new government software models: an introduction to saas and application outsourcing presented to...

New Government Software Models: An Introduction to SaaS and Application OutsourcingPresented to State of OregonOct. 15th, 2009

Rishi SoodVice President, Government

[email protected]

2© 2006 Gartner, Inc. All Rights Reserved.

Presentation OutlineState & Local Environment•Market Segmentation and Solutions Map

•Major Cost Optimization Strategies

•Budget Battles: Traditional vs. Innovative

SaaS and AO: An Introduction•Alternative Delivery Models & The Cloud: A Primer

•SaaS and AO: Working Definitions

•SaaS and AO: A Comparative Look

•SaaS Areas of Development

•SaaS and AO: State & Local Government Users

Practical Steps to SaaS•Centralized IT and the Agencies: Building Collaborative Spirit

•Cloud Myths and SaaS Benefits

•SaaS Differentiation

•Four Steps to SaaS Today


State & Local Government:Market Segmentation

A/F TR PS CJ HHS NR PW OT

•Admin. & Finance

•Tax & Revenue

•General Services

•Budget

•Assessor’s

•Treasury

•Transportation

•Roads

•Motor Vehicles

•Ports

•Public Safety

•Sheriff’s

•Police

•Fire

•Criminal Justice

•Courts

•Corrections

•Probation

•Parole

•Health

•Human Services

•Social Services

•Youth Services

•Human Resources

•Labor

•Worker Comp.

•Natural Resources

•Environment

•Conservation

•Land

•Water

•Forestry

•Public Works

•Interior

•Other Agencies

•Economic Development

Governor/Mayor

Legislature City Council

Decentralized Market

•50 states

•3200+ counties

•19000+ cities

Source: Gartner Dataquest


State & Local Government:IT Solutions Map

A/F

•Int. Tax Systems

•Financial Mgmt.

•Purchasing

•Records Mgmt.

•HR Systems

•Retirement

•311

•Other

HS

•Case Mgmt. Systems

•Eligibility Assessment

•Fraud Detection

•Child Welfare

•Child Care

•Child Support

•UI Systems

•WC Systems

•Other

HL

•Medicaid

•WIC

•Electronic Lab Systems

•Disease Surveillance

•Records Mgmt.

•BioT Info. Systems

•Environ. Health

•Other

PS

•CAD

•RMS

•Biometrics

•MDTs

•Mugshot

•Crime Analysis

•Video Surveillance

•Mass Notification

•Other

CJ

•CJIS

•Jail Mgmt.

•Inmate Tracking

•Jury Mgmt.

•Court RMS

•Court Automation

•Other

TR

•ITS

•CAD/CAE

•Fleet Mgmt.

•Driver’s License

•Vehicle Registration

•Project Mgmt. Systems

•Port Security

•Other

PW

•GIS

•Project Mgmt.

•Operations Mgmt.

•CAD

•HR Systems

•Other

NR

•GIS

•Permitting

•Envir. Systems

•Water Resources

•Forestry Mgmt

•Land Mgmt.

•Hazard Waste

•Other

Source: Gartner Dataquest


State Government Fiscal Issues

Mid Year Actions: 42 states made budget cuts totaling $31.5 billion

State General Funds for FY 2010 represent -2.5% over FY 2009

FY 2010: 37 states already anticipate budget gaps

Source: NASBO

Total Year End Balances as % of Expenditures, FY2009

<1% (11)

1%-5% (15)

5%-10% (16)

>10% (8)


Link costs to

demand

Change Operating Practices

Cos

t con

tain

men

t

Change Operating

Model

Enterprise call center consolidation within government Call center consolidation across government

Teleworking Using tools to reduce travel (e.g. video conferencing)Cell phone usage

Shift to Variable

Cost

Enable shared risk / reward contracts

Pay for IT investments with bonds

Consider SaaS for certain applications

Manage Demand

Canceling non-viable projects

Project prioritization

Break-up large projects and defer pieces

Create a project management office

Reduce Resource

Costs

Reduce Labor Cost

Offshore application development

Offshore application maintenance

Automate software distribution

Utilizing fewer contractors and consultants

Reduce Technology

Cost

Standardize administrative applications

Standardize e-mailImplementing energy

saving measuresConsolidate mainframes

High-volume print rationalization / consolidation

Desktop printer consolidation

Adopting open-source desktop software

Server cons. (physical, rational, capacity)

Convert networks to VPN

Implementing VoIP

Restructure email storage

Remove games from PCs and PDAs

Reuse software components

Adopting open-source server software

Discontinue buying proprietary hardware

Defer purchases of desktop products

Renegotiate shelfware maintenance

Discard unused equipment

Confiscate underused equipment

Improve IS Business Practices

Centralize application development

Centralize portal management and development

Negotiate enterprise email agreement

Consolidate IT procurement

Create a shared services environment for IT infrastructure

Create shared disaster recovery centers

Consolidate and renegotiate vendor contracts

Centralize desktop application management

Helpdesk consolidation

Create a project management office

Renegotiate network rates

Telecommunications audit

Benchmarking

Mapping all Cost Cutting Items

Source: Cost Cutting in IT to Cope with Economic Slowdown, Gartner


Budget Battles: Traditional vs. the Innovative

Traditional

•Across the board budget cuts

•Increase fees

•Reduce workforce

•Raid rainy day funds Innovative•Increase technology penetration to reduce operational cost

