software engineering operation application services business plan

Application Services Business Plan

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Software Engineering Operation


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. 21-23)• Adjustment on 3 Year Objectives (pg. 32)• New forecasting scenarios (pg. 36-38)• New sales assumptions and guidelines (pg. 43)• Sales and marketing success tracking indicators (pg. 44)


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Contents

Customer Needs and Challenges......3-7

Segmentation....................................8-16

Offer & Services.............................17-30

Goals, Financials & Resources.......31-40

Required Issues and Actions...........41-48

Appendix of Misc.. Slides................49-66

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


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Customer Needs & Challenges


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% of Respondents

3.80

1.10

9.90

11.40

12.40

16.60

17.80

18.20

21.30

21.80

22.30

25.50

27.90

28.00

30.50

33.90

38.70

39.30

43.60

51.10

0 10 20 30 40 50 60

None

Euro Plan

KM

SC

Collaborative Computing

DW

ECOM

Asset Mgmt

Mobile Computing

CMS

Help Desk

Ent. Appl. Solns

BRS

NT Migration

Intranet

Y2K

CPE Maint

Security

E-Messaging

Internet

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


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Client Needs and Application Services

New development Achieve competitive advantage, accelerate TTM, increase profits, obtain new skills, accelerate BPR efforts

Data warehouse and mining Business performance & customer needs analysis improvements

Emerging & Internet Change customer and supplier business models, accelerate TTM. technology Integrate with legacy environments.

Package Implementation Integrate business functions, improve TTM& functionality. Management

Transitioning Conversions, migrations, re-hosting, transformation to new architectures for performance, capability or cost improvements

Year 2000 Services Assess problem, obtain resources, convert or replace

Retooling Teach staff new processes, technologies, methodologies

Support Application 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.

Services Needs

Inte

gra

te w

/ c

urr

ent

envir

onm

ents


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IT Staffing Dilemma

Competition with providers for resources

Service provider as a solutionto 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


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Competitive LandscapeMany Players

Package ManagementAndersen ConsultingEDSPrice WaterhouseCSC

New DevelopmentAndersen ConsultingGap Gemini SogetiMCI SystemhouseCambridge Technology Group

Full ServiceEDSIBM Global ServicesCSCPerot SystemsSAICUnisys

Staff AugmentationComputer HorizonsKeaneComputer Task GroupAccustaff

Year 2000Gap GeminiCiber Inc.Cognizant Technology SolutionsIBM Global ServicesComputer HorizonsCompuwareData DimensionsMastechIMRKeane

TransitioningMCI SystemhouseLockheed MartinAndersen ConsultingGE CapitalEntexVanstarPKS

Legacy MaintenanceKeaneCoopers & LybrandAndersen ConsultingCap Gemini AmericaIMR

OffshoreIMRCBSIHCL AmericaMastechSyntelInfosys

Source: Gartner Group, 7/97* IDC Top Providers, 1997


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Segmentation


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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 B Segment C

New Solutions

Hig

h G

ap

Low

or

no G

ap

Segment D Segment E Segment F

Deployment Capability“The Gap”

“Early adopter” “Cost conscious”“Value seekers”


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“Cost conscious”

Services for the Target SegmentFocus: Which Needs? Which Services?

New Solutions

“Value seekers”• Wants help to

apply technology• Lower risk• TTM - Increase



“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


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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

“Costconscious”

New Solutions

“Value seekers”• Help apply

technology• Manage risk• TTM - Increase



“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


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Competition: How Differentiate?

Provide cost savings and to free in-house IS

Help apply technology, increase speed of implementation

Emerging technologies

Different valuefor 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


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SWEO Internet Focus

Access

Collaboration

Transaction

Intranet Internet

Internal publishing

Collaboration,workflow

Internal & business-to-business apps.

Home pages

DynamicWeb pages

Business-toconsumer apps. SWEO

Target for InternetSolutions

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....


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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.”


