Webinar: Modernization Pulls New Value From Legacy and Client-Server Enterprise Applications

Transcript of a BriefingsDirect webinar with David McFarlane and Adam Markey on the economic and productivity advantages from application modernization.

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Announcer: Hello, and welcome to a special BriefingsDirect presentation, a podcast created from a recent Nexaweb Technologies Webinar on application modernization.

The webinar examines how enterprises are gaining economic and productivity advantages from modernizing legacy and older client-server applications. The logic, data, and integration patterns' value within these older applications can be effectively extracted and repurposed using tools and methods, including those from Nexaweb. That means the IT and business value from these assets can be reestablished as Web applications on highly efficient platforms.

We'll learn how Nexaweb has worked with a number of companies to attain new value from legacy and client-server applications, while making those assets more easily deployed as rich, agile Web applications and services. Those services can then be better extended across modern and flexible business processes.

On this podcast, we'll hear from Dana Gardner, principal analyst at Interarbor Solutions, as well as David McFarlane, COO at Nexaweb, and then Adam Markey, solution architect at Nexaweb.

First, welcome our initial presenter, BriefingsDirect's Dana Gardner.

Dana Gardner: We're dealing with an awful lot of applications out there in the IT world. It's always astonishing to me, when I go into enterprises and ask them how many applications they have in production, that in many cases they don't know. In the cases where they do know, they're usually off by about 20 or 30 percent, when they go in and do an audit.

In many cases, we're looking at companies that have been around for a while with 10 or 20 years worth of applications. These can be on mainframe. They can be written in COBOL. They could be still running on Unix platforms. In a perfect world we'd have an opportunity to go in and audit these, sunset some, and re-factor others.

Today, however, many organizations are faced with manpower and labor issues. They've got skill sets that they can't bring in, even if they wanted to, for some of these older applications. There is, of course, a whole new set of applications that might not be considered legacy, but that are several years old now. These are N-tier and Java, distributed applications, .NET, COM, DCOM, a whole stew in many organizations.

What I am asking folks to do, now that we're into a situation where economics are probably more prominent than ever -- not that that's not usually the case in IT -- is to take a look at what applications are constraining their business. Not so much to worry about what the technology is that they are running on or what the skill sets are, but to start factoring what new initiatives they need to do and how can they get their top line and bottom line as robust as possible? How do they get IT to be an enabler and not viewed as a cost center?

This is really where we should start thinking about modernizing and transforming IT -- getting application functionality that is essential, but is in someway handicapping what businesses want to do.

We want to exploit new architectures and bring more applications into association with them. It's not just architectures in terms of technology, but approaches and methodologies like service-oriented architecture (SOA), or what some people call Web-oriented architecture (WOA), looking to take advantage of interfaces and speed of innovation so that organizations can start to improve productivity for their internal constituents, in this case usually employees or partners.

Then, increasingly because of the difficulty in bringing about new business during a period of economic downturn, they're reaching out through the Internet, reaching out through the channels that are more productive, less costly and utilizing applications to focus on new business in new ways.

SOA and mobile devices

Increasingly, as I mentioned, this involves SOA, but it also increasingly involves mobile. We need to go out and reach people through their mobile Internet devices, through their iPhone and their BlackBerry, and a host of other devices at the edge. You need to be able to do that with applications and you need to be able to do it fast.

So, the goal is flexibility in terms of which applications and services need to reach new and older constituencies at less cost and, over time, reduce the number of platforms that you are supporting, sunset some apps, bring them into a new age, a new paradigm, and reduce your operating costs as a result.

Information really is the goal here, even though we are, with a handful of applications, starting to focus on the ones that are going to give us the biggest bang for the buck, recognizing that we need to go in and thoughtfully approach these applications, bring them into use with other Web services and Web applications, and think about mashups and Enterprise 2.0 types of activities. That involves expanding the use of these new methodologies.

One of the things that's interesting about companies that are aggressively using SOA is they also happen to be usually aggressive in using newer development platforms and tools. They're using dynamic languages, Web interfaces, and rich Internet application (RIA) interfaces. This is what's allowing them to take their newer applications and bring them into a services orientation reuse. Some of those services can be flexible and agile.

