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Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 1 Software Engineering Operation Application Services Business Plan Fast Track.

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Presentation on theme: "Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 1 Software Engineering Operation Application Services Business Plan Fast Track."— Presentation transcript:

1 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 1 Software Engineering Operation Application Services Business Plan Fast Track Business Plan v.2 May 18, 1998 This version includes the following revisions since the 4/29 Management review: A revised segmentation model (same information) (pg. 9-11) Fine tuning of the service offerings (pg ) Adjustment on 3 Year Objectives (pg. 32) New forecasting scenarios (pg ) New sales assumptions and guidelines (pg. 43) Sales and marketing success tracking indicators (pg. 44)

2 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 2 Contents Customer Needs and Challenges Segmentation Offer & Services Goals, Financials & Resources Required Issues and Actions Appendix of Misc.. Slides Contributors: Gary Gujral, Joe Martinez, Helmut Bentsche, Terry Ash, Donnie Foster, Matt O’Donnell, Michael Dautel, Mike McGarry, Satish Varma (TCS) Business Plan written by : Jeri Crittenden, Consultant

3 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 3 Customer Needs & Challenges

4 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 4 % of Respondents Source: Dataquest end-user budget survey, 7/97 as quoted in Y2K Market Analysis Customer’s resources and skills are stretched across a wide range of initiatives, technologies, and implementation timelines. F1000 Top Service Initiatives - ‘97

5 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 5 Client Needs and Application Services New developmentAchieve competitive advantage, accelerate TTM, increase profits, obtain new skills, accelerate BPR efforts Data warehouse and miningBusiness performance & customer needs analysis improvements Emerging & Internet Change customer and supplier business models, accelerate TTM. technologyIntegrate with legacy environments. Package ImplementationIntegrate business functions, improve TTM& functionality. Management Transitioning Conversions, migrations, re-hosting, transformation to new architectures for performance, capability or cost improvements Year 2000 ServicesAssess problem, obtain resources, convert or replace Retooling Teach staff new processes, technologies, methodologies SupportApplication help desk, 24X7 troubleshooting Maintenance Fix bugs, reduce costs, improve operational performance or productivity, shift of internal resources to new development Key needs where customers look to application developers, systems integrators and outsources. ServicesNeeds Integrate w/ current environments

6 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 6 IT Staffing Dilemma Competition with providers for resources Service provider as a solution to resource shortage Service provider as a competitor for resources Recruiting network Skills database Subcontractors Offshore Colleges Retention Methodologies Processes & tools Service delivery model Management training Certification Career paths Staffing & Recruiting Skills Transfer & Assessment Training & Reskilling Interviews Skills tests Mentoring Project knowledge transfer Three most important elements of the staffing dilemma Source: Gartner Group 1997 from Deloitte & Touche survey of 1400 CIO’s WW Finding & retaining skilled resources has become a major IT challenge

7 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 7 Competitive Landscape Many Players Package Management Andersen Consulting EDS Price Waterhouse CSC New Development Andersen Consulting Gap Gemini Sogeti MCI Systemhouse Cambridge Technology Group Full Service EDS IBM Global Services CSC Perot Systems SAIC Unisys Staff Augmentation Computer Horizons Keane Computer Task Group Accustaff Year 2000 Gap Gemini Ciber Inc. Cognizant Technology Solutions IBM Global Services Computer Horizons Compuware Data Dimensions Mastech IMR Keane Transitioning MCI Systemhouse Lockheed Martin Andersen Consulting GE Capital Entex Vanstar PKS Legacy Maintenance Keane Coopers & Lybrand Andersen Consulting Cap Gemini America IMR Offshore IMR CBSI HCL America Mastech Syntel Infosys Source: Gartner Group, 7/97 * IDC Top Providers, 1997

8 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 8 Segmentation

9 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 9 Application Services Segmentation Approach Implement beta /emerging technologies Proof of concept technology does what is promised Wants help to apply technology Lower risk TTM - Increase speed of implementation New functionality for competitive advantage Focus on cost savings and improved operations Free in-house IS to work on strategic initiatives Stage of Technology Integration in Marketplace SWEO’s target segment for application services -- “Value Seekers” -- enterprises aggressively applying technology for new or improved business capabilities - and are resource constrained. Emerging technology Routine/standardized Segment A Segment BSegment C New Solutions High Gap Low or no Gap Segment D Segment E Segment F Deployment Capability “The Gap” “Early adopter” “Cost conscious” “Value seekers”

