rationalizing an enterprise it architecture
DESCRIPTION
Rationalizing an Enterprise IT Architecture presentation, as delivered by Ken Naylor at OTN Architect Day in Redwood Shores, CA, 7/22/09. Find an OTN Architect Day event near you: http://www.oracle.com/technology/architect/archday.html Interact with Architect Day presenters and participants on Oracle Mix: https://mix.oracle.com/groups/15511TRANSCRIPT
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Rationalizing an Enterprise IT Architecture
Ken Naylor
Insight Program Director – North American Technology Organization
PACE OF BUSINESSIncreasing expectations
from customers and
partners to provide
answers sooner
INNOVATIONCompanies are under
pressure to bring
products and services
to market faster
GLOBALIZATIONCustomers, supply chain,
and competition have all
become global
REDUCE COSTSRelentless pressures
to drive additional
efficiencies…do more
with less
Businesses Challenges
• Evolved through corporate,
organizational and technology
changes
• Mergers & Acquisitions
• Adapted to new business
processes
• Adhere to layers of regulatory
requirements
• Integrate ‘best of breed’
applications
• Account for LOB IT ‘initiatives’
• Organizational and Information
silos
• Complex IT environment,
multiple skill sets, costly to
operate
• Inflexible IT infrastructure,
difficult (and risky) to modify
• Redundant application systems
and business processes
• Multiple versions of business
data
IT Environment History Resulting in
IT Challenges
OK, Who Made This Mess?
“The value of information increases exponentially as fragmentation is reduced.”
EllisonEllison’’s Laws Law
Reinvent IT EconomicsThe architect’s dilemma
InfrastructureInfrastructure
StrategicStrategicInvestmentInvestment
InfrastructureInfrastructure
StrategicStrategicInvestmentInvestment
SavingsSavings
AnnualIT Spend
IT Spending and Demand Survey
�80% Maintenance�20% New Projects
IT Spend for World-Class Performers is
Comparable to Their Peers…
…But, they spend it differently
World-Class Performers Reduce Complexity
• They spend 18% less on IT
• They require 36% fewer IT workers
• They need 29% fewer apps
• They finish 91% of all projects to
spec, on time and on budget
• 100% have their top IT exec on the
senior management committee
• Better IT Vendor Management
• 5% fewer hardware vendors
• 29% less contractor services
• 65% fewer software suppliers
• Standardized best practices and
good architecture
• Simplification and standardization
• Higher levels of process discipline
• Improved overall alignment with
business objectives
• Eliminate Information Silo’s
• Intelligent Outsourcing
• Empowered change agent
Characteristics How Do They Do It?
8
Fusion Middleware
Governance, Risk and
Compliance
Enterprise Performance Management
ERP ERP
Standardization & Standardization &
IT ConsolidationIT Consolidation
World Class
Performance
World Class
Performance
Oracle Global TransformationPhase One (1998-2003): Operational Excellence
Goal: Save $1 Billion Per Year
Business Strategy:Business Strategy:
1. 1. Simplify information systemsSimplify information systems
2. Standardize data, systems, and 2. Standardize data, systems, and
business processesbusiness processes
3. Automate processes3. Automate processes
4. Move to shared service4. Move to shared service
Copyright ©2009 Oracle Corporation. All rights reserved. 9
Technical Architecture
Technical Architecture
Oracle Rationalized IT Portfolio
63 Financial databases 1 Financial single global instance
1 IT Support single global instance
60 IT Support databases
97 Email servers on 120 databases
1 cluster of 2 Email servers and 4 databases
501 Education servers 296 Education servers
32 IT Support servers, 600 test servers
2 IT Support servers, 30 test servers
40 Education registration systems
1 Education registration system
27 IT Support applications 1 IT Support application
>1000 applications<100 applications – standardized on E-Business Suite
40 Data Centers
2300+ Staff
1 Global IT & Governance Model
2 Data Centers + 1600 Staff
Few standard business processes
Standardized core business processes
Business Architecture
Information Architecture
Old State Current State
App./Services Architecture
Infrastructure Architecture
Copyright ©2008 Oracle Corporation. All rights reserved. 10
The Transformation Payoff for Oracle The Ability to Scale Without Increasing Costs
$0$0$0$0
$2$2$2$2
$4$4$4$4
$6$6$6$6
$8$8$8$8
$10$10$10$10
$12$12$12$12
$14$14$14$14
$16$16$16$16
$18$18$18$18
$20$20$20$20
199319931993199319941994199419941995199519951995199619961996199619971997199719971998199819981998199919991999199920002000200020002001200120012001200220022002200220032003200320032004200420042004200520052005200520062006200620062007200720072007
Billions
0%0%0%0%
1%1%1%1%
2%2%2%2%
3%3%3%3%
4%4%4%4%
5%5%5%5%
6%6%6%6%
7%7%7%7%
8%8%8%8%
9%9%9%9%
Percentage
Revenue G&A
G&A as % of revenue