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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


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Target Opportunity - Checklist

High degree of custom S/W development (COBOL; M/F’s)

Using IT for competitive advantage

Legislative orIndustry pressure(deregulation)

FinancialServices (‘98)

Legacy to......•Internet/•Emerging•UNIX•NT

Delivery Gap+ 50 man years

Skills Gapin 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 Account s

Primary Criteria

Additional Qualifiers

No Standalone Y2K or Maintenance projects

High probability for long-term S/W partnership


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Offer & Services


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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


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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

ITOutsourcing

• 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


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Services-to-Alliance Strategy

ApplicationServices

Supporting Services : we do these in support of application development engagements

Platform TransitionsCode Conversions (Y2K)

Application Support

Alliance

• 3+ year relationship• Minimum 50 man

years of resources annually

• $10++ million annual revenue minimum

CustomerBusinessDrivers

• 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 1 23

• $2-4M annual minimum per project to get started• 2-3 projects that lead to alliance within 2 years


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ASAP Services

ASAP Methodology

Strategic ApplicationDevelopment & 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


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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 ApplicationDevelopment &

Deployment



Internet Enabled


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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 ApplicationDevelopment &

Deployment



InternetEnabled

Legislative, Year 2000


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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


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MigrationMethodology

Planning &Investigation

Tools Development/Customization

ApplicationMigration

Pilot Migration

AcceptanceImplementation

& ProductSupport

• 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 Site HP Site Customer Site

• Migration Guide• Implementation

Proposal

• Tools • Migrated Pilot Application

• Migrated Code• Data Migration

Tools• Environment

Migration Tools

• Test Results • Final System

Del

iver

able

sA

ctiv

itie

s

Example.....


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ASAP ExpertiseDeep 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....


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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


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Market PositioningPerception and reality we are after....

TTM AbilityHigh

Med

Low

High Med Low Risk

Offshorecompany

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


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Customer Examples

‘Valueometer’

Abilitytorampresources

Technologycompetence

Technologycompetence

Resourceramp

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


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Projects SummaryWhere we are....

Status Project $M # Years Peak Competition Lead SalesType H/C Cycle/Mo

BBB complete App Dev 28 1.5 150 IBM/AC PSO 3SF Falcon complete App Dev 8 1.5 118 IBM SF21/PSO 10 daysAmadeus complete App Dev 4 1.5 40 IBM PSO ?

SF ICAT implement App Dev 6? - - - SF21/PSO -SF Alliance prospect alliance 6? 3+ 300 IBM/Sat SF21

AllTel assm't Migration 6? 1.5 - IBM PSO 6?Ford implement embedded 600K 2+ 10 - PSO ?

EHPT implement R&D ext 1.4 2+ 18 - - -CoCreate implement R&D ext 1.3 2+ 17 - - -


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Goals, Financials & Resources


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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.


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Three Year Objectives1998 - 2000

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 2000.

• 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 2000.

• 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 2000.

• Continuously evolve our value added to be able to premium price services to achieve a minimum 40% overall profit margin annually 1998-2000.

• Achieve resource utilization rate of 85% in 1999.

• Achieve Application Services ‘98-’01

orders of US$ 20M, 32M, 58M, 76M

revenue of US$ 15M, 27M, 52M, 73M.


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May ‘98 REVENUE Forecast(US$000)

Current CustomersAmericas -State Farm ICAT -AllTel migration -Ford -DisaEuropeJapanSubtotal

Funnel-State Farm Alliance* -AllTel Alliance*

Subtotal

Total

‘98 ‘99 ‘00 ‘01

3,000 150 750 1501,000?-0-5,050

3,000 5,000 10,000 15,0003,000 5,000 10,000 15,000

6,000 10,000 20,000 30,000

11,050 10,000 20,000 30,000

*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.


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Project Size Scenarios

Alliance* Medium Small AssessmentAnnual Revenue $5.5M $4.0M $2.0M $200K (3 Mo.)

COGS @60% $3.3M $2.4M $1.2M $0.18On-siteProject Director 1 1 (Proj Mgr) 1(Proj Mgr)Project Admin 1 1Clerical 1

On-site - From IndiaProject Mgr 1 1 1 1Technical Leads 2 2 1 2Software Eng 1 1

Off-shoreProject Managers 2 2 1Technical Leads 4 3 1Programmers 38 26 10

Profit @ 40% $2.2 $1.6M $0.8M $0.12Total H/C = 50 36 16 4

“The Perfect World”*Alliance = 3 years; 50 man years / year


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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?


