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Case study – Audit d’un département IT

Case study – Audit d’un département IT. Gestion des technologies de l’information – GEST310 Pascale Vande Velde. Contexte. Audit du département informatique d’une grande banque belge (Company X) réalisé fin 2002. Pilote réalisé sur deux départements faisant partie du département développement.

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Case study – Audit d’un département IT

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  1. Case study – Audit d’un département IT Gestion des technologies de l’information – GEST310 Pascale Vande Velde

  2. Contexte • Audit du département informatique d’une grande banque belge (Company X) réalisé fin 2002. Pilote réalisé sur deux départements faisant partie du département développement. • AAA : département Office Automation, responsable pour les développements et maintenance réalisés sur des applications PC (Lotus Notes, excel/VB, FoxPro, etc....) et responsable des trainings PC • BBB : département Information Management, responsable pour les applications de type business intelligence (SAS, BO, datawarehouse) • L’objectif de cet audit est d’identifier des opportunités de réduction de coûts – de l’ordre de 40% du budget 2002 pour ces départements • Méthodologie • Réalisation d’interviews, revue de documents • Phase 1 : Présentattion et validation de notre diagnostic • Phase 2 : Présentation de recommendations et d’un plan d’action

  3. Governance Strategy Development & Planning Solutions Delivery & Implementation Architecture Management Service Delivery Resource Management Use of a IT Capability model to structure results • IT strategies and plans that are tightly aligned with business priorities and provide an aggressive but realistic roadmap to the future • An IT leadership team with the appropriate business acumen and technical depth to architect and manage the transition to the future • A business leadership team equipped and motivated to lead the use of IT • A governance structure for IT that clearly defines roles and responsibilities and establishes the forums to provide overall direction for IT • Management and execution processes that are formal, consistently applied, and results and value oriented • An existing portfolio of systems with competitively differentiating functionality that are sufficiently architected to require minimal manual intervention to enable future growth • A solutions delivery capability that is predictable and cost-effective for both small, focused efforts and large, complex, multi-year initiatives • An IT infrastructure that is modular, scalable, stable, and secure and a foundation for a global business • How HR, financial and knowledge resources are planned and managed • How day to day operational service is planned and delivered

  4. IT Budget in MEUR - 9% - 12% Source : xx 2003 budget currently under approval – amount TBC Although the overall IT budget has been reduced by approximately 10% per year over the last two years, AAA and BBB budgets have remained fairly constant Reduction of externals costs, software costs in 2003 Reduction of DEV budget from 264 MEUR in 2001 to 220 MEUR in 2002 (HIT PCs) Evolution of manweeks Budget evolution Source : xx 2001 includes Company X V FTEs (8 FTEs for AAA, 10 FTEs for BBB) 2002 Excludes Fixed Fees work • Factors for sustained high workload within BBB • Increased effort in investments : increase from 1319 MW in 2001 to 1734 MW in 2003 due to : • Launch of insurance DWH projects in 2003 (commercial DWH : 733 MW, informatielaag Company X V : 280 MW) • Planning of infrastructure projects in 2003 (346 MW) • Reduced participation to KIT project (494 MW in 2001, 15 MW in 2002) and completion of Bikes (265 MW in 2001, 62 MW in 2002) • Decreased effort in maintenance • From 1037 MW in 2001 to 619 MW in 2003 • Factors for sustained high workload within AAA • Increased effort in investments : increase from 557 MW in 2001 to 810 MW in 2003 due to : • Participation to key Company X infrastructure projects API, KIT and HIT (219 MW in 2001, 396 in 2002) • Launch of Company X Inet project ( 128 MW in 2002, 74 MW in 2003) • Planning of infrastructure projects in 2003 (522 MW) • Decreased effort in maintenance • From 1415 MW in 2001 to 989 MW in 2003

  5. The activities performed by AAA are very diverse. Work on investment projects, driven for a majority by other departments, represent 52% of these activities while the remainder of the time is spent on maintenance and support. Also, AAA does very few pre-studies AAA FY2002 as of 4Q2002 Time spent by activity type • 75% of the investment budget (business and technical projects) relates to 5 major projects: • API (203 MW) – Business • KIT (168 MW) – Business (merger) • Company X Inet (128 MW) - Business • Offertes ondernemingen (92 MW) - Business • HIT (104 MW) - Technical • The remaining 25% of investment project relates to 20 sub-projects. The average time spent on such a project is 8,7 MW • 12% of AAA budget is dedicated to incident fixing and unplanned requests • 27% of AAA budget is evolutive maintenance (after elimination of some project budget overrun that was pushed into maintenance). Evolution maintenance relates to a small number of activities (e.g. organigram organisatie, archivering juridische documenten, aangetekende zendingen, zaalreservering,…) • Business Projects – Projects with defined start and end dates, clear deliverables and delivering business value. Those projects have a clear business sponsor • Technical projects – Projects with defined start and end dates, clear deliverables. Those projects do not typically deliver business value, but are enablers. They are either required by multiple business projects or facilitate the increased efficiency of the IT function • Business project corrective – Renewal of applications because they did not respond to requirements • Maintenance (evolution, regulatory) – small evolutions to existing applications. • Corrective maintenance (bug fixings, rebuild, corrective adjustments…) • Training includes delivery of training, administration and functional support of OA tools * After reclassification of activities

