Quality Management Justifying Investments Samu Lehikoinen Solution

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Quality Management – Justifying Investments Samu Lehikoinen Solution Architect HP Software Finland © 2008 Hewlett-Packard Development Company, L. P. The information contained herein is subject to change without notice

IT Inflicted Business Revolution Online Trading • Business Transformation • − from technology provider to service provider − Strategic competitive advantage (IPTV, comes with content) Efficiency and self service • mobile services • localization services, Tourism, online booking • … • Business Processes are run on IT.

HP Software’s lifecycle approach to BTO Optimize IT efficiency and business value Business Outcomes Business Needs Business & IT Services Make right spending decisions Deliver on time Meet business SLAs HP SOFTWARE LIFECYCLE APPROACH Automate end-to-end processes Share information and tools STRATEGY APPLICATIONS OPERATIONS

Service lifecycle Optimize the services IT delivers to the lines of business Business Outcomes Optimize business alignment by prioritizing utilization of IT resources – capital, people and assets – inline with business priorities Quality Center STRATEGY Performance Center Service Management Center Change & Configuration Center Application Security Center Project & Portfolio Management Center Business Availability Center Operations Center Network Management Center APPLICATIONS OPERATIONS Automate consolidation and prioritization of requests across strategy, apps and ops Gain visibility into planned and actual costs of application projects and IT services Manage supply and demand based on operational data across strategy, apps and ops

Definitions • Quality Management − method for ensuring that all the activities necessary to design, develop and implement a product or service are effective and efficient with respect to the system and its performance − three main components: quality control, quality assurance and quality improvement • Business Value – Generic term − Some examples: Customer Satisfaction, Revenue Growth, Profitability, Market Share, Wallet Share, Cross-Sell Ratio, Marketing Campaign Response Rates, or Relationship Duration.

Problem statement (Business Viewpoint) How can we ensure that applications provided by IT to automate Business Processes actually provide value to the business and continue to do so throughout their useful life? 36

Problem statement – QA Team Viewpoint How can we proof - with reasonable credibility - that further investments on QA will lead to increased business value of the Application or Application portfolio? …throughout the Application lifecycle… 36

Quality - Who Cares? TSE managing director Tomio Amano blamed the glitch on a software upgrade for processing data from securities companies which was introduced in October 35

Measuring Value by… • Nordic bank could not claim service payments after unsuccessful integration – cost 10 M€ • Bank lost 40000 customers in the integration process Taloussanomat 28. 10. 2008

… Post-Disaster Assessment

“ 40% of unplanned downtime is caused by application failures, costing an average of $100 k per hour for mission-critical apps” © 2008 Hewlett-Packard Development Company, L. P. Gartner, The Concept to Production, Software Changes and subject to Management , April 2008 From information contained herein is Configuration change without notice - Industry Analyst

Ongoing Change. Adds to the Problem … Apr 12 th, 1 am Major Application Update Rolled out Apr 19 th, 1 am Maintenance team finally produces patch that is expected to fix the invoice module Apr 12 th, 12 noon Invoice module not working; expensive manual process instituted Go Live 31 Apr 19 th, 12 noon Patch brings down entire finance system

Loss of Existing Customers What is the Business Impact? Loss of Potential Customers Staff Morale Loss of Revenue Rework Costs Brand Damage Triage Costs

They manage IT outcomes. 29

“The single most important thing to remember about any enterprise is that results exist only on the outside. The result of a business is a satisfied customer. The result of a hospital is a healed patient. The result of a school is a student who has learned something and puts it to work 10 years later. Inside an enterprise there are only costs. ” - Peter F. Drucker, The New Realities

Maximizing Business Value Balancing between strategic and “keep the light on” initiatives • IT Financials Management • − Asset Management − Portfolio management − Project management − Business Service Management • And so on BTO - Aligning all IT operations to Maximize Business Value of IT.

The questions remaining for QA … 27

ACCRUE COST TAKE RISK Application Layer PROVIDE VALUE Infrastructure Layer Development 26 Production

REDUCE COST TAKE MORE RISK Application Layer PROVIDE VALUE Infrastructure Layer Development 25 Production

INCREASE COST TAKE LESS RISK Application Layer PROVIDE VALUE Infrastructure Layer Development Production Where is the ideal trade-off point? 24

Where Are Defects Detected ? 59. 5% 20. 5% 16. 5% 3. 5% Req Dev Test Prod Source: NIST 2002 RTI Project 7007. 011 19

The Valueof Fixing Defects Early Where Defects Are Introduced Where Defects Are Detected Req Dev Test Prod X Relative Cost to Fix Req Dev Test Prod X Req Cost of Defects Dev Test Prod Actual Cost Ideal Cost Req 16 Dev Test Prod Source: NIST 2002 RTI Project 7007. 011

The Valueof Fixing Defects Early Where Defects Are Introduced Where Defects Are Detected Req Dev Test Prod X Relative Cost to Fix Req Dev Test Prod X Potential Value of Earlier Testing Cost of Defects Req Dev Test Prod Actual Cost Ideal Cost Req 15 Dev Test Prod Source: NIST 2002 RTI Project 7007. 011

