping inside your applications will reveal a whole heap of code doing things that were once thought really important – but time moves on and not necessarily all of them return anything like the value they used to. Just as at the higher, portfolio level there is value in some of it, and elsewhere there are opportunities to remove other parts. Some code simply no longer gets called…at anytime, by anything. It makes sense to get rid of it. Some code may get called, but is doing nothing special – again, question its value and remove it if it isn’t earning its keep. However, at the other end of the business value spectrum, some code not only gets called, but is at the heart of what makes your business successful. It’s important not just to identify this code, but to cherish it and protect it from slash ‘n’ burn rewrite or package replacement initiatives, or from the ravages of misinformed spaghetti coding.
When you can identify the unique intellectual property that lies beneath your business applications, you can develop and extend the value it contains. The truth really is in there.
Move to the right platform for your business… not IT
Too many times we have seen applications, or even languages, discarded for the wrong reasons, with applications often eliminated along with the platform. ‘Platform’ here can mean the physical hardware that your business applications run on, the operating environment, or the layers of middleware or deployment infrastructure that have been laid down to support ‘the business’. The thing is, it’s seldom been ‘the business’ that decides any of this stuff.
However, these days the business seems increasingly to be making platform decisions by default rather than through any centralized, corporate effort as user-centric development and technology sourcing increases. This is driven by technology savvy individuals bringing Apple technology into the workplace, for example, and demanding mobile access to just about everything. Where possible, IT must support this.
In addition to demands from within the business the sun-downing of hardware environment by vendors adds to the pressure on IT to change the infrastructure to more modern, better-supported systems. This is, of course, completely understandable but can expose the business to the problems of discarding applications along with the old platforms – as we mentioned previously. The applications running on those platforms are suddenly seen as unwanted citizens holding up a much-needed renovation project. The same applies to other hardware platforms, like mainframes, which are still supported by the vendor but are no longer seen as strategic by IT. Suddenly everyone is looking around for ways to replace the applications. Of course, it’s reasonable to evaluate replacements but the platform is one thing, the applications are the lifeblood of the business processes. They are not one and the same and should not be viewed as such.
The real value comes from selecting the platform that best supports the needs of the business. This can involve migrating an application without changing it at all, so that it looks exactly the same on Monday as it did on Friday, when the mainframe was switched off and the new platform running the application went live. In this case, ‘business’ benefits from performance improvements and the advantages of new, more modern, platforms than rather than simply continuing with the existing platform and its associated costs and limitations. Modernizing platforms, importantly, gives much greater scope for the kind of on-demand availability and consumption-based pricing offered by the cloud…a platform direction that it’s anticipated all business applications will be heading if not now, then in the very near future.
See how Micro Focus can help you and how we can help you cut your IT Debt, Drive Your Digital Business, and Simplify Your IT Transformation.