Using IT Portfolio Analysis to Enhance IT Agility

Using IT Portfolio Analysis to Enhance IT AgilityJuly, 2008

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Using IT Portfolio Analysis to Enhance IT Agility

Agenda

• Introductions

• About Virtusa

• Current State of the Industry & Overall Trends

• Portfolio Scoring & Analysis—an Innovative Approach

• Case Study—Verizon Business

• Summary

• Questions

"You can't manage what you can't measure…”- Judy Spitz, senior vice president and chief information office for Verizon Business

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Introductions

• Michele PelinoSenior AnalystForrester Research

• Alan MottDirector Systems Planning & Enterprise ArchitectureInformation TechnologyVerizon Business

• George BerelsonDirector, Business ConsultingVirtusa Corporation

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About Virtusa

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• US-based corporation:– Headquartered in Westborough, MA– Locations in US, Europe and Asia– Technology Centers in U.S., U.K., India

& Sri Lanka

• Over 4,200 world-class professionals

• 57 current clients

• Listed on NASDAQ (VRTU)

• Rapidly growing & profitable– FY 2008 Revenue: $165.2 million– Operating income: $19.4 million– 5-year compound annual growth rate:

46%

• Numerous awards and certifications

Global IT Services Provider

39%

38%

22%

46% CAGR$ 165.2M

$25M

Awards and Certifications

ISO 27001

Revenue Growth

Virtusa is a next-generation IT services provider with a strong 12-year track record

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We have a great balance in our business, as demonstrated by our revenue distribution

Communications & Technology

Media,Information &

Other

40%

38%

22%

Europe

North America

31%

69%

IT Consulting&

ImplementationServices

Outsourcing71%

29%

Period shown: Q3 FY2008

Banking, Financial Services

& Insurance

Industry Geography

Service Offerings

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Technology Implementation OutsourcingIT Consulting

• Application and platform management

• Infrastructure management

• Quality assurance management

• Application and platform engineering

• Systems rationalization

• Systems integration• Business Process Mgt• Data warehousing

and business intelligence

• Assessment and planning services

• Architecture and design

• Governance services

End-to-end capabilities

All services are enhanced by our unique Platforming approach and client-centric consulting model

We provide a broad range of IT services to our clients

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Client DelightIndustry Accolades

Finalist for BT Supplier

Innovation Award (2007)

& Best Customer

Experience Innovation

(2005 & 2007)FinTech 100 (2007)

Pegasystems’ Partner

Innovation Award for Engineering

Excellence (2007)

Global Services Top 100 Most Innovative Service Providers

(2008, 2006)

Quality Award for Open Reach product (2006)

IBM Partner Award (2007)

Aetna Enterprise Innovation Award

(2007)

“Best Offshore Development Team” & “Best Application

of BT’s Agile Practices”

(2007)

Ranked #1 IT Systems Outsourcing

Vendor in Wealth Management

Industry (2007)

Ranked 388 in the Deloitte

Technology Fast 500 (2007)

Listed in NASSCOM's

100 IT Innovators (2007)

Corporate Excellence Award 2008

Gold Award at Sri Lanka’s National HRM

Awards (2007)

Innovation Awards

WorldQuality Day

Agile Awards

Ranked #252 in the VARBusiness

500 List (2008)

We are highly recognized by our clients and industry for innovation…

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Not The Usual Suspects Part II: Cost, Quality, AndClient Service Benefits From Mid-tier Providers -- April 14, 2008

by Stephanie Moore, Forrester Research

“Virtusa’s strong suit is more modern customer-facing front-office systems

development and support…”

“Differentiators include:• A commitment to evolving rather than just maintaining systems under its care… Virtusa encourages its enterprise clients to think of these existing systems the same way a software vendor thinks of its products. Every cycle brings a new release or improved functionality—making them valuable and relevant that much longer.• Low ratio of on-site to offshore staff… Virtusa has one of the lowest, if not the lowest, ratio of on-site to offshore staff…Virtusa has also intentionally oriented its processes, client training, and staff to be effective in this model. • Focus on business analysts… Virtusa has invested more than most Indian providers on business analysts (BAs). This staff effectively bridges the gap between Virtusa and the client, as well as the gap between the on-site and offshore delivery teams.”