Revenue in Billions
+4 acquisitions
+17 acquisitions
+14 acquisitions
• Practically speaking…
- You’re not likely to achieve meaningful levels of IT Rationalization without Enterprise Architecture
- You’re not likely to develop an effective Enterprise Architecture without employing IT Rationalization practices
The Role of the Enterprise Architect
ETL
Informatica Powermart
business events
JDBC / ODBC / Web Services
Web Site
Oracle Weblogic Application Server
web services
Business ProcessesSOA – BPEL Process Manager
Proactive EventsSOA – Business Activity Monitoring (BAM)
Events & MessagesSOA – Oracle Enterprise Service Bus (ESB)
Batch
Files
Real
Time
Data Grid & Caching Layer
Oracle Coherence Grid
Existing E2.0Confluence Wiki, Oracle Portal
SearchOracle Enterprise Search
Vehicle Domain Model , BI Analytics, Sessions, etc
VDM, BI Analytics , etc
BI
Analytics
Operational &Decision Support Databases
(Media and D/W )
Data Warehouse
Oracle Database EE (10g & 11g)
RAC, RAT, OLAP, Partitioning , Advanced
Compression
Web Site
Media
FinancialsStatistical Analysis
& Data Mining
SASSAS
ConsolidatedUser Interface
(Portal, Community,
Collaboration )
Oracle WebCenter
Dashboards & Enterprise BI
(Enterprise Business
Model, Caching, BI
Engine )
Oracle Business intelligence
EE
Reporting (pre-built & ad-hoc)
Microstrategy &
Ad-Hoc Tools (e.g., SQL
Navigator
BI ApplicationsOracle BI Applications
(Finance, HR, etc.)
Copyright ©2009 Oracle Corporation. All rights reserved. 12
Information Technology RationalizationGuiding Principles
• Driven by Business Strategy and value-based priorities
• Standardizes & Simplifies the technical architecture
• Broad perspective 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. 13
IT Rationalization Process
Establishes the vision for business and information technology.
Involves the right mix of people for success.
Establishes objectives, “future state” and roadmap.
Provides prescriptive guidance, process and standards for Business and Information Technology.
Documents current state and path to future state.
Promotes adherence to EA guidance and plans while architecting business-driven, enterprise solutions.
Identify the Business Strategy
Establish Enterprise Architecture Program
Define “Future State”Architecture
Define Rationalization Roadmap
Establish EA Governance
11
33
22
55
44
Copyright ©2009 Oracle Corporation. All rights reserved. 14
Identify the Business Strategy
Establish Enterprise Architecture Program
Define “Future State”Architecture
Define Rationalization Roadmap
Establish EA Governance
11
33
22
55
44
Reduce Costs
Faster to Market
Innovate
Globalize
Business Goals
Copyright ©2009 Oracle Corporation. All rights reserved. 15
• Executive Sponsors
• Business Stakeholders
• Chief Enterprise Architect
• Program Manager
• Business Architects & Industry Experts
• Information Analysts
• Solution Architects
• Strategic Vendors
TASKS
PEOPLE
• Establish goals, leadership and resources
• Define scope and the next iteration of work product
• Gain Executive sponsorship and support
• Conduct Stakeholder analysis
• Establish plan for an EA Governance Board
• Develop a communication plan
Identify the Business Strategy
Define “Future State”Architecture
Establish EA Governance
11
33
22
55
44
Establish Enterprise Architecture Program
Define Rationalization Roadmap
Copyright ©2009 Oracle Corporation. All rights reserved. 16
How do you…
• Stay current with technology and applications,
• Implementing best practice business models,
• Yet be able to integrate these business processes
• To improve business visibility, agility and efficiency
Identify the Business Strategy
Define “Future State”Architecture
Establish EA Governance
11
33
22
55
44
Establish Enterprise Architecture Program
Define Rationalization Roadmap
Copyright ©2009 Oracle Corporation. All rights reserved. 17
Defining “Future State” Architecture
Business Business StrategyStrategy
Business Business Requirements Requirements & Objectives& Objectives
Architectural Architectural PrinciplesPrinciples
Business ArchitectureBusiness Architecture
Application ArchitectureApplication Architecture
Technical ArchitectureTechnical Architecture
EA Views
EA Views
EA Artifa
cts
EA Artifa
cts
Business Process & GRC Models
Data/Info Objects & Models
Technology Standards & Reference Models
Industry Industry Best PracticesBest Practices
& Models& Models
EA Inputs
EA Inputs
EA/Solutioning Process & Guidance
Information ArchitectureInformation Architecture
Capability & Service Descriptions
Copyright ©2009 Oracle Corporation. All rights reserved. 18
Business ArchitectureDecomposed
Business ArchitectureBusiness Architecture
Order to CashOrder to Cash
Procure to PayProcure to Pay
Hire to ExitHire to Exit
Service & SupportService & Support
Industry Specific & CustomIndustry Specific & Custom
…
QuickTime™ and a decompressor
are needed to see this picture.
