Software Industry - a Global Strategic Perspective

SOFTWARE INDUSTRY - A GLOBAL STRATEGIC PERSPECTIVE

Managing IT Governance & Compliance

Regulations and mandates such as Sarbanes-Oxley, Basel II, the EU Data Protection Directive, HIPAA, and International Accounting Standards have forced profound changes in business policies and processes. U.S. companies will spend $5.5 billion in 2004 to comply with Sarbanes-Oxley. European banks will spend almost $4 billion in IT over the next two years to comply with Basel II.

In Charge of Change: IT executives are adopting IT governance strategies and software to manage the priorities, processes, and people of IT--gaining visibility and control over their compliance initiatives. This enables them to:

* Ensure IT compliance initiatives are prioritized and managed on time and on budget.

* Manage benefits, costs, resources, and business objectives within a transparent process.

* Mitigate the risk and costs of business process and application changes.

Enabling Strategic Sourcing

There is a seminal shift from outsourcing IT for cost reduction to "strategic sourcing" for business value. It is estimated that global outsourcing deals will rise 30 percent by 2005, and that the global business process outsourcing market will reach $130 billion in 2004. Strategic sourcing--the optimal mix of in-house, outsourced, and offshore IT projects--represents a profound opportunity for IT to maximize business value.

In Charge of Change: IT executives are adopting BTO software and services to optimize IT prior to outsourcing--gaining visibility and control over both in-house and outsourced business processes and teams. This enables them to:

* Effectively govern a mixed portfolio of IT projects in alignment with business goals.

* Ensure outsourced IT initiatives are tested and deployed to meet the same quality and performance standards as in-house applications.

* Manage and monitor both outsourced and in-house applications based on business results and service levels.

Mastering Application Complexity & Change

Most business processes are automated through software. As the rate of business and technology change continues to accelerate, it becomes increasingly challenging to maximize the business value of those applications while reducing costs and risks. Today's IT executives must become "masters of change and complexity"--managing distributed, heterogeneous IT infrastructures, legacy systems, and packaged ERP and CRM systems while embracing modern composite applications built with J2EE, .NET, and Web services technologies.

In Charge of Change: IT executives are adopting BTO software and services to optimize application quality, performance, and business availability--gaining strategic visibility and control over planned and unplanned changes to their applications and underlying infrastructure. This enables them to:

* Reduce costs and risks of delivering and managing business results from custom and packaged applications.

* Optimize quality, performance, availability, and problem resolution across the entire application lifecycle.

* Implement change and configuration management approaches to map the relationship between applications and infrastructure.

Nothing Ventured, Nothing Gained

As IT budgets shrank in recent years, many enterprises quickly turned to outsourcing IT projects and business processes to reduce costs.

And many enterprises have learned the hard way that outsourcing a problem in the hopes of decreasing costs often backfires. Today, prudent executives are making "strategic sourcing" decisions based on how to use the right people, processes, and technology with the right mix of internal and external teams and technologies. The challenge CIOs face now is how to effectively manage outsourced IT initiatives to optimize business value and reduce risk.

Getting Your House in Order

To optimize their strategic mix of outsourced, offshore, and in-house applications, effective CIOs are doing three things:

* They are testing, analyzing, and optimizing current applications and infrastructure to understand existing capability and costs ensuring a realistic benchmark for strategic outsourcing decisions.

* They are measuring the value of outsourced operations from a business perspective based on business-oriented service level agreements, as opposed to isolated, silo-based IT metrics.

* They're managing and monitoring the business availability of outsourced applications on an ongoing basis; and identifying, diagnosing, and fixing potential downtimes before they impact the business.

The BTO Approach to Strategic Sourcing

Leading CIOs are approaching strategic IT sourcing from a BTO lifecycle point of view--governing the portfolio of outsourced projects, while ensuring the quality, performance, and availability of their outsourced applications. They are starting by implementing IT governance software and processes to ensure visibility and control over their outsourced operations, manage demand as well as change requests, and manage project, service level, and quality metrics updates. They are adopting a center-of-excellence approach to application delivery, enabling both the client and outsourcer to be on the same page with regard to application testing, quality, and performance. And they are taking a business-centric approach to application management--mapping the relationship between applications and underlying infrastructure; providing shared visibility into application availability with an early-warning system that identifies service-level breaches before they bring the business down.

A Complex New World

Today's IT executives are striving to master an increasingly distributed, heterogeneous IT environment, where business processes are deployed across multiple global locations, and packaged enterprise applications interoperate with numerous custom and legacy applications. This new application environment is further diversified with emerging composite applications built on and distributed using J2EE, .NET, and Web services technologies. Plus, everything becomes increasingly complex when you mix in business decisions to develop and deploy applications