Enterprise Applications: Maximizing Their Value, Maintaining and Measuring Their Worth Executive Summary The directive to ‘do more with less’ is certainly not new to IT, yet the pressure to meet that demand is stronger than ever. As a result, companies are rethinking their application strategies and renewing their efforts to drive more value from their enterprise applications – including solutions for eCommerce, enterprise resource planning (ERP), messaging and collaboration. This paper discusses how the right service provider can help businesses maximize, maintain and measure application value from the start and over the long term – to increase their worth to the enterprise while supporting cost-efficient business growth. Enterprise Applications: Maximizing Their Value, Maintaining and Measuring Their Worth ______________________________________________________ 2 After a time of great economic uncertainty, cautious spending and a This sophisticated level of expertise is expensive to maintain in-house, ‘wait and see’ philosophy towards starting any new IT project, 2011 yet it is required for getting the most from each application and new is opening with resurgence in business activity. As companies began capability. Adopting the new capabilities within these ERP applications, to focus once again on business growth, IT organizations faced the and taking full advantage of existing capabilities, can be critical to year with a long list of pent-up demands and many are still awaiting supporting business recovery and new growth. attention. During the period of economic downturn, many companies put application upgrades on hold and delayed the adoption of the new As application capabilities expand, application capabilities offered by new software releases. This created a backlog complexity grows. of IT projects, compounded by IT demands related to acquisitions, divestures, industry regulations and other events. To handle this backlog, many senior IT executives are reviewing their eCommerce Applications overall approach to delivering applications to the enterprise. Having Since a successful web presence is never static, eCommerce become very adept at managing tighter budgets during leaner times, applications are in a constant state of change, especially in the they’re being tasked with applying the lessons learned to support cost- business-to-consumer (B2C) and business-to-business (B2B) spaces. efficient business growth as they move forward. The cost overhead involved in keeping up with those changes is hard to bear, and most internal teams are not funded or designed to move At the same time, line-of-business managers, from finance and HR to that quickly. order processing and customer service, are looking to tap into the full functionality of their applications to speed business process execution, New capabilities, such as targeted content delivery, cross-channel fuel revenue gains and create new business efficiencies. Yet, constantly commerce and ‘freemium’ offers, are vital to attracting customers, increasing application and infrastructure complexity, coupled with increasing sales and building profitable relationships with business limited on-staff resources, make that difficult. partners. To use these tools effectively, an organization must have the right applications and the right skill sets. All these factors have been a tipping point towards establishing or expanding relationships with IT service providers. As companies survey ERP Applications the vendor landscape, the following information can be helpful in With ERP applications, it’s not just about adding new functionality; it’s understanding why this can be a wise approach to meeting business about getting more functionality from the applications running now. and IT challenges and maximizing the value of enterprise applications In fact, during conversations with top business executives, AT&T has for renewed business growth. learned that many believe they are only getting roughly 70 percent of the value they should be getting out of their ERP applications. Considering the millions of dollars already spent on licensing and the Current IT Challenges emphasis on cost efficiency, companies are hesitant to make additional investments in the staff needed to capture the remaining 30 percent of • Responding to a new surge in business activity benefits. That hesitation is warranted, since one ERP application may include 10-15 modules. Depending upon the scope of the solution, • Managing a backlog of upgrades and delayed IT projects separate skills may be required for each module, including both • Supporting cost-efficient business growth technology and business experts. As a result, companies can be stuck in the status quo, unable to benefit from that elusive 30 percent of • Rethinking enterprise application delivery strategies functionality or new application capabilities. Unfortunately, much of the higher-end value and efficiencies provided by these applications is • Gaining more functionality and ROI from contained in that 30 percent. enterprise applications • Dealing with increasing application complexity Messaging and Collaboration Applications While email alone is essential to running a business, its worth is often • Maximizing, maintaining and measuring application value seen as a given – certainly critical to making the business run, but not critical to making it run better. In response, companies are thinking beyond basic messaging to collaboration technologies, which was at Reducing Complexity, Expanding Capabilities the forefront of new software initiatives in 2010. Across the board, from eCommerce and ERP applications to messaging The real value will come by elevating the conversation further, to and collaboration solutions, enterprise applications are bringing new unified communications. These solutions can integrate multiple forms capabilities to businesses faster than they can adopt them. It’s a of data, voice, and video communications, allowing distributed internal double-edged sword for IT: As applications become more capable, they teams and external partners to collaborate from wherever they are, become more valuable to the business, but they also become more using any device. complicated as they demand more time, resources and expertise. The goal is to reduce process time for key business activities, but Each enterprise application not only includes a complicated mix of reaching that goal requires further investments in staff time and specialized tools and technologies, each requires a highly specialized resources. It also requires expertise that extends beyond stove-piped skill set to