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ASAP Forecast Scenarios"AGGRESSIVE" - ORDERS ($M) "STRETCH" - ORDERS ($M) "% of SWEO SCALE" - ORDERS ($M)

SWEO Forecast 40M 60M 90M 120MASAP Target 20M(.5) 30M(.5) 54M(.6) 72M(.6)

Year Year YearCustomer 98 99 00 01 Customer 98 99 00 01 Customer 98 99 00 01Americas Americas Americas 60%StateFarm 6 10 20 20 StateFarm 6 10 15 20 StateFarm 4 6 10 10Alltel 6 10 15 20 Alltel 6 6 10 10 Alltel 4 4 6 10WF/NWM/CiticCorp 6 6 10 20 WF/NWM/CiticCorp 2 4 6 10 WF/NWM/CiticCorp 2 4 6 6

4 2 4 6 10 4 2 4 6 6 4 2 2 4 65 2 4 6 10 5 2 4 4 6 5 2 4 46 2 4 6 6 2 4 6 6 2 47 2 4 6 7 2 4 4 7 2 48 2 4 6 8 2 4 4 8 2 29 2 4 9 2 4 9 2

10 2 4 10 2 411 2 4 11 2 412 2 12 213 2 13 214 2 14 2

Total 22 40 75 116 Total 18 34 59 84 Total 12 18 34 44

Europe Europe Europe 30%1 4 6 10 15 1 4 4 6 10 1 2 4 6 62 4 6 10 10 2 2 4 6 6 2 2 2 4 63 2 4 6 10 3 2 4 6 6 3 2 2 2 44 2 4 6 6 4 2 2 4 6 4 2 2 25 2 4 6 5 2 4 6 5 2 26 2 4 6 6 2 4 4 6 27 2 4 4 7 2 4 4 78 2 4 8 2 49 2 4 9 2 4

10 2 4 10 2 411 2 11 212 2 12 213 2 13 2



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Japan Japan Japan 10%1 4 6 10 15 1 2 4 6 10 1 2 2 4 42 2 4 6 10 2 2 2 4 6 2 2 2 23 2 4 6 3 2 4 6 3 2 24 2 4 6 4 2 4 4 4 25 2 4 4 5 2 2 46 2 4 6 2 47 2 4 7 2 48 2 4 8 2 49 2 9 2

10 2 10 211 2 11 2


ORDERS Total 40 82 159 250 ORDERS Total 32 66 125 192 ORDERS Total 20 32 58 76

REVENUE REVENUE REVENUE Americas Americas AmericasSF 5 8 15 15 SF 5 8 12 15 SF 3 5 8 8Alltel 5 8 12 15 Alltel 5 5 8 8 Alltel 3 3 5 8Rest 98-10M 7 3 Rest 98-6M 5 1 Rest 98-4M 3 1Rest 99 - 20M 15 5 Rest 99 - 18M 14 4 Rest 99 - 8M 6 2Rest 00 - 40M 30 10 Rest 00 - 34M 26 8 Rest 00 - 20M 15 5Rest 01 - 78M 59 Rest 01 - 54M 40 Rest 01 - 28M 21Total 17 34 62 99 Total 15 28 50 71 Total 9 15 30 42

Europe Europe Europe98 - 12M 9 3 98 - 10M 7 3 98 - 6M 5 199 - 26M 20 6 99 - 20M 15 5 99 - 10M 7 300 - 50M 38 12 00 - 40M 30 10 00 - 16M 12 401 - 75M 57 01 - 60M 45 01 - 22M 17Total 9 23 44 69 Total 7 18 35 55 Total 5 8 15 21

Japan Japan Japan98 - 6M 5 1 98 - 4M 3 1 98 - 2M 1 199 - 16M 12 4 99 - 12M 9 3 99 - 4M 3 100 - 34M 26 8 00 - 26M 20 6 00 - 8M 6 201 - 59M 44 01 - 48M 36 01 - 10M 8Total 5 13 30 52 Total 3 10 23 42 Total 1 4 7 10Total Revenue 31 70 136 220 Total Revenue 25 56 108 168 Total Revenue 15 27 52 73Resource Est: 280 636 1236 2000 Resource Est: 230 510 980 1527 Resource Est: 155 280 480 665Note: Revenue - Assume 75% of orders in year booked, 25% in following year