•Partner with third party specialist to improve process

•Deploy emerging technologies and management models to meet new requirements


II. Changing Government Software: An Introduction to Cloud, SaaS, and AO


Cloud Computing:Definition and Perspective

Cloud Computing:

A style of computing where massively

scalable and elastic IT-enabled

capabilities are provided "as a

service" to external customers using

Internet technologies*

"All that matters is results; I don't care how it's done.""All that matters is results; I don't care how it's done."

"I don't want to own assets — I want to pay for elastic use, like a utility."

"I don't want to own assets — I want to pay for elastic use, like a utility."

"It's about economies of scale, with effective and dynamic sharing."

"It's about economies of scale, with effective and dynamic sharing."

Acquisition ModelService

Business Model Pay for use

Technical Model Scalable, elastic, shareable

Access Model Internet

"I want accessibility from anywhere, from any device."

"I want accessibility from anywhere, from any device."

EC2 and S3

Global-class industrialization of computing resources and services

Global-class industrialization of computing resources and services

*It would be easy to add this refining statement: "Where

the consumers of the services need only care

about what the service does for them, not how it is

implemented."


ADAMs? Alternatives to Traditional Approaches

ITIT

Traditional Alternative Systems Integration Business process outsourcing In-house custom app. development Application outsourcing On-site, installed software licenses E-mail outsourcing, document

management/print outsourcing Hosting, Web hosting, colocation Company-owned and managed

infrastructure and IT assets (DC, PCs, network, software)

In-house managed networks, network outsourcing

Hardware and software leasing

• Business process utility (BPU)

• Software as a service (SaaS)

• Cloud Computing/Cloud Services

• Community source

• Appliances (physical and virtual only)

• Software streaming

• Infrastructure utility (IU)

• Storage as a service

• Grid

• Utility computing

• Capacity on demand

• Communication as a service

• Remote management services

• User-owned appliances or PCs

SaaS; the lead indicator for ADAMs since 2000

Processes as a Service; the modernized "bureau"

IU: a transitional stage for traditional outsourcing

"The cloud" becoming the "uber" term for ADAMs. Cloud computing = a style

of computing.Cloud services = any type of

service leveraging cloud computing


Software as a Service: A Working Definition

Software as a service:- An application owned, delivered and managed remotely by

one or more providers

- Where the provider delivers an application based on a single set of common code and data definitions, which are consumed in a one-to-many model by all contracted customers at any time

- On a pay-for-use basis or as a subscription based on usage metrics


Application Outsourcing: A Working Definition

Application Outsourcing:- An application owned by the customer, managed on

premise or remotely by the provider(s)

- Where the provider delivers an application based on a standardized set of common code and data definitions, which are consumed in a one-to-one model by the customer

- Paid for generally as a percentage of the annual license fee


Saas and AO: A Comparative Look

Application Outsourcing SaaS

Definition • An application owned, delivered, and managed remotely by the provider(s), multitenant software architecture and contracted on a subscription basis

Characteristics • "1-2-Many"• Pre-implementation outsourcing• Pay for service• Pay as you go • "Net Native"/Web Services/SOA

Definition• An application owned by the customer, managed on premise or remotely by the provider(s), paid for on a percentage of annual license fee.

Characteristics• "1-2-1"• Post-implementation outsourcing• Pay for services• Annualized payment(s) • Client/Server + Web services "wrappers"


SaaS "Sweet Spot" Continuesto be Pragmatists and Beginners

Comprehensive Strategy

49% 10%

40% 1%

Percentages are estimates only

Low High

Hig

h

IT Abilityto Execute

Low

• Replace low-end software tools

• IT resource or budget constrained;

Beginner"Simple utility applications"

• Departmental focus

• Requirements to extend existing SaaS solutions through configuration

• Integration with solution add-ons but only for departmental requirements

Pragmatist"Replace

departmentalon-premises applications"

• Replace on-premises applications wherever possible

• Buy into SaaS ecosystem or suite concept

• Use SaaS development platforms

Visionary"Eliminateas much

on premisesas we can"

• Crossdepartmental focus

• Automate end-to-end processes such as lead to order

• Mixed deployment Environment

Master"Weave SaaS

into the fabric of our application

portfolio"


SaaS Hype Cycle

Technology Trigger

Peak ofInflated

Expectations

Trough of Disillusionment Slope of Enlightenment Plateau of

Productivity

time

visibility

SaaS Procurement Applications

Years to mainstream adoption:

less than 2 years 2 to 5 years 5 to 10 years more than 10 yearsobsoletebefore plateau

