Using IT Portfolio Analysis to Enhance IT Agility

1. Using IT Portfolio Analysis to Enhance IT Agility July, 2008

2. Agenda • Introductions • About Virtusa • Current State of the Industry & Overall Trends • Portfolio Scoring & Analysis—an Innovative Approach • Case Study—Verizon Business • Summary • Questions "You can't manage what you can't measure…” - Judy Spitz, senior vice president and chief information office for Verizon Business

3. Introductions • Michele PelinoSenior AnalystForrester Research • Alan MottDirector Systems Planning & Enterprise ArchitectureInformation TechnologyVerizon Business • George BerelsonDirector, Business ConsultingVirtusa Corporation

4. About Virtusa

5. US-based corporation: Headquartered in Westborough, MA Locations in US, Europe and Asia Technology Centers in U.S., U.K., India & Sri Lanka Over 4,200 world-class professionals 57 current clients Listed on NASDAQ (VRTU) Rapidly growing & profitable FY 2008 Revenue: $165.2 million Operating income: $19.4 million 5-year compound annual growth rate: 46% Numerous awards and certifications Virtusa is a next-generation IT services provider with a strong 12-year track record Global IT Services Provider Revenue Growth $ 165.2M 46% CAGR $25M ISO 27001 Awards and Certifications 22% 39% 38%

6. We have a great balance in our business, as demonstrated by our revenue distribution Industry Geography Media,Information &Other Europe 31% 22% Communications & Technology 40% 69% 38% Service Offerings Banking, Financial Services& Insurance North America IT Consulting& ImplementationServices 29% 71% Outsourcing Period shown: Q3 FY2008

7. We provide a broad range of IT services to our clients IT Consulting Technology Implementation Outsourcing • Assessment and planning services • Architecture and design • Governance services • Application and platform engineering • Systems rationalization • Systems integration • Business Process Mgt • Data warehousing and business intelligence • Application and platform management • Infrastructure management • Quality assurance management End-to-end capabilities All services are enhanced by our unique Platforming approach and client-centric consulting model

8. Client Delight Industry Accolades We are highly recognized by our clients and industry for innovation… World Innovation Quality Day Awards Corporate Excellence Award 2008 Quality Award for Open Reach product (2006) Finalist for BT Supplier Innovation Award (2007) & Best Customer Experience Innovation (2005 & 2007) Global Services Top 100 Most Innovative Service Providers (2008, 2006) “Best Offshore Development Team” & “Best Application of BT’s Agile Practices” (2007) FinTech 100 (2007) Ranked #252 in the VARBusiness 500 List (2008) Ranked #1 IT Systems Outsourcing Vendor in Wealth Management Industry (2007) Agile Awards IBM Partner Award (2007) Listed in NASSCOM's  100 IT Innovators (2007) Pegasystems’ Partner Innovation Award for Engineering Excellence (2007) Ranked 388 in the Deloitte Technology Fast 500 (2007) Aetna Enterprise Innovation Award (2007) Gold Award at Sri Lanka’s National HRM Awards (2007)

9. …and also by analysts “Virtusa’s strong suit is more modern customer-facing front-office systems development and support…” • “Differentiatorsinclude: • A commitment to evolving rather than just maintaining systems under its care… Virtusa encourages its enterprise clients to think of these existing systems the same way a software vendor thinks of its products. Every cycle brings a new release or improved functionality—making them valuable and relevant that much longer. • Low ratio of on-site to offshore staff… Virtusa has one of the lowest, if not the lowest, ratio of on-site to offshore staff…Virtusa has also intentionally oriented its processes, client training, and staff to be effective in this model. • Focus on business analysts… Virtusa has invested more than most Indian providers on business analysts (BAs). This staff effectively bridges the gap between Virtusa and the client, as well as the gap between the on-site and offshore delivery teams.” Not The Usual Suspects Part II: Cost, Quality, And Client Service Benefits From Mid-tier Providers -- April 14, 2008 by Stephanie Moore, Forrester Research