10 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 10 “Cost conscious” Services for the Target Segment Focus: Which Needs? Which Services? New Solutions “Value seekers” Wants help to apply technology Lower risk TTM - Increase speed of implementation New functionality for competitive advantage “Early adopters” Where can SWEO - Add the most value to solving customer’s business problems - Earn profit (premium price) - Set direction for future growth - Leverage our strengths & experience - Establish credibility - Position w/ channel & competitors Possible Services to Meet Needs.... New development Data warehouse and mining Emerging & internet technology integration Package Implementation Management Transitioning Year 2000 Services Retooling Support Maintenance

11 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 11 Services Mapping to the Target Segment * SWEO Primary Application Services Address urgent business needs Add significant value for premium Leverage India expertise Differentiate on lowering risk and TTM Align w/ ISBU role “Cost conscious” New Solutions “Value seekers” Help apply technology Manage risk TTM - Increase speed of implementation New functionality for competitive advantage “Early adopters” Key Customer Services to Meet Needs.... * New development * Emerging & internet technology integration Secondary Services Transitioning Year 2000 Services Retooling Support Maintenance *Integrate with existing/legacy environments

12 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 12 Competition: How Differentiate? Provide cost savings and to free in-house IS Help apply technology, increase speed of implementation Emerging technologies Different value for services over time Product Vendors SI’s/AC/ ISSC Offshore Co. IT Outsourcers Legend: Provider Focus Provider Direction Vendor’s Value Propositions: Resources, skills at low cost Improve processing efficiencies, manage costs Management expertise moving into technology Integrate anything New /existing technology; know-how to use/ manage it SWEO Target Mgmt Consultants

13 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 13 SWEO Internet Focus Access Collaboration Transaction Intranet Internet Internal publishing Collaboration, workflow Internal & business- to-business apps. Home pages Dynamic Web pages Business-to consumer apps. SWEO Target for Internet Solutions Use ISBU & SSG software for depth of integration with enterprise legacy operations, applications, and databases *Source: SWEO modified from International Data Corporation 1997 Internet Solution Landscape ISBU Emerging Solutions Application Services helps drive HP emerging software into the....

14 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 14 SWEO’s Target Client IS has a significant delivery gap: they are lacking 50+ person years of development capability and are in pain.Gap may be due to numerous reasons: –Lacking IS resources and skills to manage business unit demands for applications to achieve strategic/competitive advantage –Backlog of application revisions for new capabilities or performance improvements –Year 2000 projects have consumed resources Organizations undergoing business initiatives to take advantage of emerging internet technologies - but concerned about implementation risk Concerned about loss of control through outsourcing “Our strategic business initiatives require more IS resources with the right skill set and experience than we have or can reasonably hire and train in the next 1-2 years.”

15 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 15 Target Opportunity - Checklist Primary Criteria Customers in SWEO targeted, named enterprise accounts –Focus on financial services market with FSBU & EAO Major delivery gap: 50+ man years of development Skills gap for emerging technologies IT methodologies and tools dated - struggling with move to new technologies Planning to use internet and open systems (UNIX) & NT technologies to improve business to business or business to consumer performance Better than 50% chance to evolve from a projects-to-alliance relationship Open to or exploring India resources SWEO is NOT Targeting Stand alone Year 2000 projects Stand alone maintenance projects

16 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 16 Target Opportunity - Checklist High degree of custom S/W development (COBOL; M/F’s) Using IT for competitive advantage Legislative or Industry pressure (deregulation) Financial Services (‘98) Legacy to Internet/ Emerging UNIX NT Delivery Gap + 50 man years Skills Gap in newer technologies Current Environment HP relationship at IT & LOB Open to or exploring India for resource Possible to use SSG S/W products Dated IT Infrastructure & Processes No entrenched SI or Outsourcer - or not satisfied with current partners Target Accounts Primary Criteria Additional Qualifiers No Standalone Y2K or Maintenance projects High probability for long-term S/W partnership

17 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 17 Offer & Services

18 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 18 SWEO Offer Our Application Services Alliance Program (ASAP), offers an approach to strategic application development that reduces risk and accelerates solutions deployment when compared to staff augmentation, project based contracts, or outsourcing alternatives. ASAP HP-Quality Application Development Services Access to large pool of skilled resources Deep knowledge of HP’s technologies Knowledge Transfer Partnership

