Enterprise Services for Defense Transformation Prof. Paul A. Strassmann George Mason University, February 19, 2007 1
Case Study Hewlett-Packard Cost Reduction 2
Example of Application Simplification Domain (All) Primary Y Region (All) Owner GCP Count of Asset Name 200 24 24 30 30 24 24 23 150 16 16 27 17 17 27 15 27 21 21 16 13 13 100 10 10 15 16 16 11 9 8 14 14 11 11 8 8 7 7 10 8 8 6 9 9 7 10 10 6 6 8 7 50 7 7 6 7 5 8 6 5 6 6 6 0 Current FY06 - Q2 FY06 - Q3 FY06 - Q4 FY07 - Q1 FY07 - Q2 22 27 12 15 16 5 12 13 7 13 6 13 10 7 7 5 6 6 4 3 7 5 2 4 FY07 - Q3 Period FY07 - Q4 Capability Training & Cert Dashbd & Reporting Prog adm/compens Data Collection Portal Newsgram Marketing Mgt Datawarehouse C&R - deal P & S Catalog Quote/Config Mkt Dev Fund Locator Acct Mgt & P. Profiling 13 Leads Mgt 5 Data cleansing/std 12 stock protect 10 13 10 10 2 4 7 2 2 10 contract 7 4 2 7 7 5 6 4 2 4 2 3 4 5 23 2 3 4 2 5 6 6 4 2 4 2 A2A Integ 5 5 6 Pricing Comm 23 4 2 23 4 2 23 12 5 Content Publi. Fraud Mgt Rebate Comm Control - EUV FY08 - Q1 FY08 - Q2 FY08 - Q3 FY08 - Q4 C&R - promo Portal Metric 3
Transformation Indicators - HP Case 4
Enterprise Data Warehouse Legacy applications = chaos Production Control MRP Inventory Control Parts Management Logistics Shipping Raw Goods Order Control Enterprise data warehouse = order Finance Continuity Consolidation Control Collaboration Marketing Sales Accounting Management Reporting Engineering Data Warehouse Single version of the truth Actuarial Human Resources Purchasing 5
IT Portfolio Scorecard Metric Target Performance % On Time Delivery Annualized Benefit ($B) $2B $2.5B $3B $1B Value-Added/IT Developer % Projects On Quality Target % Innovation vs. Sustaining 2004 2005 2006 2007 6
Opportunity to Standardize, Consolidate and Integrate 100% 33 48 21 44 5 17 80% 60% 40% Low Commonality High Commonality 20% 0% 67 52 79 56 83 95 Marketing Ops Sales Ops Order Mgmt Supply Chain Finance HR 7
A Transformation Calculator (See BASELINE January 2007) 8
Calculating the Transformation % - (Baseline January 2007) 9
Case Study The Department of Defense 10
Components of Transformation in DoD Data Strategy Net-Centric Operations Enterprise Services Information Assurance 11
Organization for Transformation in DoD Warfighter Mission Area Business Mission Area Intelligence Mission Area 12
Distribution of DoD I.T. Spending 13
Most DoD I.T. Spending in Infrastructure 14
Scope of Business Management Systems 15
Business Mission in Military Services 16
Current Organization of I.T. Spending in Services Air Force Army Navy Acquisition - 15 Finance - 16 HR - 49 Installation - 13 Logistics - 152 Budgeting - 172 Acquisition - 4 Finance - 3 HR - 49 Installation - 6 Logistics - 47 Budgeting - 2 Acquisition - 45 Finance - 104 HR - 158 Installation - 21 Logistics - 232 Budgeting - 87 Infrastructure - 601 Projects Infrastructure - 181 Projects Infrastructure - 401 Projects 17
Proposed Ultimate Organization of I.T. Spending in Services Air Force Army Portals Navy Acquisition - 4 Finance - 3 HR - 49 Installation - 6 Logistics - 47 Budgeting - 2 Shared Infrastructure - 12 Projects 18
Organization for Transformation of DoD - As Defined by NII 19
Potential Cost Reduction Through Consolidation of DoD Systems NOTE: Cost/Function Point = $1,200; Function Points/Application = 20,000; Function Points/Infrastructure = 200,000 20
What is Needed: A Business Transformation Engine Interoperability to share data; Reduce mediation costs I.T. cost reduction; Consolidate applications, use shared components Operating cost reduction; Automate reliability, security and information assurance Rapid delivery of new capabilities; Reduce integration costs for innovation 21
Functions of the Business Transformation Engine DoD Business Process Models Legacy Applications Transformed Applications Interoperability Rules Interoperability Filter Transformation Engine Shared Services Transformed Services Interoperability Controller Services Directory Services Portal Client Interface Transformation Engine DoD MetaData Directory 22
The DoD Policy Context: Data Sharing for Net-Centric Operations 23
Application Transformation Functions DoD Business Process Models provide the means for resolving procedural and process issues across different Communities of Interest. Shared Services include Application Development Services and Application Component Services. Transformed Services are applications that can be certified as fully compliant with DoD policies. Services Directory identifies the contents and access processes for delivery of composite applications that can utilize parts of available services. Services Portal Services Portal provides a standard interface that can be adapted to meeting customers requirements. 24
Case Study Managing Software 25