As of June 2008

Web Analytics

Mobile Applications on Demand

Supply and Demand Chain Planning (SaaS)

On-Demand Sales Force Automation

SaaS for Contact Center Customer ServiceMRM On Demand

Security SAASHRMS (SaaS)

On-Demand Sales Incentive Compensation Management

SaaS Data Quality

BPMS-Enabled SaaS

Policy Administration SaaS Options for Life Insurers On Demand Partner Relationship Management

Application Platform as a ServiceSaaS-enabled

Application Platforms

E-Commerce on Demand

E-mail SaaS

Communications as a Service

SaaS — Business Intelligence

SaaS Portals

Project & Portfolio Management (PPM) SaaS

On-Demand Financial Management Applications

E-Recruitment

Employee Performance Management

Distributed Order Management

Integration as a ServiceBusiness Process Hubs

Multienterprise Business Process Platform

From: "Hype Cycle for Software as a Service, 2008" (G00159149)


SaaS Growth No Longer Easy to Ignore: 2005-2011, Worldwide

SaaS Revenue

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

2005

2006

2007

2008

2009

2010

2011

Years

Mill

ion

s U

SD

Other Application Software

Supply Chain Management

Office Suites and DCC

Enterprise Resource Planning

Customer Relationship Management

Content, Communications and Collaboration


SaaS/AO: Representative Government Users

State •WY Finance

•MN & OH Econ Agencies

•TX Dept. Criminal Justice

•NJ Transit Dept.

•IL Dept. of Revenue

Local•Arlington Co, VA, Finance

•Chicago, IL Housing Authority

•Schaumburg, IL Finance Department

Federal•Social Security Agency

•Army Logistics Mgmt.

•National Geospatial Agency

Commercial•American Med Response

•Greyhound Transport.

•Mission Federal Credit Union


III. What Should You Do Next…


Enterprise IT and the Agencies: Key Attributes to Working Together

Positive Strategies and Tactics

Enterprise Wide Framework

Unified Governance Strategy

Future Investment analysis

Collaborative Planning

Joint Prioritization

Adding hosting/specialization

Integration (OP & hosted)

Consulting about SaaS/AO

SaaS/AO Enablement

Hosted custom extensions

Negative Strategies and Tactics

Denial – “This is a fad”

Avoidance – “NIMBY”

Assuming that tomorrow’s CSFs are the same as yesterday’s

Clinging onto the hope that old norms will re-assert themselves

Ignoring the opportunity SaaS/AO presents for re-invention, adaptation, innovation

Placing all or nothing bets


Step One: Recognize the Myths

Industry Myth Gartner's Insight

A hybrid model will and should dominate for the next 10 years

Everything needs to be in the cloud

Cloud computing is a service delivery and consumption model with multiple attributes

All remote computing or off-premises hosting is cloud computing

It might save you money but not if used just to replicate on-premises work off premises

Cloud Computing will always save you money

"Cloud" is a euphemism for an abstraction. It cannot be touched, bought, or sold

"Clouds" are hardware-based services offering compute,

network and storage capacity


Step Two: Understand the Trade Offs that SaaS Presents

Upsides- Pay for what you use

- From an operational budget

- Basic functionality that you really need, not bells and whistles that you might need

- No operational management worries

- No infrastructure overhead/management

- Medium term lower TCO

- Faster implementations

- Easier integration*

Downsides- No asset value

- Less central management of the application portfolio

- More basic functionality*

- Vendor management (incl. oversight of their operational management)

- Security concerns

- Longer term TCO uncertainties

- “OP2OD” (On Premise to On Demand) integration

* Sometimes real, sometimes perceived•theoretically; particularly of SaaS to SaaS

applications written with open APIs


Step Three: Choose Vendors That Have Separated the 'Engine' From the User Experience

The front end (i.e., the user experience) must:

Be highly configurable,with limited requirements for technical skills

Have rich (but notoverwhelming)functional options

Be highly intuitive Be easy to use (for non-

technical audience) Have an attractive

user interface Be straightforward to integrate

into other applications

The back end (i.e., the engine) must:

Have a multitenant architecture(i.e., one-to-many)

Have a highly standardized supporting infrastructure

Make extensive use ofRTI approaches(i.e., server emulation, "virtualization," etc.)

Focus on scale and leverage of technology deployment


Step Four: Getting Started with SaaS Today

Determine potential savings or cost increases

Step 1: Savings

Step 4: Use

Step 3:Migrate

Action Outcome

Immediate impact and feedback

Jump-start your efforts, but do not stop here

Compare your cost of tech expenses to SaaS providers

Test SaaS applications with core users

Step 2: Portfolio

Determine usage Scenarios

Find three workloads with which you can experiment

Select applications to align with SaaS strategy

New Government Software Models: An Introduction to SaaS and Application OutsourcingPresented to State of OregonOct. 15th, 2009

Rishi SoodVice President, Government

[email protected]

new government software models: an introduction to saas and application outsourcing presented to...

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