19 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 19 Key Differentiation ASAP (IT Extension Approach) ASAP is a collaborative approach that allows the client to maintain contol of strategic applications, provides access to large pool of skilled resources, and reduces per project start-up time and risks. Resource Augmentation IT Outsourcing Requires Customer management oversight as the prime High per project start-up time Customer must find skilled resources Increases on-site infrastrucutre costs Ranges from bodies to SI projects T&M to Fixed price Vendor primes and contols Long specification & bidding process for 5-10 year outsource contract Vendor buys assets Continue on-site infrastructure costs Fixed price with renegotiations Joint Project Office primes Manage multiple project streams Provides access to very large quantities of skilled resources Global, off-site resource infrastructure Consistent application of tools & methods Deliverables based pricing

20 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 20 Services-to-Alliance Strategy Application Services Supporting Services : we do these in support of application development engagements Platform Transitions Code Conversions (Y2K) Application Support Alliance 3+ year relationship Minimum 50 man years of resources annually $10++ million annual revenue minimum Customer Business Drivers Changing business models Competitive advantage Multiple strategic application projects What we’re after: Clients we can engage 2-3 times and evolve to a multi-year “Alliance” Project $2-4M annual minimum per project to get started 2-3 projects that lead to alliance within 2 years

21 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 21 ASAP Services ASAP Methodology Strategic Application Development & Deployment Application & Platform Migrations Legislative, Year 2000, Euro ‘02 Application Enhancements SWEO’s primary service focus is strategic application development. We provide three complementary services to support the delivery of the strategic application. For all four service areas, integrating internet and newer technologies into existing environments is a major focus and significant part of our value added. Internet Enabled

22 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 22 ASAP Methodology Establishes and manages joint Client-HP software development alliance and project office Establishes a process to meet business priorities Provides rigorous project management and processes to manage software engineering resources on multiple project streams simultaneously Provides on-site design and large-scale (hundreds) off-site software engineering resource ramp and management Establishes a distributed, physical environment for quality software development and support Implements a communication & equipment infrastructure Applies integrated process management (i.e. forecasting, production planning, quality, documentation, etc.) Applies client’s tools and methodologies as required - or HP’s Implements appropriate practices (re-use,tools use) Provides for knowledge transfer Legislative, Year 2000 ASAP Methodology Strategic Application Development & Deployment Application & Platform Migrations Application Enhancements Internet Enabled

23 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 23 Strategic Application Development & Related Services ¤ Application Development Service - Application design, development and deployment for HP and NT platforms ¤ Application Transition Service - Application and platform migrations from any current mainframe or server environment ¤ Application Compliance Service - Assessment and code conversions for legislated situations like Year 2000 or Euro currency, during Application Development or Transition Services ¤ Application Enhancements Services - Continued support for developed or re-hosted applications ASAP Methodology Strategic Application Development & Deployment Application & Platform Migrations Application Enhancements Internet Enabled Legislative, Year 2000

24 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 24 ASAP Methodologies & Tools Methodologies –IT Extensions (ASAP) –Project Management (Focus PM) –Software Development (CPLC) –Migrations –Year 2000 –Application Enhancements –Quality Documenting each Form the foundation for quality application initiatives Tools –Project Management tools –Software estimation tools –Software defect tracking tools –ISO 9000 based software process definitions –SEI based process improvement methods –Knowledge management

25 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 25 Migration Methodology Planning & Investigation Tools Development/ Customization Application Migration Pilot Migration Acceptance Implementation & Product Support Application Analysis Environment Investigation Alternatives Analysis Establishing Project Objectives & Scope Developing Project Estimates & Plans Tools Specification Application Migration Tools Data Conversion Tools Environment Conversion Tools Tools Testing DB Conversion Pilot Migration Program Conversion Unit Testing Integration Testing System Testing Documentation Functional Verification Interface Development Testing Stress Testing Performance Tuning Installation User Training Maintenance Support Customer SiteHP SiteCustomer Site Migration Guide Implementation Proposal ToolsMigrated Pilot Application Migrated Code Data Migration Tools Environment Migration Tools Test ResultsFinal System DeliverablesActivities Example.....

