Gartner has developed its first Smart Enterprise Suite Magic Quadrant.

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1 InSide Gartner This Week Vol. XIX, No. 12, 19 March 2003 In This Issue... Management Update: Gartner s Smart Enterprise Suite Magic Quadrant for 2003 Gartner has developed its first Smart Enterprise Suite Magic Quadrant. Enterprises that are evaluating portal, content management and collaboration functionality should use the Magic Quadrant and also consider how the markets are evolving. The Smart Enterprise Suite Category Emerges Gartner identified in May 2002 the emergence of a new category that it calls the smart enterprise suite (SES). A combination of portal, collaborative and content management functionality, the SES is becoming a highly significant evolutionary trend as the related markets mature and merge. Market events have clearly confirmed that move. (continued on page 2) CIO Update: Extend Mainframe Life by Adopting a Service-Oriented Architecture Many CIOs and other executives are looking into how to achieve improved cost-effectiveness for their operations. Enterprises that implement service-oriented architectures on their mainframes can extend the life cycles of their systems. However, many have been reluctant to incur the costs required to attain high levels of granularity. Legacy Systems Persist Large enterprises have tried a number of approaches to eliminate rigid legacy systems from their portfolios, but they have had only limited success. Despite packaged conversion or platform transformation, many are left with a significant portfolio of legacy systems. Although some applications are simply too archaic to save in their current implementa- (continued on page 6) 1 Management Update: Gartner s Smart Enterprise Suite Magic Quadrant for 2003 Gartner has developed its first Smart Enterprise Suite Magic Quadrant. Enterprises that are evaluating portal, content management and collaboration functionality should use the Magic Quadrant and also consider how the markets are evolving. 1 CIO Update: Extend Mainframe Life by Adopting a Service-Oriented Architecture Enterprises that implement serviceoriented architectures on their mainframes can extend the life cycles of their systems. However, many have been reluctant to incur the costs required to attain high levels of granularity. 8 CIO Update: Legacy Modernization Magic Quadrant Helps in Providing Applications for Tomorrow The conversion of aging applications to more modern architectures requires new packaged tools. Gartner s Legacy Modernization Magic Quadrant describes this market, which combines legacy understanding and transformation. 11 Management Update: How HP Reinvented Product Development Management Gartner presents a case study on how the Hewlett-Packard (HP) Imaging and Printing Group has standardized its tools, processes, procedures and program management to transform its product development process. HP s complex global organization made this a major effort. 14 At Random

2 Management Update: Gartner s Smart Enterprise Suite Magic Quadrant for 2003 (continued from page 1) Notable acquisitions driven by the need to aggregate larger suites of functionality include: Documentum bought eroom Vignette acquired Epicentric Open Text bought Corechange Portal vendors continue to expand the scope of their products well beyond the gateway for example, Plumtree Software s Enterprise Web, Computer Associates International s Cleverpath and IBM s WebSphere Portal. SES Definition Gartner defines the required and optional features of an SES as the following: Content management. Basic document management with library services and the ability to publish documents to the Web via the portal. More substantial document management (such as compound document authoring) and Web content management is not required and is considered of limited relevance to an SES. Features such as digital asset management and support for rich media are not required. Collaboration and community support. The ability of groups of self-selected users to participate in discussions and document sharing (often referred to as teamrooms ) is the basic requirement. Not all products include real-time collaboration capabilities, but Gartner expects that to soon be a requirement. The ability to deliver presence awareness will be an important feature in this capability. Messaging ( and voice mail) is not considered a requirement in the suite, although a few vendors include it. In most cases, Gartner expects an SES to be deployed alongside current messaging (and directory) infrastructure. Information retrieval. The ability to index and search information managed within the suite is a common element of content, collaboration and portal features. Extending this capability to other data sources is desirable, but not required. More-advanced features, including information categorization, taxonomy generation, profiling and expertise location, are not required. Process management. Targets not the repetitive tasks supported by traditional workflow, but the ad hoc and dynamic activities characteristic of knowledge workers. The extent of the process support offered in a suite varies considerably. This is an area where more market exposure will determine the feature set more precisely. A basic level of business process management tools will become an expected feature. Business intelligence and data analytics functionality. Gartner does not expect the full capabilities of major business intelligence suites to be incorporated into the SES. However, some analytics functionality tightly integrated with the use of the functionality in the suite can enable use of the suite to be monitored effectively and provide a valuable feedback loop supporting the dynamics of collaboration. Multichannel access. Providing connectivity to a range of desktop and mobile devices via a mix of connectivity methods is supported for content management and collaboration. This functionality is considered optional now, but is becoming a standard feature of portal frameworks. Future assessments are likely to focus on the scope and flexibility of multichannel capabilities this may involve exploiting companion products, rather than being a component within the SES. Portal framework. Although Gartner has not required that the portal framework be part of the suite, any product that is delivered to work with other portal 2003 Gartner, Inc. and/or its Affiliates. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice. Additional subscriptions may be ordered for an annual fee ($500 in the United States for 50 issues per year; higher pricing may apply elsewhere). Multiple reprint prices are available on request; contact Gartner at Comments can be ed to: inside@gartner.com. 2 Inside Gartner This Week