  6. Unlike AAA, BBB has ownership of a number of business projects. Project related activities represent 40% of BBB activities. The remainder relates to EUC support (19%) and maintenance (31%) BBB FY2002 as of 4Q2001 Time spent by activity type • 89% of the business projects budget relates to 4 major projects • Mirabo (381 MW) • DWH Insurance (130 MW) • Bikes (62 MW) • Schade (52 MW) • The remaining 11% relate to 11 sub-projects. The average time spent on such a project is 6,7 MW • 11% of BBB budget is dedicated to incident fixing and unplanned requests • 20% of BBB budget is evolutive maintenance (includes a reclassification of recurring activities from projects to maintenance) • 19% is support to end-user development (SAS competence center) • Business Projects – Projects with defined start and end dates, clear deliverables and delivering business value. Those projects have a clear business sponsor • Technical projects – Projects with defined start and end dates, clear deliverables. Those projects do not typically deliver business value, but are enablers. They are either required by multiple business projects or facilitate the increased efficiency of the IT function • Maintenance (evolution, regulatory) – small evolutions to existing applications • Corrective maintenance (bug fixings, rebuild, corrective adjustments…) • EUC support – support to end user development with SAS and BO • Administration and others * After reclassification of activities

  7. A typical ratio beween project activities and application maintenance / support is 3:1 Excludes SAS Competency Centre Excludes training related effort • Projects and Enhancement represent costs related to major new features and functionality or system replacement; our research indicates it provides the most value-add to the business and aligned properly, is the best way to improve overall business performance • Maintenance and support is cost related to day-to-day application management and support to sustain production applications;our research shows it tends to provide limited value to the business AAA BBB NB : Above ratios represent workdays and not total costs

  8. Key strengths • The customer is generally satisfied by the services provided by BBB and AAA. “Wij zijn over deze dienst tevreden en willen deze aanbevelen bij onze collega’s. Mochten wij in termen van klant-leverancier praten, dan zouden we bereid zijn voor haar output te betalen” – Company X Kwaliteitsprijs 2002 • There is a governance structure in place, aligned with the business organization and evolving based on lessons learnt from previous years • AAA and BBB analysts and managers have strong relationships with the business users. There is a strong mentality of client service • Pre-studies allow to define up-front the scope and effort associated with a proposed project. • There is a solid methodology to define functional tests (test conditions, results) • The datawarehousearchitecture is based on a simple set of technologies (mainframe, DB2, MetaSuite) • Ratio of external vs. internal employees is according to known practices • Good team spirit is perceived as one of the key advantages of AAA and BBB by its staff members • AAA and BBB provide a flexible working environment towards private life

  9. We have assessed AAA and BBB to identify root causes for current inefficiencies, and have identified the following key opportunity areas for improvement • Need to better define and position the services relating to End User Computing (positioning of EUC) • The current governance practices drive micro-management and do not support easily the approval and launch of transversal projects (governance) • Demand for Office Automation work is mainly generated by ICT • The majority of MPAs are accepted – the efficiency of the process of request prioritisation should be enhanced (demand management) • The provision of services related to EUC and desktop management should be enhanced to ensure end-to-end responsibility and cost transparency (service delivery) • The IT vision is not detailed at a level that supports the taking of technology decisions (strategy development & planning) • Project management practices and solution delivery processes and tools need strengthening (solution delivery and implementation) • There are opportunities for simplification and rationalization of the application and technical architectures • Maintainability and operability of the data warehouse is heavily impacted by the complexity of the application flow; performance and usability are heavily impacted by the complexity of the underlying data warehouse data model • Current business and operations requirements do not justify the existing usage of storage space • There is no inventory of Lotus Notes applications, DB sizes and usage

  10. End User Computing: development of simple non-critical applications by end users based on SAS, MsAccess, Business Objects, Visual Basic and Lotus Notes “I do not know which services I can expect from AAA and which budgets I get from AAA” – Business client “If I let my end users develop macro’s in a complex excel application, we will get very quickly a spaghetti ” – Business client “I am in touch with DEV and the vendor for an external package, Fisccalc, and with AAA for packages developed internally. What is the rationale ? ” – Business client “AAA is not pro active. They are running behind the facts ” – Business client “Will IT enable EUC cells to access transactional information available on the core IT systems to feed our SAS and Access reporting applications ? How will ICT position the EUC cells regarding information delivery ? ” – EUC coordinator “AAA moet (de kans kunnen hebben om te) evolueren naar een situatie waar ze naar de toekomst kunnen bouwen; zu zijn ze bezig met het inhalen van de achterstand ” – Staff survey “I do not expect AAA and BBB to develop applications. I expect from them a good technical architecture, frames, methodologies, tools and second line support ” – EUC coordinator

  11. The business does not value nor understand the value delivered by AAA and by the SAS competence centre – budgets requested have been significantly cut in the ATS process • For the FY03 budgeting process, all initial capacity for AAA was requested by AAA itself (no business demand) • 30% of the investment capacity requested by AAA for 2003 has been rejected by the various ATS. Most of the rejected capacity is related to technical transversal projects • 25% of the investment capacity requested by the SAS, BO competence centres for 2003 has been rejected by the various ATS Split Lotus Notes/PC/Bureautica/SAS/BO environments by ATS • 100% of initial capacity requested by AAA (June 2002) • Rejected capacity in September 2002 related to development of Lotus Notes, PC, bureautica, SAS and BO environments Split Lotus Notes/PC/Bureautica and SAS/BO environments Source : ATS budget 2003 – version October 4, 2002 (AAA), version October 7, 2002 (BBB)

  12. End User Computing within AAA presents some areas for improvement (more structured approach for new builds and maintenance, decrease of incidents volume, introduction of standard desktop configurations) Includes PC and Lotus Notes developments Areas for improvement : 1) Pre studies 2) Analysis of options (custom vs package) 3) Development frameworkss, tools (Lotus Notes, VB, Access) Generic bureautica trainings are no core activity of AAA Potential for reduction of bureautica maintenance thanks to a standardization of desktop configurations Lotus Notes is by far the key technology used Incidents/NGO accounts for one third of maintenance work (excl. time spent on projects). Areas for improvement : 1) standardization of desktop configuration 2) release management process for PC applications 3) Better incidents routing Includes PC and Lotus Notes evolutive maintenance Areas for improvement : 1) Development frameworks 2) Strict demand management Time spent on HIT and API projects Source : review of first nine months maintenance work 2002 (PMW)