26 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 26 ASAP Expertise Deep technical expertise and critical resources to support strategic initiatives Platforms HP-UX MPE/iX MVS/CICS Windows NT & Windows 95 Languages COBOL FORTRAN C++ C Java Oracle*Forms Basic VB PASCAL PowerBuilder Proprietary languages Databases DB2 Oracle Informix Sybase SQLServer Ingress Allbase Image IMS IDMS Case Tools Oracle IEW ParadigmPlus Need to be able to describe depth... HP Emerging Technologies Open Pix Security Change Engine Future....

27 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 27 HP/ SWEO Contributions Summary ASAP HP-Quality Application Development Services Multi-vendor experience Globally distributed S/W development methodologies Global support Deep knowledge of HP’s technologies HP R& D Alliances Broad & deep technology base Knowledge Transfer For application of emerging technologies Two-way for processes, tools, methodologies Access to large pool of skilled resources Software Competence Center Rapid ramp of skilled resources Global communications infrastructure Partnership Multi-year commitment Account Team local presence & relations Lower risk Reliable partner

28 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 28 Market Positioning Perception and reality we are after.... TTM Ability High Med Low HighMedLow Risk Offshore company Integrator HP technologies competence Large scale Project Management experience Large pool skilled resources Global distributed SW Eng’g Management systems Global infrastructure HP - reliability & experience SWEO ASAP

29 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 29 Customer Examples ‘Valueometer’ Ability to ramp resources Technology competence Technology competence Resource ramp State Farm - Falcon M/F HP 3000 Claims Processing Migration Deadline; 10 day close Needed 130 COBOL developers in 2-3 months GM 33%,NOP 21.9%; completed ahead of schedule Amadeus IBM TPF UNIX; Networking Reservation System Consortium 200K terminals through Europe; 2500 TPS High cost of maintenance; 200 IS personnel Used 40 Europe & India developers $4M to PSO (~$1,304,000 ESO costs); 18 months Need to find the optimum balance to premium price

30 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 30 Projects Summary Where we are....

31 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 31 Goals, Financials & Resources

32 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 32 Statement of Purpose The ASAP purpose is to help build HP’s strategic presence in our target accounts. We’ll do this by providing application services that support our client’s business needs for competitive advantage. We will focus on: –helping our clients achieve better time to market and functionality on new or redesigned enterprise applications, –reducing the risk of the transition to newer or emerging technologies –and integrating existing environments with emerging internet/e-business software and solutions. SWEO Purpose is to provide software engineering, enterprise infrastructure integration and custom support. We team with –the Internet Software Business Unit (ISBU) product and operation groups to bring software products to market to help create a profitable software business for HP, and –EAO organizations to help build a strategic presence in targeted enterprise accounts. SWEO Vision is to be a global, premier provider of strategic internet enterprise solutions enabled by HP software products.

33 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 33 Three Year Objectives Objectives Build multi-year (3 year minimum) annuity revenue ‘application alliances’ with a portfolio of clients. Become a preferred software engineering partner to targeted clients for integrating HP internet SW and emerging technologies into existing environments. Key Strategies Focus on implementing ASAP and supporting methodologies. Target Financial Services in 1998, and two additional industries by Develop a team with competencies in delivering premium software engineering services (emerging technologies; TTM; functionality, re-use). Leverage the India competency center for large scale, skilled resources. Goals / Performance Tracking Evolve application services delivery to 50% internet/emerging technology development and integration services by Earn a “top three” position (HP, IBM, ?) as a hardware vendor that provides internet integration and development services. Build annuity revenue via 1 new client “alliance” in 1998, 2 in 1999 and 3 in Continuously evolve our value added to be able to premium price services to achieve a minimum 40% overall profit margin annually Achieve resource utilization rate of 85% in Achieve Application Services ‘98-’01 orders of US$ 20M, 32M, 58M, 76M revenue of US$ 15M, 27M, 52M, 73M.

34 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 34 May ‘98 REVENUE Forecast (US$000) Current Customers Americas -State Farm ICAT -AllTel migration -Ford -Disa Europe Japan Subtotal Funnel -State Farm Alliance* -AllTel Alliance* Subtotal Total ‘98‘99‘00‘01 3, ,000? -0- 5,050 3,0005,00010,000 15,000 6,00010,00020,00030,000 11,050 10,00020,00030,000 *Americas SERC annual revenue forecast goal for SF & AllTtel Alliances is $5M, 12M, 20M, 20M respectively. The writer of the business plan is taking a more conservative view.

