strategic enterprise-wide initiatives: finding the right partner

Strategic Enterprise-Wide Initiatives:Finding the Right Partner

A Netsession hosted by Cognizant Technology Solutions

June 28, 2002

2:00-3:15 PM EST

AGENDA

2:00-2:30 PM: Stephanie Moore, Vice President and Research Leader, Giga Information Group

2:30-3:00 PM: Doug Schafer, First Vice President, Options Trading System Development, Philadelphia Stock Exchange

3:00-3:15 PM: Q & A

© 2002 Giga Information Group, Inc. All rights reserved. Reproduction or redistribution in any form without the prior written permission of Giga Information Group is expressly prohibited.

Giga Information Group®

Technology Advice.Business Results.

Stephanie MooreVice President & Research Leader

Offshore and Nearshore OpportunitiesState of the Art in Strategic Global Sourcing

© 2002 Giga Information Group, Inc.3

Outsourcing Drivers

FocusFocus

QualityQuality

Time to MarketTime to Market

SkillsSkillsShortageShortage

Specialist Specialist RequirementsRequirements

Cost Savings/Cost Savings/ContainmentContainment

OUTSOURCINGDRIVERS

2002

Be very clear what your drivers are!


Global Sourcing

Improved networking and communications technologies have changed how and where we do business.

Remote workers and teams are commonplace.

Global sourcing permits cost, quality and time to market benefits that are unattainable in local regions.


Offshore Outsourcing — India Dominates

Dominant player

Indian firms have honed their offshore management processes

Cost

Quality

Language

Local presence

US acceptance of Indian vendors

Skills base and offerings (not just cheap and COBOL and applications)

Outsourcing to India is becoming a driver rather than a deterrent!


India Dominates -- Skills on Offer

“Legacy” application maintenance and support

ERP, CRM, J2EE, XML, Web services development, support

Infrastructure outsourcing

Managed services: help desk

Consulting: strategy, quality, architecture

Business process outsourcing

India continues to move up the value chain and now competes head to head with the former Big Five consulting firms and top tier systems integrators


Other Geographies

Offshore and Nearshore: China, Philippines, Eastern Europe, Vietnam, Ireland, N. Ireland, Canada, Mexico


US-Based Outsourcers and Consultants Promote Global Delivery Capabilities

Reaction to intense financial pressure Strong references and customer desire for global sourcing

solutions Intense pressure from the established Indian vendors who are

moving up the value chain just as the US outsourcers attempt to perfect their delivery of commodity services.


US-Based Professional Services Firms’ Offshore Offerings Have not invested as much time or money in

perfecting their offshore delivery capability

Quality and process maturity not a priority until now

Low-level maintenance and development work was the norm

Cannibalisation

Many firms partner for the offshore skills

But, offshoring to a local SI viewed as less risky


Client Location Global Development Centers

StrategyProgram ManagementAnalysis and planningHigh level designUser interface designProject co-ordinationOnsite testingImplementation

ProjectProject managementDetailed designCodingTestingDocumentation

Project

Bug fixesWarranty supportMaintenance

Post implementation support

Rapid reaction support

Post implementation support

Discovery

Most projects mix onshore and offshore resources

Modern Global Delivery


Risk analysis is the first step. Benefits

must outweigh risks to proceed.

Offshore Sourcing Risks

Cultural issues/clash

Language barriers

Distance to vendor

Time zone differences (can be a plus or minus)

Political instability

Telecommunications infrastructure

General country infrastructure

Management challenges (PM skills weak in India!)

All other general outsourcing risks


Contingency Planning is Critical for All Indian Vendor Relationships

Pay attention to standard DR, BCP

“Near-site” employee pools

Guarantees of onsite-ready staff– Visas

– Local facilities or non-Indian remote facilities

Built-in network redundancy

Increased security

Documentation

Contract provisions– Who pays for what?


Vendor Selection Methodology Define your needs Develop selection criteria based on those needs Research the market using reputable third party

resources. Investigate:– Vendor skills

– Vendor clients

– Case studies

RFI/RFP– Vendor responses will immediately reduce candidates

Visit vendor facilities– Interview engagement mangers, project managers,

developers (random), architect/technical specialists


Selection Criteria

Industry expertise

Technical expertise

Consultant quality

Methodology

Knowledge management

Knowledge transfer

Cultural integration

Availability and pricing


Additional Offshore Vendor Criteria

Reference projects

Breakdown of local vs. offshore talent

Percentage of business from new application development vs. maintenance/ support outsourcing

What is the vendor’s process maturity, and what type of quality assessments/ certifications have been done?

Soft skills training


Critical Success Factors

Use transparent model

Disciplined requirements definition

Selection of appropriate pilot projects

Vendor selection process

Clear objectives, metrics

Active relationship management

Clear communications plan

Significant onshore presence in early stages

Make internal process & quality improvement integral

Senior executive sponsorship

Develop (tele) communication plan before the contract is signed

Understand and focus on cultural issues

Measure performance, success


PHLX Next Generation Architecture

Douglas M. Schafer, Jr.

