Versata Business Benefits:
Increasing Your Return On Investment (ROI)

What is ROI Analysis?

A company's future depends on investing resources in business solutions that yield tangible financial and strategic benefits. ROI analysis is a practical and reliable way to identify and quantify the organizational impact of a proposed solution. At a conceptual level, ROI analysis answers a very basic question: "What am I getting for my money?"

Why Do I Need ROI Analysis?

Initially, ROI analysis is critical to understanding the reasons for investing in a proposed solution, such as undertaking a development project or making a significant purchase. While this mode of analysis is not new, today's challenging economy has made ROI analysis an essential part of a company's financial discipline. An accurate ROI analysis reveals the true economic impact of a project and permits an objective assessment of its value.

"Today, many corporations won't commit to new tech purchases unless they see the benefits [ROI] spelled out in black and white"

"Seeing Your Web Payoff," Business Week

"Our editorial studies revealed that the great IT challenge is determining ROI, or technology payback - proving the value of technology investments from a business perspective"

Maryfran Johnson, Computerworld Editor-in-Chief

In addition to understanding the economic impact of a project, an effective ROI analysis also provides a tool to determine the project's productivity and efficiency. For example, if an ROI analysis prior to beginning a project shows an expected 30% reduction in data input, yet once implemented the project realizes only a 10% reduction, project managers can then better determine the problem with the project's initial strategy, and modify it accordingly.

Finally, a thorough review of expected versus actual ROI can also provide a valuable learning tool that can be applied to future projects. For these reasons, a robust ROI analysis is a critical part of any significant IT project.

How Do I Go About Conducting an ROI Analysis of an IT Project?

A complete ROI analysis is a thought-provoking process. First, all the costs associated with a project (both direct and indirect) must be identified. Then, an understanding of the ways in which the project will impact the current environment must be achieved. This step is followed by an assessment of whether the project will benefit the company's financial and strategic goals. When performing an ROI analysis of an IT project, industry best practices suggest the following areas of impact should be considered:

 

Initial Investment	Revenue	Costs	Time to Market
License Fees Maintenance and Support Training Downtime Lost productivity	Customer Churn Reduction Shorter sales cycle	Higher efficiency Elimination of repetitive processes Maintenance	Profit Acceleration Competitive Advantage

It is important to note that the true economic impact typically exceeds the direct cash flows associated with a project once hidden costs (such as cost of a manager's time or lost productivity due to training requirements) are identified. There will always be qualitative factors that are difficult to reduce to a number. For example, how are issues like increased employee morale quantified? In spite of the difficulties associated with putting a dollar value on these factors, their impact is real and should be kept in mind when deciding to pursue a particular endeavor.

While the ROI analysis process may seem complicated, it need not take an excessive amount of time. Merely listing the factors that are involved is beneficial. Once these have been identified, prioritize and model the impact of the top three factors in each of the above categories. This level of analysis will not provide a complete picture, but will provide sufficient detail for major decisions.

How Does Versata Affect My ROI?

Versata can significantly boost the return on an investment when building enterprise applications for the J2EE platform. Versata automates more than 95% of the development effort required to express the core functionality of an application's business logic, the business's policies and procedures, in J2EE-compliant code. This translates directly into tangible benefits throughout the application development lifecycle.

J2EE Application Development & Versata

J2EE and the Service Oriented Architecture

J2EE has emerged as the platform of choice for building large-scale enterprise applications. Although the platform provides numerous facilities that simplify the development of distributed applications, it requires a considerable investment in personnel and tools to successfully design, build, and deploy a J2EE-compliant system.

The Service Oriented Architecture (SOA) depicted below is an architectural approach that utilizes the benefits of the J2EE platform and is optimal for building enterprise applications. The essential feature of the SOA is the separation of business logic from the integration and presentation layers. This enables the independent modification of any of the following factors: (1) how business functionality is accessed; (2) the business functionality itself; and (3) how data is stored in back office systems.

Figure 1: Service Oriented Architecture (SOA)

While the benefits of adopting this development model are significant, there is a price to be paid. Developers need to be proficient in Java and comfortable using advanced J2EE patterns and architectural concepts. As a result, J2EE development using the SOA methodology is complicated and requires a significant investment in training and tools to ensure success.

The Productivity Gap

While there are numerous vendors to help with development in the presentation and integration layers, the bulk of an application's complexity resides in the business logic layer. Current tools do almost nothing to ease the burden of coding business logic. Currently, up to 80% of the total work involved in business logic development is handwritten Java code. While there is an abundance of tools to help with the presentation and integration layers, the fundamental value of an application resides in its business logic. The majority of vendors are not capable of helping with this area. Code generators and IDEs will generate application skeletons, but programmers are still required to hand-implement business logic.