10. Current State of the Industry & Overall Trends Michele PelinoSenior AnalystForrester Research

11. CIOs must evaluate and prioritize many different business and applications issues Assessing the value and performance of the portfolio - knowing what you have, where to invest, what to retire Using and adjusting the portfolio to quickly meet business and market demands Understanding if the resources, efforts, value and performance are aligned with business objectives and strategy Asset classification applied to OSS/BSS is usually non-existent or inaccurate Massive number of applications and duplicate functionality, especially with acquisitions and the retention of legacy systems Realization that applications are business assets comprising a “portfolio”

12. Telecommunications service providers face a variety of overall challenges Increased competition Declining revenues • Cable company competition • Displacement of fixed voice service with VoIP • Declining ARPUs from mobile services and applications • New entrants (e.g., Google, Vonage) compete for voice and applications revenue Service provider challenges Network convergence Organizational impacts • Fixed and mobile network convergence • Technology decisions impact organization • NGN architecture deployment • Need stronger communication between IT, network, marketing, and strategy teams • Network consolidation (mergers, acquisitions)

13. In addition, telecommunications service providers must address particular business challenges

14. However, implementing these IT initiatives is difficult… Address technical issues Rationalize equipment, processes and resources Assess IT initiatives in a structured, objective and logical manner Consider ongoing support and maintenance requirements Document individual knowledge for reuse Leverage industry-accepted standards and frameworks Recognize that standards are now “Darwinistic” or evolutionary Facilitate the transition from in-house development to standard off-the-shelf products Use standard frameworks to guide the transition process (e.g., TMForum standards such as the eTOM and SID frameworks)

15. …and establishing organizational support and metrics are critical requirements for success Organizational issues Identify a senior level “champion” in the organization Obtain agreement from various individuals on shared equipment, processes and functions Requires employees to work together in new ways Establishing metrics for success Expanded revenues from new applications and services Efficient infrastructure (e.g., server and application consolidation) Improved customer satisfaction and retention rates Increased ability to quickly adapt to dynamic market changes IT professionals need processes, tools and solutions to help them identify, prioritize and address these IT challenges and issues

16. Portfolio Scoring & Analysis—an Innovative Approach George Berelson Director, Business ConsultingVirtusa Corporation

17. There is a wide spectrum of maturity in the management of application portfolios Who has the experience? What do our users or developers think? Do you know what the pieces are or where they are located? Do you know what you have? What business value does it bring? How well do you know your applications? Level of Maturity

18. Typical approaches to decision-making are not ideal, and there is significant opportunity for improvement • Decisions are often made not through rational, objective analysis and evaluation, but instead through: • Politics • Habits • Rules • Guesses • Emotions • The latest airline magazine business article… …leading to ineffective decisions and outcomes An approach to solving this is to use our foundational tools (TMF or other standards) to build a model for understanding and decision making

19. Once we understand the application portfolio, we can make decisions rationally and objectively • Treat our “portfolio” as any business should treat its important assets, investments and capital • Classify applications, figure out where they stand, what they do, how they perform • Understand how to take actions to optimize the portfolio’s performance and quickly meet changing business and market requirements—the business agility imperative

20. What can we achieve with an innovative approach?Enhance business agility and support better IT decisions Gain a better understanding of IT assets/application portfolio Breadth of assets Learn “what you don’t know” Increase organizational awareness of IT asset characteristics Business value provided Efficiency and effectiveness Related revenue and costs Improve decision-making capability for IT asset actions IT changes to meet business needs Sunsetting, consolidation, further investment Technology rationalization, platforming opportunities Outsourcing, maintenance Aligning assets and investments with business objectives

21. Create and apply an innovative, business-focused scoring & analysis model to your IT portfolio Build Model Hierarchy Identify Important Metrics Dimensions isolate the important comparative elements for assessment and decision-making Metrics are aligned to the concepts and definitions of the organization and to the lines of business and business strategy

22. Define a scoring & weighting model that reflects both business and technology goals and priorities IT Metrics Metrics have weights 1,3 & 5 to signify their importance to the Focus Area Focus Areas have weights from 1 to 10 to signify their relative importance to the Strategic Indicator Data Points Data Points have weights 1, 3 & 5 to signify their importance to the Metric Scoring and weighting reflect the organization’s strategy, goals, direction and relative view of importance