That's not to say you can't do some of those things with the older applications as well. In many cases, tools are being brought about and third-party inputs, in terms of professional services and guidance, are coming around. I'm recommending to people to respond more quickly, to save operational costs, to get agile and reach out through these new edge devices and/or the Internet, and do it in a fairly short order.

It's amazing to me that for those companies that have moved in this direction, they can get applications out the door in weeks rather than months, and in many cases, you can transform and modernize older applications on aging platforms just as quickly.

We want to move faster. We want to recognize that we need a higher payoff, because we also recognize that the line-of-business people, those folks that are tasked with developing new business or maintaining older business, are in a rush, because things are changing so quickly in the world around us. They often need to go at fast-break or breakneck speed with their business activities. They're going to look at IT to be there for them, and not be a handicap or to tell them that they have to wait in line or that this project is going to be six to eight months.

So, we need to get that higher agility and productivity, not just for IT, but for the business goals. Application modernization is an important aspect of doing this.

How does modernization fit in? It's not something that's going to happen on its own, obviously. There are many other activities, approaches, and priorities that IT folks are dealing with. Modernizing, however, fits in quite well. It can be used as a way to rationalize any expenditure around modernization, when you factor in that you can often cut your operating costs significantly over time.

You can also become greener. You can use less electricity, because you're leveraging newer systems and hardware that are multi core and designed to run with better performance in terms of heat reduction. There are more options around cloud computing and accessing some services or, perhaps, just experimenting with application development and testing on someone else's infrastructure.

By moving towards modernization you also set yourself up to be much more ready for SOA or to exploit those investments you have already made in SOA.

Compliance benefits

There are also compliance benefits for those organizations that are facing payment-card industry (PCI) standards in financial or other regulatory environments, freeing up applications in such a way that you can develop reports, share the data, and integrate the data. These are all benefits to your compliance issues as well.

As I mentioned earlier, by moving into a modernization for older applications, you've got the ability to mash up and take advantage of these newer interfaces, reuse, and extended application.

There is a whole host of rationalizations and reasons to do this from an IT perspective. The benefits are much more involved with these business issues and developer satisfaction, recognizing that if you are going to hire developers, you are going to be limited in the skill sets. You want to find ones that are able to work with the tools and present these applications and services in the interfaces that you have chosen.

Keeping operations at a lower cost, again, is an incentive, and that's something they can take out to their operating and financial officers and get that backing for these investments to move forward on application modernization and transformation.

One of the questions I get is, "How do we get started? We've identified applications. We recognized the business agility benefits. Where do we look among those applications to start getting that bang for the buck, where to get modern first?"

Well, you want to look at applications that are orphans in some respect. They're monolithic. They're on their own -- dedicated server, dedicated hardware, and dedicated stack and runtime environment, just for a single application.

Those are good candidates to say, "How can we take that into a virtualized environment?" Are there stacks that can support that same runtime environment on a virtualized server, reduce your hardware and operating costs as a result? Are they brittle?

Are there applications that people have put a literal and figurative wall around saying, "Don't go near that application. If we do anything to it, it might tank and we don't have the documentation or the people around to get it back into operating condition. It's risky and it's dangerous."

Conventional wisdom will say don't go near it. It's better to say, "Listen, if that's important to our business, if it's holding our business back, that's a great target for going in and finding a way to extract the logic, extract the data and present it as something that's much more flexible and easy to work with."

You can also look for labor issues. As I said, if skills have disappeared, why wait for the proverbial crash and then deal with it? It's better to be a little bit proactive.

We also need to look at what functional areas are going to be supporting agility as these business requirements change. If you're an organization where you've got supply chain issues, you need to find redundancy. You need to find new partners quickly. Perhaps some have gone out of business or no longer able to manufacture or supply certain parts. You need to be fleet and agile.

If there are applications that are holding you back from being able to pick and choose in a marketplace more readily, that's a functional area that's a priority for getting out to a Web interface.

Faster, better, cheaper

People are going to be looking to do things faster, better, cheaper. In many cases those innovative companies that are coming to market now are doing it all through the Web, because they are green-field organizations themselves. They are of, for, and by the Web. If you're going to interact with them and take advantage of the cost, innovation, and productivity benefits they offer, your applications need to interrelate, operate, and take advantage of standards and Web services to play with them.