  13. “Oplossingen niet opdringen aan het bedrijf maar richten op haar noden” – Staff survey “Apothekersrekeningen voor budgetten ” – Staff survey Governance “AAA is not pro active. They are running behind the facts ” – Business client “I do not know which services I can expect from AAA and which budgets I get from AAA” – Business client “AAA moet (de kans kunnen hebben om te) evolueren naar een situatie waar ze naar de toekomst kunnen bouwen; zu zijn ze bezig met het inhalen van de achterstand ” – Staff survey “I do not expect AAA and BBB to develop applications. I expect from them a good technical architecture, frames, methodologies, tools and second line support ” – EUC coordinator “We have to prepare all our pre studies in the beginning of the year for the next year while our DWH projects are pluriannual projects” – Business

  14. MPA’s still open per due date ** Maintenance workload per Direction in MD (AAA) * AAA has to manage many MPAs during a financial year (1,218 tickets on 9 month basis in 2002). Very few tickets are cancelled • Out of the 188 MPAs generated during the first nine months of 2002 and which are not archived yet, only 9 were rejected or cancelled. 70 MPAs are today in the pipeline • BOS team spends a lot of time on insurance, bureautica and training requests (38% of BOS effort) * PMW extract (January – September 2002) * Solve extract (October 2002)

  15. “Upon request of BBB, I reserved resources in 2002 to migrate from version 6 to 8 (SAS). We are in October and I still do not know whether the migration will take place in 2002 or not ” – Business client Service delivery “I expect SLAs with SAS CC and AAA ( what is possible, which resources are available) and a stable relationship (consistency from year to year) ” – Business client “We decided to retain Word 6.0. DEV has decided to move to Windows 2000. We wonder which impact it will have on our department. ” – Business client “I had a problem with headings in Word. I called **505. They told me I could have a problem with my network drive ” – Business client “When we put the huisstijl application into production, we got many bugs, problems reported by end users. ” – AAA staff member “Some business critical applications are Lotus Notes applications but DEV does not provide service levels ” – AAA staff member

  16. Provision of services in the field of end user computing (Lotus Notes/VB/SAS/BO) and desktop could be improved Charge back mechanism similar to development charge back mechanism and cost transparency is low Functional calls are not properly handled by helpdesk No specific Governance in place for transversal projects such as EUC, desktop Some desktop SLAs, no EUC SLAs Customers Users Communicate Support Serve Plan Bill No standard desktop configurations, 500-600 PC and 1100 Lotus Notes applications Business does not understand EUC services/budgets AcDEVnt Management Helpdesk Governance HIT migration occurred prior to applications rationalization Organisation Lines of responsibility for Desktop Support and application management are confused (DEV/AAA) Architecture Process Project Management Procurement Finance Little or no Change Management Process in many areas leading to risk of service failures (e.g. migration to Windows NT) Environment Mgnt Asset Mgnt Change Mgnt Cost of EUC and desktop spread over DEV, AAA/BBB and business (EUC cells) Upgrade/ Refresh Protect Support No proper environments for release management Bank and Insurance platforms not uniformized (Lotus Notes, SAS, desktops) No standardized technical infrastructure for EUC development Technology

  17. Procedures have been defined between DEV and AAA for release management of desktop and PC solutions. However, there are bottlenecks in the process: Technical fiche provided to ISG by AAA Packaging by ISG Functional testing By AAA Acceptation By ISG Production By ISG Service delivery Sometimes misunderstanding on content of technical fiche Performed in environment that is different than production environment All combinations of desktop configurations cannot be tested without regression testing Errors detected too late in the process Increase in bug fixing volume Best practice Company X environment • Frequent releases (one release per month for headquarter, twice a year for bank agencies) • One standard desktop and a catalogue of 600+ PC applications from which people can select what they required • No test environment that reproduces the majority of live environments • Limited number of configurations (insurance agent, branch clerk, headquarter management, IT developer, etc..) that allow focused and extensive testing • Significant reduction of the applications available on catalogue (no more than 50) vs

  18. DEV Produkt Fabriek BBB • Technical Support • Database Administrator AAA • Application Maintenance • Application Maintenance • Office Automation support • Package Application support • Training • Lotus Notes support • Application Maintenance User Generates Incident Insufficient knowledge to direct appropriately or resolve simple problems Functional requests are often not handled properly (process not as structured as for technical requests) Service delivery – incident management Helpdesk (##505 or Branch) Log Problem Investigates / Analysis /Prioritises Frequent direct calls to AAA team members Level 2: Technical Level 2: Functional Further Diagnose Problem Further Diagnose Problem Resolve (some) problems Resolve (some) problems Level 3

  19. ATS1 IT Department IT department ATS1 IT Services ATSn Supply Demand Detailed charge back statement Service Item Standard Lotus Notes application delivery Deliver a working Lotus Notes standard database (discussion, library) within 2 working weeks of the request being approved and scheduled Frequency As requested Service level 70% Service volume 4 per month AAA and BBB are operating under a charge-back mode rather than a service Center mode • There is no single Service Specification (catalogue of services) provided that covers services that could be provided by AAA and BBB • There is no clear definition of the services provided by AAA, for example, for a process-based service item; EDEVAMPLE SAS report development support Respond to user request for support within within 2 working days of the request being logged by the help desk 5 per day As requested 80%

