Gartner’sPace-LayeredApplicationStrategyJohanBronkhorst

ThePaceLayeredApplicationStrategy

Gartner’s Pace–Layered Application Strategy is a methodology for categorising, selecting, managing and governing applications to support business change

Whydocompaniesstruggletoreplacelegacysystems?

Many companies make long-term decisions on mission-critical software solutions without anappropriate IT-strategy to guide decisionmakers. Is it any wonder thatmost of the IT selectionprojects fail todeliveronexpectations? Selectinganddeployingsoftware intheabsenceofan IT-strategyissimilartobeexpectedtohitatargetwhilebeingblindfolded.

Most software selection project for Enterprise Resource Planning Systems (ERP) starts with aRequestforProposal(RFP).TheRFPaskssoftwarevendorstostatethecapabilitiesoftheirsoftwareandtoprovideaquotationfortheirsolution. Shortlistedvendorsareinvitedtodemonstratetheirsoftware, andafter somedeliberation, the companywill choosewhat it considers tobe themostappropriatesolution.

Theaboveapproach,moreoftenthannot,doesn'thavethefairy-taleendingthatvendorspromiseandcompaniesexpect.Inmostinstances,afterspendinganincredibleamountoftimeandmoney,there is no "happily ever after" but rather a situation of blame shifting for non-compliance andbudgetblowouts.

Thequestioniswhatwentwrongandwhatcanwelearnfromit?

The main reason for failure is the conversation between business leaders and IT leaders is notworking. The biggest mistake most companies make is to have only one policy for selecting,deploying andmanaging applications. Theproblemwith this approach is it doesn't recognise thatapplicationsareinherentlydifferentbasedonhowtheorganisationusesthem.

The Pace Layered Application Strategy from Gartner provides a framework for betterdecision-making.

GartnerintroducedthePace-LayeredApplicationStrategybydefiningthreeapplicationcategoriesor"layers"todistinguishapplicationtypesbasedonhowcompaniesusethem:

ThePaceLayeredApplicationStrategy

Fig1ThePaceLayeredApplicationStrategy

Systems-of-Record

These are typically applications that are for processes that are stable over an extendedperiod (10+ years). Typical applications thatmake up an organisation's Systems-of-RecordareFinance,HR,AssetManagement,BankingandProcurement.Thegreatestbenefitsfromthese systems are efficiencies in transaction processing. These systems should provide astablebasisforrecordingandmanageallcoreactivitiesoftheorganisationforat leasttenyears,sotheymustallowforanyanticipatedgrowthinscale.Systems-of-DifferentiationThese are applications that support processes unique to the company or its industry andthat drive competitive advantage. These applications should continually be evaluated andmightrequirechangingeverycoupleofyears.Theseapplicationsmaybepartofasuiteorcanbebest-of-breedapplications.Systems-of-Innovation

These are applications built to support business transformation including new andinnovative business activities. These applications must be constructed quickly to enableenterprises to take advantage of new ideas and opportunities. These systems will eithersupport innovativenewtechnologies toprovidenewcapabilitiesordeliverstrategicvalue.For example, profitability modelling and optimisation applications enable executives tounderstand what drives profitability and to create new strategies that can transformcorporateperformance.

Connective-Tissue

This isthetechnologythatallowsapplications indifferentPace-Layersandwithin layerstoworktogetherasawhole.Connective-Tissueincludestechnologiessuchas;Service-orientedarchitecture (SOA), Application Program Interfaces (API's) and Business ProcessModelling(BPM). With the Pace-Layered model, Connective-Tissue becomes an essentialconsideration for companies as this ensure that Systems-of-Innovation andDifferentiationcanstillbefully integratedwithSystems-of-Record, inacosteffective,robustandefficientway.

ThePaceLayeredApplicationStrategy

BenefitsofthePace-Layerapproach

The Pace-Layered Application Strategy provides the framework for governance to encouragemeaningfulandcontinuousinputfromthevariousdepartmentsinacompanywhiletheoccurrenceof"ShadowIT*"isminimised.

*Shadow IT is when individuals use solutions (e.g. Spreadsheets) outside the official business systems to overcomefrustrationswiththesolution.

Thebiggestbenefitof thePace-LayeredApplicationStrategy is that it enablesbusiness leaders tofocusonareaswheredifferentiationandinnovationcangivethemacompetitiveadvantageandtoactontheseopportunitiesquickly.

HowcanPace-Layerspromotedifferentiation?

· Provide a process to consider individual businessactivitiesratherthanapplicationcategories.

· Create a framework to support the coexistence ofintegratedsuitesand"best-of-class"apps.

· Establish a governance process that allows departments to specify, justify and evenpurchaseapplicationsthemselves.

Most of our customers areastounded at the resultswhenthey see the materialimprovement in businessoutcomes when theyreprioritiseIT..

ThePaceLayeredApplicationStrategy

· EncourageadialoguebetweenbusinessandITleadersaboutwhichactivitiesare(orshouldbe)differentiating.

