Rationalizing an Enterprise IT Architecture


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Rationalizing an Enterprise IT Architecture presentation, as delivered by Ken Naylor at OTN Architect Day in Redwood Shores, CA, 7/22/09.

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Rationalizing an Enterprise IT Architecture

  1. 1. <Insert Picture Here> Rationalizing an Enterprise IT Architecture Ken Naylor Insight Program Director – North American Technology Organization
  2. 2. Businesses Challenges PACE OF BUSINESS INNOVATION Increasing expectations Companies are under from customers and pressure to bring partners to provide products and services answers sooner to market faster GLOBALIZATION REDUCE COSTS Customers, supply chain, Relentless pressures and competition have all to drive additional become global efficiencies…do more with less
  3. 3. IT Challenges IT Environment History Resulting in • Evolved through corporate, • Organizational and Information organizational and technology silos changes • Complex IT environment, • Mergers & Acquisitions multiple skill sets, costly to • Adapted to new business operate processes • Inflexible IT infrastructure, • Adhere to layers of regulatory difficult (and risky) to modify requirements • Redundant application systems • Integrate ‘best of breed’ and business processes applications • Multiple versions of business • Account for LOB IT ‘initiatives’ data
  4. 4. OK, Who Made This Mess? Ellison’s Law “The value of information increases exponentially as fragmentation is reduced.”
  5. 5. Reinvent IT Economics The architect’s dilemma Strategic Savings Investment Annual Strategic IT Spend Investment Infrastructure IT Spending and Demand Survey 80% Maintenance Infrastructure 20% New Projects
  6. 6. IT Spend for World-Class Performers is Comparable to Their Peers… …But, they spend it differently
  7. 7. World-Class Performers Reduce Complexity Characteristics How Do They Do It? • They spend 18% less on IT • Better IT Vendor Management • They require 36% fewer IT workers • 5% fewer hardware vendors • They need 29% fewer apps • 29% less contractor services • 65% fewer software suppliers • They finish 91% of all projects to spec, on time and on budget • Standardized best practices and • 100% have their top IT exec on the good architecture senior management committee • Simplification and standardization • Higher levels of process discipline • Improved overall alignment with business objectives • Eliminate Information Silo’s • Intelligent Outsourcing • Empowered change agent
  8. 8. Oracle Global Transformation Phase One (1998-2003): Operational Excellence ERP Goal: Save $1 Billion Per Year Standardization & Enterprise Performance IT Consolidation Management World Class Fusion Middleware Performance Business Strategy: 1. Simplify information systems Governance, 2. Standardize data, systems, and Risk and business processes Compliance 3. Automate processes 4. Move to shared service 8
  9. 9. Oracle Rationalized IT Portfolio Old State Current State 40 Data Centers 1 Global IT & Governance Model Business 2300+ Staff 2 Data Centers + 1600 Staff Architecture Few standard business Standardized core business processes processes 63 Financial databases 1 Financial single global instance Information Architecture 60 IT Support databases 1 IT Support single global instance 40 Education registration 1 Education registration Technical Architecture Technical Architecture systems system App./Services Architecture 27 IT Support applications 1 IT Support application <100 applications – standardized on >1000 applications E-Business Suite 97 Email servers on 1 cluster of 2 Email servers and 120 databases 4 databases Infrastructure 501 Education servers 296 Education servers Architecture 32 IT Support servers, 600 2 IT Support servers, 30 test test servers servers Copyright ©2009 Oracle Corporation. All rights reserved. 9
  10. 10. The Transformation Payoff for Oracle The Ability to Scale Without Increasing Costs +14 $20 acquisitions 9% $18 G&A as % of revenue +17 8% $16 acquisitions 7% $14 +4 acquisitions 6% $12 Percentage 5% Billions $10 4% $8 $6 3% $4 2% $2 Revenue in Billions 1% $0 0% 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 Revenue G&A Copyright ©2008 Oracle Corporation. All rights reserved. 10