Current State of Software According to Capers Jones Initial requirements are seldom more than 50% complete. Finding and fixing bugs is the most expensive software activity. Creating documents is the second most expensive software activity. Most forms of testing touch less than 50% of the code being tested. There are more defects in test cases than in the software itself. About 5% of modules in applications will contain 50% of all defects. About 7% of all defect repairs will accidentally inject new defects. About 5% of software outsource contracts end up in litigation. About 35% of projects > 10,000 function points will be cancelled. About 50% of projects > 10,000 function points will be one year late. 26
Proliferation of Software Choices More than 600 programming languages; More than 40 different formal methods; More than 38 different kinds of size metrics; More than 26 named development methods; More than 25 international standards organizations. 27
Proliferation of Software Development Methodologies (Partial) Capability maturity model (CMM); Capability maturity model integration (CMMI); CASE tools; CRYSTAL development approach; Dynamic system development method (DSDM); Extreme programming (XP); ISO 9000-9004 standards; Personal software process (PSP); Rapid application development (RAD); Structured process (TSP); Unified modeling language (UML). 28
Proliferation of Metrics to Measure Size of Software IFPUG function points; Backfired function points; Cosmic function points; Engineering function points; Feature points; Mark II function points; NESMA function points; Object points; Use-case points; Web-object points; Lines of code; Number of source code logical statements. 29
Testing Requirements for a Large Systems Project Requirements inspections Design inspections Document inspections Code inspections Test plan and test case inspection Defect repair inspection Software quality assurance reviews Unit testing Component testing New function testing Regression testing Performance testing System testing Acceptance testing 30
Paperwork Exceeds Programming Work Monthly status reports to executive management; Weekly progress reports to clients; Daily communication between clients and the prime contractor; Daily communication between the prime contractor and sub contractors; Daily communication between developers and development management; Full email support among all participants; Full voice support among all participants; Video conference communication among remote locations; Automated distribution of documents and source code among developers; Automated distribution of change requests to developers; Automated distribution of defect reports to developers; Emergency or red flag communication for problems. 31
Staff Requirements for a Large Software Project (Partial List) Configuration Control Specialists Cost Estimating Specialists Customer Liaison Specialists Data Base Administration Specialists Data quality Specialists Decision Support Specialists Domain Knowledge Specialists Human Factors Specialists Integration Specialists Maintenance specialists for post-release defect repairs Outsource/Package Evaluation Specialists Performance Specialists Project Cost Estimating Specialists Quality Assurance Specialists Technical Writing Specialists Testing Specialists 32
What Happens in DoD Development Centers Each unit selects a different software improvement model. The result is political battle between the units. Each striving to have its choice adopted as the standard. 33
Findings from Benchmark Studies For several years after adoption of a new software development approach productivity and quality levels do tend to improve. When DoD is revisited years later, the new method has been abandoned and productivity and quality results have declined back to the levels before the improvement program started. New management wants to start a new software process improvement program. Data on the earlier improvement programs has vanished. 34
Project Success/Failure Probabilities 35
What is a Function Point? A function point is a unit of measurement to express the amount of business functionality an information system provides to a user. Function points are an ISO recognized software metric to size an information system based on the functionality that is perceived by the user of the information system. The size is determined by identifying the components of the system as seen by the end-user: the inputs, outputs, inquiries, interfaces to other systems, and logical internal files. There can be 70-300 Lines of Code per Function Point. 36
A Software Cost Reduction Calculator 37
Reduction of Software Costs through Consolidation 38
Summary There are thousands of ways how systems projects can fail - there are only a few ways how they can succeed. Transformation calls for consolidation of applications and data center operations. 39