35 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 35 Project Size Scenarios Alliance*MediumSmallAssessment Annual Revenue$5.5M$4.0M$2.0M$200K (3 Mo.) $2.4M$1.2M$0.18 On-site Project Director11 (Proj Mgr)1(Proj Mgr) Project Admin11 Clerical1 On-site - From India Project Mgr 1111 Technical Leads2212 Software Eng11 Off-shore Project Managers221 Technical Leads431 Programmers %$2.2$1.6M$0.8M $0.12 Total H/C = “The Perfect World” *Alliance = 3 years; 50 man years / year

36 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 36 ASAP Forecast Scenarios The following forecasts are provided as a way of opening the discussions with each SERC to determine what is possible. There are three forecast scenarios: –Aggressive –Stretch –% of SWEO SCALE The forecasts will be reviewed with each SERC Manager and goals will be set by the Management team. Each team will be asked to develop a bottom-up forecast using current sales leads in the sales cycle for forecasting. Each team should consider and work towards validating: –What are the sales cycle phase time frames? –What are the percentages to be used for tracking between the phases? –What are the project sizes we are seeing in the regions?

37 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 37 ASAP Forecast Scenarios

38 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 38

39 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 39 Global Deployment Americas USA Canada Mexico Brazil ROA Europe Germany/Austria/Switz UK France Scandinavia Italy Iberia Eastern Europe Benelux Japan AAA ‘98‘99‘00 BuildGrowGrow Opportunistically only Build GrowGrow Opportunistically only Build GrowGrow ‘‘99 Country strategy should be determined by leverage of target accounts we have done projects in as well as the types of solutions. ‘‘99 add 2-3 countries ‘‘99 add 1 country

40 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 40 Business Development Minimum Resource Considerations AmericasEuropeJapan ‘98 ‘99‘98 ‘99‘98 ‘99 BD SolutionsArchitect Project Managers India Technical Scope & Proposal Support* Program Marketing1 for Global Projects Project Managers for each SERC on board in advance of project start dates. India* + US based Project Team per revenue targets1998 = = 370 Assumptions: 1 BD/SA for every 8-10 Proposals (Not all qualified leads make it to proposal stage) Cupertino Marketing provides Program Marketing Director 1 PM for every 1 small and 1 medium projects Business Development

41 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 41 Example Business Development Data Canada Government Y2K bid: Approximately 270 hours of presales for proposal development Cost about $24,000 for SERC ($88 avg. HC hourly cost) Assume about 3X that cost for HP (field resources, proposal marketing team, etc.) State Farm Alliance effort: January through March about 600 hours (Donnie, Terry, Darryl, Mike) Will require about another 3 months of 3 FTE for 1500 hours Total about 2100 hours to evolve to an Alliance over 6 months or +$185,000 Assumptions State Farm is a ‘mature’ HP client. This effort could double for accounts with no HP project oriented experience (to 4000 hours) SWEO gains experience after 3-5 Alliance proposals and reduces costs to 3 FTE for 3 months

42 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 42 Required Issues & Actions

43 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 43 Sales Assumptions & Guidelines Assumptions Sales cycle for small and medium projects is 3 months from qualified lead through proposal acceptance to project start date. Alliance pre-sales is 6 months. Assume must complete at least 2 projects to pursue Alliance in order to establish credibility of performance, build relationship, and prove value. Guidelines SERC SBM’s need to be able to find the balance on project sizes: Only targeting small projects ($2M range) won’t leverage India SW center. Only targeting “killer” projects $6M+ require a long sales cycle and higher risk if we fail to develop a project Best target is to start with $2-4M project size starting points and continue to sell into the account for the follow-on projects. If the account doesn’t have the ability to grow to “Alliance” status (50+ man years of resources/year; $10M of revenue/year) in three years, don’t pursue. Note: The assumptions and guidelines need to be tested for each region.