  20. The Cityplan, that defines the vision for the application and technology architectures is one of the projects approved in the 2003 budget. It is currently not detailed anough. As a result ; • AAA and BBB employees are not sufficiently aware of the IT vision • What is the overall target application architecture? • What are the guiding principles to support the taking of technology decision ? • What are the major technology standards and positioning of some key tools such as Lotus Notes, SAS ? • What is the desktop blueprint and what are the standard configurations ? • And yet there is an architect cell of people who are typically not well integrated in key projects • The business perceives that technical solutions are driven by ICT, and may be over-engineered; they are not necessarily based on discussed business requirements. • In the context of the DWH, users were not presented with options derived from their requirements, but with one solution. • Financial or organisation impact to the business is not sufficiently clear or analysed « Business were told what they wanted » • Projects do not consistently have validated and monitored business cases

  21. (Mirabo) “50% of the functional tests had still to be done but the application was put into production ” – Business client Solutions delivery and implementation (Mirabo project) ”When we were ready to test, business had no resources available. Now (after production roll out) that we are reduced to 2 people, business is testing with 10 people”– BBB staff member (Mirabo project) ”When we turned up to test, there was nothing to test”– Business ”niet in de eerste plaats “quick & dirty” opdrachten aannemen, maar aansturen op degelijke, duurzame applicaties”– Staff survey ”flexibeler kunnen omgaan met héél wat regels, procedures en processen die uitgewerkt zijn voor de massa centrale ontwikkelaars”– Staff survey

  22. The project planning, organization and management processes for major projects need strengthening • Development projects are split into multiple sub-projects under the responsibility of the different departments, leading to: • Lack of visibility on the total cost of a project (business costs, parts of project budget is sometimes included in BOS budgets) • Lack of coordination between the different sub-project plans (particularly between business and ICT) • Accuracy on project costs is required very early in the project life-cycle process, and the estimating processes are not robust enough • Project management metrics and reporting are not complete or mature enough • Solution planning, delivery and maintenance processes and tools are not industrialised or adapted to the technology used, leading to: • Inefficiency in the solutions delivery process • Delivery of solutions to the business that are not appropriately tested • De-scoping of solutions

  23. We looked at four of the key projects impacting AAA and BBB. In all cases, the analysis shows that there are improvement opportunities with the quality of delivery and the respect of scope, budgets and deadlines • Key projects impacting AAA and BBB • HIT – deployment of standard workstation for headquarters • API – web-enablement of branch applications • BIKES – DWH build • MIRABO – Commercial reportings • KIT – Rationalisation of all applications (AAA impact – PC applications only) • Some project budget overruns are pushed in the maintenance budget, leading to a lack of transparency on the total project costs. Project HIT - in 2002 AAA Spent project time Additional project time allocated to AAA maintenance budget 23 mandays 251 mandays Project API – in 2002 AAA Spent project time Additional project time allocated to AAA maintenance budget 203 mandays 17 mandays

  24. Projects based on new technology or approach (outsourcing) are difficult to estimate For example for the BIKES project • Under-estimation of internal resource effort • In 2001, budget variance of +67,3% (460 000 euros*) • To-date in 2002, budget variance of +39,8% (of which 13,4mw/26,8% relate to new rules for the definition of project baseline) • A cost variance on external resources services due to the acceptance of change requests (13,6% for 2001) +19,9 = 13,4+5,5 Source – BIKES project management * Estimate based on 4000Euros/manweek • The pressure to meet timelines and deliver leads to re-scoping to fit in the project deadline and budget. Also, users have very high expectations and are not willing to accept earlier delivery of reduced scope leading to implementation by the user department, generating hidden-IT costs Following revised deadlines, the scope of the MIRABO project was reduced by a few Business Object reports. Those reports have not been incorporated in a further release of the project, but are now being developed by the business in the live environment. At least 2FTEs are working on these activities that should have been done by ICT Source – MKB MIRABO project management

  25. Project SC Service line 1 Service Line 2 Business Project SC Service line 1 Service Line 2 Business Project leader Project leader Sub-Project Team 1 Sub-Project Team n Sub-Project Team DEV Sub-Project Team z Sub-Project Team 1 Sub-Project Team n Sub-Project Team DEV Sub-Project Team z … … There is no common overall project organisation or project planning which takes into consideration all the activities and resources required to deliver the end business results. Each sub-project is managed within the service line rather than as a single project. This is particularly evident for the business • The business and ICT sub-project plans are often insufficiently coordinated, leading to project delays and higher maintenance costs after go-live. (Mirabo project - Business) “When we turned up to test, there was nothing to test” “(Mirabo project) When we (ICT) were ready to test, Business had no resources available. Now (after production rollout) that we are reduced to 2 people, Business is testing with 10 people” • Resources assigned to the project activities produce status reports to the project manager. vs

  26. Business Functional Estimating Uncertainty Technical Requirements Code, Testing, Implementation Case Design Design New Technology Commercial organisations would generally fix price here ICT often forced to fix price here Existing Technology Level of uncertainty - > Accuracy on project costs is required very early in the project life-cycle process, and the estimating processes are not robust enough • ICT (AAA and BBB) are forced into providing a definitive cost for a project at a very early stage and are then held to that cost Estimating is based on experience, not based on process. This works better for mature technologies where the level of confidence in the estimates is very high. Projects based on newer technologies are more difficult to estimate; confidence is much lower The pressure to meet visible targets leads to ‘short cuts’ such as reducing the amount of testing, reducing the scope and implementing functionality after go-live.