3 products must do so via an installation process without requiring any development or custom configuration. Magic Quadrant Background Gartner has developed its first Smart Enterprise Suite Magic Quadrant (see Figure 1). As always in an emerging market segment, the criteria for inclusion are somewhat fluid. Any vendor that offers a combination of portal, content management and collaboration support, and offers those functions as a suite was considered. Other functions in particular, analytics capability although not requirements, are considered additional strengths in the market. Gartner has not regarded it as necessary for a vendor to own or develop all of the technology in the suite, but it must be delivered as a package from one vendor, not simply by cross-marketing agreements. In rating the vendors, Gartner has looked at strengths in each of the component areas, as well as market presence and other standard factors in considering Ability to Execute. For Vision, Gartner has considered the degree to which the vendor has identified with the concept of a suite as a primary element in its approach to the market, and the capabilities so far delivered by the suite. Market Commentary Although the market is new, it has already undergone one significant change. Gartner originally anticipated that the first generation of SESs would be a package primarily of established application functionality bundled into a single product offering. That would have the advantages of simplified purchasing and reduced integration complexity, and, with suitable price points, could drive the adoption of this functionality into wider markets. Gartner expected that this might be followed by the emergence of the SES as a Figure 1 Gartner s Smart Enterprise Suite Magic Quadrant Ability to Execute Challengers platform for developing new applications such applications would combine the capabilities of transaction-based processing with extended features supporting rich content and collaborative business processes. In fact, the second generation has not been distinct, and some vendors are already addressing the issue of SES as platform. This has therefore been reflected by consideration of exploitation of a service-oriented architecture and the provision of tools for creating composite applications. IBM Leaders Microsoft Open Text SAP Plumtree Software Hummingbird Documentum Oracle Vignette CA FileNet Sun imanage PeopleSoft Siebel Systems SiteScape Stellent Hyperwave divine BroadVision As of March 2003 Source: Gartner Research Niche Players Visionaries Completeness of Vision CA Sun Computer Associates International Sun Microsystems 19 March

4 Management Update: Gartner s Smart Enterprise Suite Magic Quadrant for 2003 (continued) No Leaders or Challengers Because SES is a young market, Gartner has not yet identified any Leaders or Challengers. In this Magic Quadrant, Ability to Execute has been assessed with regard to investment directed to this market, as well as presence in the precursor markets (portals, content management and collaboration support). As the suite market becomes established, prior positions will become less important and success will be predicated on execution specifically as a suite vendor. Gartner therefore expects significant shifts in the future in the position of the vendors. Visionaries Quadrant Visionaries are companies that show a strong understanding of the likely evolution of the market. They may lack a strong track record in a market. In this case, because the SES market is still emerging, there is little to speak of in terms of past proven success, so the Ability to Execute rankings are modest overall. IBM and SAP are the most advanced in their offerings, reflecting the scale of investment and the breadth of their offerings. Plumtree Software, the strongest of the pure play portal vendors also makes a strong showing, but lags somewhat as a result of its lesser scale. Its offer is limited by less capability of its tools for creation of composite applications using the SES as a platform. Hummingbird and Open Text are, from the collaborative document management sector, the leading visionary vendors. Hummingbird has, for some time, offered a broad range of capabilities representative of the SES. Its challenge will be to sustain a competitive position against muchlarger companies. Open Text has a comprehensive content and collaboration capability, and the recent acquisition of Corechange should address its weakness in portals. Vignette s more-limited initial focus on Web content management was expanded by the acquisition of Epicentric. The product integration is not yet complete, but the vision of a comprehensive application platform is powerful. PeopleSoft, another major business application vendor, is following a path similar to SAP s. Both enterprises are looking to create new applications exploiting the breadth of the SES as a platform and also offering the platform as a product in its own right. PeopleSoft, however, is significantly less advanced in achieving this goal. SAP has delivered initial xapps and the NetWeaver platform. PeopleSoft s AppConnect platform is less extensive and has yet to be targeted at the full range of collaborative and content-centric applications. Siebel Systems Application Base contains most of the elements of an SES, but it has not been a player in any of the precursor markets. It remains unclear to what extent Siebel will choose to offer generic platform capabilities vs. focusing on specific business applications. Computer Associates International has established a position using its portal as a framework to deliver business intelligence capability. It is now extending this functionality to deliver additional elements of the SES. Hyperwave has for some time delivered a combination of portal, collaboration and content capabilities. It remains a small company with little presence in the United States (it is based in Germany), but nonetheless has demonstrated good vision toward the SES. Niche Players Oracle, Microsoft and Sun Microsystems, all powerhouse companies, have shown an interest in entering the SES market, but have yet to demonstrate a comprehensive vision. Oracle, although it has named its product Oracle Collaboration Suite, has so far focused attention on and messaging functions. It has no significant content management functionality, and has yet to leverage any of its tools expertise into this space, so Oracle Collaboration Suite 4 Inside Gartner This Week