But Are You Measuring This? ? Where Defects Are Detected Req Dev Test Prod Where Defects Are Introduced ? ? Relative Cost to Fix Req Dev Test Prod Req 14 Dev Test Prod Source: NIST 2002 RTI Project 7007. 011

With the rightapproach … ACCRUE COST TAKE RISK Application Layer PROVIDE VALUE Infrastructure Layer Development 13 Production

… we can achieve this! REDUCE COST TAKE LESS RISK Application Layer PROVIDE VALUE Infrastructure Layer Development 13 Production

The Real. Lifecycle of an Application Plan Define New Deployment or Major Upgrade Build & Test Launch Fix/ patch Full Quality process 12 Fix/ patch Minor release Operate Minor release Focus on fast turnaround

Value provided to the business Application Layer Alternative view of ALM HP Application Lifecycle HP BTO Infrastructure Layer Development Production ITIL Version 2 ITIL Version 3 7 Business Service ALM (as defined by certain industry experts)

The future holds even greater risk Ensuring quality of service-based applications “Quote to cash” End-to-end business process J 2 EE SOA shared service library

Three Critical. Pillars of Quality Will my Application work in Production? Will it be Secure? Are you sure that it cannot be compromised for personal or financial gain? Will it be Responsive? 21 Will it do what it is intended to do at all times? Will it continue to deliver value under load, with acceptable degradation and no functional failures?

HP Quality Model The move toward centralized quality assurance Stage 4 Stage 3 Stage 2 Stage 1 Project testing Product utility Centralized product available as a shared service Perform testing of individual projects More efficient delivery of applications into production Centralized personnel help improve project quality and performance Enforce and improve quality and performance standards across the enterprise ROI ROI Service utility Quality and performance authority Hardware and software consolidation Leverage Expertise Enterprise impact

Building Business Case - HP’s Process Align Model Deliver Initiatives Business Applications Discover Challenges (Anecdotes) Infrastructure Value Propositions Benefit Models (ROI Scenarios) Customer Data Demand / Cost Models ROI Result Business Case Package

Examples Quantifiable value propositions Quality assurance Minimize cost Mitigate risk (efficiency gains) (quality improvement) Reduce the level of effort associated with: Reduce risk of application defects, leading to: • Lower rework costs • Lower support costs • Fewer end user minutes • Requirements management • Test coverage management • Test management • Defect management • Test automation • Status reporting lost (end user productivity) • Revenue protection • SLA or regulatory noncompliance Minimize time (faster time to value) Get revenue producing applications to market faster

Example - Benefits Summary Total Benefits Year 1 Year 2 Year 3 Total 74. 022€ 197. 193€ 283. 295€ 554. 510€ Configuration Management Process Efficiency 27. 311€ 72. 756€ 104. 524€ 204. 592€ Incident Management Process Efficiency 16. 680€ 44. 437€ 63. 839€ 124. 956€ Automated Relationship Mapping Process Efficiency 11. 754€ 31. 312€ 44. 983€ 88. 048€ Change Management Process Efficiency 10. 922€ 29. 096€ 41. 800€ 81. 818€ Availability Management Process Efficiency 5. 566€ 14. 827€ 21. 301€ 41. 694€ Service Level Management Process Efficiency 1. 789€ 4. 766€ 6. 847€ 13. 403€ IT Cost Reductions Total IT Cost Reductions 74. 022€ 197. 193€ 283. 295€ 554. 510€ Business Operating Efficiency Time to Value (Indirect) 0€ 0€ Compliance Penalty Risk Mitigation (Indirect) 0€ 0€ Mapping - Change Impact Risk Mitigation (Indirect) 0€ 0€ End User Outage Effect - Risk Mitigation (Indirect) 0€ 0€ Mapping - SOX Audit Efficiency (Indirect) 0€ 0€ Total Business Operating Efficiency 0€ 0€ 74. 022€ 197. 193€ 283. 295€ 554. 510€ 0€ 0€ Business Strategic Advantage Total Business Strategic Advantage Direct Benefits Indirect Benefits

Example - Benefits Summary

Why commercial solution ? Integrated requirements management • Efficiency gains for individual tester • estimation of application maturity • Project customizations are easy • Out the box metrics for leading QM initiatives • − Enables cross project quality metrics − Enable the organization to move toward centralized QA Integrations to test automation, security- and loadtesting tools • Life cycle integrations to HP BTO software • Skilled Resources available, Large User Group • … •

The HP difference Ensuring application quality and business outcomes Lifecycle approach to quality • Ensures readiness of new application deployments and upgrades • Improves the speed and efficiency of quality efforts Greatest coverage of enterprise environments and platforms • Unparalleled support for your application environments Quality methodology model • Repeatable quality process designed to save time and cost over traditional approaches Undisputed industry leadership • 58. 8% market share in distributed automated quality software – IDC, “Worldwide Distributed Automated Software Quality Tools 2005 -2009 Forecast and 2004 Vendor Shares, ” Doc #33771, Jul 2005 • 77% market share in performance testing – “Application Load Testing Market Is Poised for Growth” by George Hamilton, July 2005, Yankee Group Accelerated time to value • Rapid deployment through managed service deployments or packaged solution offerings