  27. Project management metrics and reporting are not complete or mature enough. • We have analysed 9 status reports from the following different projects: • BIKES (2) • Mirabo (2) • KTV (1) • CICO (2) • EUC status reports (2) Typical implementation of quantitative project tracking • PMW is used only used for time tracking • No use of quantitative project management metrics such as • Original and adapted baselines • Earned, Burned, Estimate to Complete • Finalized and signed-off deliverables • Budget impact of issues • Problem & incident management • No consolidated view on problems and incidents logged in various tools • Accompanying documentation is maintained separately from the workflow process • Number of anomalies per status (and per type), average resolution time, average resolution effort,… • Quality reviews on documentation and code • Stage containment: exit criteria compliance for each phase of the project • Deliverable review matrix • Earned Value • Forecasting • Productivity based on deliverable progress • Productivity based on completed deliverables

  28. Solution planning and delivery processes and tools could be further industrialised or adapted to the technology used. Stage containment is not applied consistently, leading to a high number of functional changes or fixes during acceptance test or production. Typically changes implemented after go-live cost 10DEV more than if implemented during the project development cycle • The solutions delivered to the business are not sufficiently tested • BBB: Functional and technical testing occurs in production environment causing delays for the end of month processing after each new production rollout “Testing infrastructure is a problem.” • AAA: the testing phase is the weakest link in the AD lifecycle of PC applications Datawarehouse abends - evolution • Analysis of the root cause of abends is not available • It is not possible to analyze on which tickets BBB worked – an extract of SOLVE was done, but numbers obtained are unrealistic as some information is over-written • The total effort spent by BBB on the development of the Mai release for example is not easily available • Typical ratios are • Rework as a % of development time • Testing stage containment • Defect density Release Release • There is no consistent knowledge management; functional documentation can be changed but changes not shared with the business, leading to misunderstanding or rework during testing • The existing methodology does not address RAD (used for AAA projects)

  29. Architecture management “We have to cope with two SAS environment. It implies different conventions, standards, methodologies, release management process,… ” – EUC cell coordinator “For the HIT users, we have a standard desktop package and a catalogue with 500-600 applications. We have no end users configuration types” – DEV staff member “We have about 1100 Lotus Notes applications within the group. We have no inventory of them and we do not know how many of them are effectively used” – AAA staff member “Still 15% of the headquarters users do not have a HIT PC, very likely because they had some applications which could not be easily packaged ” – SFB staff member (about the roll out of Perigrine) ”This will not solve the problem of which priority to attribute to a request” – xx

  30. Problems occur at various points in the end-to-end data warehouse architecture • As the data extraction logic is owned by BBB, the impact of changes on the data warehouse tends to be overlooked by the source systems. These unexpected changes then cause delays in the monthly data refresh • The data model of the commercial data warehouse is technically versatile, however Business users find it difficult to use. It also requires further performance tuning for current querying needs • The inflow processing has become complex “network” of programs o.a. by its shear volume (~1200 ETL programs), making it very difficult to test thoroughly in acceptance, and to analyse production errors • Exception in the monthly processing are mostly due to disk space problems, JCL errors and program abends • At all stages of the development process, there is room for improving the quality of the work delivered. Also the available tooling should better contribute to the people’s efficiency • The use of Business Objects within Company X pushes the product to its limits

  31. No consolidation of the environments • The rollout of Perigrine will not replace the 3 different tools used to submit requests • Incoming requests are logged into 3 different tools (BIB, PIB, Insurance) • Look and feel of the Notes applications remains channel specific (Insurance, Headquarter, Bank agencies) • Bank and Insurance have a different infrastructure(Unix vs NT), a different operations team and a different release management (e.g. packaging and rollout procedures) • The IT environment is not tailored to support Business critical Notes applications • Lotus Notes is perceived as a tactical platform although 10 applications are identified as business critical (temporary solutions with a permanent character) • Examples: EL-tool for QCR, • AAA is expected to give a 1st class support, but the underlying infrastructure and processes are not set up for minimal cycle times (there is no ‘zuilenconcept’ for Notes development) • There are no SLA’s on the Notes servers • Frequent production rollouts give maximum flexibility to the Business, but cause overhead for AAA • Maintenance tasks of Notes applications are not exhaustive • Administrational responsibilities for Notes applications need to be detailed out more and enforced • Like for the creation of a Notes application, the decommissioning should be a process between the Business (application owner) and DEV (ISG), however it is AAA has budgeted for this rationalization effort, even though it is ISG that disposes of the necessary access rights and tools • Likely waste of hardware resources and “double” maintenance effort for AAA • The Notes Development team is focussed on building rather than rationalization • It is not known how many of the 1100 Notes applications are no longer used • Likely waste of disk space and a growing risk of database corruptions • Unlike for the Lotus Notes Mail, IMV does not set a maximum on the size of a Notes application. AAA does not develop archiving functionality unless explicitly asked for by Business. So the Notes application keeps on growing until Business runs into problems Lotus Notes infrastructure

  32. PC Applications • Rationalization of custom-built PC applications is slow-paced • KIT focussed on front office and back-office applications used in the bank agencies, but majority of applications are used in HQ • Applications need to be maintained in obsolete technology due to down-scoping of API (5 credit simulation applications) and the pace of the roll-out of the API architecture • Situation on PC applications for Company X Insurance is unclear • Packaging overlap with DEV • AAA has developed packaging expertise for the PCN, API and HIT platform, which is also done by DEV for the base and package software • Production incidents for new releases are often due to incomplete compatibility testing • Acceptance testing by DEV is too limited because of multiple hardware/software combinations (using HOP is not adequate • The PC development environment needs to be industrialized to support the business critical applications • E.g. ‘PC-Boekingen’ (sending booking entries to accounting) • Office Automation • There is no desktop blueprint defined to evaluate requests against • HIT Configuration covers part of the users (8500 fixed PCs and 2500 portable PCs) • In Scope: Bank headquarters, Regional offices, Corporate and Private Banking offices (mix PCs and HIT) and Foreign branches (in 2003) • Out of Scope: Company X V (2006?), Bank branches (API configuration), Corporate and Private Banking offices (mix PCs and HIT), Asset management and financial markets • There are no configurations by end users profiles defined • Applications rationalization did not take place prior to the migration Office automation and PC applications