5 is not currently considered an application platform product. Microsoft clearly has capabilities in all aspects of the SES, but it has so far focused more on the development of distinct products across the range of SES functions. SharePoint Portal Server combines the features of a portal and document management, but is not a leading product in either category. Other elements of the Microsoft portfolio, such as Web content management and realtime collaboration are, as yet, not fully integrated. Sun Microsystems acquired assets from iplanet, and it has potential in this market, but Sun has yet to show significant commitment. imanage, Stellent, BroadVision, SiteScape and divine are all moving toward a suite from different starting points and with different strengths. They are more-specialized offerings as compared with those from IBM or SAP but, as is often the case with niche vendors, where the product fits, it may well be a better choice than a powerhouse vendor s offering. imanage is building toward a suite, for example, embedding WebEx to provide real-time collaboration capabilities, but it has yet to build momentum as a suite vendor. Stellent has a content management background, but only recently has the company shown interest in pursuing a broader target. BroadVision is showing signs of recovering from severe financial problems and recognizing that it needs to extend beyond its contentcentric portal product. SiteScape remains a small vendor focused on collaboration and using partnerships to deliver a broader suite. divine has made acquisitions that have given it capabilities across the whole portfolio. So far, however, it has chosen to focus on extranet solutions rather than the SES. Its recent Chapter 11 bankruptcy filing severely limits its ability to execute. Documentum and FileNet, leading document management vendors, have substantial assets that could be applied to the SES market, but neither has yet delivered the full range of capabilities required for the suite in an integrated fashion. Documentum, with its purchase of eroom, has demonstrated a recognition of the need to move beyond its traditional strength in document management, but still falls short of a suite in the portal dimension. FileNet s focus on content integration technologies is an important component of the SES, but it is insufficient to make it a leading contender. Bottom Line The SES market is showing the potential strength of some powerhouse vendors (IBM and SAP), but there is a good range of smaller or more-specialized companies also pursuing this opportunity. Potential buyers will have to decide between the breadth of an offer and its potential tie-in to current infrastructure, or choose to pursue more-targeted approaches to the integration of collaboration, applications and information access with lower initial cost and commitment. Written by Edward Younker, Research Products Analytical sources: Simon Hayward, Mark Gilbert, Gene Phifer and French Caldwell, Gartner Research For related Inside Gartner articles, see: CIO Update: The Impact of SAP Products on Enterprise Architecture, 26 February March

6 CIO Update: Extend Mainframe Life by Adopting a Service-Oriented Architecture (continued from page 1) tions, others are more flexible and can be leveraged by exposing the business rules embedded within. Service-Oriented Architecture Gartner espouses a development strategy that employs a serviceoriented architecture (SOA). The SODA (service-oriented development of applications) framework provides the development mechanisms to implement an SOA. However, with little interest in anything invasive, enterprises have used legacy extension technologies to wrap transactions and expose them through alternative presentation mechanisms (such as Java or HTML), or as programmatic objects (including the Component Object Model and Java). This approach works when the granularity of the business function (as represented by the screen ) is acceptable. By using programmatic integration servers, for example, you can package a flow of screens into a coarser granularity service than a simple screen or you can expose only a subset of the screen through a service interface. While this pseudo-soa approach works, true flexibility and maintainability are provided via finer-grain business functions that do not map to their traditional legacy presentation layers. SODA for Mainframes The SOA approach describes the framework for exposing business functions as services that is, those services that can be accessed by applications that need them. In traditional mainframe legacy systems, these business functions are written to be exposed to individuals via a 3270-style presentation layer. A new development-environment category is emerging that enables the assembly of composite applications based on services. Web services producer platforms are a set of tools, frameworks, engines and services that enable this style of construction. These platforms are focused primarily on Web services, but they can also support composition without using the Web services approach. The keys to these platforms are automation and flexibility, through the ability to quickly maintain or enhance applications that are assembled using this approach. Producer platforms for the mainframe are slowly evolving and will require a level of tool integration by the user to provide these functions. However, they are possible and Gartner recommends using them. Software services are components that do not require a developer to use a specific component model. They enable a developer to create programmatic interfaces that can access any underlying platform model such as.net or J2EE (Java 2 Platform, Enterprise Edition) without having to be specific to any single model. When building applications that rely on services, developers must recognize that services are not static components. Rather, software services come with a consistent behavioral aspect that is, a service will behave in different ways, but over time, the behavior becomes a pattern. That is because a service is an operational set of functions that an enterprise must manage for quality control and availability. There is no better environment in which to source services than the installed base of working, time-tested business functions that are implemented in legacy systems. Legacy Systems and Fine-Grain Components Wrapping current business functions is possible, but to provide the greatest flexibility in reusing systems, finer-grain services must be exposed. That requires a willingness to restructure current applications, isolating (as much as possible) the presentation layer from the business logic. It is unnecessary to completely re-engineer the systems or isolate the presentation layer, the business logic and the data access layer. However, it is beneficial to restructure the systems to enable service-oriented access as well as the current presentation mechanism (3270). Continued refinement of the systems into increasingly finer-grain business logic is an evolutionary process that should occur over time, balancing the need for ultimate flexibility with the performance requirements necessary for these systems. Balance is something that enterprises must discover for themselves. 6 Inside Gartner This Week

