Rationalizing an Enterprise IT Architecture
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The document discusses the importance of rationalizing enterprise IT architecture to reduce costs and improve efficiency through standardization and simplification. It highlights the role of strategic IT management in addressing complex environments, vendor management, and achieving alignment between business objectives and IT infrastructure. Key principles and processes are outlined for establishing a governance model, defining future states, and delivering on enterprise architecture goals.
Rationalizing an Enterprise IT Architecture
- 1. <Insert Picture Here> Rationalizing an Enterprise IT Architecture Shaun McLaurin Insight Program Director – North American Technology Organization
- 2. Business & IT Challenges IT Environment History Resulting in • Evolved through corporate, • Organizational and Information organizational and technology silos changes • Complex IT environment, multiple • Mergers & Acquisitions skill sets, costly to operate • Adapted to new business processes • Inflexible IT infrastructure difficult • Adhere to layers of regulatory (and risky) to modify requirements • Redundant application systems • Integrate ‘best of breed’ applications and business processes • Account for LOB IT ‘initiatives’ • Multiple versions of business data
- 3. It’s Expensive to Have Bad Information Ellison’s Law “The value of information increases exponentially as fragmentation is reduced.”
- 4. Reinvent IT Economics An architect’s dilemma Strategic Savings Investment Annual Strategic IT Spend Investment Infrastructure IT Spending and Demand Survey 80% Maintenance Infrastructure 20% New Projects
- 5. IT Spend for World-Class Performers is Comparable to Their Peers… …But, they spend it differently
- 6. 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. • Intelligent Outsourcing • Empowered change agent
- 7. Oracle Rationalized IT Portfolio 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. 7
- 8. The Transformation Payoff 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. 8
- 9. Information Technology Rationalization Guiding Principles • Driven by Business Strategy • Standardizes & Simplifies the technical architecture • Just enough 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. 9
- 10. 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. 10
- 11. 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. 11
- 12. Globalized Operational Excellence Oracle Transformation Drivers Lower Costs Better Information, Improve Increase Speed Customer Service Governance • Fewer data centers • Global information • Streamline • Improved quality visibility applications and service • Self service change processes • Global consistency • One customer management of process, policy experience • Labor & transaction & data • Fast integration cost efficiencies of new • Strong internal acquisitions • Shared service controls centers • Easier compliance • Offshoring Copyright ©2009 Oracle Corporation. All rights reserved. 12
- 13. The Global Transformation Payoff for Oracle Ability to drive profitable, sustainable growth We grow our operating cash flow 3 times faster than five years ago. Safra Catz, CFO Oracle Q3 Earnings Report, March 2008 (40.8% in 2007) 45% 40% 35% 30% Percentage Operating Margin % 25% 20% 15% 10% (14.4% in 1993) 5% 0% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Operating Margin % Note: Figures based on non-GAAP results. GAAP to non-GAAP reconciliations are available on the Oracle Investor Relations website at www.oracle.com/investor. Achieved through global processes, consolidation, simplification and shared services
- 14. 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 • Solution Architects 5 Governance • Strategic Vendors Copyright ©2009 Oracle Corporation. All rights reserved. 14
- 15. 1 Identify the How do you… Business Strategy • Stay current with technology and applications, • Implementing best practice business models, Establish Enterprise • Yet be able to integrate these business processes 2 Architecture Program • To improve business visibility, agility and efficiency 3 Define “Future State” Architecture 4 Define Rationalization Roadmap Establish EA 5 Governance Copyright ©2009 Oracle Corporation. All rights reserved. 15
- 16. 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 Leverage ‘Common Use Applications’ Architecture Copyright ©2009 Oracle Corporation. All rights reserved. 16
- 17. Best Practice Industry Processes Example Industries… High Consumer Communications Retail Banking Technology Goods Account Integrated Trade Promotion Order to Bill Order to Cash Origination with Logistics Execution Core Banking Revenue High Tech Integrated Trade Promotion Multi-Channel Management Distribution Financial Controls Management Customer Service Product Lifecycle Multi Channel Demand Customer Care Banking IRM Management Order Management Management Copyright ©2009 Oracle Corporation. All rights reserved. 17
- 18. Conceptual Business Model : Retail 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
- 19. 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. 19
- 20. 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. 20
- 21. 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. 21
- 22. 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 benefits to be Targeted Benefits derived from the future state
- 23. 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 • Review IT project designs 2 Architecture Program • Review proposed enterprise solution architectures and major initiatives • Provide direction 3 Define “Future State” Architecture BOARD MEMBERS • Chief Information Officer Define Rationalization • Chief Enterprise Architect 4 Roadmap • At least one Executive Sponsor • At least one major Business Executive • At least one Business Architect Establish EA • Lead Solution Architects pulled in on an as-needed 5 Governance basis Copyright ©2008 Oracle Corporation. All rights reserved. 23
- 24. 8 Strategies for Transformation Composite Business Processes Composite Business Processes 8
- 25. IT Standardization Strategy Driven by business model Common Processes Common Data
- 26. Accelerate Transformation Benefits Leverage Integration and BI platforms End-to-end visibility Unified workplace Compliance Composite business processes Composite Business Process Composite Business Process and business analytics accelerate 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
- 27. Enterprise Software Architecture Customers Employees Partners Applications Documents User Interaction Analytics Collaboration Composite Industry Processes 3rd Party Legacy Applications Applications Applications ERP HCM CRM Industries Business Intelligence Security & Integration & Analytics Compliance Technology Existing Technology Data & Scale & Application Enterprise Content Continuity Development Management
- 28. 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