…and also by analysts

Current State of the Industry & Overall TrendsMichele PelinoSenior AnalystForrester Research

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CIOs must evaluate and prioritize many different business and applications issues

Creating competitive advantage,

through superior customer

experience

Improving quality, right

first time

Reducing IT costs,

maximizing IT investments

Helping business deliver solutions faster, reduce

cycle time

Massive number of applications and duplicate

functionality, especially with acquisitions and the

retention of legacy systems

Realization that applications are business assets comprising a “portfolio”

Using and adjusting the portfolio to quickly meet business and market

demands

Assessing the value and performance of the portfolio - knowing what you have, where to invest, what to retire

Understanding if the resources,

efforts, value and

performance are aligned with

business objectives and

strategy

Asset classification applied to OSS/BSS is usually non-existent or inaccurate

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Telecommunications service providers face a variety of overall challenges

Service provider challenges

Declining revenues• Displacement of fixed voice service with VoIP

• Declining ARPUs from mobile services and applications

Organizational impacts• Technology decisions impact organization

• Need stronger communication between IT, network, marketing, and strategy teams

Increased competition• Cable company competition

• New entrants (e.g., Google, Vonage) compete for voice and applications revenue

Network convergence• Fixed and mobile network convergence• NGN architecture deployment

• Network consolidation (mergers, acquisitions)

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Using IT Portfolio Analysis to Enhance IT AgilityIn addition, telecommunications service providers must address particular business challenges

Business Challenge Factors Contributing To Business Challenges

Reduce cost & leverage

existing investments

• Operating and maintaining hundreds to thousands of applications• Duplicate functionality• Unknown business value• A spectrum of maturity levels in understanding application portfolios across and within organizations

Improve time-to-

market for new services

• Highly-complex/interdependent systems and environments, leading to high cost for changes and new functionality

Right first time (RFT)

• Fragmented systems and data—no single truth • Disjointed processes—manual, error-prone and slow • Transaction integrity issues—high failure & error rates

Enhance customer

experience

• Cost, cycle time and RFT all having a negative impact on the service delivered to customers

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However, implementing these IT initiatives is difficult…• Address technical issues– Rationalize equipment, processes and resources– Assess IT initiatives in a structured, objective and logical manner– Consider ongoing support and maintenance requirements– Document individual knowledge for reuse

• Leverage industry-accepted standards and frameworks– Recognize that standards are now “Darwinistic” or evolutionary– Facilitate the transition from in-house development to standard off-the-

shelf products– Use standard frameworks to guide the transition process (e.g., TMForum

standards such as the eTOM and SID frameworks)

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…and establishing organizational support and metrics are critical requirements for success

• Organizational issues– Identify a senior level “champion” in the organization– Obtain agreement from various individuals on shared equipment,

processes and functions– Requires employees to work together in new ways

• Establishing metrics for success– Expanded revenues from new applications and services– Efficient infrastructure (e.g., server and application consolidation)– Improved customer satisfaction and retention rates – Increased ability to quickly adapt to dynamic market changes

IT professionals need processes, tools and solutions to help them identify, prioritize and address these IT challenges and

issues

George Berelson Director, Business ConsultingVirtusa Corporation

Portfolio Scoring & Analysis—an Innovative Approach

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There is a wide spectrum of maturity in the management of application portfolios

How well do you know your applications?Level of Maturity

Do you knowwhat you have?

Who has the experience?

What do our users or developers think?

What business

value does it bring?

Do you knowwhat the pieces areor where they are

located?

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Using IT Portfolio Analysis to Enhance IT AgilityTypical approaches to decision-making are not ideal, and there is significant opportunity for improvement

• Decisions are often made not through rational, objective analysis and evaluation, but instead through:– Politics– Habits– Rules– Guesses– Emotions– The latest airline magazine business article…

…leading to ineffective decisions and outcomes

An approach to solving this is to use our foundational tools (TMF or other standards) to build a model for understanding and

decision making

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Once we understand the application portfolio, we can make decisions rationally and objectively• Treat our “portfolio” as any business should treat its important assets,

investments and capital

• Classify applications, figure out where they stand, what they do, how they perform

• Understand how to take actions to optimize the portfolio’s performance and quickly meet changing business and market requirements—the business agility imperative

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What can we achieve with an innovative approach?Enhance business agility and support better IT decisions

• Gain a better understanding of IT assets/application portfolio– Breadth of assets– Learn “what you don’t know”

• Increase organizational awareness of IT asset characteristics– Business value provided– Efficiency and effectiveness– Related revenue and costs

• Improve decision-making capability for IT asset actions– IT changes to meet business needs– Sunsetting, consolidation, further investment– Technology rationalization, platforming opportunities– Outsourcing, maintenance– Aligning assets and investments with business objectives

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Using IT Portfolio Analysis to Enhance IT AgilityCreate and apply an innovative, business-focused scoring & analysis model to your IT portfolio

Dimensions isolate the important comparative

elements for assessment and decision-making

Metrics are aligned to the concepts and definitions of the

organization and to the lines of business and

business strategy

Identify Important Metrics Build Model Hierarchy

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Using IT Portfolio Analysis to Enhance IT AgilityDefine a scoring & weighting model that reflects both business and technology goals and priorities

IT Metrics

Data Points

Data Points have weights 1, 3 & 5 to signify their

importance to the Metric

Metrics have weights 1,3 & 5to signify their importance

to the Focus AreaFocus Areas have weights

from 1 to 10 to signify their relative importance to the Strategic Indicator

Scoring and weighting reflect the organization’s strategy, goals, direction and relative view of

importance

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Put it into a manageable, achievable action plan