configure, deploy, manage and upgrade the application, messaging technologies to a comprehensive understanding of how and there is often only a minimal amount of cross-over skills between they can work together effectively. solutions. Enterprise Applications: Maximizing Their Value, Maintaining and Measuring Their Worth ______________________________________________________ 3 Recommendation While these applications can deliver more value to the business than Service providers can help companies adopt these new capabilities, any one application could, the cost of that added value can often be without having to take on the financial burden of new staff resources. extended across the entire application ecosystem. After implementing, managing, monitoring and supporting hundreds of enterprise applications for customers, the right service provider Applications are no longer isolated environments, will know how to fully utilize and expand application functionality to deliver the highest service levels and value. they are part of a larger ecosystem of complementary solutions. There’s no need to engage multiple vendors for the specific application expertise needed for different applications. In fact, there is a growing trend towards consolidating vendor footprints – ‘right-sourcing’ to a few strategic partners who have broad capabilities.. Recommendation Choosing a service provider with a breadth of capabilities and services Make certain that the provider’s expertise extends across the complete is key here. The more capabilities they can bring to the application application lifecycle, from assessment, planning and deployment to and technology framework, the more holistically they can deal with maintenance, upgrades and renewals. This capability can free internal the system, which can provide more value to end consumers within staff to focus on more strategic IT projects in the queue. It can also the business. While some vendors are excellent at solving very specific help create IT solutions that differentiate the business. problems, a broader scope is needed today. The conversation shouldn’t center on just one application, business process or requirement. Capable Further, by managing the full application lifecycle, service providers providers should address the whole application ecosystem and, most can reduce ramp-up time for projects and spot opportunities for importantly, the end business result the ecosystem should achieve. improvement at any point in the cycle. With a more comprehensive understanding of the application environment, they can also help Managing Complexity in the IT Stack assess the relevance and potential value of new application functionality Like other components of the application ecosystem, the IT and speed time-to-benefit for new capabilities the company chooses infrastructure has become more complex to manage, monitor to adopt. Since IT solutions are never static and evolve with the needs and maintain. That complexity extends across every layer of the IT of the business, a capable provider should be able and willing to stack – from data center servers, operating systems, databases and facilitate this evolution. middleware to the network and end-user device. In today’s IT world, the technology involved in delivering a business process or experience Security to an end user has become more capable and, therefore, it is often nning Pla Us er more complicated. As nt s e ist ssm Optimize the infrastructure to optimize an Asse ce Application Lifecycle business processes. port Re eCommerce and ERP Applications pt ce O im n Since IT is being viewed as a key enabler to rejuvenating business i za p li a tio n om growth, the stakes are high. For ERP applications, even a few seconds E n h a n ce m e n t C of downtime can disrupt critical business processes and productivity. For eCommerce applications, where availability is so tightly coupled By managing the complete application lifecycle, service providers with revenue, downtime can translate into lost sales and, possibly, can reduce ramp-up time for new projects and speed the adoption lost customers. of new application functionality. For both applications, the underlying computing infrastructure must deliver 24x7 service and respond to end users at the speed of the Addressing The Application Ecosystem web. The dynamic nature of ERP and eCommerce applications also The complexity of an enterprise application solution reaches well leaves the IT staff with the complex task of managing computing beyond the core application itself: It extends into the ecosystem of resources that must adapt to fluctuating demands, which can interrelated solutions that work together to support a business process change by the minute. or deliver a user experience. Messaging and Collaboration Applications In today’s business world, application ecosystems can be highly As more internal and external teams use unified communications complicated and integrated across a broad base of systems and solutions for collaboration, the demand on computing and networking technologies. There are composite applications that can combine infrastructures will increase significantly. The IT staff must manage a data from a variety of solutions – order and inventory data from SAP® complicated mix of data, voice, and video technologies and deliver the ERP applications, customer data from Oracle® CRM applications, applications to a variety of endpoint devices and platforms. They must supplier information from Ariba® or many other application across the also work to secure the infrastructure against threats that can be a enterprise – into one solution that provides a net capability to the natural outgrowth of expanded collaboration. business. This has long been the case in the eCommerce world, where applications often ‘mash up’ content from multiple sources to create more meaningful, highly interactive experiences for customers. Enterprise Applications: Maximizing Their Value, Maintaining and Measuring Their Worth ______________________________________________________ 4 Further, they must now deal with the massive amounts of data Mapping is especially important for companies with unique business these new capabilities can generate. As data becomes more highly processes. Without identifying what those processes are upfront centralized through the use of these systems, the IT team can face and incorporating them into the application workflow, their unique new issues around storage, retention and, most importantly, security. competitive value may be lost. The operational and staff requirements to maintain this high level of Given the backlog of IT