From Application Consolidation to a Commoditised Service Exposing the True Value of Architecture

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From Application Consolidation to a Commoditised
Service Exposing the True Value of Architecture

• Ian Race, Iain Mortimer
• Director, ICR Consulting, Enterprise Architect,
  Microsoft

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Context

• Most organisations are in the middle of a journey
  to contain their application estate
• The explosion of middle tier systems has at least
  been corralled and containment steps are in place
• Standardisation has been introduced with varying
  degrees of success and definition
• The Application inventory is documented
• The complexity problem is recognised

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The Architects Dilemma

• Architects have a really challenging job driving
  forward on many fronts whilst at the same time
  sorting out the problem areas
• Keeping systems running to support the business
• Being a good Cost Citizen and business man
• Introducing new systems and functions whilst
  maintaining SLAs
• Removing redundant or risky systems
• Clarifying Priorities
• Dealing with regulators
• Developing staff

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The Architects problem

• A common approach has been to look at duplication
  and drive for consolidation
• But the optimum path to consolidation is complex
  and usually not obvious
• How does an architect demonstrate that these
  issues are being tackled?
• How does an architect ensure that the right
  things are done?

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The Architectural Journey

• We architects believe that an Architecture
  helps you effectively manage your IT and helps
  you meet your Businesss objectives
• We know that where an organisation has managed to
  create a comprehensive Enterprise Model /
  architecture the following will become visible
• Duplicate applications and infrastructure
• Common component locations
• Key architecture components
• Low value components

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Premise

• But the PL benefits are not being realised of a
  concerted architectural approach
• Commoditising the utility components focuses
  resources on the key components that are
  delivering competitive advantage
• Simply rationalising applications and platforms
  misses this point and explains the failure of
  Architectural efforts
• A more root and branch revolution is required

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Workshop Objectives

• This is an Architects Conference so we will
  discuss at the Architecture level
• What does the Architecture view have to describe
  to help us address these issues?
• What kind and how complete an Architecture view
  do we need?
• An Application view?
• Service view front to back?
• A layer?
• A platform based view?
• Can we nail down parts of the architecture and
  why?

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Gratuitous picture of a complex structure
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Proper Architecture
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Architects try to develop an Enterprise Model

• Enterprise Models give us
• Common view of components
• End to end key business processes
• Common language and framework
• Will be used to enable
• A strategic view
• The correct allocation of resources
• Understanding gaps in capability and change
  portfolio

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To be successful critical questions need
answering

• What are the core capabilities of the business?
• How should an organisation share and re-use
  resources?
• What is essential that we own and run?
• Does the organisation invest optimally in assets
  and core capabilities?
• Lets unpack a bit .....

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Core capabilities

• The value chain model has informed much strategic
  thinking
• Configuration and core capabilities are different
  across each vertical
• Retailer
• Manufacturer
• Bank

Core capability competitive advantage, margin
driving But it is not all or nothing
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How should an organisation share and re-use
resources?

• Balance of cost and value
• Duplication verses differentiation
• Modes of sharing
• Bespoke
• Re-use
• Sharing
• But there are pros and cons

• Cost
• Control
• Standardisation
• Resource alignment
• Lead time to change
• Time to Market

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What is essential that we own and run?

• Continuum of delivery
• Run inside
• JVs
• Alliances
• Outsource

• Access to best in class
• Protecting Competitive advantage
• Cost / Pricing / Profit
• Control
• EoS
• Fixed/Variable gearing

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Investing Optimally in Assets and Competencies

• Business dominance is fundamentally about two
  things
• Having things which people want
• Being able to do things that people want
• Supply and Demand
• High supply - Low value
• Low supply High value

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Investing Optimally.
Assets
Competency
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Investing Optimally.
core
Assets
Non-core
Competency
Non-core
core
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Investing Optimally.
core
Best of Breed Invest Mould organisation around
these
Assets
Non-core
Competency
Non-core
core
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Investing Optimally.
core
Assets
Commodity / Utility Source externally
Non-core
Competency
Non-core
core
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Investing Optimally.
In-sourcing Partnerships
core
Assets
Non-core
Competency
Non-core
core
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Investing Optimally.
core
Assets
Alliances / ventures
Non-core
Competency
Non-core
core
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Investing Optimally.
In-sourcing Partnerships
core
Best of Breed Invest Mould organisation around
these
Assets
Alliances / ventures
Commodity / Utility Source externally
Non-core
Competency
Non-core
core
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Is this true ?
core
Assets
Non-core
Competency
Non-core
core
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Figuring out Assets and Competencies