• Scope and objectives for portfolio analysis

• Identify IT metrics to provide meaningful insights on asset portfolio– Business/IT priorities– Virtusa experience– Industry best practices

• Identify and plan IT asset portfolio inventory/repository

• Develop scoring and analysis model to evaluate assets based on metrics

• Pilot phase for limited set of IT assets– Interviews and surveys– Prove out concept– Adjust based on feedback

and results

• Phased approach for remainder of IT assets– Primary focus on surveys– Increased automation for

continued assessment

Build tailored portfolio analysis model

Create portfolio analysis roadmap

Execute roadmap

• Collect metric data for IT assets, per scoring and analysis model– Pilot– Remainder

• Analyze, evaluate, and compare IT assets along various dimensions – Rankings– Graphs– Recommendations

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What’s needed to do this?• Application inventory– Knowing what applications you have and which you need to score and compare– What components they contain or use

• Data about the applications—financial, demographic, etc.– Business processes they address or provide– Business constituencies served—business unit, lines of service, product lines,

customer lines– Revenue contributions, costs, risks

• The knowledge in people’s heads…– How well-constructed is the application?– How easy is it to use/work with?– Is it in compliance with company best practices and architectural standards?– How easily is it supported and maintained?

• Known business imperatives and vision, as applied to IT applications– Strategic initiatives, such as improved agility, customer experience, growth,

satisfaction, new markets, new regulations, etc.

Alan MottDirector Systems Planning & Enterprise ArchitectureInformation TechnologyVerizon Business

Case Study—Verizon Business

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We had a good start at attacking the problem…• Through several mergers & acquisitions, Verizon had developed processes and

tools for capturing the application portfolio, but were limited in analysis capabilities

• Accuracy via Financial Management processes• Property Accounting recognition of assets• No funding released without a properly identified application

• Hardware & software specifics via scans• eTOM & SID used as taxonomy• Costs captured through financial processes• Product and customer relationship captured for Profitability Reporting

• Ad-hoc collection• Surveys/questionnaires• Occasional deep-dive trade studies• Corporate compliance attestations• Spin-off knowledge from development & design

Intuition

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… but we wanted to take it to the next level• Good inventory and attributes revealed areas of opportunity– Redundancies readily apparent– Non-standard technologies identified– High cost areas revealed

• No lack of knowledge or opinion…– Had the knowledge power of 30,000 people– Intuition and experiences told us where to look and what to do

• However, we did need:– Objective way to challenge or substantiate the intuition– A method to capture and normalize the knowledge– A clear link to how decisions contribute to business value– A way to continually assess the portfolio

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We added analysis capabilities to our Application Portfolio• Application Scoring Tool

– Takes into account the intrinsic value of applications in eTOM business processes

– Validates IT Roadmap decisions– Used in prioritization method to optimize & plan

• End of service life• Technology upgrades or changes• Business continuity planning

– Continual grooming of the Application Portfolio• Keeps pace with business and technology changes

– Links operations and security to business understanding

• Processes and procedures to validate or challenge expenditures on applications

• Continual harvesting and audit of Application Portfolio data– One version of the truth– Avoids data stagnation

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Application Scoring Tool

Business Value & Efficiency Rankings

Relative Strengths, with Underlying Indicators

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We addressed each aspect of the challenges

Creating competitive advantage,

through superior customer

experience

Improving quality, right

first time

Reducing IT costs,

maximizing IT investments

Helping business deliver solutions faster, reduce

cycle time

We met our objectives and plan to calibrate and improve the model through continued use in Financial and Asset Management,

Strategic and Enterprise Planning, Enterprise Risk Management, and Enterprise Effectiveness Management

•IT modernization roadmap•Reusable solution to evaluate new inventory (i.e., mergers & acquisitions or additional business units)

•More agile IT•Evolution of IT portfolio toward software platforms

•Business value ranking resonates extremely well in the organization, providing an accessible means of making decisions

•Improved quality of service•Improved responsiveness to customer needs and wants

Summary

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Summary• Companies face the challenges of broad, overlapping applications in

their portfolios that constrain the business agility imperative

• They may be starting at different places on the continuum– Some, like Verizon, are further along– Others, maybe not so far

• Can all benefit from improved visibility and decision capability– Systematic, consistent, objective– Helping to better align IT with the business

“By continually capturing more than 100 data-points for each asset, we are able to monitor and analyze the business value and IT efficiency dimensions across our entire application portfolio. This new level of

visibility strengthens our roadmap planning for optimal investment in our strategic systems.”

- Judy Spitz, senior vice president and chief information office for Verizon Business.

Questions

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For more information, contact:Dan KielarSenior Vice President, [email protected]

mailto:[email protected]

Documents

Using IT Portfolio Analysis to Enhance IT Agility