  33. Re-inforce demand management to focus work on value-added activities, eliminating activities not delivering business value n% of AAA maintenance Enforce Business cases for investment projects, to improve visibility and linkage with Company X business imperatives or IT cost reduction imperatives n% Reduce IT cost N% Cost reduction Issue Tree Shift OA standard training and associated administration to HRM, outsource or move to e-learning. n% of AAA I. Optimize IT governance Delegate development of simple Lotus Notes DBs, Access and SAS solutions to the business n% of SAS and LN Optimize discre-tionary IT spend Complete Cityplan and detail vision based on business imperatives (target application and technology architectures) +++ Enhance IT capabilities +++ Measure performance of the organisations based on simple standard metrics and tools ++ Increase value contribution of IT organization Define clear roles, responsibilities and services provided for EUC (EUC vs DEV, EUC vs end-user computer cells) +++ Postponed or cancel projects or evolutions not aligned with priorities or with no approved business case n% of budget Reduce IT cost N% II. Optimize solutions development Improve applications development and tools (testing, standards, stage containement) n% of maintenance Enhance IT capabilities +++ Simplify and standardize project management metrics and reporting, and associated tools ++ III. Optimize resource management Optimize non-discretionary IT spend IV. Optimize service delivery/maintenance

  34. I. Optimize IT governance Optimize discre-tionary IT spend Cost reduction Issue Tree II. Optimize solutions development Overlap in activities and competencies between sub-depart. (training, DWH maint., pgm mgt). Reallocate freed-up resources N% resource costs Reduce IT cost N% III. Optimize resource management Enhance IT capabilities ++ Optimize knowledge management + DWH - Reduction of CPU and space usage (remove miroring, full rebuilds, migrate 3TB temp files faster to tapes, reduce back-ups) Optimize ETLs N% of capacity costs Increase value contribution of IT organization Archive Lotus Notes databases Removal of unused and Lotus Notes and PC applications. Rationalisation of PC applications n% of budget Reduce IT cost high Rationalize PCs not utilized because of multiple work locations; implement shared PCs or consider laptops for very mobile users n% Optimize non-discretionary IT spend Consolidate Lotus Notes servers (on-going for Company X Bank, to be initiated for Insurance) n% Define standard workstation configurations (software) n% IV. Optimize service delivery/maintenance Simplify and standardize management reporting and metrics, and associated tools ++ Enhance IT capabilities +++ Enhance help desk capability to ensure maximum resolution of basic problems at level 1 and better routing to level 2 and 3 +++

  35. We highlighted the following key opportunity areas for improvement • Need to better define and position the services relating to End User Computing (positioning of EUC) • The provision of services related to EUC and desktop management should be enhanced to ensure end-to-end responsibility and cost transparency (service delivery) • The current governance practices drive micro-management and do not support easily the approval and launch of transversal projects (governance) • The majority of MPAs are accepted – the efficiency of the process of request prioritisation should be enhanced (demand management) • The IT vision is not detailed at a level that supports the taking of technology decisions (strategy development & planning) • Project management practices and solution delivery processes and tools need strengthening (solution delivery and implementation) • There are opportunities for simplification and rationalization of the application and technical architectures

  36. Retail Bank Asset Management Support functions Corporate Markets Insurance Etc… Business • Generates standard demands (in the service catalogue) • Generates incidents • Generates new demand • Pays for services Customer End user SLAs IT Strategy Customer Relationship Management Service Desk Finance • Deals with standard demands • Incident logging • Initial prioritisation • Resolution of simple problems • Routing to next level • Feedback to end-user • IT budgets • IT vision • Target application architecture • Target technical architecture • Technology guiding principles • Organisation and methodology framework • Demand analysis • Pre-studies • SLA reporting • Service problem escalations • Demand prioritisation facilitation Service definition & Management HR • Career mgt • Skills devt OLAs OLAs • Change mgt • Performance Development and maintenance Service control Integration Management Service introduction … SAS VB BO Lotus Notes • Integration tests • User tests • Regression tests • Project Managers (technical projects, deployment projects, technical part of business projects) Operations Technical Services Project 1 • Operations management (monitoring, back-up, scheduling) • Change implementation (JCL, etc..) • Technical support operations (incident resolutions, DB administration) • Configuration mgt Project 2 • Technical experts (project work, major incidents) • New product analysis and selection • Capacity planning • disaster recovery plan & test Industrialised service delivery … Maintenance Releases EUC support EUC support EUC support Hot fixes Hot fixes Hot fixes Hot fixes Resource management Solution and Service Delivery Model

  37. The Service model is structured around standard services, rates per service and detailed roles and responsibilities for the delivery of these services. A number of activities within AAA and BBB can be structured as services delivered to the business. What?How?Why? • Combine a set of detailed services into one bundle that is more easily understood by the business. For example: a service offering of “workstation” instead of “PC, plus software, network, and support” • Defined by ICT in consultation with business areas • Improved customer understanding of services and ability to compare with outside prices Standard Service Bundles • Create a rate for each service bundle based on loaded cost — base customer charges on the rate per bundle and the number of bundles used. For example: charge the customer by the number of “workstations” used • Determined by analysis of historic cost, plus a contingency amount, divided by units served • Bills are more easily understood by the customer What? Rates Per Service Bundle How? Why? What? How?Why? • Revised and expanded roles and responsibilities to help ensure accountability. For example: account manager responsible for negotiating SLAs • Detailed process flows defining activities and interactions • Clear accountability for new activities and outcomes Roles and Responsibilities