· Introducetheideathatdifferentiatingapplicationschangeatafasterpace.

HowcanPace-Layersencourageinnovation?

Createacategoryof"InnovationApplications"withabudgetandgovernanceprocess.

Establish a development environment with tools and resources to make innovative applicationsfasterandeasiertodevelop.

UsethepacelayersmodeltoshiftsomefundingfromsystemsofrecordapplicationstoInnovationapplications.

Develop "connective tissue" that allows Systems of Innovation applications to accessmaster dataandcallWebserviceswithoutcompromisingdataintegrityorsecurity.

By using the Pace-Layered model, companies can develop more appropriate strategies for eachlayer. Once the Pace-Layered Application Strategy is understood and supported by all the roleplayers, it becomes easier to get consensus on the right process to evaluate and implement newsoftwareapplications.Eachlayershouldhaveadifferentiatedstrategyforareassuchas;budgeting,maintenance and support, selection criteria, data management, architectural standards anddeploymentmodelasdepictedinthefollowingtableofrecommendationsfromGartner:Table1

ThePaceLayeredApplicationStrategy

BuildingaPace-LayeredStrategy

Atthispoint, Itrustwehaveproventhebenefitsoffirst implementingaholistic ITstrategybeforeengaginginaselectionprojectforanewERPsystem.Thechallengeishowtogoaboutit.

RecommendedProcess

TherecommendedprocesstoimplementaPace-LayeredApplicationStrategyisasfollows:

CreateapanelofbusinessusersandITapplicationexperts.

Decomposeexistingsuitesintoindividualapplications.

Associateeachapplicationwiththebusinessprocessitsupports.

Analysethecharacteristicsofeachapplicationandprocess.

UsethePace-LayeredApplicationfeaturesasastartingpointtoassigntheapplicationtoalayer.

Adaptyoursoftwaregovernancemodeltofittheobjectivesandneedsofthethreelayers.

Establishasetofconnectivetechnologiestofacilitatetheinteroperabilityoftheapplicationwithinandbetweenlayers.

BuildawarenessofPace-Layersthroughouttheorganisation.

Encourageuserstothinkaboutapplicationsandprocessesbasedontheirprobablerateofchange

ExampleofexistingapplicationsassignedtoPace-Layers

(As-Ismodel)

Withlimitedinformationaboutyouroperations,thefollowingexampleisforclarificationpurposesonly

ThePaceLayeredApplicationStrategy

Withtheaboveexample,itisnowpossibletoevaluatewherethegapsare.First,startwithSystems-of-Recordastheseformthefoundationforalltheotherapplications.ThemostimportantquestionstoaskregardingSystems-of-Recordare:

· Does my Systems-of-Record provide the most cost effective way to process dailytransactions?

· Willmysystemsofrecordbescalabletoaccommodategrowthoverthenexttenyears?· Dotheyprovidethe"connectivetissue"tointegratetootherapplications?

Atthispoint,somecompaniesrealisethereisnoneedtoreplacetheirSystem-of-Record.However,iftheanswertoanyoftheabovequestionsis"no",thenitistimetoconsiderreplacingthem.

Replacingyoursystemsofrecord

TheselectionofanewSystem-of-Recordshouldstillfollowaformalevaluationprocess,afterall,thisisa long-termdecisionandcritical toget right.The focus,however, changes to the following fourareas:

Connectivetissue–Probablythemost importantconsiderationandanareathatmanycompaniesoverlookintheevaluationprocess.Connectivetechnologyiscriticaltoensuresystemsofinnovationanddifferentiationcansuccessfullybeintegrated.

Scalability–Extrapolategrowthexpectationsovertenyearsandensurethesystemcanhandlethenumberoftransactionsaswellasusers.

Upgrades–Ensurethevendorregularlyprovidesupdatestothesolutiontoensureyoukeepcurrent,especially in areas such as technology improvements and potential regulatory changes. It's also

ThePaceLayeredApplicationStrategy

important to understand what is involved in upgrading as it could vary significantly betweendifferentvendors.

Best practice – Business processes managed by systems of record should be standardised andsupportedbybest-practicetemplatesintheapplications.

TheTo-Bemodelcouldnowlookasfollows

ThePaceLayeredApplicationStrategy

Summary

Itwasnot the intentionof thisdocument tocover thePace-LayeredApplicationStrategy indepthbuttoratherprovideahigh-leveloverview.Wetrustthiswhite-paperclarifiedthepotentialbenefitsof first developing a robust IT-strategy before engaging on a software selection project. If this issomethingyouwouldliketopursue,we'dlovetohelp.AtCBSERPConsultingwehavetheexpertisetoassistcompanieswiththeimplementationofaPace-LayeredApplicationStrategy.Pleasedonothesitatetogiveusacallshouldyouhaveanyfurtherquestions.

BestRegards

JohanBronkhorst

SolutionsArchitect

CBSERPSolutions

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