44 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 44 Sales & Marketing Success Tracking Indicators Qualified leads - ability to get field to sell SWEO capabilities and pull SWEO in. Orders -ability to consistently build annuity stream that meets or exceeds the SCALE forecast Revenue - ability to achieve SCALE revenue targets. Forecast assumptions: 25% of order in quarter booked; 50% in 2nd quarter; 25% in 3rd quarter. IP/Value - our value for creative solutions using internet and emerging technologies, ability to resource large development projects, ability to manage down risk of using offshore resources for TTM and implementing new technology. Our IP value for pricing purposes should be in the 20% range. Profit Margin - Target is 40% minimum, in addition to the IP value. Utilization rate - Target overall utilization rate for project resources is 85%. Sales Cycle percentage monitoring (see following page) - track how many contacts it takes to find qualified customers, propose, close, and conduct subsequent projects. See initial target percentages on following page.)

45 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 45 Issue: Sales & Delivery Lifecycle Funnel Management: track numbers & percentages types of projects (target segments/hit criteria?) size of projects watch for trends Sales Contacts Qualified Leads (75%) Solution: Proposal/SOW (50%) Selection (90%) Delivery (100%) New Projects (90%) Targets C/F* Q1 Q2 Q3 Q Know your segment Offer value solutions Meet client need Improve client’s business Build repeat business Avg Time in Mo Negotiate (75%) *C=current F=future Leads - are everything. (EAO) Closing high % is critical. (Right solution - SBMs & SAs) Ruthlessly manage the timeframes down! (No slop) Phase & target % phase- to-phase

46 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 46 Critical Success Factors TEST the strategy - with field and with customers. Are we positioned properly? Is this a credible offer? Do customer’s believe we can deliver? Will they buy from us? Is this the right way to meet customer’s needs?.....etc. Marketing and sales - focus to grow the lead pipeline in the target market. Shorten the sales cycle; achieve repeat business Hiring, training and retention of skilled resources Making the Global development approach work - every time Increase HP knowledge content and value (knowledge retention; increase skills) Leverage re-use Developing synergies and smooth working relationships with other HP organizations to gain more of the services market Careful not to get positioned as a body shop/staff augmentation for maintenance!!!! Mantra...we must add value.

47 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 47 Critical & Follow-on Actions India Competence Center Fine tune & document methodologies & areas of expertise Lead/train on technology assessments for internet and emerging applications Lead on identifying systematic approach for reuse SERC’s Recruitment of SAs, PMs Assign & focus SBMs on ASAP selling Become Proposal Guru’s: Ability to efficiently create an incredible, credible “marketing” document Target account planning with EAO & FSBU (w/Marketing) Systematic approach to begin reuse approaches Assess how SERC’s can retain more revenue Cost tracking of Business Development Marketing Hire ASAP Program Manager Work with FSBU and EAO to target the top 50 and next 50 - lead generation and account planning Develop customer presentation Plan & develop collateral/sales tools Continue work on business plan: more detail around solutions opportunities and industries. Find the leverage points. Teaming agreement with OSD Office of Project Management Knowledge Management: Funnel, Proposal & Project Tracking Databases

48 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 48 YIKES!! Action Timeline FSBU Alignment EAO Alignment Phase 2: Field ‘Training’ Phase 1: Go-To-Market Strategies Phase 3: TEST w/ 10 Phase 4: Correct, launch SERC’s assign resources & hiring process Agree to target segments support ASAP Teaming agreements Target customers Develop account plan Plan sales training Draft collateral 1x1 ‘training’ for target account reps Provide customer presentation Supporting sales tools Sales contacts and qualification of first 10 accounts Feedback on message, collateral, etc. Program adjustments Launch contacts with the next 40 accounts Track program results May June July Roles Marketing/RonMarketing Marketing FieldField SERC/BDE BDE BDEBDE MarketingMarketing SWEO Alignment

49 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 49 Fit with other SWEO Services Phase Application Services Evolve to a solution focus? Phase CSD??? (EBanking/Comm) Phase Supply Chain??? FinanceTelecom Other Primary target is : Named target accounts - the “SWEO target ”- with sales Work strategy w/FSBU & EAO Target clients: enterprise HP accounts with a 50+ man-year IT gap. Opportunity has internet possibilities Leverage into: Emerging internet opportunities Customer Service Delivery Leverage into: Customer services via supply chain Financial transactions Next 50accounts TBD Customer & Vendor supply chain services Arrow direction indicates SWEO AD approach. Dotted arows are secondary. Use ASAP to form the foundation for targeted solutions Telecom version of CSD

50 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 50 Appendix of Additional, Miscellaneous Slides Customer Profiles WIP on SWEO capabilities Additional detail on ASAP services - customer presentation fodder..