First Vice President, OTS Development

About PHLX

Founded in 1790; First organized stock exchange in US

Provides Market place to trade • Stocks

• Equity options

• Index options

• Foreign currency options

Financial Automation Group (~160 staff members) is responsible for all exchange automation development and support

• Three trading systems supporting each of the exchange trading floors

• Trade Data Access System to support market surveillance, marketing, and Web based customer reports.

• Exchange Business System to support trade clearing and settlement, accounting & billing, security management, and customer transmissions.

Exchange Project Goals

Architecture to Specifically Address the Redesign of the Back-Office and Surveillance/Marketing Systems

Develop an Enterprise-Wide Architectural Solution That Would Address:

• Enhancement of services via timely access to enterprise data

• Real-time and non-real-time data accessibility between platforms while minimizing impact to trading floor systems

• Increased scalability demands

• Industry mandates such as T+1, STP, COATS, etc.

• Growing obsolescence of some enterprise components

• Unnecessary development of infrastructure

• Desire to increase development efficiency and minimize costs while maintaining sufficient quality and reliability

Next Generation Architecture

Develop an Enterprise-Wide ‘Blueprint’

• Provide As-is and To-be functional systems views and identify gaps

• Cross-reference additional business drivers and ‘pain areas’ against the to-be functional view

• Accommodate various stakeholder concerns

• Address Non-functional requirements (performance, SLA’s, migration, best practices, etc.)

• Provide a roadmap for product selection, development and deployment framework, and future functionality by mapping functional/non-functional requirements to various views

• Verification of architecture by testing functional/non-functional requirements against the ‘blueprint’

• Develop implementation plan based on internal and external drivers (industry deadlines, migration risk, staffing, cost, etc.)

Partner Criteria

Strong team management with the ability to focus and ‘drive’ towards a solution

Experienced with other architectural engagements

Experienced with formal process and project management geared toward architectural assessment

Previous knowledge of PHLX systems and/or industry experience

Ability to draw on quality personnel from multiple disciplines

Ability to effectively use PHLX staff where appropriate

Vendor Evaluation Process

Generated an RFP outlining the objectives of the assignment and the expected role of the vendor

Invested the time with the bidders to educate them prior to entertaining formal responses

Kept the number of bidders to a small number to insure quality bids

Asked for a formal written response and an oral presentation. Used the presentation to evaluate the depth of the talent being assigned to the project and the depth of real experience

Careful to avoid ‘boilerplate’ responses by clearly outlining expectations during the process

Cognizant – Our partner

Extensive knowledge of PHLX systems from prior successful engagements

• Executed Decimalization project for PHLX’s complete Back office operation - Exchange Business System(EBS) and Stock Clearing Corporation of Philadelphia(SCCP)

“Dream team” approach leveraging Cognizant’s extensive talent pool with strong IT Engineering Orientation

• Technical competencies - Data warehousing, Message based middleware, J2EE

• Financial domain experience

• Enterprise Architecture modeling capabilities

Worked with major stock exchanges and brokerage firms

Also experienced in Custodial operation and STP/T+1 requirement

Project Deliverables

Architecture Blueprints with multiple view points– Functional view

– Data view

– System view

– Technology & Deployment view

– Technology Integration Matrix

Implementation & roll-out plans

Architecture Workshops

Provides the ‘big picture’ for various stakeholders

Engagement Roadmap

ArchitectureRequirements•Functional•Nonfunctional •Environmental

Start-up Meeting

Architecture Models•Functional•System•Data •Technology •Deployment

Top downStakeholder Interviews

Bottom UpCode Inspections

Architecture IterationsPresentation of models & refinements

•Final Architecture•Implementation Plan

Interactive Workshops

Tool based inventory; Prior Application knowledge

Multiple viewpoints

Proposed Architecture Blue Prints

System View

InfrastructureServices

Front Office

Reference Data Management

Accounts & Security

Referential Store

Enterprise DataManagement

w ETL Logicw Data Martsw Data Warehousew OLAP & Reportingw Metadata Management

SCCP Business

Reporting

Core Processing Elements

CommElements

Back Office

Reporting

Core Processing Elements

CommElements

Accounting DataManagement

Accounting

AccountingFRONT OFFICE

FOCore

Processes

Notification Subscriber

Referential Store Extract Interface

FOData Store

Access

IntermediateStaging Area

TradeQ

OrderQ

QuoteQ

Other Q

BACK OFFICE

Trade Extract I/F

Trade Editor Trade NotificationService Trade Reporting

System

Tradevalidator

« Controller»

TradeCapture Agent

«Processor»

Trade Store

« Data Store»

Trade ClearingProcessor

Trade Clearing andRecon agent

Trade StoreData Access I/F

Open InterestProcessor

« Processor»

Open Interest Store

« Data Store»

Open Interest ReportingSystem

Open Interest ExtractInterface

Order StoreData Access

I/F

Order Recon Agent« Process»

Order Store

« Data Store» Order ReportingSystem

Ordervalidator

« Controller»