You also need to take a look at where maintenance costs are high. We've certainly seen a number of cases where by modernizing applications you have reduced your cost on maintenance by 20 or 30 percent, sometimes even more. Again, if this is done in the context of some of these larger initiatives around green and virtualization, the savings can be even more dramatic.

I also want to emphasize -- and I can't say it enough -- those SOA activities shouldn't be there for just the newer apps. The more older apps you bring in, the more return on investment you get for your platform modernization investments, as well as saving on the older platform costs, not to mention those productivity and agility benefits.

We also need to think about the data. In some cases, I have seen organizations where they have applications running and aren't really using the application for other than as an application repository for the data. They have a hard time thinking about what to do with the data. The application is being supported at high cost, and it's a glorified proprietary database, taking up app server and rack space.

If you're looking at applications that are more data centric in their usage, why not extract that data, find what bits of the logic might still be relevant or useful, put that into service orientation, and reduce your cost, while extending that data into new processes and new benefits.

It's also important to look at where the technical quality of an app is low. Many companies are working with applications that were never built very well and never performed particularly well, using old kludgy interfaces. People are not as productive and sometimes resist working with them. These are candidates for where to put your wood behind your arrow when it comes to application modernization.

In beginning the process, we need to look at the architecture targets. We need to think about where you're going to put these applications if you are refactoring them and bringing them into the Web standards process.

It's important to have capacity. We want to have enough architecture, systems, and runtime in place. We should think about hosting or collocation, where you can decrease your cost and the risk of capital expenditure, but at the same time, still have a home for these new apps.

You certainly don't want to overextend and build out platforms without the applications being ready. It's a bit of a balancing act -- making sure you have enough capacity, but at the same time performing these modernization transformation tasks. You certainly don't want to transform apps and not have a good home for them.

Also important is an inventory of these critical apps, based on some of the criteria, we have gone through.

Crawl, walk, run

The nice thing about creating the categorization is that once you've got some processes in place on how to go about this, with one application you can extend that to others. The crawl-walk-run approach makes a great deal of sense, but when you've learned to crawl well, extend and reuse that to walk well, and then scale it from there.

This construction, deconstruction, rationalization process should also be vetted and audited in the sense that you can demonstrate paybacks. We don't want to demonstrate cost centers becoming larger cost centers. We want to show, at each step of the way, how this is beneficial in cost as well as productivity. Then, we need to focus continually on these business requirements, to make a difference and enhance these business processes.

There are some traps. It's easier said than done. It's complicated. You need to extract data carefully. If you start losing logic and access to data that are part of important business processes, then you're going to lose the trust and confidence, and some of your future important cost benefit activities might be in jeopardy.

It's important to understand the code. You don't want to go and start monkeying around with and extracting code, unless you really know what you're doing. If you don't, it's important to get outside help.

There are people who are not doing this for the first time. They've done it many times. They're familiar with certain application types and platforms. It's better to let them come in, than for you to be a guinea pig yourself or take trials and tests as your first step. That's not a good idea when you're starting to deal with critical and important application.

Stick to processes and methods that do work. Don't recreate the wheel, unless you need to, and once you have got a good wheel creation method, repeat and verify.

You need to be rigorous, be systemic, and verify results, as we have said. That's what's going to get you those transformational benefits, rather than piecemeal benefits. You're going to see how application modernization fits into the context of these other activities, You're going to be well on the way to satisfying your constituencies, getting the funding you need, and then seeing more of your budget going to innovation and productivity and not to maintenance and upkeep.

There are a lot of great reasons to modernize, and we have mentioned a number of them. There are backwards and forwards compatibility issues. There are big payoffs in cost and agility, and now it's time to look at some of the examples of how this has been put into place.

Announcer: Thanks Dana. Now, we'll hear from David McFarlane, COO at Nexaweb, on some use-case scenarios for adopting and benefiting from these application modernization opportunities. Here is David McFarlane.

Understanding value

David McFarlane: We're going to go a little bit deeper and actually take a look at a case study of one of our clients, one of our successful implementations, and see the value that came out of it.

To really understand what value is, we have to understand how we're going to quantify it in the first place. We're probably all in IT here, and we're probably all IT heads, but we have to take a step back, take a top-down approach, and understand how we define that value in the business.

