Aberdeen Group Extending Software Development Methodologies To Business Decision Making Tim Sloane Director, Enterprise & Internet Infrastructure Sloane@aberdeen.com 617-854-5324 June 26, 2002 Project #
Agenda • The Software Development Process Reviewed • Software Realities • Business Planning Drives Our Requirements • “Modeling” & Simulation • Lessons From Other Industries • Model Sharing & Re-Use Aberdeen Group 2
“Software Development” Defined (For This Discussion) • Implements An Important Business Process • Involves Multiple Teams And/Or Departments • Part Of Enterprise Strategic or Tactical Imperative • Represents Significant Enterprise Investment • Failure Impacts Bottom Line Or Delays Execution of Corporate Strategy/Tactics Aberdeen Group 3
Business Process Development Stages Strategic Direction Concurrent Engineering of Business Processes, Products, and Organizational Structure Evaluation of Business Processes, Products, and Implementation Organizational Structure IT Organization Operational Execution Data Bayer, F. Junginger, S. Kühn, H, A Business Process-Oriented Aberdeen Group Methodology for Developing E-Business Applications 4
IT And Software Supplier Focus Today Strategic Direction Concurrent Engineering of Business Processes, Products, and Organizational Inception Structure Evaluation of Business Processes, Products, and Implementation Organizational Structure IT Organization Execution Operational Data Aberdeen Group Based on the BPMS7-Paradigm 5 (Karagiannis et al. 1996; Bayer et al. 1999),
Software Success In 1999 DoD Study • Review Of $35.7B Spent By The DoD On Software Indicates [1] : – 75 % Never Used Or Cancelled Prior To Delivery – 23 % Used After Modification – Only 2% Used As Delivered Source: JAWS S3 Proceedings, 1999 Aberdeen Group 6
Software Reality In The Large Enterprise Ford “…business managers asked IT for a major system upgrade costing about $1 million. But, months later, when it came time for deployment, managers had changed their minds. The enhancements, though built and paid for, never got off the showroom floor.” S. Caulfield, IT Services Global Manager, Ford Only about 30% of reengineering projects are successful. M. Hammer, J. Champy, “Reengineering the Corporation” Aberdeen Group 7
Business And IT Working Together • Only 5% of enterprise IT organizations are fully integrated into the business planning cycle [Meta Group] • Requirements creep should be around 1 percent per month. In fact, creep of more than 2 percent a month is probably a sure sign of a project that will never reach completion. [6] Aberdeen Group 8
The Business/Technical Divide IBM Systems Journal, Volume 39, Number 2, 2000 by D. Bevington Analysis Design Discomfort Predominantly Predominantly Zone Technology Focused Business Focused ? Solution Problem Statement Interaction of Business Models Technology Models Business and Technology Models Aberdeen Group 9
Measuring & Evaluating “What Is” Strategic Direction What Is Concurrent Engineering Business Intelligence of Business Processes, & Monitoring Products, and Organizational Structure Evaluation of Business Processes, Products, and Implementation Organizational Structure IT Organization Execution Operational Data Aberdeen Group Based on the BPMS7-Paradigm 10 (Karagiannis et al. 1996; Bayer et al. 1999),
Strategy and Tactics Look at “What If” What If Strategic Direction What Is Business Intelligence Concurrent Engineering & Monitoring of Business Processes, Products, and Organizational Structure Evaluation of Business Processes, Products, and Implementation Organizational Structure IT Organization Execution Operational Data Aberdeen Group Based on the BPMS7-Paradigm 11 (Karagiannis et al. 1996; Bayer et al. 1999),
Process Selection Cost/Benefit Analysis What If Strategic Direction What Is Cost/Benefit Business Intelligence Concurrent Engineering & Monitoring of Business Processes, Products, and Organizational Structure Evaluation of Business Processes, Products, and Implementation Organizational Structure IT Organization Execution Operational Data Aberdeen Group Based on the BPMS7-Paradigm 12 (Karagiannis et al. 1996; Bayer et al. 1999),
Business Evaluation Cycle What If Strategic Direction What Is Business Intelligence Concurrent Engineering & Monitoring of Business Processes, Products, and Organizational Cost/Benefits Structure Evaluation of Business Processes, Products, and Implementation Organizational Structure IT Organization Execution Operational Data Aberdeen Group Based on the BPMS7-Paradigm 13 (Karagiannis et al. 1996; Bayer et al. 1999),