Note: Resources = (Revenue / 5.5M ) X 50 people


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Global Deployment

AmericasUSACanadaMexicoBrazilROA

EuropeGermany/Austria/SwitzUKFranceScandinaviaItalyIberiaEastern EuropeBenelux

Japan

AAA

‘98 ‘99 ‘00Build Grow GrowOpportunistically only

Build Grow GrowBuild Grow Grow

Opportunistically only

Build Grow Grow

‘‘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


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Business DevelopmentMinimum Resource Considerations

Americas Europe Japan‘98 ‘99 ‘98 ‘99 ‘98 ‘99

BD 2 +2 2 +2 1 +1

Solutions Architect 3 +3 2 +2 1 +1

Project Managers 3 +3 2 +1 1 +1

India Technical Scope& Proposal Support* 4 6 4 4 2 2

Program Marketing 1 for GlobalProjectsProject Managers for each SERC on board in advance of project start dates.

India* + US based Project Teamper revenue targets 1998 = 194 1999 = 370

Assumptions: 1 BD/SA for every 8-10 Proposals (Not all qualified leads make it to proposal stage)Cupertino Marketing provides Program Marketing Director1 PM for every 1 small and 1 medium projects

Business Development


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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


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Required Issues & Actions


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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.


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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.)


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Issue: Sales & Delivery Lifecycle

Funnel Management:• track numbers & percentages• types of projects (target segments/hit criteria?)• size of projects• watch for trends

SalesContacts

QualifiedLeads (75%)

Solution:Proposal/SOW

(50%)

Selection(90%)

Delivery(100%)

NewProjects (90%)

TargetsC/F*

Q1Q2Q3Q4

100 10 4 3 1 .75 .25 50 38 19 15 14 14 12

Know your segment Offer value solutions Meet client need Improve client’s business Build repeat business

Avg Time in Mo. 2 1 1 1 9-12+

Negotiate (75%)

*C=currentF=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


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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.


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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


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YIKES!! Action Timeline

FSBUAlignment

EAOAlignment

Phase 2:Field‘Training’

Phase 1:Go-To-MarketStrategies

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

RolesMarketing/Ron Marketing Marketing Field Field

SERC/BDE BDE BDE BDE Marketing Marketing

SWEOAlignment


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Fit with other SWEO Services

Phase 1 - 1998ApplicationServices Evolve to a solution focus?

Phase 2 - 1999CSD??? (EBanking/Comm)

Phase 3 - 1999Supply Chain???

Finance Telecom Other Primary target is :• Named target accounts - the “SWEO target 50 + 50”- 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


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Appendix of Additional, Miscellaneous Slides

• Customer Profiles

• WIP on SWEO capabilities

• Additional detail on ASAP services - customer presentation fodder..


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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


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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


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State FarmOverview: • 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 1000-1500 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?


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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.


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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.


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ALLTEL

HP CO and ALLTEL Strategic Alliance

Investigativeand Pilot Phase

MigrationPhase

Virtuoso IICompetencyCenter

ITAlliance

Bus

ines

s R

elat

ions

hip

Orders and Revenue ($)

$300K

$6M

>$10M

>$20M

Migration Analysis

Migration SW DevelopmentY2K

Intl LocalizationR&DSW DevelopmentSupportMaintenance

SW DevelopmentSupportMaintenance


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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


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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


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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


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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


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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 ~


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Year 2000Customer 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


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Year 2000 Methodology

Strategy Development

Analysis Conversion Implementation

• Existing applications & data

• System Software

• Selected applications & data

• Updated applications & data

• Updated applications & data

Customer Site HP Site Customer Site

Pre-analysisToolkit &Services

AnalysisToolkit &Services

ConversionToolkit &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


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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 20000 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


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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


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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


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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

software engineering operation application services business plan

Documents