• It is easy for people to work on assumptions when
  thinking about their core competencies and
  assets.
• Eg - Credit card Company - not a world class
  card system but a cracking neural network
• Y2K helped to flush out the hares
• Being able to authorise a card
• Paying the merchants
• A useful exercise is to ask the Finance
  department

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Driver analysis

Value
Operational
Customer Base
Nett Interest
Revenue
Fee Structure
Fees / Charges
Revenue / segment
Sales Marketing
Costs
Staff
Resource Utilisation
IT
Premises
Credit Risk
Capital costs
Capital
Operational Risk
RWA
Market Risk
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Getting to the technology drivers
Operational
Technology
Customer Base
Fee Structure
Revenue / segment
Sales Marketing
Staff
IT
Premises
Credit Risk
Operational Risk
Market Risk
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The value chain as a diagnostic
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Motion
Customer Facing Channel Partners

• Within the traditional bank, operations are
  captured in 5 areas
• Develop Product / Service
• Generate Demand
• Fulfill Demand
• Plan Manage the Enterprise
• Collaboration
• Outside of the bank, external entities are shown
• Customers and Suppliers/Partners
• IT and other Service Providers
• Channel Partners
• Regulatory Institutions

BusinessPartners
BusinessPartners
Business
Customers
1. Develop Product / Service
2. Generate Demand
5. Collaboration
3. Fulfill Demand
4. Plan Manage Business
IT Providers
Regulatory Institutions



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Motion
Customer Facing Channel Partners
Customers
Suppliers
Business
2. Generate Demand
1. Develop Product / Service
5. Collaboration
3. Fulfill Demand
4. Plan Manage Business
3.1. Provide Service
3.2. Advanced Planning
3.3. Procurement
3.3.1 Sourcing and Supplier Contract Management
3.3.2 Purchasing
Level 4 3. Fulfill Demand 3.3 Procurement 3.3.2
Purchasing - Request Resources - Create
Purchase Requisitions
Request Resources
Create Purchase Requisitions
3.4. Produce Product
3.3.3 Receiving of Indirect / Capital Goods and
Services
3.5. Logistics
Logistics Providers
Financial Service Providers
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Putting it together
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Address the problem

• What drives the value
• What are your core competencies and assets?
• Swamps and Alligators, Where do you begin? Begin
  with where you want to end up!
• Document the no brainers and the no regrets
• Carry out at least a rough cost modelling

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Architect enough

• Need to have the key parts architected to such a
  level that decisions can be made
• The Architecture needs to have a clear
  understanding of the non-functional requirements
  to deliver the supported business services
• Good enough and cost effective
• Can you get to a cost per seat per function?
• What kills the business?
• What might change rapidly?

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Architectural Strategy Drive towards
standardisation
Huge diversity needing rationalisation. Identify
the key nn
IIS
CICS
Websphere
UDB
SQL
DB2
AIX
MVS
Win
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Architecture is a paradox

• Tradition focus has been on amalgamation and
  taking the big picture
• Reaping the benefits at the application level
  requires disassembly of systems

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Technology Choices
In-sourcing Partnerships
core
Best of Breed Invest Mould organisation around
these
Marketing analytics
Unique Product Features
Assets
Alliances / ventures
Commodity / Utility Source externally
Telephony
White labelling
Non-core
Competency
Non-core
core
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Plan to win and build the business case

• Plan on 3 levels short, medium and long term
• Long term is the direction of change, the
  strategy
• Medium and long term goals are aligned to the
  Business plan and will change with the Business
  priorities and as technology evolves
• Short term resolves immediate issues but starts
  to take you in the right direction

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Standard Process and Tools Facilitates
Interoperability

• The use of standard approach, processes and
  toolsets will assist with collaboration.
• Prince 2 and MSP for Projects
• SOA or similar for Architecture, with tools like
  EA or
• Rational Toolset and Visual Studio .Net
• Utilise Patterns where possible and begin to
  adopt DSLs, SML and SDM
• ITIL and MOF for Operations and Service Level
  Management
• Standard management suites and tools

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Conclusions

• An Architecture will give you a useful tool to
  help manage your environment
• The architecture must focus on the core assets of
  the company and its core capabilities
• This will inform and be informed by your
  business priorities enabling you to make
  effective decisions on where you should be and
  how to get there.
• An Architecture will assist in explaining to your
  stakeholders where the IT budget is being spent
  and at where value
• THIS IS A CONVERSATION enjoy the debate.

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• Thank you