Quarterly Business Re-Evaluations • Quarterly Financial Reviews Drive Business Re-evaluations • Common IT Role Is To: – Capture & Store Business Data – Produce Mandated Reports – Produce Reports Requested By Senior Management That Provides Operational Insight Aberdeen Group 14
Ideas Are Not Treated Equally • Models of critical enterprise options are inherently political. Financial modelers report [8] : – 45% were asked to alter sales/revenue forecasts to reflect senior manager’s more favorable level – 52% were requested to adjust cost projections to a more favorable level – 42% were requested to create “backcasts” to support senior manager’s sales/revenue projections – 26% report that divisions/departments withhold critical data needed to develop accurate models Anyone Still Surprised At The Project Failure Rate? Aberdeen Group 15
IT Has Limited Opportunity To Respond • Only 5% of enterprise IT organizations are fully integrated into the business planning cycle [Meta Group] • Requirements creep should be around 1 percent per month. In fact, creep of more than 2 percent a month is probably a sure sign of a project that will never reach completion. [6] It Is Imperative IT Establish A Voice In Business Aberdeen Group 16
Good News: IT Has The Basic Tools • Data Collection / Data Analytics • Business Process Documentation In: – Documents – Software – Workflow / BPM – Data • Modeling Talent and Integration Tools • Analytic Thinking Skills • A Self-Interest For Cross-Organizational Success Aberdeen Group 17
Accept A Broader View Of “Model” Model A simplified representation of a system that approximates reality but emphasizes some features/functions at the expense of others to promote a better understanding of the modeled item. Simulation The manipulation of a model in such a way that it operates on time or space to compress it, thus enabling one to perceive the interactions that would not otherwise be apparent. Aberdeen Group 18
The Expanded Role For Models • Models are inherently social media and mechanisms. They become the organization’s lingua franca, or medium francum, and bridge the multiple Departments of Babel. Simulation mediates between people and information and becomes the medium for relationship management between stakeholders. • As an adjunct to software prototyping, simulation will transform the speed and nature of communication and collaboration for process improvement and therefore for software development. • A unified modeling and simulation approach supports the visualization of new processes across departments and enterprises – and comes with a ROI calculator built in! derived from [4] “Serious Play” Aberdeen Group 19
Simulation Applied To Architecture Aberdeen Group 20
Simulation Applied To Aerospace – Henry Shomber, 777 Chief Engineer For Digital Preassembly” – EPIC – Electronic Preassembly In Computer, Drove Collaboration Using 2,200 Terminals For Design Team And Key Suppliers – 777 Design Goals Constrained The Model – Departments Were Allocated Assets (weight chits) – Automatic Conflict Detection And Alert Generation Aberdeen Group 21
Simulation Applied To Process Manufacturing • Stakeholders – Plant Designers, Business Managers, Equipment Manufacturers, Builders – Bayer Consolidated Four Types Of Simulation And Models To Analyze Polymerization Process And Plant Design Prior To Construction – The Simulation Analysis Maximized Productivity To Cost – The Simulation Was Also Used As Prime Training Tool • Managers see impact of operational decisions • Operators see impact of specific control functions – Bayer Sells Managerial Training Using Business Simulation Aberdeen Group 22
Simulation Benefits: • Encourages Collaboration Between Stake Holders • Drives Common Vocabulary / Business Object Definition • Communicates The Solution To Stake Holders And Others • Reduces Or Eliminates The Need For Prototypes • Provides Clarity On Organizational Impact • Automatically Formalizes The ROI Perceived By Stake Holders • Drives A Common Set Of Expectations • Defines How Success Will Be Measured • Becomes An Ongoing Communications And Training Tool • Provides New Insight Into Corporate Strategy And Tactics Aberdeen Group 23
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