IBM Software Group ® Smarter Application Portfolio Management Per Kroll - August 2011

IBM Software Group | Rational software 2 2 Problem: Insufficient spend on strategic projects “A large UK bank initiated its APM effort to take a 90:10 ratio for run-the-bank / grow-the-bank down to a more reasonable 40:60 ratio. Dell shifted its maintenance-to-innovation ratio from 80:20 to 50:50.” - The Application Portfolio Management Landscape — Combine Process And Tools To Tame The Beast, Phil Murphy, Forrester Research, Inc. April 15, 2011

IBM Software Group | Rational software 3 Solving the problems requires a different approach…. Addressing the problem requires an asset (application) portfolio approach to complement the traditional project portfolio approach Project Portfolio Management  Commonly used in mature companies  Provides executives (only)  control over 20% of this year’s budget,  ability to affect this year’s project proposals. Application Portfolio Management  Used effectively by only a few leaders  Provides executives  multi-year control over 80% of the budget,  ability to generate new project proposals such as structural changes to address problems faced. ”We can't solve problems by using the same kind of thinking we used when we created them.” - Albert Einstein

IBM Software Group | Rational software 4 Solution: Well-defined process with information feeds Effectively translate business needs to executable roadmaps Determine Disposition Do Macro Planning / Roadmapping Gather info, analyze, make decisions Application Details Business Alignment Cu sto me r Ins igh t an d An aly tic s Pla n Im ple me nt Dat a Col lect ion Organization Financial Performance Technical Debt $25 /def ect $10 0/de fect $16, 000 per defe ct $45 0/de fect $241,000 per defe ct $15 8,00 0 per defe ct Service Quality Architecture & Technology Text Title Text Application Portfolio Management Sample feeds Retire Retain Replace As-Is Consolidate Upgrade Rehost Wrap Convert Refactor Discontinue Rewrite Purchase Lease Retool Enabled through maturing analytics: Qualitative  Quantitative  Predictive

IBM Software Group | Rational software 5 APM-Driven IT Optimizations Consolidation Driver: M&A, divestitures, silos Benefit: Cost Payback time: Short Modernization Driver: Brittle architectures, retention, age Benefit: Cost, Agility, Risk Payback time: Medium Compliance Driver: Regulations Benefit: Risk Payback time: Short Investment Management Driver: Transparency, Efficiency Benefit: Cost, Business alignment Payback time: Medium SLA Optimization Driver: Operational complexity, Cost, Risk Benefit: Operational Cost, Bus alignment Payback time: Short Cloud Driver: Operational cost, fluctuations Benefit: Cost, Flexibility Payback time: Short Rightshore / Outsource Driver: Globalization, cost Benefit: Cost, competency Payback time: Short Application Inventory

IBM Software Group | Rational software 6 Adoption of APM: Industry Maturity 20% use tools - Often too complex and ‘blank sheet” issue 80% use spreadsheets - Scalability issue beyond 50 applications “Business leaders demand that IT leaders “do more with less” to free resources for innovation and growth. Applications professionals are turning to application portfolio management (APM) to meet those challenges” -The Application Portfolio Management Landscape — Combine Process And Tools To Tame The Beast, Phil Murphy, Forrester Research, Inc. April 15, 2011 The market situation opens an opportunity for leaders to differentiate themselves from laggards

IBM Software Group | Rational software 7 APM Reference Model: IBM Rational Focal Point Out-of-the-box Information model and analytics

IBM Software Group | Rational software 8 Application Rationalization through Smarter APM Effectively execute on business planning and architectural roadmapping Storage Collaboration QueryDiscovery Administration: Users, projects, process Best Practice Processes Presentation: Mashups Future IBM Capabilities Product & Project Management Collaborative Lifecycle Management Engineering & Software Tools Business Planning & Alignment Your existing capabilities 3 rd -Party Jazz Capabilities Compliance & Security Rational Focal Point Analysis, decisions, roadmaps. Execution roadmap Execution Status Architecture Application Lifecycle Management Rational System Architect Impact analysis and architectural roadmaps. “Vision without execution is hallucination”

IBM Software Group | Rational software 9 Execute with collaborative application lifecycle management Deploy new, common team infrastructure to manage modernization projects Benefits Improved communication, higher quality, informed decision making, and more automated, transparent, and predictable software development Support for re-platforming, UI modernization, conversion, refactoring, and rewriting

IBM Software Group | Rational software 10