  38. We have drafted an initial list of standard and non standard services: Standard services Non-Standard services Standard Training delivery Delivery of training on standard office automation and utilities Delivery of training on MS Access development and framework Delivery of training on standard SAS development environment Delivery of training on standard BO development environment Application development Simple application development Application fixing and support Application fixing of applications under the responsibility of AAA Application support (level 2) for applications under the responsibility of AAA Fixing of reports under the responsibility of ICT BBB Fixing of BO universes under the responsibility of ICT BBB Consulting services Support for office automation tools and utilities Support with EUC development tools Quality reviews of End User Computing cells or other ICT developments Tool selection / definition support based on functional requirements and technical constraints Response to request for proposals from business Infrastructure services SAS development environment maintenance and support SAS technical environment maintenance and support BO development environment maintenance and support BO technical environment maintenance and support ACCESS development environment maintenance and support ACCESS technical environment maintenance and support Supplier panel definition, frame contract definition License management Application development Data conversion from existing application to new replacing long term application Data load into new application before go-live Application development (simple, medium, complex) Inbound/outbound interface development Development of reports Creation of new extracts from the Data Warehouse Development of BO universes Application fixing and support Evolution to existing application (simple, medium, complex) Evolution to reports under the responsibility of ICT BBB Evolution to BO universes developed by ICT BBB Consulting services Support for selection of PC application based on functional needs Assignment of expert resources to EUC or other ICT project teams Infrastructure services Upgrade of PC package application included in the standard catalogue Migration of application supported by ICT to new technology platform Development tool release / version upgrade Standard services are services that can be executed in an industrialized pre-defined manner. Their pricing can be defined accurately. Standard services are requested by the end-user through the service desk (**505). Non-standard services are services that require a pre-study or analysis in order to assess their cost and the set-up of a project to deliver. Non-standard services go through the demand management process

  39. Services are billed using three key categories of charges: usage, project, and infrastructure charges. — Customer Statements — • Usage charges: • Recur every period • Will vary in amount from period to period • Based on technology service usage (telecomm, data center, ACTR, etc.) • Project charges: • May or may not recur • May vary in amount from period to period • Based on project specific support time tracking (BIKES, API, etc.) • Infrastructure charges: • Recur every period • Remain constant in amount from period to period • Based on fixed price per user or unit of inventory (telephones, data ports, etc.) ICT Bundled Service Bill Desktop Support Service Usage Charges $xx Project Charges $xx Infrastructure Charges $xx Processing Service Usage Charges $xx Project Charges $xx Infrastructure Charges $xx Market Data Service Usage Charges $xx Project Charges $xx Infrastructure Charges $xx Site Technology Service Usage Charges $xx Project Charges $xx Infrastructure Charges $xx Communication Service Usage Charges $xx Project Charges $xx Infrastructure Charges $xx ETS Internal Service Infrastructure Charges $xx Enterprise-Wide Service Infrastructure Charges $xx Total Service Bill $ZZ,000

  40. Solution delivery and maintenance activities are structured in projects, with clear deliverables, start and end dates • Apply demand management process • All maintenance and project work structured and managed in a project mode • Maintenance releases with fixed budgets (frequency depending on technology) • Impose documentation of business case (qualitative at minimum) • Industrialise delivery • Standard development environment and tools (design, build and test) • Standard development framework and tools for EUC cells • Estimating tools • Systematic code reviews • Capitalize on projects (effort, sample deliverables and lessons learnt) • Enhance incident management process • Only “must-do” fixes resulting from incidents arising in production are handled outside maintenance releases • Single point of entry into the maintenance team • Generalize utilisation of Perigrine tool • Simple Activity monitoring metrics (incident resolution, maintenance activities)

  41. DWH Service Centre Customer • Retail Bank • Marketing • Etc… DWH Service Centre end-user • MKB • MKC • Generates incident • Requests standard work request from the service catalogue • Requests major functional enhancements • Defines requirements for new systems • Pays for services • Provides year priorities (ATS process) Help Desk (505) • Logs incident or standard request • Assigns priority • Route incident Demand Prioritization (MPA) Service management and control Incident Analysis (2nd level) • Request analysis and planning • Business case support • Service performance measurement and reporting • Change management • Analyse incident • Identify problems (recurring incidents, or major incidents) Development (project managers, developers, business analysts) Technical Expertise (Technical project managers, technical experts) Application / data fiDEV (3rd level) Operations • Delivery of technical projects • Participation in Company X projects (sub-projects) • Capacity planning • Delivery of projects • Participation in Company X projects (sub-projects) • Delivery of maintenance releases • SLAs document the agreed level of services for all Services provided by the DWH Service Centre. These services fall into two main categories: • Delivery of information to the end-user • Implementation of new project Datawarehouse service model Incident or standard request SLAs Demand Incident DATAWAREHOUSE SERVICE CENTER OLAs OLAs OLAs document the service to be provided by the different functions/ organizations (internal or external) required to deliver the end-to-end level of service negotiated in the SLA • Incident resolution • Must-do fixes • Operations management (monitoring, back-up, scheduling) • Incident resolution • Change implementation