7 Although restructuring current systems into fine-grain components increases the flexibility when developing new applications, it can also have a negative effect on system performance. Moreover, established systems were not designed for reuse, and they often contain behaviors whose meaning has been lost over time. Enterprises that successfully implement SOAs on the mainframe will use legacy understanding and legacy transformation tools to create right-grain services (that is, services that are not too small and do not negatively affect performance, but neither are they too big to hinder reasonable use) and identify the lost meanings. Web Services on the Mainframe Gartner has previously discussed the applicability of exposing current business functions on the mainframe as Web services. Enterprises that accept SODA as their future application strategy must also include current mainframe applications. While options exist to transform applications off the mainframe into J2EE or.net platforms, those options are most appropriate for enterprises at the lower end of the mainframe MIPS scale that is, fewer than 200 MIPS. (MIPS, or millions of instructions per second, is a common measure of computer power.) Enterprises with a greater investment in mainframe MIPS must begin to address the role that mainframes will play in their application strategies in the next five to 10 years. Gartner does not underestimate the difficulty of this decision, but an SOA enables enterprises to leverage their current applications and platforms while evolving to a J2EE or.net architecture. That is actually the single-biggest application development decision that enterprises must make. The architectures are maturing, but they have not shown the ability to completely replace the huge, mission-critical, industrial-strength applications that continue to execute on the mainframe in CICS (Customer Information Control System) or IMS (Information Management System). Most large enterprises will likely continue to have both J2EE and.net platforms in their portfolios, but they must decide how to integrate the traditional mainframe systems into their enterprise architectures. A service-oriented approach particularly using Web services provides a mechanism to integrate the applications with either platform, since they both can consume Web services. Bottom Line Mainframe-based enterprises can increase their flexibility and reduce their risk by restructuring established systems around an SOA. However, an SOA requires a willingness to undertake invasive re-architecting of the systems. In the past, most enterprises have shown little interest in doing that, leaving them with tactical extension or highly risky transformation approaches. The amount of change required is a function of the granularity desired from established systems. The greatest gain comes from the finest grain, but that requires the most restructuring and the highest expense. Written by Edward Younker, Research Products Analytical source: Dale Vecchio, Gartner Research For related Inside Gartner articles, see: CIO Update: The Future of the IBM Mainframe Looks Surprisingly Good, 5 March 2003 CIO Update: AD Survey of Enterprise IT Managers Reveals Top Concerns, 21 August 2002 CIO Update: How Web Services Will Change Enterprise Architectures, 31 July March

8 CIO Update: Legacy Modernization Magic Quadrant Helps in Providing Applications for Tomorrow Many CIOs are looking into how they can get the most out of their application portfolios. The conversion of aging applications to more modern architectures requires new packaged tools. Gartner s Legacy Modernization Magic Quadrant describes this market, which combines legacy understanding and transformation. Ways to Modernize Applications Application portfolios can be modernized by replacement via commercial packaged software solutions, outsourced development or in-house modernization initiatives. The 1990s represented the decade of packaged software, which fixed the Y2K problem, enabled enterprises to take advantage of the Internet and updated many aging application portfolios to newer, more dynamic business practices. However, for many enterprises, there are areas in which such approaches will not do the job. Gartner defines legacy understanding tools as those that provide system inventory, program understanding and code modification. Those solutions supply relationship mapping of application artifacts, in-depth data and control flow, code modification and testing. They may operate on a mainframe or workstation. Figure 2 Gartner s Legacy Modernization Magic Quadrant Challengers Allen Systems Group The leaders and visionaries products are often involved in e-business initiatives. This focus provides the knowledge required to enable legacy extension and enterprise application integration (EAI) solutions in a way that recognizes the business knowledge already implemented in the systems. Those tools reduce the risk of missing business logic or misunderstanding the application interfaces between legacy systems. Earlier product positioning for these vendors included reducing the cost of maintenance and Y2K conversion. The products represented in Gartner s Legacy Modernization Magic Quadrant are not strictly competitive with each other. Although they all focus on the evolutionary modernization of legacy systems, they may address it in different ways. IBM Leaders BluePhoenix/Crystal Cast Software The Legacy Modernization Magic Quadrant Custom applications that defy replacement through these more common approaches are candidates for the legacy modernization toolsets represented in Gartner s Legacy Modernization Magic Quadrant (see Figure 2). Many vendors in this market segment offer code and system analysis tools that have been in the market for years. Ability to Execute Compuware Modern Software Technologies Transoft Progeni Relativity Technologies Niche Players Source: Gartner Research Micro Focus Completeness of Vision HAL KS SEEC Trinity Millennium Group Soamai SWS Software Systems As of February 2003 Visionaries HAL KS: HAL Knowledge Solutions 8 Inside Gartner This Week

