IBM offers its customers an offering called the Business Value Assessment (BVA) at no charge which provides a proven methodology and process to build a business case for justification for their software investments. This offering includes a financial business case which outlines the Return of Investment (ROI) and Total Cost of Ownership (TCO) of such investments. These findings are delivered with full collaboration of the customer’s business and IT teams.
The BVA process includes iterative data collection and validation prior to one or more onsite workshops. These workshops can be aligned with standard discovery type workshops conducted for any business driven IT projects.
Customers have discovered that Business Value Assessments offered and delivered by IBM have allowed them to justify their investments in IBM solutions and technologies. The most valuable outcomes from a BVA are the insights and comparisons against similar investments with many of the top competitors in the Hybrid Integration space. One such example below from a successful BVA provides insights and comparisons of using the IBM Middleware technologies against the Oracle Red Stack.
This customer is a long term user of JD Edwards ERP applications. JD Edwards as an independent company had licensed IBM’s WebSphere Application Server as the foundation for their applications. After Oracle acquired JD Edwards, it has been their strategy to move all JD Edwards customers to the Red Stack. Whenever the Software and Services (S&S) for JD Edwards applications came up for negotiations, Oracle wanted customers to move from the WAS ND application server to the Oracle’s Weblogic server. This strategy was clearly used to discourage customers from using competitor’s technologies and eventually discontinue the support for the underlying WAS ND server.
In this particular case the customer had been asked to purchase new licenses for the Weblogic server or continue to get WAS ND supported directly from IBM. IBM offered to do a BVA at no charge to understand the cost of licensing/support of WAS ND directly from IBM rather than moving to Weblogic from Oracle.
Based on the methodology above. The IBM BVA team and the customer team followed the following process:
- Understand the Business Problem/ Challenge
Worked with customer to understand Current-State problems, drivers for change, goals and benefits of Future-State environment
- Identify Challenges and Opportunities for Improvement
Defined the current-state and aligned to business strategies and goals
- Provide A Business Vision
This was based on customer’s strategic vision, IBM’s industry expertise, and the current environment
- Define Technology Requirements
Technical requirements were identified based on future-state vision, current infrastructure, business initiatives and objectives
- Define the Business Value
Assessed financial impact in business terms of initiatives
The goal of this initiative was to:
- Evaluate the cost, and value in maintaining WAS licensing for the current 20,000 user base of JDE
- Minimize impact to the current infrastructure and support tools
- Minimize business impact to the current user install base
- Minimize operational costs
- Minimize or eliminate any retraining in different technologies
Assumptions and Scope:
- A 5 year TCO model was assumed to get a long-term understanding of the costs
- This BVA is a comparison between re-licensing WAS with an IBM Unlimited License Agreement (IULA) for the existing 20,000 user base of JDE, or purchasing, and migrating to Oracle’s Red Stack
- Client’s entitled price for WAS ND was used for all WAS capital investments, and year 2 through 5 S&S maintenance costs.
- Oracle Red Stack List Price of $500 per client was used for the benefit analysis, along with their standard 20% cost of $100 per client for years 2 through 5 S&S maintenance costs.
- Since WAS is already part of the install base, it was assumed that benefits will start to be realized immediately after the IBM investment.
- WAS to Red Stack migration costs would be approximately $333,000 utilizing offshore resources
- A 5% yearly growth factor for Red Stack S&S is used as part of the comparison
- To implement this proposed solution, it will require a 5 year cumulative investment of $ 3,165,443 including: $ 1,700,000 in capital expenditure , $ 1,465,443 in operating expenditures.
- IT cost reductions: $ 18,953,250 over 5 years
- A positive 5 year return on investment
- Reduced Hardware Infrastructure impact, and risk
- Reduced software, and yearly maintenance
- Time to value through minimized infrastructure changes
- Business operation savings: Not Quantified (Eliminate training and restructuring costs)
- Achieve a 1 Month Break Even, and a 500% Risk Adjusted ROI, and a NPV of $12,858,020 over 5 years
Recommendation to the Customer: Purchase an IBM Unlimited License Agreement (IULA) for WAS ND to support the current infrastructure and Install base of JDE.
Note: Leave a comment or write to WhyWebSphere@gmail.com for more details about the BVA or an IULA offered by IBM for your IT transformation and hybrid integration projects.
Categories: Cost & Licensing