projects and the rush to move the application performance, availability, agility and security are very demanding and deployment cycle along, companies may sometimes make missteps in expensive, especially for an IT organization focused on cost efficiency. this time-consuming, yet crucial mapping process. It’s a fast track to It can be a daunting task to be an expert at any one of these areas, decreasing value: When the application fails to meet user requirements yet the current business climate requires support teams to be experts and the objectives of the business, it has only minimal worth to in all of them. the company. Recommendation Recommendations Since they host and manage enterprise applications every day, Engaging a service provider in the mapping process is the best way to service providers know how to optimize every layer of the IT stack for maximize application value right from the start or when companies are improved application performance, availability, agility and security. They re-engineering a business process for more efficiency. can quickly implement eCommerce applications, run them reliably and deal with constant, rapid change. This should be a collaborative process, beginning with a full analysis of business requirements to define user needs and business objectives. Using virtual compute power and storage to dynamically expand the Functional requirements should be next, documenting and mapping environment when the need arises, capable providers can manage the steps involved in the business process – from closing the books the seasonal spikes many eCommerce sites experience. These periods to placing an online order – to ensure they align with the final of peak activity can mean 15-20 times more traffic. In this space, application workflow. protecting customer information is paramount to winning trust and business, so companies also need to make sure the service provider In this top-down approach, this upfront work is completed by the complies with the Payment Card Industry Security Standard (PCI/DSS). service provider and approved by the customer before moving into technical requirements, the mix of foundational technology that will In taking the service provider approach, organizations can redirect drive the newly streamlined business process. energies from managing technology components to strengthening their brand and market position and creating richer, revenue-generating Measuring Outcomes With Business-Based Metrics online experiences for their customers. At one time, the value of IT services were only judged by metrics around availability and performance, such as uptime or transaction For IT organizations and line-of-business managers looking to unlock speed. But those metrics provided no indication about whether an more value from their ERP applications, a service provider can monitor, actual business outcome was achieved. manage and adapt the supporting infrastructure resources to remove performance bottlenecks and enhance business process efficiency. Service providers who manage hundreds of these applications are Business-based SLAs clarify goals and hold the very adept at maximizing their value for customers. They are also at the forefront of product evolution and often work with ERP software service provider to a higher standard of service. vendor teams to learn about new application capabilities in the beta stages of development. Today, IT organizations are being measured by business-oriented With unified communication applications running in a provider’s highly metrics: Their ability to meet service level agreements (SLAs) around secure data center and across a high-bandwidth network, employees, specific business processes. Those SLAs can apply to a range of partners and vendors can collaborate in new ways to increase business outcomes, from providing the systems to meet manufacturing opportunities for business growth, without increasing the technology quotas and get orders shipped, to closing financial statements or burden on IT staffs. reducing user abandonment rates on web channels. Consolidating infrastructure and application services with a single In turn, companies looking to outsource IT services want to extend provider can greatly reduce complexity. Economies of scale also apply: those same metrics to service providers. They want business-based Accomplishing more with a sole, strategic supplier can decrease SLAs to incent providers and measure the value of the infrastructure aggregate costs. and application services they deliver. Aligning Applications with Business Goals Recommendation The goal of enterprise applications is to streamline and optimize Companies should be aware that this outcome-based approach business processes to drive revenue. But without documenting and presents a paradigm shift for many service providers. They are being mapping those processes into the application workflow, critical asked to broaden their focus beyond the technology solution they processes could be missed. Once the application is deployed, that provide to focus on the business capability it delivers. This brings could lead to lost orders, inaccurate financial reports or late paychecks. higher levels of responsibility and accountability into the SLAs service providers typically write. Map business processes to maximize application Yet, there are service providers who welcome business-based value from the start. SLAs, because these SLAs crystallize what the customer is trying to accomplish. Armed with that input, the service provider can know the most relevant technology tools to apply. It also brings a deeper level Enterprise Applications: Maximizing Their Value, Maintaining and Measuring Their Worth ______________________________________________________ 5 of collaboration to the relationship, as well as a higher level of trust as With global collaboration capabilities, companies may need to tap into service provider and customer work together towards a common goal. extra compute capacity for special events, such as a web conference Business-based SLAs epitomize the business value a service provider announcing a product, process or capability to employees across the can bring to a customer and should be a critical decision factor in world. As teams become more geographically dispersed, these systems vendor selection. will become as critical to business operations as traditional phone and mail service. Upgrading Applications To Maintain Value Now seen as a way to drive new business growth, the same upgrades eCommerce Applications that many companies put on hold during the economic crunch are Site traffic can increase by as