CAI To become the premier computer software development and support organization in the world

High Productivity Fixed Price On Time Within Budget Defined Processes Metrics High Productivity Fixed Price On Time Within Budget Defined Processes Metrics

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CAI Mission Statement

“To become the premier computer software development and support

organization in the world”


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CAI

• In The Business Of Information Technology Outsourcing

• Focused On Being A Best Practices & Productivity Leader

• Thought Leadership Is A Key Focus

• Business Value To Clients Is Very Large


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The Intersection of Human Capital & Best Practices

HUMAN CAPITAL COSTS– Insourcing– T&M– Outsourcing– Project Outsourcing– It Software Best Practices

BEST PRACTICES– Metrics Based Management– Process Definition– Computer and Operational

Control– Real Time Repository– Continuous Improvement

“The IT Management Revolution”


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Current Human Capital Costs• People

•$•T & M

•Outsourcing

Best Practices

Critical Success Factors•Consolidate and Leverage T & M Dollars•Build a Best Practices Plan

-Assess Current Status-Create a Best Practices Vision-Develop a Tactical Plan-Finance with T & M Dollars

Current Level

Results

Co

sts

• 30% Reduction in Human Capitol Costs

• Best Practices Management


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CAI Best Practice Enablers200 M

$125M

175 M

$150M

$30M

$100M

$50M

$15M

$5M

$10M

85’ 88’

91’ 92’ 94’ 98’ 2000’ 03’ 04’86’

Mission Statement

createdFirst $1

Million Dollar Fixed Price

Project

First $1 Million Dollar Fixed Price

Project


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CAI Best Practice Enablers

200 M

$125M

175 M

$150M

$30M

$100M

$50M

$15M

$5M

$10M

85’ 88’

91’ 92’ 94’ 98’ 2000’ 03’ 04’86’

Created Legacy Systems Managed

Maintenance Methodology


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CAI Best Practice Enablers200 M

$125M

175 M

$150M

$30M

$100M

$50M

$15M

$5M

$10M

85’ 88’

91’ 92’ 94’ 98’ 2000’ 03’ 04’86’

Mission Statement

createdFirst $1 Million Dollar Fixed Price Project

First $1 Million Dollar Fixed Price Project

Created Legacy Systems Managed Maintenance Methodology - Dupont

Created first “Nearshore

Development Center”

Large “Off Site” Fixed Price

Development Project - IBM

Application of metrics Based Management to Help Desk Operations

Real Time Operations and

Workflow Management

….Tracer to Legacy Systems

Real Time Operations

Management for all software

operations – TRACER 2


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CAI Best Practice Enablers

200 M

$125M

175 M

$150M

$30M

$100M

$50M

$15M

$5M

$10M

85’ 88’

91’ 92’ 94’ 98’ 2000’ 03’ 04’86’

Mission Statement

createdFirst $1 Million Dollar Fixed Price Project

First $1 Million Dollar Fixed Price Project

Created Legacy Systems Managed Maintenance Methodology - Dupont

Created first “Nearshore

Development Center”

Large “Off Site” Fixed Price

Development Project - IBM

Application of metrics Based Management to Help Desk Operations

Real Time Operations and Workflow

Management ….Tracer to legacy systems

Created Offshore Manila

Development Center

Project Office and Quality

Management Systemic

Integration

Real Time Operations

Management for all software operations

– TRACER 2

Automated Project Office

System

High Productivity Fixed Price On Time Within Budget Defined Processes MetricsHigh Productivity Fixed Price On Time Within Budget Defined Processes Metrics

The Manufacturing

Revolution and IT

…a Better Way


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The Manufacturing Model

• U.S. Post-War Manufacturing Leadership Set World Standards for Decades

• Emerging Asian and European Manufacturers’ Capability Shook the Foundations of North American Economic Assumptions in 1970’s and 1980’s

• Led to a Fundamental Transformation in the Manufacturing Model

This Transformation Model Provides Vital Lessons for Transforming Software

Management Today


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Manufacturing Results Compared to Service Sector

Real Output per Full-Time Equivalent Worker, 1977-2001


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Manufacturing Revolution Results

• Dramatically Lower Costs Per Unit• Continuous Cost Reductions Per Unit• Higher Quality

Examples• Steel: 8 hrs/ton vs. 25• Auto: Toyota 23 Hours per car vs. 100

GM 28 Hours per car vs. 100• GE: Constant stream of 10% per year cost reductions• Motorola, et al Six Sigma

3.4 Failures per Million


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Core Principles of the Manufacturing Revolution

• Constantly Improving Productivity• Standard Cost Model• Continuous Improvement• Defined Processes• Process Management• Metrics• Rock Solid Metrics Based Management


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Techniques Used in Manufacturing

• Standard Components - Standard Cost per Component

• Workflow Process Definition• Real Time Tracking: Operational

Events• Real-Time Operations Costs and

Activity Process Control Concepts…Best Practices P Output

Input=


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Techniques Used in Manufacturing

• Real-Time Operational Software

• “Smart Repository” for all Operational Data

• Knowledge Capture

• Systematic Approach

• Mine Operational Data

• Continuous Improvement (Six Sigma)

• Artificial Intelligence Engines

P OutputInput

=


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How Did They Do It?