51 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 51 Current Capabilities Broad technical skill set in legacy and distributed systems environments Have in-depth knowledge of HP technology –HP R&D alliances –Access to source code Experience in managing large software development projects Ability to manage distributed development world-wide: on/off-site; India Tools & methodologies –For development, migration, Y2K –Can develop needed tools for the environment/situation Additional capabilities –Have a global communications infrastructure –Provide access to scalable resources (hundreds of programmers) Need India input

52 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 52 Amadeus Reservation System Consortium Situation: –IBM Transaction Processing Facility environment (asssembly language high throughput operating system) Migration –2500 TPS –200,000 terminals over Europe managed by 2 TPF switches protocol conversion connected to backend systems –200 IS personnel for maintenance HP - used R&D extension team in India for Unix and Network solution Influenced R&D to make changes to meet customer requirements $4M (loss); 18 months; completed project

53 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 53 State Farm Overview: IT not able to meet LOB needs –TTM on products/services- Legislative issues –Y2K pressure- Rework-business updates/mainenance 4000 IT employees; 7% turnover Post LOB research found needed resources to meet needs Tried project based work - found the start-up time too high Chose 4 ‘partners’: IBM, HP, company in India, a local bodyshop Projects Claims Processing Systems –Needed 130 COBOL SW developers for HP 3000 migration in 2-3 months –Closed the deal in 10 days –Finished ahead of schedule- project ran 1996 through January 1997 –$10M revenue? –Most profitable project to date for SWEO (50% PM) ICAT –Contract not signed; interim order in place –GUI onto regional claims offices PCs –SF scrapping $6M worth of development that didn’t work –$5-10M over 2 years?

54 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 54 Sarasin Bank Tele-banking application? Use object base to build 3 tier client/server? Offered free development; thought we’d “make lots of dollars” 2 year project - still going $$? Environment? Banco Bamerindus do Brasil Mainframe to client/server reengineering using OO technology No application development $30M? Loss? Break-even? Project canceled when customer ran out of money; customer didn’t use change management practices.

55 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 55 AllTel Information Services Company sells a m/f version of the Virtuoso 2 (V2) billing system for wireless services. Current environment is a IBM m/f; migrating to HP9000 Goal is to sell a marketable billing system WW. Drivers are TTM, cost and business opportunity Phase 1) 300K assessment complete 4/24 Phase 2) $3.5-4M migration to be proposed on 4/24; start 5/15-6/1 Will perform a Y2K impact analysis as part of the project Future strategy - propose a ‘global’ version (GPS); localization services for the billing system; toaster and maintenance.

56 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 56 ALLTEL HP CO and ALLTEL Strategic Alliance Investigative and Pilot Phase Migration Phase Virtuoso II Competency Center IT Alliance Business Relationship Orders and Revenue ($) $300K $6M >$10M >$20M Migration Analysis Migration SW Development Y2K Intl Localization R&D SW Development Support Maintenance SW Development Support Maintenance

57 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 57 Application Services Alliance Program (ASAP) Internet Integration Service Elements Assessment of internet and related technology for internal, business-to-business and consumer-to-business applications Integration of internet and current environments Secure networks design Benefits Risk management in the use of emerging technologies Early review of emerging HP internet technologies Access to resources trained in the technologies by the R&D organizations Implementation teams that support continuing HP development on released products

58 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 58 Application Services Alliance Program (ASAP) Platform Migration Service Elements Server consolidation Re-hosting from mainframes Applications redevelopment Benefits Knowledge and experience to port numerous applications from multiple environments to HP platforms Performance improvements via new technology Improved operations

59 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 59 Application Services Alliance Program (ASAP) Application Enhancement Services Software enhancements to address changing business needs and improve operations Software enhancements to improve operations Establish service level and reporting metrics Benefits Quickly address business unit needs Improve software operations management Access to resources with knowledge and experience in all platform and environments

60 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 60 Application Services Alliance Program (ASAP) Year 2000 Services Strategy Development (fix, update, replace) Analysis Conversion & Pilot Tests Implementation & Compliance testing Benefits Methodologies and tools specific to the Year 2000 problem Ability to design tools for legacy environments or use a chosen vendor’s tools Ramp resources to the project size Access to large pool of COBOL resources

