Cost Reductions Based on Application Life Cycle

Whitepaper – Application Cycle Management

Samenvatting van volledige publicatie van de ASL BiSL Foundation

For the past one or two years those ICT managers who are active within the context of application management, have increasingly faced the task of cutting costs. The potential reductions are substantial, because three quarters of application costs are incurred in the maintenance & control stage. But how is one to achieve a reduction in a responsible manner?
In addition, how can one develop a cost-savings outlook for the future which also makes allowances for any required innovation? This white paper is the outcome of two evenings during which experts and interested parties exchanged ideas about such issues based on ASL (Van der Pols, 2001).

Introduction ACM

In order to improve the ASL framework and to share currently available knowledge and experience the ASL Foundation’s Development Working Group regularly holds evening seminars. You can consult the most important insights and findings in the ASL Foundation’s white papers covering the seminars. In this respect the same structure is used as that of the programme for the seminar concerned. This white paper ends with conclusions about ACM.
Applications Cycle Management in a nutshell ACM is a part of ASL which focuses on the future supply of information and the life cycle of the applications that constitute part of this. Using these processes, an application management organization develops a strategy for the next three to five years and stages for growth towards the new situation that has been outlined.

This occurs at the following two levels: at the level of ‘an individual application’ for a specific business process and at the level of ‘all the applications’ or portfolio of applications which support a number of business processes. Before determining the strategy it is necessary to monitor trends in the field of technology, the business processes within a customer’s organization, and the latter’s surroundings, in other words, the entire chain pertaining to the applications that are managed.
It is vitally important that other relevant angles are also represented in this process, such as infrastructure (infrastructure management), the supply of information and product development (business information systems management).

The ACM processes are as follows.

– ICT development strategy examines which ICT developments could be interesting for a customer’s organization and its supply of information. New system development technologies and new infrastructures, such as the Internet, can create opportunities for organizations, which have an impact on these applications.
– Customer environment strategy highlights demands and opportunities in relation to the applications and information supply used by a customer’s organization within the context of chain development. Organizations are increasingly operating as part of a chain of organizations. Consequently, applications are acquiring closer links with each other. The potential for an organization’s own information supply determines its place and position within these chain processes. Changing market conditions, and new and amended legislation and regulations also need to be considered in this process.
– Customer organization strategy charts developments within a customer’s organization (such as marketing, policy and organizational changes), as well as obstacles, their impact on applications and opportunities for capitalising on this.
– ICT portfolio management entails establishing the significance and performance of the various applications for organizations, implementing corporate policy and defining a strategy for the future of the ICT portfolio. Matters that are considered, include investment issues, the life cycle of applications and how items are phased out. This ensures the achievement of optimum coordination in respect of the larger investments and changes in the supply of information. Within many customer organizations this process constitutes part of information policy or planning.
– Life cycle management involves formulating a future strategy for an application, detailing relevant action, so as to ensure that the application concerned is capable of providing optimum support for the business process in question in the years ahead. Opportunities and future requirements are matched in relation to one or more applications which support a business process. A strategy is then prepared to satisfy these future requirements. This process is more in-depth, more substantive and, compared with the preceding process, more sharply focused on the specific business process which the relevant application supports.

Hypotheses and discussions.

In order to involve visitors more closely in the subject matter and to obtain new insights discussions were held on the basis of the hypotheses listed below.

Hypothesis 1: ACM yields more than what it costs.
This hypothesis induces one to consider the benefits of a long-term application strategy. ASL Foundation’s conclusion and opinion in respect of Hypothesis 1. No one can predict the future, although it does appear to be worthwhile to consider developments in the field of ICT, the organization and its surroundings on a regular basis. An application management organization is usually well aware of ICT developments. It can take an important step towards achieving business ICT alignment by sharing this knowledge with customers and by considering the impact of these developments on the various individual applications and its entire application portfolio.Sometimes people are surprised by events, such as the problems pertaining to the millennium. It also hppens that people invest a good deal of time and money in something which is never put into service for all sorts of reasons. By implementing ACM one can change course in good time and it may even be possible to avoid such issues.
As such, ACM presents an opportunity to cut costs.