As Dana said earlier, application modernization impacts all areas of your business, and the three areas that it really impacts are business, operations, and IT. So, you have to step outside your role. You have to see what value the business would see out of it, what operations would see out of it, and also for yourself in IT, what gains and benefits you would get out of that. When you add them all together, you get the overall value for that application modernization.

Let's take a look at a real case study as an example. Just to set some background, we have a legacy system, a customer relationship management (CRM) call center application for one of our clients. They have about five call centers, with around 50 employees, and they're on a C++ client-server application.

The important thing to note about this is that, in legacy systems, there are usually multiple instances of this application. Since it's a client-server app, we have to remember that it's also deployed and managed on each individual desktop. Each individual employee has their own installation on their desktop, which is sometimes a nightmare to manage for most IT shops.

We took that system and built a modernized system with it. We had a J2EE architecture with desktop browser look and feel, as Dana talked about earlier. You get that real performance out of the installed client-server application, but it's delivered over the Web via zero client install.

You don't have to do anything besides update your Web server, and everybody automatically has the new application, the new look and feel, the new business logic, and access to whatever data you've hooked it up to on the backend.

Also important is the ability of our system that we modernized to be deployed as an open standard. We used J2EE architecture, and that means we're able to integrate with anything that you have on your back end via open Java application programming interfaces (APIs).

There is a vast array of open source products out there waiting to be used, to be integrated, and to modernize systems. There's also a large workforce that will be able to understand a Java application as opposed to a custom C++ application or even a COBOL application. We also consolidated it to one distributed instance, since we can now manage it centrally from one data center.

ROI analysis

When you're doing a modernization, you're probably going to have to do some sort of return on investmment (ROI) analysis to understand exactly what you're going to get out of this application, and that's going to take some time.

If you're coming from an IT perspective, you might have most of the benefits already in your head: "I'll have people using Java instead of COBOL. I'll have all the developers focused on one development language, instead of multiple development languages. I'm going to be able to decrease by deployment time, etc."

But, when justifying something like this, you need to take a step back, and as we said before, look at the factors in these three areas that are most affected by application modernization. As Dana pointed out, it's business operations in IT. So, we go ahead and look at the business.

We have to ask a few questions here: "Who are my users? How long does each transaction take?" Say I'm a call center and it takes few minutes for a user to get through a transaction, if I can cut that to one-and-a-half minutes or even one minute, I'm able to increase productivity significantly.

The next part is operations. How is that productivity increased, but also what does it mean to have a modern application infrastructure? If previously I had to come in to work and sit down at my desktop, because that's the only place that application was installed, maybe I don't even need to come in to work anymore. Maybe I can work from home. Maybe I can work from India, if I want to, as long as I have VPN access into that sort of an application. You can begin to see the operational flexibility that you get out of that.

Then, as we look into the IT benefits that we have here, how long did it take to make a change to my legacy system? One of the biggest benefits that we're seeing is when coming from legacy C++ PowerBuilder applications, where you really have to code each and every aspect of the user interface (UI), the business logic, and the specific data interaction, because we don't have SOA to leverage, and we don't have hooks into services that we've built or are planning to build in our application.

Also, we have to think of what the developer actually had to do to make that change. In older technologies, they might not have a way to prototype the UI and show the business users feedback before they are able to get sign off on what they're going to build. They might have to program each and every element of the user interface, all the way down to writing SQL stored procedures that are application-specific to a database.

Going to a modern architecture, you're going to have services and you're going to have your object-relational management capabilities. You're going to have some great middle-tier applications like Spring and Struts to enhance the development. Obviously, with Nexaweb technologies, you have that ability to create the declarative user interfaces, which speeds up UI development time significantly.

Also we have what hardware and software do the application run on, and what licenses am I paying for? As Dana pointed out earlier, you'll have a significant opportunity for maintenance savings, when you go to a modern architecture.

Productivity gains

We asked all these questions, and we found some significant areas of value in our CRM modernization case. In the business we actually saw a 15 percent gain in end-user productivity, which impacted our clients by about $1.5 million a year. In these times, you're actually able to slim down or trim your workflow if you have a more productive application. In this case, which are the productivities that are able to do more calls quicker, service customers quicker? Ultimately, that ends up in end user satisfaction and dollars saved as well.

Next, you have the operational value. What we had here was a decrease in audit time. We found that their auditors were going around to each individual desktop and seeing exactly which applications were installed on their computer. They had to look at each of the five instances in each call center for auditing, instead of looking at one consolidated instance, with just one database and book of record for all the operation there. So, that saved a lot of auditing time for them, which is really great.