61 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 61 Application Services Alliance Program (ASAP) Accelerate (the client’s) benefits: Transform information systems into a competitive advantage - take on major initiatives and implement strategic IS programs faster knowing you have the knowledge and resource depth needed Reduce the risk of integrating emerging technologies into existing environments Gain access to technology experts skilled in multiple platforms, the newest development tools, and software development quality programs Implement a development management process that will align and prioritize business units needs Tap into a virtually unlimited resource that is experienced and focused on your environment. ~ Go Forward Faster ~

62 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 62 Year 2000 Customer Need Legacy systems were not designed for full 4-digit year representation Systems may fail with the millennium date change Failures will be in: –Date arithmetic –Date comparisons –Sorting Areas affected will include: –File formats –User interfaces (screens and reports) –Program logic Examples –Order fulfillment systems may not accept orders beyond Y2K –Expiry date for a new credit card may set as 1900 vs. 2000, disallowing any transactions on the “expired” card

63 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 63 Year 2000 Methodology Strategy Development Analysis Conversion Implementatio n Existing applications & data System Software Selected applications & data Updated applications & data Customer Site HP Site Customer Site Pre-analysis Toolkit & Services Analysis Toolkit & Services Conversion Toolkit & Services Repository manual inputs Risks to the business are assessed and an enterprise-wide Y2K strategy is evolved and documented. Impact Analysis Report is generated and strategies for resolution are finalized Retrofit production changes Change user interfaces Implement Compliance Test Application software and other related items are changed and tested Updated application is made to function in a ‘live’ environment

64 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 64 Year 2000 Tools Analysis Scanners for languages; like COBOL, C Repository Loader to load cross reference data - attributes and relationships between various objects CASEPAC repository with extensions to support XREF information Special reporting tools on CASEPAC for Year inpact analysis Provision for storing into the repository, inputs regarding selection of date fields and identification of changes to be made Analyzer to determine changes to user interface files Load Modeule Analyzer to scan the load module and determine the language of each component program Conversions Conversion Tool (filter) based on compiler technology for carrying out changes to date variables. Affected variables and the changes will be automatically picked up from the repository Tools for generating file conversion programs Date Translation Tools for generating test data for simulating runs in the next century Date Simulation Tools for simulating system dates of the next century Data Comparator Tools for comparing data in corresponding output and I-O files before and after conversion

65 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 65 Year 2000 Experience & Tools in HP Platform Experience MPE/UNIX/IBM mainframes and AS400 COBOL or C languages Over 1 million lines of code (6-8 person years of effort minimum) Strategic HP accounts –MPE/iX operating systems –Databases (IMAGE, IMAGE/SQL, ALLBASE/SQL) –Networking products –OpenVew client and WEB server products Tools Tools are based on parser and repository technology which makes development of Y2K tools for any language or platform possible Current tools handle standard languages such as COBOL and C with embedded SQL Tools for HP 3000 and HP 9000

66 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 66 Year 2000 Cababilities Summary Capability for over 5000 person-years and 1 billion lines of code Proven methodology and processes Support for any date strategy Tool-based migration: extensive tool set including HP3000 and HP9000 expertise Access to HP’s technology groups Factory approach for maximum efficiency Value additions: language conversions, enhancements, performance tuning HP - WIN Project HP WW Orders, Shipments and Invoices HP9000; HP-UX COBOL; ORACLE; SQL; C; PERL; SHELL;PJCL 2607 programs 463 datasets and flatfiles 550,000 LOC HP - OASYS Project Impact analysis and conversion HP3000; MPE; COBOL; VPLUS; IMAGE; BRW 88 programs, 36 datasets 165,000 LOC Insurance Project Impact analysis and conversion IBM AS/400; ILE; DB2/400; COBOL 16 person years Need HP projects vs. TCS

67 Application Services Business Plan Draft internal SWEO only SWEO 5/4/98 67 Application Services HP Channel Alignment New development Transitioning/Migration Offshore capabilities Inter/Intra/Extranet Year 2000 Services Retooling Support Maintenance Data warehouse and mining Package Implementation & Management Outsourcing - any & all above SWEO SWEO & PSO SWEO SWEO & PSO SWEO limited SWEO limited, & PSO Partner SWEO limited PSO & SWEO OSD OSD, SWEO supporting


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