9 Micro Focus International s strength, for example, is in the COBOL market. Transoft s strength is in midtier platforms, although it has acquired a mainframe tool. Modern Software Technologies strength lies mostly in the Natural/Adabas arena. HAL Knowledge Solutions focuses on providing sufficient information about application portfolios to enable improved process, reduced cost and application modernization activities. Soamai provides legacy and distributed repository solutions that are important for a wide variety of modernization activities, particularly evolution to a service-oriented architecture (SOA). Vendors in the Legacy Modernization Magic Quadrant address the problem in different ways, so they do not always compete directly with others in this market. Identifying Business Rules Although legacy systems contain useful business knowledge, extracting that value remains difficult. Many enterprises have little desire to open up a Pandora s box of legacy systems. Current trends indicate that most prefer noninvasive extension approaches. Extending established applications to new environments is the least-risky and often the leastinvasive approach. It is, by far, the most common method. It provides immediate, short-term and low-risk resolution to immediate e-business demands for open access to traditionally internal applications by new external constituents. Efforts to understand legacy systems to extract business logic are increasing. Legacy transformation tools provide business rule identification, code slicing, code modification or transformation from one language to another. These products are generally provided as add-ons to legacy understanding tools. They may operate on a mainframe or a workstation. Other sophisticated tools can also support language wrapping for creating components out of legacy systems and provide support for porting legacy business logic to new architectures and languages. The risk of completely transforming a legacy application to a new platform limits this choice to those with the oldest platforms. These burning platforms are beyond hope of continued growth and evolution. Many enterprises are looking to transform a legacy system for reasons other than concern for the current platform s longevity. In some cases, enterprises may be driven by concern about the availability of dwindling resources, such as COBOL or Software AG s Natural programmers, and Computer Associates International s CA-IDMS or IBM assembler language skills. This transformation discussion is about redeveloping a mainframe-based application that is becoming hard to manage. Leaders Quadrant The leading vendors providing legacy modernization solutions continue to grow and refine their solutions. IBM, which has shown little strength in legacy understanding or legacy transformation, has established legacy modernization as a strategic pillar of its long-term application development (AD) strategy. IBM s advantage in this market is not just its tooling. It is also dominant in the underlying AD infrastructure associated with many legacy environments (predominantly IBM mainframes), and it has a large service capability. Enhancements to CICS and IMS, in addition to WebSphere Studio Asset Analyzer and WebSphere Studio Enterprise Developer, have moved IBM into a leadership position. Life is still complex in this environment, but IBM is showing leadership in its thought processes, its tooling and its service offerings. BluePhoenix/Crystal, a subsidiary of Formula Systems, an Israel-based holding company, has a wide array of products and service-based solutions for a broad spectrum of legacy modernization initiatives. From its legacy modernization tools through its strong service partners, BluePhoenix/Crystal has a strong modernization offering that should be anyone s shortlist. 19 March

10 CIO Update: Legacy Modernization Magic Quadrant Helps in Providing Applications for Tomorrow (continued) Cast Software, a leading vendor in the previous legacy understanding market, has made its mark by focusing on the new legacy distributed systems. It continues to provide a strong product and has a good set of partners. It positions its products across the entire application life cycle, including both maintenance and new development. It has recently added COBOL support to its long list of distributed languages. Market Size The legacy modernization market is not large. The market size represented in the Legacy Modernization Magic Quadrant does not consider the service revenue from the larger external service providers, and so it could be misleading. The service revenue associated with this same space is at least 10 times this amount. Some vendors in this market derive a portion of their revenue from direct product sales, some from their own service capabilities and some from partner revenue. There is some service revenue, such as from Trinity Millennium Group and BluePhoenix/Crystal, but this market size is predominantly represented by tools revenue. show a tremendous upside. With the exception of correcting the Y2K problem, the tools have not shown strong revenue streams. However, Gartner does see a reinvigorated market for the tools to reduce the cost of maintaining aging legacy systems. In fact, many of the largest outsourcing enterprises depend on the tools to ensure they can maintain application code they didn t write. Bottom Line There are many benefits to legacy modernization tools, and they significantly reduce the risk of failure when maintaining or transforming aging legacy systems. However, AD organizations have shown a reluctance to invest in their legacy portfolios during the last decade, Y2K notwithstanding. Figure 3 The Legacy Modernization Market Dollars in Millions $ As the economy drives many enterprises to rethink their legacy portfolios, Gartner expects legacy modernization vendors to have some success. Until enterprises recognize that packaged solutions are not a panacea (and neither is outsourcing), this market will remain muted. Written by Edward Younker, Research Products Analytical source: Dale Vecchio, Gartner Research For related Inside Gartner articles, see: CIO Update: The Future of the IBM Mainframe Looks Surprisingly Good, 5 March 2003 CIO Update: AD Survey of Enterprise IT Managers Reveals Top Concerns, 21 August 2002 CIO Update: How Web Services Will Change Enterprise Architectures, 31 July 2002 Gartner projects fairly flat growth (see Figure 3) because of the historical lethargy of the market, as well as the current economic climate. Although enterprises are focusing on reusing and extending legacy systems, and these tools are prime candidates, revenue still does not Source: Gartner Research 10 Inside Gartner This Week