  11. 11. The Role of the Enterprise Architect • Practically speaking… - You’re not likely to achieve meaningful levels of IT Rationalization without Enterprise Architecture - You’re not likely to develop an effective Enterprise Architecture without employing IT Rationalization practices Vehicle Domain Model , BI Analytics, Sessions, etc Web Site Oracle Weblogic Application Server Data Grid & Caching Layer Oracle Coherence Grid VDM, BI Analytics , etc Events & Messages Business Processes SOA – Oracle Enterprise Service Bus (ESB) web services SOA – BPEL Process Manager business events Real BI Analytics Time BI Applications Oracle BI Applications (Finance, HR, etc.) Operational & Existing E2.0 Proactive Events Decision Support Databases JDBC / ODBC / Web Services Confluence Wiki, Oracle Portal SOA – Business Activity Monitoring (BAM) (Media and D/W ) Dashboards & Enterprise BI (Enterprise Business Model, Caching, BI Web Site Engine ) Reporting Search (pre-built & ad-hoc) Consolidated Oracle Enterprise Search Oracle Business intelligence User Interface Batch EE (Portal, Community, Files Collaboration ) Media Microstrategy & Ad-Hoc Tools (e.g., SQL Oracle WebCenter ETL Data Warehouse Navigator Informatica Powermart Financials Statistical Analysis Oracle Database EE (10g & 11g) RAC, RAT, OLAP, Partitioning , Advanced & Data Mining Compression SAS SAS
  12. 12. Information Technology Rationalization Guiding Principles • Driven by Business Strategy and value-based priorities • Standardizes & Simplifies the technical architecture • Broad perspective for enterprise solutioning efforts • Reuses best practice Business Models, Process Models and Reference Architectures from industry and commercial vendors • Initially focused on speed-of-delivery for high level guidance • Matures iteratively & evolutionary for breadth & depth • Can be enforced Copyright ©2009 Oracle Corporation. All rights reserved. 12
  13. 13. IT Rationalization Process 1 Identify the Establishes the vision for business and Business Strategy information technology. Establish Enterprise Involves the right mix of people for success. 2 Architecture Program Establishes objectives, “future state” and roadmap. 3 Define “Future State” Provides prescriptive guidance, process and Architecture standards for Business and Information Technology. 4 Define Rationalization Documents current state and path to future state. Roadmap Establish EA Promotes adherence to EA guidance and plans 5 Governance while architecting business-driven, enterprise solutions. Copyright ©2009 Oracle Corporation. All rights reserved. 13
  14. 14. Business Goals 1 Identify the Business Strategy Reduce Costs Establish Enterprise 2 Architecture Program Faster to Market 3 Define “Future State” Architecture Innovate 4 Define Rationalization Roadmap Globalize Establish EA 5 Governance Copyright ©2009 Oracle Corporation. All rights reserved. 14
  15. 15. TASKS • Establish goals, leadership and resources 1 Identify the • Define scope and the next iteration of work Business Strategy product • Gain Executive sponsorship and support Establish Enterprise • Conduct Stakeholder analysis 2 Architecture Program • Establish plan for an EA Governance Board • Develop a communication plan 3 Define “Future State” PEOPLE Architecture • Executive Sponsors • Business Stakeholders Define Rationalization • Chief Enterprise Architect 4 Roadmap • Program Manager • Business Architects & Industry Experts • Information Analysts Establish EA 5 • Solution Architects Governance • Strategic Vendors Copyright ©2009 Oracle Corporation. All rights reserved. 15
  16. 16. How do you… 1 Identify the • Stay current with technology and Business Strategy applications, • Implementing best practice business Establish Enterprise models, 2 Architecture Program • Yet be able to integrate these business processes • To improve business visibility, agility 3 Define “Future State” and efficiency Architecture 4 Define Rationalization Roadmap Establish EA 5 Governance Copyright ©2009 Oracle Corporation. All rights reserved. 16
  17. 17. Defining “Future State” Architecture Business Strategy EA Inputs EA Inputs Business Industry Architectural Requirements Best Practices Principles & Objectives & Models EA/Solutioning Process & Guidance Business Architecture Business Process & GRC Models EA Artifacts EA Artifacts Application Architecture Capability & Service EA Views Descriptions Information Architecture Data/Info Objects & Models Technology Standards Technical Architecture & Reference Models Copyright ©2009 Oracle Corporation. All rights reserved. 17
  18. 18. Business Architecture Decomposed Business Architecture Order to Cash QuickTime™ and a decompressor are needed to see this picture. Procure to Pay QuickTime™ and a decompressor are needed to see this picture. QuickTime™ and a decompressor are needed to see this picture. Hire to Exit … Service & Support Industry Specific & Custom Copyright ©2009 Oracle Corporation. All rights reserved. 18