Another thing was that it improved the performance of another help desk. This was a help desk for customer support, but the internal IT help desk actually saw huge improvement. Because the application was centrally managed, all people had to do was go to a Website or click a link to access that application, instead of having to install software. As you know, when you install software, a ton of things can happen. You actually have to do a lot of testing for that software as well. All that has been reduced, and we're saving about $15K there.

When you look at the IT benefits, we have that IT developer productivity gain that we talked about. We eliminated some hardware and software for those five instances and some of that maintenance cost. So, that's and $85K impact. There are the deployment benefits of a RIA, when you're going from deploying applications on 250 computers to zero computers. You're going to see an immediate impact there, and that was around $250K for the time to do that, the software that it took to push that out, and for the support that it needed to run.

Because of the change management benefits from RIAs, the development productivity, and the ability to go from requirements to design, to testing, to production much more quickly than a client-server application, we're able to see a 90 percent gain there, which had a $200K impact.

When you look at it in total, the yearly bottom line improvement was about $2.23 million for this one instance, with one time improvement of $85K for the hardware and the software that we got rid of. It was only a one-time investment of about $800K.

I say "only," but if you look at the business, operational, and the IT impacts together, you get payback in the first full year. If you were only coming from that IT perspective, you would have seen that the payback is actually a little bit longer than a year.

If you add all those numbers up, you get something a little less than $800K, about $700K, I believe. That will be about 14- or 15-month payback instead of about a 5- or 6-month payback. When you're trying to make a case for modernization, this is exactly what your CFO or your CEO needs to know -- how it affects your bottom line from all areas of the business, not just IT.

Let's not forget the intangibles that come with application modernization. It's always about the bottom line. There are some great things that you get out of a modern application infrastructure, and the first thing you get, when you look at the business, is improved response time.

Happier CSRs

The number one thing I could think of is that your customer service representatives (CSRs) are going to be happier, because once they click a button, it's not going to take two seconds to respond like the old application. It's going to be fast. It's going to be rich. You're not going to have any installation issues when you do an upgrade. It's going to be smooth.

You're going to have happier CSRs. Having happier CSRs means that you're going to have improved customer service, and a customer satisfaction level, when people get calls through quicker, and when people talk to happy customer service representative.

Also, when you're doing application modernization, you have a good opportunity to automate manual portions of the business process. You can go in and say, "This person is cutting and pasting something into an Excel spreadsheet, and emailing this to somebody else as a report after they're done." Maybe there's an opportunity there to have that done automatically. So, it saves them time again. That's where you can really find your increased productivity.

When we look at operations, we actually enabled real estate consolidation. I didn't put those numbers in the ROI, because they were probably going to do that anyway, but it was an enabler. Having a technology to go from five call centers to one call center with distributed agents across the country and across the world saves the business a lot of money on the real estate, the power, and the infrastructure needed to have five call centers up and running.

Again, you get the workforce flexibility, because I can work from home, work from India, or come and work from the office. I could do this job from anywhere, if I have access to this application. Obviously, we're able to bring outsourced call centers online on-demand with that.

Then, we move on to IT. As I said before, it's short release cycles with more functionality. When release cycles are shorter, you can incrementally build in more features to your application, make people more productive, and make the application do more in less time, which is obviously what we want to do.

We have a standardized J2EE architecture, which means the people that you're going to look for to maintain the application are going to be out there. There is a huge number of Java developers out there waiting and ready to come in to maintain your application.

We're built on open standards to ensure that the application is ready for the future. There are a lot of RIA technologies that try to lock you in to one runtime and one development methodology. We use open standards as much as we can to push your application out the door as fast as possible, and be as maintainable as possible, and as ready for the future as possible.

Announcer: Thanks, David. Now, we'll hear from Adam Markey, solution architect at Nexaweb, on specific deployment examples of application modernization projects. Here, then, is Adam.

Enterprise-wide value

Adam Markey: As we look at these different customer examples, we really want to see how they've had an impact of value across the enterprise, and see, from a business point of view, the ability to be able to increase market reach, improve user productivity, decrease the time to market, increase customer engagement and loyalty, and sustain, if not build upon, that competitive advantage.