11 Management Update: How HP Reinvented Product Development Management Gartner presents a case study on how the Hewlett-Packard (HP) Imaging and Printing Group has standardized its tools, processes, procedures and program management to transform its product development process. HP s complex global organization made this a major effort. Background Hewlett-Packard s Imaging and Printing Group (IPG) was already looking at new markets such as digital imaging and cameras when the then-new HP CEO, Carly Fiorina, charged every division with reinvention. IPG is an approximately $20 billion business that accounts for roughly 25 percent of HP s revenue. It s the world leader in inkjet printers, laser printers and scanners. The Problems Corporate goals included 50 percent reductions in several areas: Time-to-market for new products Warranty expenses Product development costs The achievement of those goals would be complicated by HP s extensive use of third-party design partners and by the outsourcing of most of its manufacturing. IPG identified four major challenges that were impeding the acceleration of product development, limiting the reduction of product costs, and slowing the recognition and resolution of product defects: Divergence in new product development processes. For decades, myriad autonomous design centers, many of which were third parties outside IPG s direct control, had evolved disparate sets of procedures. An initial target tied to this challenge was improvement in storing and accessing new product development data for example, altering procedures and technology to reduce a day-long process to access design change data to a one-minute process. Disparate procedures make it difficult to locate and reuse content, but standardization facilitates it because designers and others know where to find information. Lack of scalability in new product development and other processes. Product development processes had not been created for use in an extended enterprise; instead, they had been optimized locally. That included spinoffs and outsourcers. Multiple HP organizations. HP business partners had difficulty interfacing with multiple HP organizations, all of which had different data formats, planning processes, structures and decision making. That introduced the potential for delays and increased costs. The complexity of IPG s global business. The challenges were magnified by the sheer complexity of IPG s global business, featuring tens of thousands of products and suppliers. Products were assembled differently in several continents and regions based on different constraints, such as parts availability. The Objectives To meet those challenges, IPG launched its Enterprise Product Development Management (EPDM) initiative to reduce divergent new product development processes, unify its autonomous design centers, improve extended-enterprise collaboration and accelerate design. Its specific objectives included the following: Set up a single process for bills of materials, knowledge management and change management the process would span IPG and its front-end design partners Unify nomenclature so that, for example, a product structure and the parts inside would share an identifier Secure access to safely allow external members of the extended enterprise into the EPDM systems Capture collaborative design results in near real time The Approach Taken To reduce complexity, IPG product lines would each need a single implementation stream. PTC s Windchill-based applications were 19 March