  42. Business strategy Business processes Business requirements RELATIONSHIP MANAGEMENT INFORMATION DELIVERY SERVICE DELIVERY NAVIGATOR DISTRIBUTOR DRIVER CORE • Cross-selling of some products • Common customer base • Etc… INTEGRATOR MANAGEMENT AND CONTROL The Cityplan translates the business strategy into the target application architecture for each functional area, which then drives technology architecture TARGET APPLICATION / INFORMATION ARCHITECTURE • Custom vs Package • SIEBEL • SAP HR, FI, CO • DWH • SWIFT • RiskPro • Decalog • Etc.. Example: The Accenture VISION model • SAS • BO • DB2 VDEV • Lotus Notes • EAI • etc TARGET TECHNICAL ARCHITECTURE Integrated Dev. Env. Architecture Netcentric Architecture Framework Data WarehouseArchitecture TARGET INFRASTRUCTURE • Data distribution • Application distribution • Networks • Servers • Laptops • Desktops

  43. Lotus Notes currently supports many functionalities for Bank and Insurance in areas of the application architecture that should be covered by other technologies DEVld be covered by DWH INFORMATION DELIVERY SERVICE DELIVERY RELATIONSHIP MANAGEMENT Klachtenregistratie RMS Final CIF BMO ELB pakket Isabel NAVIGATOR Omnia DRIVER To be covered by core Product Factory apps. SSV DISTRIBUTOR Acceptatie knipperlichten Trigoon Hermes CORE Zware ongevallen Betwiste zaken Verzending kredietvoorstel Simulatiepakket zichtrek Personenschade Ebanking desk To be covered by SAP ERP ADD INTEGRATOR Bank COS QCR HRM Juridische tijdschriften Evalueren/ waarderen Insurance Personeelsbeheer Kennisbank MANAGEMENT AND CONTROL

  44. Customer Management Risk Control Sales and marketing AcDEVnt and contract management Customer Service Customer Service Direct Direct Campaign Campaign Credit management Underwriting Requirements (Client Level) Claims Assessment (Client Level) Management Management Marketing Marketing Management Management Customer individual Customer individual Sales Sales Need Risk profiling Agent & Other Party Limit Checking Profitability and segment Support Support Analysis Fraud Detection Debt collection Offer structuring Agent & other parties performance Agent & other parties management and pricing RELATIONSHIP MANAGEMENT INFORMATION DELIVERY SERVICE DELIVERY NAVIGATOR DISTRIBUTOR DRIVER CORE INTEGRATOR MANAGEMENT AND CONTROL In the long term, the architecture needs to evolve to accomodate future business needs such as Campaign Management, reporting for Credits, Savings and Loans,.. RELATIONSHIP MANAGEMENT Bank Bank & Insurance DWH possible scope ADMINISTRATION MANAGEMENT INFORMATION Financial & risk Sales Operations Treasury Financial & Management AcDEVnting Financial Budgeting & Forecasting Productivity Management Cost Center Management Distribution Channel Performance Sales Per- Formance Reporting Client seg- Ment Profi- Tability AcDEVnts Payable/ Purchasing General Ledger MANAGEMENT AND CONTROL Human Resources Management Funding Business Unit Profitability Management Service Quality Management Liquidity Payroll Asset/ Liability Management Product Profitability New Product Design Reinsurance And Risk Management AcDEVnts Receivable Inventory Control FiDEVed Assets ALM Litigation Market Research & Analysis EDEVternal Marketing Information Economic & Competitor Data Management Regulatory And Compliance Reporting Investment Management Electronic Office EDEVecutive Information Systems

  45. The implementation of the Solution and Service Delivery model for AAA and BBB , the definition of a clear vision and the rationalization of the DWH architecture address the key opportunity areas identified during the ERI • Define and implement clearly defined services (pricing, SLA, OLA, billing) • Apply demand management and MPA process for all non-standard demand • Implement incident management process through systematic call to help desk for all incidents and standard demand • Detail the Cityplan for EUC technologies • Need to better define and position the services relating to End User Computing (positioning of EUC) • The provision of services related to EUC and desktop management should be enhanced to ensure end-to-end responsibility and cost transparency (service delivery) • The current governance practices drive micro-management and do not support easily the approval and launch of transversal projects (governance) • The majority of MPAs are accepted – the efficiency of the process of request prioritisation should be enhanced (demand management) • The IT vision is not detailed at a level that supports the taking of technology decisions (strategy development & planning) • Project management practices and solution delivery processes and tools need strengthening (solution delivery and implementation) • There are opportunities for simplification and rationalization of the application and technical architectures • Define and implement clearly defined services (pricing, SLA, OLA, billing for infrastructure services) • Apply demand management and MPA process for all non-standard demand • Apply demand management and MPA process with systematic documentation of anticipated benefits • Define target application, information and technology architectures in line with overall directions provided by the Cityplan OPM project • Define target application, information and technology architectures in line with overall directions provided by the Cityplan OPM project • Implement development and maintenance best practices (BO, SAS, DWH, Lotus Notes, VB Access) • Organise all work except fixing in project mode • Rationalized DWH storage and processing

  46. The process excellence initiatives covering the end-to-end lifecycle and the PC rationalization initiative show an attractive ratio between investment and benefits

  47. Additional costs savings could be achieved if the Lotus Notes architecture is rationalized 1,100 applications 100% LN team workload (16 FTEs) +/- 50 key applications * Development 20% Highest potential for costs savings 70% Maintenance Remaining 1,000 applications Maintenance remaining applications Limited costs savings potential 10% Source : xx * Bank : SSV, COS, QCR, RMS, CIF, VKV, MDM, CCBI, ebanking desk,.. Insurance : Bijstand24+, Hermes, kennisbank, betwiste zaken, zware ongevallen, personenschade, Trigoon, juridische tijdschriften, ..

  48. Both the data warehouse rationalization and the process excellence initiatives show an attractive ratio between investment and benefits Remark:The investments are calculated using the new ICT manweek cost of 3.200 € instead of 4.000 €

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