We also want to look at the operations as well and understand how this new architecture has actually realized benefits in terms of a reduced real estate, greater utilization of global workforce, reduction in energy, moving to green architectures, and improving the overall vendor management.

For those closely responsible for the organization and who deliver this capability, we want to look at IT and how this process helps deal with the rapidly changing demographics in the IT skills market. As the baby boomers move on and out of or off the job market, many of the legacy skills that we relied on so heavily through the years are becoming very rare and hard to find within the organization.

We'll take a look at that process efficiency, and generally how we can improve the overall efficiency and cost in terms of licenses and the use of open source. So, let's take a closer look at a few examples to help illustrate that. There's nothing wrong with your screens here. This first example is actually an example of the modernization of a Japanese phone exchange trading platform.

In this case, this was a trading platform built by Enfour, Bank of Tokyo-Mitsubishi (BTM). The challenge that BTM had was that, once they were capable of satisfying their large corporate customers with their on-premises foreign exchange trading platforms, the small- and medium-sized enterprises (SMEs) were quite different in terms of what they required.

They needed a UI and an application that was much simpler for them to adopt. They didn't have the necessary IT infrastructure to be able to establish the complex on-premises systems. They needed something that had no IT barriers to adoption.

What we did for BTM with our partner Hitachi was to help modernize and transform the entire trading platform to the Web. Just to stress, this isn't simply an information portal, this is a fully functioning trading platform. There are over 500 screens. It's integrated to a 120 different data sources with very stringent service-level requirements to the deployment of the application.

We needed to be able to display any fluctuations and exchange right from the Reuters feed in 200 milliseconds or less. We needed to be able to complete a close loop transaction in two seconds or less.

So, this is a fully functioning trading platform. What's it's meant for BTM is that they've been able to dramatically increase the adoption and penetration into the SME market. Fundamentally, these SME or institutional traders don't need any architecture whatsoever, just a browser. There is no client installation. They're able to self-serve, which means they can simply enter the URL, log in, and get started. This has been a tremendous cost reduction and also revenue growth for this product line in penetrating this new market segment.

In the same field of foreign exchange trading, we were able to help a number of Japanese banks take their products and services global. Traditionally, the market had been very service-intensive through a call center. You dialed in and placed your trade with the trader over the phone. By being able to move this entire platform to the Web, we allowed them to go global and go 24/7.

Now, we have over 30,000 institutional traders using this trading platform and application to self-serve through operations, not just in Tokyo, but in Singapore, London, New York, Frankfurt, literally around the world.

New capabilities

Not only has it extended the product line with very little additional operational cost to the banks, but it's also allowed them to provide new capabilities to those customers. One, for example, is the ability to be able to run continuous global book.

In the traditional implementations of trading platforms, each one would be an on-premises installation, which meant that each region would actually have to close their books and close out their operations at the end of their working day. Because it's now managed and provisioned in system, it can actually run globally, and allows them to maintain those books, and maintain common alerts across entities that themselves have a global footprint.

Not only were we getting them to a new market, but we were also allowing them to introduce new functionality. It allowed them to interact more closely with the customers, providing real-time chat facilities, and allowing the traders in Japan to interact directly with a trader as they exhibited certain behavior. It allowed them to offer custom contracts and has significantly increased the close rate of those applications.

So, a big impact in terms of market reach for the banks in Japan is one example. Let's take a look here at how we've been able to dramatically improve user productivity and dramatically reduce the business process time for large organizations.

This is a representation for one of the largest telecommunications groups in Europe. The challenge that they were facing is that they had a request for proposal (RFP) process that was very complicated. They had to be able to provide quotations for countrywide mobile platforms, a very large, complex design process, which was performed through one application, one legacy application as a product configurator.

Then, they would go to another application for doing the parts costing and bill of material assessment, another application for the pricing, and finally, an overall RFP approval process for these large $100 million-plus projects running over 10 years.

The whole process was taking them anywhere up to four weeks. It was fragmented. It was error prone. There were spreadsheets, and the files were flying around the globe, trying to complete this process.

What we were able to do for this organization was to streamline the process and present it as a single-branded Web-based workflow that brought all the different elements together, and, most importantly, ran on top of a SAP NetWeaver infrastructure. In fact, the workflow was designed to have an SAP look and feel.