12 Management Update: How HP Reinvented Product Development Management (continued) selected as supporting solutions, with implementation streams to be based on a single instance in a Windchill-based product design environment. The product life cycle collaboration framework sought to coordinate back-end design centers with the front-end regions product requirements in Europe, Asia and the Americas. Automated tool support and general acceptance of a common product configuration management process were important parts of this initiative. IPG selected the quasistandard CMII from the Institute of Configuration Management for configuration management. Configuration management of products, facilities and processes necessitated handling requirements in those areas, accommodating changes (such as through standard change notices and change orders) and ensuring conformance. With a single stream, the range of disparate business requirements could be dealt with in a coherent manner, rather than via multiple, divergent product instances. The first contained implementation of the EPDM approach to be managed in the PTC Windchill-based system was the InkJet Cartridge product line. Windchill-based applications were deployed worldwide, because the product line has worldwide markets with regional variants and design partners. The implementation began with product data management, followed by the management of bills of materials and documentation. The system was first deployed in January 2001 to 300 users; the number doubled in April of that year. Prior to the CMII standard selection and the EPDM approach to the InkJet Cartridge product line, IPG initiated a user simulation involving 80 professional personnel from around the world. This was conducted for more than two weeks in a large conference room at HP s Palo Alto headquarters. It was perhaps the major event of the initiative, because it enabled IPG to get feedback, perform testing and achieve initial buy-in; in retrospect, it was perhaps the turning point of the project. The 80 professionals activities, tests and feedback were thoroughly documented, and the participants themselves a cross-section of user types returned to their business units as thought leaders and key influencers. The EPDM rollout has continued. The adoption of CMII in one part of product development had already resulted in some $14 million in annual savings cutting change order cycle times in half, reducing change order frequency by approximately 20 percent and related labor costs by about 40 percent. With broader rollout and tool support, the savings will likely grow, and the subsequent adoption of the PTC Windchill-based tool to streamline product life cycle management processes is generating additional savings. More than 1,500 named users now collaborate in Windchillbased applications with minimal customization to the tool. Customization requirements have been reduced by PTC s product partnership with HP, whereby many of HP s specifications have become part of the product. Documents, drawings, bills of materials, change tracking and so on are shared worldwide, with secure, reliable access for contract manufacturers in such diverse locations as Singapore, Puerto Rico and Ireland, as well as at multiple U.S. sites. Between the January pilot and the wider rollout, IPG spent five months preparing infrastructure and, especially, tuning processes. IPG recognized that, although tool support was essential, so were major procedural changes. Thus, many planning workshops during a period of roughly three months focused only on established vs. tobe processes. For the rollout, project management was a priority, with 30 project managers planning and controlling the various program and project activities using a multifaceted approach: Scope management. The team stressed thoroughly defining scope early in the planning phase. Issue resolution. Team members roles in issue resolution were published, and categories for project issues were defined and updated. Project management tools. Standard project management practices were established and 12 Inside Gartner This Week

13 reinforced with training, including in the PTC Windchill-based applications and, eventually, the ProjectLink module; integrated work schedules were also developed. Proactive resource planning. Profiles of the required resources were defined to ensure that the proper skill mix was allocated to the project. Deliverables and milestones. Via the Windchill-based applications, the project team and stakeholder groups were able to track progress on key deliverables. Handling risk. Risk mitigation plans were developed and maintained with periodic risk assessments. Scope was tightly managed, so that many useful changes and suggestions were approved, but postponed. In addition, a Risk Management Steering Committee for EPDM was established, which met regularly. Before the broader release could go live, several checkpoints were reviewed in three major areas: The IT environment Processes Organizational change readiness (with training complete and support/feedback mechanisms in place) Data migration and linkage to legacy systems were substantial issues. Significant data cleanup was needed, as was a major effort to prepare documents to move to the document management system. Careful selection of only that minority of documents and data that truly had to be moved (rather than a mass migration ) helped mitigate this issue. The Results Achieved One benefit IPG is receiving is a reduction in change order cycle time, which IPG includes in the category of collaboration benefits. Another gain in this category is the ability to set up a new partner in 24 hours. Heightened levels of design and process leverage and reuse are also considered collaboration benefits. Global access benefits include a reduction in stopped shipments due to revisions in engineering change orders. Under consistency benefits, IPG cites the advantages of using a single, CMII-based change process and other rationalized business processes: There are fewer orphan documents, bills of materials are more accurate and redundancy in product data entry has been sharply reduced. More important, however, is that, without consistent, standard products and processes, IPG management had not expected to be able to keep up with volume production needs for inkjet cartridges. The ability to manufacture the same products with the same processes identically around the world facilitates highervolume production. IPG is now able to quickly build new assembly lines, facilitated by the ability to manage information about assembly line design in PTC Windchillbased applications so that standard assembly lines are reproducible worldwide. Critical Success Factors and Lessons Learned Among the success factors identified was the clarity of the change program s goals around speeding design by rationalizing new product development processes, unifying design centers and improving collaboration in the virtual enterprise. The user simulation in Palo Alto, which involved 80 thought-leading professionals, was critical to the successful adoption of a standard CMII process. Equally important was containing the scope of the program, which was a difficult task. Other lessons learned involved the difficulties of migrating to new systems in terms of moving data and the need to move only the most-needed data in a cleansed, standard form. It took several months to analyze and prepare the IT infrastructure to support newly defined collaborative design processes and tools. 19 March