Measure ImproveLearn

DATA REPOSITORY


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Productivity OutputInput

=

How Did They Do It?


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How Did They Do It?

• Measure Like Crazy• Establish Aggressive Targets• Use Data Aggressively to

Make Decisions• Learn • Recognize Accomplishments

and Progress• Reward Results, not Credentials• Treasure Every Cycle of Learning Measure

Improve

Learn


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Manufacturing Initiatives

TQM BPR JIT Six Sigma Alignment “Learning

Organization”

Balanced Scorecard

Lower CostsHigh Quality

Fewer ReworksFaster Time to Market

Improved Customer

ValueRealigned Value Chain

“Teaming” Competitive

advantage Strategic Focus

Higher Investor Value


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YES IT DOES…Almost Literally!

Does This Apply To IT?


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The IT Challenge: Productivity Trend is Flat…or Declining

Ave

rag

e P

rod

uct

ivit

y In

dex

*Source: IT Metrics Strategies @2001 Cuter Information Corp

Year

1982-1985 1985-1988 1988-1991 1991-1994 1994-1997 1997-2000

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10

5

20

0

13.815.0 14.8

16.1

17.4

16.6


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Project Delivery and Cost

Meta Group statistical survey of 23,000 application development projects:

• 26% succeeded: Project delivered on-time and on-budget

• 46% challenged: Project completed over-budget or past deadline

• 28% failed: Project never completed


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Programming Productivity Disparity

“Productivity of the 90th percentile teams is four times higher than that of the 15th percentile teams”Source: Barry Boehm. Software Engineering Economics. Englewood Cliffs, NJ: Prentice Hall


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Programming Productivity

“Development and maintenance costs of projects using experienced people were half that of projects using inexperienced people”

Source: Capers Jones. Programming Productivity.. New York: McGraw-HillCosts


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TransformationCURRENT

STATE

Unpredictable

Missed Delivery Dates

Over Budget

Ineffective Productivity Measurements

Rationed Staff

High Cost

Reliable Reliable

On TimeOn Time

Within Budget Within Budget

High ProductivityHigh Productivity

Variable CapacityVariable Capacity

Lower Fixed CostLower Fixed Cost

Leadership• Management Leadership• Lead By Example• Experienced Leadership

Control & Quality• Project Office• Quality assurance• Administration

Learning• Socratic Learning Process• Education• Overcome Resistance to Change

Intellectual Property• Methodology• Knowledge• Inventions/Tools

• Processes• Measurement Systems

FUTURESTATE


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Foundation Elements

• Identified/Repeatable Processes

• Discrete Measurable Outputs

• Standard Estimating

• Performance Data Repository–Track/Analyze Data

• Software Tools to Ensure Consistency/Repeatability

• IT Organizational Change Methodology


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Standard Process

Metrics Database

Standard Estimating

Real Time Process Control

Education & Training

Governance

Metrics Based Management

THE FOUNDATION


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METRICS

STANDARD PROCESSES

PROCESS CONTROL

BEST PRACTICES

I.T. OPERATIONAL EXCELLENCE

RIGHT MANAGEMENT SYSTEM

LE

AR

NIN

G

OR

GA

NIZ

AT

ION K

NO

WL

ED

GE

M

AN

AG

EM

EN

T

REAL TIME DATA

REPOSITORY


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Normalized Cost/Headcount (Constant Scope)

PERCENT

53%CostReduction2000-2004

0

20

40

60

80

100

TEC

Baseline

CAI Start YE 2001 YE 2002 YE 2003 YE 2004

People

Dollars


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Imp

rov

ed C

ap

abili

ty L

eve

l

10%-15%

15%-25%

25%-35%

Cumulative Timeline

1-3 months 4-7 months 8-12 months

GettingGettingStartedStarted

VISIBILITYClassify and

Capture Work , Metrics,

Resources

and Time

Implement Workflow Processes

Streamline & Craft Work

ProcessesCONTROL

OPTIMIZATION

OPTIMIZATION50%

ReductionIn Costs

36 months

Summary: Three-Tier Implementation Model

CAI To become the premier computer software development and support organization in the world

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