QuickTime™ and a decompressor
are needed to see this picture.
QuickTime™ and a decompressor
are needed to see this picture.
Applications Architecture: Retail Example
CustomerDemand &Enterprise
AnalyticsAnalytics CRM & MarketingCRM & Marketing Loyalty Call Center Sales Field Service
Marketing Order Mgmt Pricing CTOWeb Store
Supply ChainPlanning
Supply ChainExecution
Business OperationsBusiness Operations
Merchandise Planning& Optimization
Merchandise Operations
Store Operations
InfrastructureInfrastructure
Integration and Collaboration
Enterprise Infrastructure
Corporate AdministrationCorporate Administration
Indirect Procurement Projects
EPM Financials
Compensation
Human Resources Real Estate
ITITHRHRHelpdesk
Store Inventory Mgmt
Point-of-Sale
Workforce Scheduling
Learning Mgmt
Store Helpdesk
Workforce Comms
TransportationManagement
ReplenishmentOptimization
Sourcing
Warehouse Management
Home Delivery
Advance InventoryPlanning
Supply NetworkOptimization
Value Chain Allocation
Value ChainCollaboration
PIMMerchandiseFinancial Planning
Assortment Planning
Item Planning
Category Mgmt
Price Optimization
Promotion Planning& Optimization
Trade Management
Invoice Match
Merchandise Management
Price Management
Sales AuditDemand Forecasting
Returns Management
Copyright ©2009 Oracle Corporation. All rights reserved. 20
Information / Data ArchitectureDecomposed
Information ArchitectureInformation Architecture
ERP Data ModelsERP Data Models
Process Data ModelsProcess Data Models
Data HubsData Hubs
Industry Data ModelsIndustry Data Models
…
Customer
ProductHealthcare
Copyright ©2009 Oracle Corporation. All rights reserved. 21
Technical ArchitectureDecomposed
Technical ArchitectureTechnical Architecture
SOA & Integration ArchitectureSOA & Integration Architecture
Data & Information Mgmt ArchitectureData & Information Mgmt Architecture
Security ArchitectureSecurity Architecture
Infrastructure ArchitectureInfrastructure Architecture
Application Development ArchitectureApplication Development Architecture
Business Intelligence ArchitectureBusiness Intelligence Architecture
Copyright ©2008 Oracle Corporation. All rights reserved. 22
EA Future State: Applications, Technology
EA Transformation Focus:Operational Excellence
(Business, IT)
Enterprise Solutioning: Business-Driven
Initiatives
IT Rationalization is an Iterative Journey
EA Transformation Focus:
Management Excellence
Identify the Business Strategy
Define “Future State”Architecture
Establish EA Governance
11
33
22
55
44
Establish Enterprise Architecture Program
Define Rationalization Roadmap
Rationalization Deliverables
Current State Gap &Opportunity Analyses
High Level Roadmap
Targeted Benefits
Target architecture and process model that defines the
applications, services, information and infrastructure required to
satisfy key business goals and requirements
High level, multi track program of phased actions, initiatives and
implementations that provides a framework for planning and
managing the future state migration
Identification of potential cost savings and other business benefits
to be derived from the future state
Future State Vision
Key findings and conclusions including targeted analyses of the
current state environment and its key performance gaps and
opportunities
Copyright ©2008 Oracle Corporation. All rights reserved. 24
• Chief Information Officer
• Chief Enterprise Architect
• At least one Executive Sponsor
• At least one major Business Executive
• At least one Business Architect
• Lead Solution Architects pulled in on an as-needed basis
RESPONSIBILITIES
BOARD MEMBERS
• Establish an EA Governance model and an Architecture Review Board
• Promote the EA agenda and adherence to “Future State” EA Prescriptive Guidance:
• Review IT project designs
• Review proposed enterprise solution architectures and major initiatives
• Provide direction
Identify the Business Strategy
Define “Future State”Architecture
Establish EA Governance
11
33
22
55
44
Establish Enterprise Architecture Program
Define Rationalization Roadmap
Copyright ©2008 Oracle Corporation. All rights reserved.