  19. 19. Applications Architecture: Retail Example Analytics Customer CRM & Marketing Loyalty Call Center Sales Field Service Demand & Enterprise Web Store Marketing Order Mgmt Pricing CTO Business Operations Supply Chain Supply Chain Merchandise Planning Merchandise Store Planning Execution & Optimization Operations Operations Merchandise Replenishment Financial Planning Trade Management Point-of-Sale Optimization PIM Assortment Planning Store Inventory Mgmt Advance Inventory Invoice Match Planning Sourcing Item Planning Returns Management Supply Network Warehouse Category Mgmt Merchandise Management Management Workforce Scheduling Optimization Price Optimization Learning Mgmt Value Chain Transportation Price Management Collaboration Management Promotion Planning & Optimization Store Helpdesk Value Chain Home Delivery Sales Audit Allocation Demand Forecasting Workforce Comms Corporate Administration EPM Financials Human Resources Real Estate Indirect Procurement Projects Compensation Helpdesk HR IT Infrastructure Integration and Collaboration Enterprise Infrastructure
  20. 20. Information / Data Architecture Decomposed Information Architecture ERP Data Models Process Data Models Data Hubs Customer Product Healthcare … Industry Data Models Copyright ©2009 Oracle Corporation. All rights reserved. 20
  21. 21. Technical Architecture Decomposed Technical Architecture SOA & Integration Architecture Business Intelligence Architecture Data & Information Mgmt Architecture Security Architecture Infrastructure Architecture Application Development Architecture Copyright ©2009 Oracle Corporation. All rights reserved. 21
  22. 22. IT Rationalization is an Iterative Journey 1 Identify the Business Strategy EA Transformation Focus: Management Excellence Establish Enterprise 2 Architecture Program Enterprise Solutioning: Business-Driven Initiatives 3 Define “Future State” EA Transformation Focus: Architecture Operational Excellence (Business, IT) Define Rationalization EA Future State: 4 Applications, Roadmap Technology Establish EA 5 Governance Copyright ©2008 Oracle Corporation. All rights reserved. 22
  23. 23. Rationalization Deliverables Key findings and conclusions including targeted analyses of the Current State Gap & current state environment and its key performance gaps and Opportunity Analyses opportunities Target architecture and process model that defines the applications, services, information and infrastructure required to Future State Vision satisfy key business goals and requirements High level, multi track program of phased actions, initiatives and implementations that provides a framework for planning and High Level Roadmap managing the future state migration Identification of potential cost savings and other business benefits Targeted Benefits to be derived from the future state
  24. 24. RESPONSIBILITIES 1 Identify the • Establish an EA Governance model and an Business Strategy Architecture Review Board • Promote the EA agenda and adherence to “Future State” EA Prescriptive Guidance: Establish Enterprise 2 Architecture Program • Review IT project designs • Review proposed enterprise solution architectures and major initiatives • Provide direction 3 Define “Future State” Architecture BOARD MEMBERS • Chief Information Officer 4 Define Rationalization • Chief Enterprise Architect Roadmap • At least one Executive Sponsor • At least one major Business Executive Establish EA • At least one Business Architect 5 • Lead Solution Architects pulled in on an as-needed Governance basis Copyright ©2008 Oracle Corporation. All rights reserved. 24
  25. 25. The Road to Operational Excellence Opportunities to standardize, consolidate and automate 1 2 3 4 Standardize Consolidate Consolidate Standardize Standardize Standardize Standardize Modernize Modernize Business Information Information Corporate Services Corporate Services Front Office Front Office Applications Applications Improve visibility and Improve efficiencies and Grow revenue, improve Preserve applications Processes Improve visibility and Improve efficiencies and Grow revenue, improve Preserve applications reduce cost: reduce cost: reduce costs: reduce costs: customer retention and customer retention and investment while investment while Customers Financial Mgmt reduce cost: reduce cost: transitioning to aa Customers Financial Mgmt transitioning to Financials Human Capital Mgmt Marketing lower cost platform lower cost platform Financials Human Capital Mgmt Marketing Organizations Organizations Procurement Procurement Sales & Service Sales & Service Consolidate Data Warehouses Data Warehouses Budgeting & Planning Budgeting & Planning Relationship Mgmt Relationship Mgmt Applications Documents Documents Facilities & Projects Facilities & Projects Collaboration Collaboration & Data 5 Standardize Service Delivery Platform Standardize Process Process Business Business User User Governance, Governance, Integration Integration Risk & Risk & Service Management Management Intelligence Intelligence Interaction Interaction Compliance Compliance Platform 6 Optimize Deploy Grid Platform Deploy Grid Platform Infrastructure 7 Source Outsource Application & Infrastructure Management Application Outsource Application & Infrastructure Management Management Copyright ©2008 Oracle Corporation. All rights reserved.