End users didn't know when they were in or outside of SAP. They didn't care and they didn't need to, because as an end-to-end process, SAP acts as the overall system of record, providing a much higher degree of control, accuracy, and a dramatic reduction in errors.

The great result, from a user productivity point of view, is that they've been able to go from a process that took four weeks to a process that now takes four hours or even less -- a dramatic reduction. More important was the ability to increase the accuracy of these processes.

Desktop-like experience

These Web applications, I should stress, are really a desktop-like experience for the end user. We think of them and talk about them as a desktop in a browser. Everything that you could do as a desktop application with all the user navigation and productivity in very intense data environments, you can do in a browser-based application as deployed in this solution.

Let's take another look at another example where Web architecture and rich Web interfaces allowed us to dramatically improve customer loyalty and customer engagement.

You maybe familiar with the concept of the extended enterprise, whereby more and more organizations need to be able to open up traditionally back-office processes, and back-office systems still managed on the sort of green screen UIs in the bowels of the company. In order to be able to truly engage their customers and improve the process flow, more and more of those systems are being opened up and presented to their customers through rich, engaging Web applications.

This is an example of that. This is a company in the Netherlands called Waterdrinker, which is actually the largest flower distributor in Europe, a very significant business for them. We were helping them to create a Web-based, self-service ordering process that dramatically reduces the dependency on the use of customer service reps. It was similar to the scenario for the foreign-exchange trading platform. We were actually migrating customer interaction to the self-served Web platforms without the need for human intervention and costly CSRs.

But, it's much more than that. We're providing a much richer experience for the user, a much more engaging experience for the user, where they're able to more dynamically navigate through the catalog and determine the optimal order for them with all kinds of what-if calculations and analysis that are provided for them in real time at their own discretion.

The net result has been a significant increase in customer satisfaction, engagement, loyalty, We're yet to see it, because it's still relatively new, but just based on the amount of response reaction and conversion that we have seen through these Web-based interfaces, loyalty benefits will follow soon after. In addition, with a Web-based UI, you're able to easily and effectively customize the user interface with different users and communities.

In this case, they're able to provide a custom UI solution that integrates their catalog ordering process into their partners' processes. They distribute through local partners and local Websites, and they're able to provide this architecture as a white-label capability and then brand it according to the local distributor, delivering a rich branded experience through their partner.

Let's talk generally about competitive advantage. Obviously, all those things that we have talked about and shown with regard to different customers, and Dana has talked about in aggregate, offer all kinds of competitive advantage.

But, there's a certain element to competitive advantage that I would like to emphasize in this transformation process. Organizations, through the years, have basically instantiated and codified their best practices in the workflows within those legacy systems. Those business rules represent years of intelligence and competitive intelligence, and often the point at which you can realize tremendous competitive advantage.

Razor-thin margins

This is never truer than in the razor-thin margins of the consumer packaged goods (CPG) business, where a lot of the margin for a customer can actually be determined through the appropriate inventory, logistics, and pricing management, literally as goods are on route. What we've done for customers like these is to enable them to quickly and effectively extract the business rules that are buried in the legacy systems.

Frankly, nobody knows how they work anymore. They're not really very well documented at best, but we have allowed them to extract those business rules that represent the competitive advantage and consolidate them into a set of corporate-wide rules that can be more effectively managed.

One issue in a traditional legacy environment is that, as you establish business rules in terms of the legacy implementation, each one is monolithic. They start to create their own derivatives, as people program, tweak, and modify. At the end of a 10-year process, the rules barely resemble each other in each of the iterations.

In our transformed architecture, we're able to provide an environment, in which you can centrally manage, control, and modify those business rules and have them consistently and immediately applied across all the necessary touch points. Through this process, we can dramatically reduce human error.

This architecture allows us to provide support tools and business rules in a form that's readily accessible to the end user. You might say, "Wait a minute. It's a Web-based application, and when I'm sitting face to face with my customers, I'm not going to have access to the Web."

As you would expect in these solutions, we're able to architect them, so that the same application can be deployed as a Web application, or used as standalone. A great example of that is Aflac, where we created their premium calculation solution that is basically used across all the customer touch points, 38,000 users. And, 6,000 of those are agents who go door-to-door.