Deploy Grid PlatformDeploy Grid Platform
Standardize Standardize
BusinessBusiness
ProcessesProcesses
ConsolidateConsolidate
ApplicationsApplications
& Data& Data
StandardizeStandardize
ServiceService
PlatformPlatform
OptimizeOptimize
InfrastructureInfrastructure
SourceSource
ApplicationApplication
ManagementManagement
Outsource Application & Infrastructure ManagementOutsource Application & Infrastructure Management
ModernizeApplications
Preserve applications
investment while
transitioning to a
lower cost platform
ModernizeApplications
Preserve applications
investment while
transitioning to a
lower cost platform
Standardize Service Delivery Platform
IntegrationIntegrationBusiness
Intelligence
Business
IntelligenceProcess
Management
Process
ManagementUser
Interaction
User
Interaction
StandardizeCorporate ServicesImprove efficiencies and
reduce costs:
�Financial Mgmt
�Human Capital Mgmt
�Procurement
�Budgeting & Planning
�Facilities & Projects
StandardizeCorporate ServicesImprove efficiencies and
reduce costs:
�Financial Mgmt
�Human Capital Mgmt
�Procurement
�Budgeting & Planning
�Facilities & Projects
StandardizeFront Office
Grow revenue, improve
customer retention and
reduce cost:
�Marketing
�Sales & Service
�Relationship Mgmt
�Collaboration
StandardizeFront Office
Grow revenue, improve
customer retention and
reduce cost:
�Marketing
�Sales & Service
�Relationship Mgmt
�Collaboration
The Road to Operational ExcellenceOpportunities to standardize, consolidate and automate
Governance, Risk & Compliance
Governance, Risk & Compliance
ConsolidateInformation
Improve visibility and
reduce cost:
�Customers
�Financials
�Organizations
�Data Warehouses
�Documents
ConsolidateInformation
Improve visibility and
reduce cost:
�Customers
�Financials
�Organizations
�Data Warehouses
�Documents
1 2 3 4
5
6
7
IT Standardization StrategyDriven by business model
Common Processes
Common Data
Accelerate Transformation BenefitsLeverage Integration and BI platforms
Common Enterprise Information Model
Composite business processes
and business analytics accelerate
business resultsComposite Business ProcessComposite Business Process
�No single source of truth
�Redundant applications
�Incomplete and conflicting data
�Labor intensive compliance
Long-term goal: Standardize processes, consolidate redundant applications and eliminate data silos
Application & Data Silos
�Common view of information
�Key Performance Indicators
�Business reporting and analytics
�Compliance reporting
�End-to-end visibility
�Unified workplace
�Compliance
• Deploy standardized business processes over legacy application silos using standards-based services.
• Improve process management and controls enforcement.
• Improve visibility through common enterprise information model.
• Improve business analytics using out-of-the-box analytics capabilities.
• Publish key performance indicators
• Shelter users from changes to underlying systems as they are consolidated over time.
28
Technical Architecture
Technical Architecture
Case Study: Large Manufacturing Company
• 217 Disparate systems
• Plant autonomy – no process integration
• 9 process chains including Order-to-Make
• Integrate processes across 3 plants
• 100,000 attributes • 15,252 attributes (down 85%)
• Data element standardization
• 62,300 programs • 12,309 programs (down 80%)
Business Architecture
Information Architecture
Current State Future State
• Legacy systems on Mainframes
• Mainframes plus HP Superdome HP/UX for Grid computing
• 5,500 interfaces • 1,561 interfaces (down 72%)
• SOA and EDI Integration
App./Services Architecture
SOA & Integration
Architecture
Infrastructure Architecture
Data Mgmt Architecture
• Plant autonomy – separate databases, duplicate data
• Replicated financial data & integrated into single global data warehouse
App. Dev. Architecture
• JDeveloper tool for creating J2EE apps
• COBOL
Results:
�$3 Billion ROI
�Reduced production lead time from 30 to 14 days
�Increased the delivery hit ratio from 82.7% to 95%
�Customer inventory days reduced from 30 days to less than 24 hours
Case Study: Large Manufacturing Company
Recommendations
• Integrate IT rationalization with enterprise architecture efforts (or use as catalyst to initiate EA efforts)
• Start at the business level and drive your down to technology
• Align with the broader business strategy – not simply a IT cost-cutting initiative
• Involve the right mix of Business/IT/EA people/Strategic vendors
• Treat IT Rationalization as an ongoing process – not a discrete project
Identify the Business Strategy
Define “Future State”Architecture
Establish EA Governance
11
33
22
55
44
Establish Enterprise Architecture Program
Define Rationalization Roadmap
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