14 Management Update: How HP Reinvented Product Development Management (continued) Bottom Line Enterprises seeking business transformation should aggressively manage scope and organizational change, using program and project management techniques. Trade-offs and costs in standardizing processes, migrating data and adapting IT infrastructure should be expected. Written by Edward Younker, Research Products Analytical source: Matt Light, Gartner Research For related Inside Gartner articles, see: Management Update: How Hewlett- Packard Used B2E as a Catalyst for Reinvention, 23 October 2002 At Random IBM Makes WebSphere Enterprise Key to Its Software Strategy. On 21 February 2003, IBM made available new members of its WebSphere v.5 family of software. WebSphere Application Server Enterprise costs $25,000 per processor, and WebSphere Studio Application Developer Integration Edition costs $6,000 per developer seat. IBM has established WebSphere Application Server (WAS) as the market co-leader with BEA Systems BEA WebLogic. With WAS v.5 and WAS Express v.5, released in 4Q02, IBM significantly closed the functional gap with its main competitor and now introduces a wealth of innovation in the WAS family. IBM has had an Enterprise version of WAS for several years, but it was a marginal offering, essentially a collection of poorly-integrated old products (such as TXSeries) and immature new features. However, WAS Enterprise v.5 has emerged as a cornerstone of IBM s offerings and is positioned as the flagship for the WAS family and as the foundation for IBM s entire software strategy. Its services will be exploited by future versions of various Lotus, Tivoli and WebSphere products, including Portal, Commerce and Business Integration. Enterprises purchasing other WebSphere products will thus adopt it implicitly even if they are not interested in its particular features. This new Enterprise version adds to the basic WAS v.5 several new extensions for enabling rapid development and deployment of complex and composite applications and Web services. Enterprise v.5 gets integrated development tools from WebSphere Studio Application Developer Integration Edition v.5. Developers can use its Process Choreographer to create complex business flows, including transaction compensation, using Web services or Java 2 Platform, Enterprise Edition (J2EE) components. Other available features include Business Rules Beans, Asynchronous Beans, Application Profiling, WorkArea Service and Web Services Gateway. Most of these add proprietary extensions to the J2EE programming model. Although IBM has proposed some (such as WorkArea Service) to the Java community process for inclusion in J2EE, their use by developers will compromise application portability and increase vendor lock-in. Enterprises that adopt leading-edge technologies and that plan for advanced Web services and composite application developments should consider WAS Enterprise v.5 as an innovative platform rich in new, if unproven and proprietary, extensions. Risk-averse enterprises should wait for the product to mature; it will do so by at least 2H04. Analytical source: Massimo Pezzini, Gartner Research 14 Inside Gartner This Week

15 Alleged AOL Security Lapses Illustrate Process Flaws. Recent media reports indicated that AOL suffered a series of security breaches that put customer data at risk. The alleged breaches were caused by employees divulging passwords and other information that allow hackers to access customer accounts and databases. AOL said it has not yet verified the security lapses. The best security defenses in the world won t work if workers circumvent them. Typically, security divides into three functional areas: keeping the bad guys out (perimeter defenses); letting good guys in (access management); and keeping the wheels on (maintenance). But enterprises often overlook a fourth area: keeping the good guys from doing bad things. Serious security lapses such as those alleged at AOL illustrate that despite strong technology defenses, fundamental flaws in security processes and training will result in significant security breaches. Usually, the most serious security breaches occur when a trusted employee performs a malicious, careless or misguided action. Frequently, workers are authorized to perform these activities, such as password resets, but they perform them for an unauthorized result. Employees do this out of ignorance, malicious intent or external manipulation ( social engineering ) for example, a hacker pretending to belong to the company s own IT security team calls a customer service representative to ask for information about a certain account. Remote call centers can be particularly susceptible to social engineering because short-term, poorly trained employees often staff them. Although enterprises can never eliminate human error and malicious intent, they have tools available to limit the risk of internal attacks, including security and business processes, employee training and internal technology defenses. Analytical source: Rich Mogull, Gartner Research Microsoft Acquisition Makes Connectix Virtual Server a Strategic Choice. On 19 February 2003, Microsoft announced the acquisition of the Virtual PC and Virtual Server products (along with associated developers and intellectual property) from privately held Connectix. With the acquisition of a partition manager, Microsoft will compete directly with VMware, which has offered virtual machine software for PCs since 1999 and for servers since VMware s GSX Server and ESX Server products have become popular server consolidation and dynamic provisioning tools, despite no support from Microsoft. Although Connectix trails VMware in market share and virtual server technology, getting the full support of Microsoft (as well as packaging benefits) will make a huge difference. VMware will therefore need to focus on staying ahead of Microsoft in technology and maintaining strong partner relationships. As Virtual Server proves itself in the market, strong Microsoft partners such as Dell Computer, Hewlett-Packard and Unisys will likely shift their focus to Microsoft s offerings by 2004 at least in place of GSX Server. Partners aligned with VMware, such as IBM, will likely offer both products. Because Microsoft acquired Connectix s technology only, the deal does not need regulatory approval. However, because the logical partitioning market already exists, any advantage Microsoft s ownership gives to Virtual Server over VMware s products could provide ammunition for an antitrust case. Gartner believes that Microsoft should offer comparable support and licensing fees for VMware GSX Server and Connectix Virtual Server. Doing so will promote software partitioning hosted by Windows, marginalize ESX Server (which runs on its own kernel) and reduce the risk of antitrust actions. In the long term, Microsoft will focus on improving mixed workload capabilities, thereby reducing the need for partitions. 19 March