Part of the architecture and part of the challenge was to deliver that insurance calculation solution in such a way that when the agent is sitting across the kitchen table from their customer, they could still perform a level of custom quotation. They could produce the necessary documentation to be able to close the customer there and then as a standalone laptop with a local printer right across the kitchen table. That's all part of bringing those business rules that represent the years of competitive advantage successfully to the Web.

Let's take a look at how some of these capabilities impact the operations themselves. Here, we'll take an example of a call-center application. This was a transformation for the Pepsi bottling group of their customer-equipment tracking system It was a PowerBuilder application, maybe 10 years old, that we successfully moved to the Web.

The real business value in this is that by doing this, by creating a Web-based environment that could be deployed in any call center, we provide the flexibility and the agility for organizations to better utilize those call centers and better utilize that real estate, often consolidating from a large number of call centers to a smaller set of agile call centers, where they can put a lot of different processes through the same infrastructure.

Cost-management advantage

This has tremendous advantages, as you can imagine, in terms of cost management for those customers. We're even able to take that to the next step with the advent of voice-based telephony. It's now possible to engage home-office operators through a voice over Internet protocol (VoIP) infrastructure.

Those operators can not only have the benefit of the call center application as a Web based application accessible through their home broadband, but actually can have the same level of computer telephony integration (CTI) that they would have had, if they sat in the call center, by virtue of a series of VoIP based CTI technology that's available.

This is offering tremendous operating improvements in terms of, for example, real-estate consolidation. Also, looking at operations and the ability to optimize the use of the workforce, we have a situation here where we deploy a very complex laboratory information-management solution for the AmeriPath, now part of Quest Diagnostics. This is part of a pathology services process that requires very experienced technicians to participate.

The joy of being able to deploy this as a Web-based application means that you get great skills mobility, which means that technicians from anywhere, provided they have Web access, can actually participate in a diagnostic process, without the need to move the sensitive Health Insurance Portability and Accountability Act (HIPAA) data. So, HIPAA data that has to be stored in one place, can be made accessible to technicians through any location who can participate then in a process 24/7.

The value to IT is manifold. We'll take a quick look at some of those before we jump into the value equation itself. This is an example with SunGard Shareholder Systems, where they wanted to modernize their commercial product line, a 401k management application. I'm sure they're pretty busy these days.

It was originally deployed as an IBM-Oracle mainframe solution with a C++ front end. We modernized it through a pure Web application, but, from an IT development point of view, the benefits of being in that Web architecture are manifold. First and foremost, they were able to manage this entire development process with one person in the US, and a whole development team offshore in India, dramatically reducing the time and cost.

In this new architecture, the ability to respond to program change requests is tremendously different. We're able to program and change requests in one-tenth of the time and, by virtue of being a Web architecture, actually deploy those in now what are weekly release cycles, instead of six-monthly cycles that you would typically see as a point solution.

As we're running a little long here, I won't go into all of these, but there are many different ways in which the modern architecture really played into creating significant additional IT value.

We provide a process we call Nexaweb Advance, which is an end-to-end transformation process that allows us to dramatically reduce the time, risk, and costs of this overall implementation. It starts with a capture phase that is able to go in and interrogate legacy systems and dramatically reduce the amount of time and effort to document the code that typically is not well documented.

Then it goes through a model transformation process that dramatically reduces the amount of actual code that has to be written. In this example, it was a 65 percent reduction in the amount of code in the three million lines of application. The net result of that is through a typical designer development cycle, we were able to realize 50 percent or more reduction in the development time.

Having done that as a Web based application, there is no kind installation, no on-site provisioning. It's all centrally managed, so dramatic reductions in operating costs recognized by customers. In the example that we shared with you a little bit earlier, where, because we're in a modern object-oriented architecture with all the inheritance benefits that that brings, we're actually able to modify and execute change requests quite often in one-tenth of the time and then deploy them immediately and effectively as Web applications.

Announcer: Thanks, Adam. With that we conclude our podcast. You have been listening to a sponsored BriefingsDirect presentation taken from a recent Nexaweb webinar on application modernization. Please find more information on these solutions at Nexaweb.com. Thanks for listening and come back next time.

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Transcript of a BriefingsDirect webinar with David McFarlane and Adam Markey on the economic and productivity advantages from application modernization. Copyright Interarbor Solutions, LLC, 2005-2009. All rights reserved.