Hypothesis 2: ACM must be implemented by the business.
A consideration of the various roles and the related division of labour produces an idea of how one can implement ACM in practice.
ASL Foundation’s conclusion and opinion in respect of Hypothesis 2. A customer’s organization bears final responsibility for the life cycle of its applications and its entire application portfolio. This is often realised through business information systems management. However, a great deal of expertise is required, if one is to be capable of making well-considered choices. In practice, this expertise is usually spread over various entities. It is possible to make appropriate decisions, which benefit both parties, thanks to the involvement of a substantive knowledge of the relevant applications and any other ICT expertise, and to share this with the business information systems management organization.

Hypothesis 3: ACM must always be implemented together with OCM.
Organization Cycle Management (OCM) and Applications Cycle Management (ACM) constitute strategic processes within ASL. There is a question as to how they relate to each other.ASL Foundation’s conclusion and opinion in respect of Hypothesis 3. OCM helps application management organizations ensure that their services keep pace with developments in the market, at their customers’, and in the fields of ICT and staffing. The OCM processes are related to various strategic organizational processes, such as portfolio management, for example. ACM focuses mainly on long-term application strategy. If one is involved in OCM processes, it is possible to reuse the output of the various ACM processes. In themselves, the ACM and OCM processes are not linked to each other directly and can be executed entirely independently of each other. In practice, other personnel are therefore often involved in these clusters: the management of the relevant application management organization in the case of OCM, and often consultants where ACM is concerned.

Hypothesis 4: ACM is not necessary in the case of package suppliers.
Application management occurs for various types of applications. Even suppliers of standard software packages can use ACM. Naturally, the question is whether this makes sense in the case of package suppliers.
ASL Foundation’s conclusion and opinion in respect of Hypothesis 4. Package suppliers are often unable to address the requirements of all their individual customers. Nevertheless, they will need to address the largest common denominator of relevant developments in order to continue to satisfy market demand. ACM also helps package suppliers consider developments in ICT, in their external markets (What are other competing package suppliers doing?) and within their own organization. In view of the fact that a package supplier actually also plays the role of an owner for the purposes of business information systems management, it can set its own priorities and determine further implementation. At any rate, ACM can certainly be used depending on the approach that is adopted and the penetration.

Conclusions

Business ICT alignment must be imbedded in a regular process and should be performed atset times. ACM can play a serious role in this respect and enables an application management organization to consider matters together with its customers. ACM makes a contribution to long-term customer relations and helps avoid surprises. In this way a business and its ICT provider can take the time to think proactively about those issues which are relevant for the future, which is also clear from the Department of Defence case study. Policy and decisions receive support thanks to a shared vision of the organization’s information supply. Application management can take the initiative or even assume the leading role in this respect but ACM will fail if the relevant business and its infrastructure service providers fail to participate sufficiently.
Monitoring trends and studying life cycles within an application portfolio help secure operations and optimise maintenance and control. As application management continues to mature, ASL’s well-considered concept of ACM will rapidly become generally accepted. In addition, we believe that ACM and the management of life cycles can constitute the basis for cost reductions. If you wish to learn more about ASL in general or ACM in particular, you are always at liberty to contact the ASL Foundation.

Credits

This white paper was written by Harry Meijer, senior consultant with Ordina (Harry.Meijer@Ordina.nl), and Mark Zwaal, consultant with the DTO (M.Zwaal@mindef.nl).
Literature
1. Meijer-Veldman M.E.E. and Van der Pols R., ‘ASL, second generation application management’, the English version of the Dutch article in IT Beheer Jaarboek 2001, Ten Hagen & Stam, The Hague, 2001.
2. Van der Pols R., ASL: a Framework for Application Management, Van Haren Publishing, 2004, ISBN 90-77212-05-1

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