OrderCapture Agent

«Processor»

OrderNotification

Service

Communication ServiceAccount Master Store Data Access I/F Security Master Store Data Access I/F

SCCP TradeClearing Queue

S C C P

TradeSettlement Processor

«Processor»

Book StoreStore

Data Access I/F

Bookkeeping Agent

BookkeepingReportingSystem

Book Adjustor

Communication Service Security Master Store Data Access I/FAccount Master Store Data Access I/F

Reorg EventTracker

Entitlement Store

« Data Store»

EntitlementReportingSystem

Entitlement Processor

« Processor»

Entitlement Editor(Adjuster)

Dividend EventTracker

P&L Calculator

«Processor»

SCCP TradeStore

Data Access I/F

P&L Store

« Data Store»

P&L ReportingSystem

Book Store

« Data Store»

Position DataCalculator

Position Data Store

« Data Store»

Position ReportingSystem

Position Monitor

Position NotificationEngine

Position ExtractInterface

SCCP TradeEditor

SCCP TradeNotification

ServiceSCCP Trade

Reporting System

SCCP TradeValidator

« Controller»

SCCP TradeCapture Agent

«Processor»

SCCP Trade Store

« Data Store»

SCCP TradeClearing Processor

SCCP Trade ClearingRecon Agent

P&L StoreData Access I/F

EntitlementStore

Data AccessI/F

Communication ServiceSecurity Master Store Data Access I/FAccount Master Store Data Access I/F

ENTERPRISE DATA MANAGEMENT

Data SourceArchival

«Tertiary Storage»

ETL Logic

ETLMaster

Controller

ETL Data Processor

EDMData Access

Interface

InboundCommunication

Repository

<Data Store>

NotificationSubscriber

Reporting

OLAP Interface

Web EnablingInterface

Ad-hoc OLAPReporting

OLAP ReportScripts

Data Warehouse Staging Area

«Repository»

Archival

«Tertiary Storage»

w w w

Ad-hoc Query

Surveillance

«DataMart»

Marketing

«DataMart»

Accounting

«DataMart»

ExecutiveDecision Support

«DataMart»

PHLX Enterprise Data Warehouse

Historic InformationStaging Area

«Data Storage»

MetadataRepository

<Repository>Metadata Access

Interface

Operational DataStore

<Data Store>

REFERENTIALDATA

MANAGEMENT

SECURITY MASTERACCOUNT MASTER

AccountExtract

Interface

AccountNotificati

onService

AccountData

Access Inf.

Account Manager

AccountMaster

« Data Store»

AccountEditor

AccountMaster Reporting

System

SecurityExtract

Interface

SecurityNotification

Service

Security. Manager

SecurityMaster

« Data Store»

SecurityEditor

SecurityMaster

ReportingSystem

OptionExpirationProcessor

SecurityData

Access Inf.

SecurityBulk

UpdateDriver

Price Capture AgentCom.

Service

ACCOUNTING

Invoice Generator

Rate Configurator

Accounts ReportingSystem

Accounting DataAccess interface

Enterprise AccountingStore

« Data Store»

PHLX - AccountingPackage

Invoice EditorSCCP Billing

Calculator

Exchange BillingCalculator

Account Master Data Access I/F

Manual ChargesCalculator

Manual Charges Store

«Data Store»

Front Office

EnterpriseData

Management

Reporting

Auditing

Archival

Security

Backup & Recovery

Communication

Referential DataManagement

Back Office SCCP

Front Office Accounting

Enterprise Data Management

Technology Paradigm shift

Host centric ‘stove-pipe’ applications

Batch ‘pipe & filter’ processing model

Legacy databases and Processing platforms

J2EE Application Server based environment for distributed application development and deployment

Asynchronous Message based communications environment for near real time sub-system coupling

Data warehousing for enterprise data management

Recommendations

Smooth phased transition of existing systems to new architecture Implement new architecture patterns and technology for a single

function Phased investment on infrastructure and technology considering

budgetary and staffing constraints

Core Technology - Message-based Middleware, Relational Data Store and Application Server Environment

Enterprise Data Management – ETCL, Metadata Repository, OLAP and OLAP Reporting

Generic Services – Scheduler, Audit and Logging, Monitoring and Management Service, Security Service, Archival, Backup & Recovery, Communication Service

Summary and Lessons Learned

Invest the time up front with the vendors during the selection process. Need to provide the vendor with a clear idea of the scope, objective, and expectations.

While the vendor can be an invaluable resource, ultimately the client must internally be clear as to their objectives and be able to critically evaluate options in a timely manner.

Internal buy-in regarding the objectives and the process is essential and must come from the top. An internal team with appropriate representation and decision making power is essential.

The vendor needs to have the appropriate technical domain experts available at critical points in the process to support the primary architecture team.

As with any outsourced project, the talent of the vendor team is ultimately the most important success factor. Beware of vendors selling ‘process’ without talent and experience.


Thank you for your participation

Q&AFor more information, please contact Deb Mukherjee at 323-377-6787 or at

[email protected]