much as 20 percent between May and now a top priority. IT executives want to provide the business with the December. Since online channels can generate well over 50 percent added functionality of newer versions, but they know the upheaval of their revenues in that period, even a few seconds of downtime can upgrades can cause and how time-consuming they can be. have a tremendous financial impact. With cloud services, they wouldn’t have to pay for extra capacity during the slow season. Since software vendors typically begin to phase out support for older releases as time goes on, further delays may mean losing support ERP Applications for the version of software running and expensive time and materials Cloud services can be used to support activities with heavy processing charges for uncovered services. As business needs change over time, loads that fall outside the realm of day-to-day tasks. For example, older applications can also become out of sync with the business and, closing the monthly books, processing payroll or supporting employee therefore, less valuable. Basically, the longer upgrades are delayed, the open enrolment for annual benefit updates. more work there is to be done and the more cost prohibitive it can be. The choice of the ‘right’ service delivery option once again ties back Recommendation to the customer’s specific business need, as well as the application The right service provider can simplify and speed even major application and business function to be supported and any industry-specific upgrades by applying best practice approaches, proven methodologies regulations that need to be considered. and lessons learned from managing many application upgrade projects. Recommendation. In the enterprise application space, many companies are using a mix of IT service delivery solutions to meet their needs. They may use cloud-based storage for archiving data, but Blueprint, map and test to avoid the most common not for their primary repository. They may use cloud-based servers upgrade pitfalls. to run a web and application layer, but not for a database. The point is, companies should think about cloud services as just one of the powerful tools in their IT services tool bag. They start by creating a blueprint to clearly define and document the project scope and schedule to keep it on track. That’s followed However, the difficulty with this approach comes when businesses by careful requirements gathering to help ensure the upgraded engage multiple vendors to deliver the mix of IT services. They become application functionality maps to the needs of the business, then a ‘traffic cop’ between service providers, left with the responsibility for rigorous testing before bringing the application live. This process helps tying all the outsourced services together into a cohesive solution for to avoid many of the most common pitfalls of any application upgrade the enterprise. project. It also allows IT organizations to provide the business with upgrades that are fine-tuned to deliver more value to the business. Think about cloud services as another powerful tool When service providers are engaged for on-going application in the IT tool bag. management, rather than one-off upgrade projects, they will already have a keen insight into the company’s business strategies, processes and environment, which can streamline upgrade cycles. A simpler strategy would be to work with a single provider offering a Assessing the Cloud range of services, from co-location, hosting and cloud services to full Today, there is a lot of confusion around various types of cloud infrastructure and application management. A single-source provider technologies and how they can be applied effectively to provide the with a broad range of services is less likely to force fit a solution and most business value to application environments. more able to provide a carefully blended mix of services to suit the business need at hand. Certainly, the overarching benefit is flexibility, both in capacity and cost. Cloud-based services offer pay-as-you-go, on-demand access to virtual Maximizing Application Value with AT&T servers and storage with elastic capacity that allows companies to As a single-source provider for comprehensive application dial the service up or down within minutes. This can be a great option management, enterprise hosting and cloud services, AT&T can help for quickly responding to changing business needs, unpredictable companies reduce the cost and complexity of service delivery and find demands and seasonal surges where extra server or storage capacity the right combination of internal and external resources to accomplish is critical to keeping business flowing and customers happy. business goals. Messaging and Collaboration Applications With more than 12 years of experience managing leading ERP, While companies may consider cloud-based storage for archiving eCommerce, messaging and collaboration applications – and expertise massive amounts of email files, these applications tend to stay fairly across every major business function –AT&T knows how to optimize static as far as the demand for compute capacity. This may change as applications to maximize and maintain their value. Full application businesses take advantage of unified communication solutions. lifecycle services free internal IT staffs to focus on strategic initiatives Enterprise Applications: Maximizing Their Value, Maintaining and Measuring Their Worth ______________________________________________________ 6 for supporting new business growth, while easing the adoption of new business processes, deal with rapid change and deliver highly application capabilities. responsive customer service. The combined security, reliability and scalability of the AT&T global With a strategic approach to solving both business and IT challenges network and enterprise-class AT&T Internet Data Centers worldwide – backed by business-based SLAs – AT&T can help companies align provides a solid foundation for enterprise applications to speed applications with business processes, measure their success and drive towards better business outcomes for lasting growth. For more information contact an AT&T Representative or visit www.att.com/business. 01/17/11 AB-2073 © 2011 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. The information in this document is provided by AT&T for informational purposes only. AT&T does not warrant the accuracy or completeness of the information or commit to issue updates or corrections to the information. AT&T is not responsible for any damages resulting from use of or reliance on the information.