  26. 26. IT Standardization Strategy Driven by business model Common Processes Common Data
  27. 27. Accelerate Transformation Benefits Leverage Integration and BI platforms End-to-end visibility Unified workplace Compliance Composite business processes and business analytics accelerate Composite Business Process Composite Business Process business results • Deploy standardized business processes over legacy application silos using Application & Data Silos standards-based services. No single source of truth Redundant applications • Improve process management and controls Incomplete and conflicting data enforcement. Labor intensive compliance • Improve visibility through common Long-term goal: Standardize processes, consolidate enterprise information model. redundant applications and eliminate data silos • Improve business analytics using out-of- the-box analytics capabilities. • Publish key performance indicators Common Enterprise Information Model • Shelter users from changes to underlying Common view of information systems as they are consolidated over time. Key Performance Indicators Business reporting and analytics Compliance reporting
  28. 28. Case Study: Large Manufacturing Company Current State Future State • 217 Disparate systems • 9 process chains including Order-to- Business Make • Plant autonomy – no Architecture process integration • Integrate processes across 3 plants Information • 100,000 attributes • 15,252 attributes (down 85%) Architecture • Data element standardization App./Services Technical Architecture • 62,300 programs • 12,309 programs (down 80%) Technical Architecture Architecture • 5,500 interfaces • 1,561 interfaces (down 72%) SOA & Integration Architecture • SOA and EDI Integration • Plant autonomy – separate • Replicated financial data & Data Mgmt databases, duplicate data integrated into single global data Architecture warehouse Infrastructure • Legacy systems on • Mainframes plus HP Architecture Mainframes Superdome HP/UX for Grid computing App. Dev. • COBOL • JDeveloper tool for creating Architecture J2EE apps 2 8
  29. 29. Case Study: Large Manufacturing Company Results: $3 Billion ROI Reduced production lead time from 30 to 14 days Increased the delivery hit ratio from 82.7% to 95% Customer inventory days reduced from 30 days to less than 24 hours
  30. 30. Recommendations 1 Identify the Business Strategy • Integrate IT rationalization with enterprise architecture efforts (or use as catalyst to initiate EA efforts) Establish Enterprise 2 Architecture Program • Start at the business level and drive your down to technology • Align with the broader business 3 Define “Future State” strategy – not simply a IT cost-cutting Architecture initiative • Involve the right mix of Business/IT/EA Define Rationalization people/Strategic vendors 4 Roadmap • Treat IT Rationalization as an ongoing process – not a discrete project Establish EA 5 Governance
  31. 31. Architect a More Competitive Enterprise • Mergers & Acquisitions : Guide strategic fit assessment and post-merger consolidation • Business Processes : Provide insights into gaps or redundancies ; Enhance customer service • Compliance & Audit : Facilitate transparency across applications ; Manage users & applications life-cycle management • Enterprise Architecture : Consolidated technical infrastructure ; Reduced costs & Increase agility • Vendor Management : Negotiate terms ; Risk Reduction