23. Scope and objectives for portfolio analysis Identify IT metrics to provide meaningful insights on asset portfolio Business/IT priorities Virtusa experience Industry best practices Identify and plan IT asset portfolio inventory/repository Develop scoring and analysis model to evaluate assets based on metrics Pilot phase for limited set of IT assets Interviews and surveys Prove out concept Adjust based on feedback and results Phased approach for remainder of IT assets Primary focus on surveys Increased automation for continued assessment Put it into a manageable, achievable action plan Build tailored portfolio analysis model Create portfolio analysis roadmap Execute roadmap • Collect metric data for IT assets, per scoring and analysis model • Pilot • Remainder • Analyze, evaluate, and compare IT assets along various dimensions • Rankings • Graphs • Recommendations

24. What’s needed to do this? • Application inventory • Knowing what applications you have and which you need to score and compare • What components they contain or use • Data about the applications—financial, demographic, etc. • Business processes they address or provide • Business constituencies served—business unit, lines of service, product lines, customer lines • Revenue contributions, costs, risks • The knowledge in people’s heads… • How well-constructed is the application? • How easy is it to use/work with? • Is it in compliance with company best practices and architectural standards? • How easily is it supported and maintained? • Known business imperatives and vision, as applied to IT applications • Strategic initiatives, such as improved agility, customer experience, growth, satisfaction, new markets, new regulations, etc.

25. Case Study—Verizon Business Alan MottDirector Systems Planning & Enterprise ArchitectureInformation TechnologyVerizon Business

26. We had a good start at attacking the problem… • Through several mergers & acquisitions, Verizon had developed processes and tools for capturing the application portfolio, but were limited in analysis capabilities • Hardware & software specifics via scans • eTOM & SID used as taxonomy • Costs captured through financial processes • Product and customer relationship captured • for Profitability Reporting • Ad-hoc collection • Surveys/questionnaires • Occasional deep-dive trade studies • Corporate compliance attestations • Spin-off knowledge from development & design • Accuracy via Financial • Management processes • Property Accounting • recognition of assets • No funding released without • a properly identified application Intuition

27. … but we wanted to take it to the next level • Good inventory and attributes revealed areas of opportunity • Redundancies readily apparent • Non-standard technologies identified • High cost areas revealed • No lack of knowledge or opinion… • Had the knowledge power of 30,000 people • Intuition and experiences told us where to look and what to do • However, we did need: • Objective way to challenge or substantiate the intuition • A method to capture and normalize the knowledge • A clear link to how decisions contribute to business value • A way to continually assess the portfolio

28. We added analysis capabilities to our Application Portfolio • Application Scoring Tool • Takes into account the intrinsic value of applications in eTOM business processes • Validates IT Roadmap decisions • Used in prioritization method to optimize & plan • End of service life • Technology upgrades or changes • Business continuity planning • Continual grooming of the Application Portfolio • Keeps pace with business and technology changes • Links operations and security to business understanding • Processes and procedures to validate or challenge expenditures on applications • Continual harvesting and audit of Application Portfolio data • One version of the truth • Avoids data stagnation

29. Application Scoring Tool Business Value & Efficiency RankingsRelative Strengths, with Underlying Indicators

30. We addressed each aspect of the challenges • More agile IT • Evolution of IT portfolio toward software platforms • Business value ranking resonates extremely well in the organization, providing an accessible means of making decisions • IT modernization roadmap • Reusable solution to evaluate new inventory (i.e., mergers & acquisitions or additional business units) • Improved quality of service • Improved responsiveness to customer needs and wants We met our objectives and plan to calibrate and improve the model through continued use in Financial and Asset Management, Strategic and Enterprise Planning, Enterprise Risk Management, and Enterprise Effectiveness Management

31. Summary

32. Summary • Companies face the challenges of broad, overlapping applications in their portfolios that constrain the business agility imperative • They may be starting at different places on the continuum • Some, like Verizon, are further along • Others, maybe not so far • Can all benefit from improved visibility and decision capability • Systematic, consistent, objective • Helping to better align IT with the business “By continually capturing more than 100 data-points for each asset, we are able to monitor and analyze the business value and IT efficiency dimensions across our entire application portfolio. This new level of visibility strengthens our roadmap planning for optimal investment in our strategic systems.” - Judy Spitz, senior vice president and chief information office for Verizon Business.

33. Questions

34. For more information, contact:Dan KielarSenior Vice President, VirtusaDKielar@virtusa.com508-389-7208