Bridging the Productivity Gap with Versata

Versata solves this productivity problem by providing an extension to the application server that directly manages and executes business logic. The Versata Logic Server complements the capabilities of a Java IDE and application server by allowing programmers or business analysts to specify their business logic declaratively. The Versata Logic Server then executes that specification directly. This approach enables users to focus on the business logic and leave the enactment and execution of that logic in a J2EE-compliant environment to the Versata Logic Server. Versata automates more than 95% of the work required to implement business logic. This automation, coupled with the ability to specify business logic declaratively has a direct, tangible impact on any software development project.

Figure 2: Versata Automates Over 95% of Business Logic Development

Versata ROI Drivers

Cheaper, Faster Route to Productivity

The effects of using Versata to augment J2EE application development are seen both in the initial phases of a project and over the life of the application. Becoming proficient in Versata as opposed to Java requires far less time and money because of the relative familiarity of declarative logic versus pure Java code. Over the course of the application development process, Versata significantly reduces the effort required to design, implement, deploy, and maintain an application.

In addition to the direct cost savings and efficiency gains when using Versata on a particular project, there are other benefits that span across an entire organization. Keeping business policies and procedures separate from IT infrastructure enables businesses to evolve their systems over time without compromising application functionality. The use of architecture-independent business logic means that users will not find themselves building next year's legacy applications today. Perhaps the most important strategic benefit from using Versata is that it allows business strategy to drive technical infrastructure, and not the other way around.

Lower Total Cost of Ownership

Versata continues to enhance an IT organization's productivity, even after the application is deployed. According to data from Gartner Research, the initial capital investment only represents 15-20% of the total cost of a new technology project while maintenance can account for up to 35% of the cost on an annual basis. Further analysis of maintenance activities reveals that almost half of the time required is spent deciphering the existing code. As modifications are made, they too are inadequately documented and thus this cycle repeats.

Modification and maintenance of business logic are greatly simplified because the Versata Logic Server separates an application's business logic from its implementation. The declarative statements are easy to read and follow. If changes are made, the Versata Logic Server automatically updates and reoptimizes the entire application. Programmers no longer need to spend cycles deciphering what logic a particular code segment is executing. As a result of these benefits, Versata's customers have seen maintenance productivity increase by a factor of two to ten times when they used Versata's Logic Server as a core part of their application development and deployment infrastructure.

Customer Case Studies

National Retailer

This Versata customer was building a back end system for managing clearance merchandise. The merchandise preparation process was a complex, multi-stage activity that entailed identifying clearance merchandise and pricing and packaging it appropriately. This system was to be linked to the retailer's primary production system that would generate the appropriate web content. Their web site received over 250,000 hits/day between 3:00pm and 3:10pm when new items were published to the site. The customer had installed a J2EE application server but had historically outsourced its application development. Versata was selected to enable the customer to build the application in-house and to standardize the customer's application development environment.

 

Application Complexity	Versata Impact	Results
209 Business Logic Statements 37 User Screens 38,000 lines of Versata-generated Java code	Faster time to market Reduced reliance on outsourced development Simplified application maintenance	Able to generate 20-50 cents on the dollar versus 10 cents on the dollar historically 60% reduction in project duration 10x increase in maintenance productivity

National Real Estate Corporation

This Versata customer facilitated and managed real estate relocation services for corporate clients. The customer's goal was to build a system that would allow managers to manage the monitor the relocation process, as well as provide tools for supplier management. The company used a variety of internal systems and had many manual processes as part of their overall service delivery process. The parts of this process that were automated were operating on two mainframe machines and the customer's desire was to transition away from these systems over time. Versata was selected to enable the rapid deployment of this mission-critical application and to simplify the porting of the application from the mainframes to more modern systems.

 

Application Complexity	Versata Impact	Results
300 Business Logic Statements 400 Process Logic Activities 120,000 lines of Versata-generated Java code	Faster time to market Legacy system extension Simplified application maintenance	73% reduction in project resource requirements 40% reduction in project duration

Conclusions

Versata boosts ROI by delivering the following strategic benefits:

• Faster time to market
  
• Strategic flexibility
  
• Extension of legacy system functionality
  
• Resource optimization throughout the application development lifecycle

"When the rate of change in the marketplace exceeds the rate of change in the organization, the end is in sight."

- Jack Welch, General Electric Corporation

While the IT resource savings are significant, it is important to look beyond these and consider the true value of a faster time to market and greater strategic flexibility. The rate of change across industries is accelerating, and it is important for businesses to keep up. The true impact of Versata's technology is that it enables business strategy to drive technical infrastructure and not the other way around. The ability to change applications rapidly and to be platform-independent means that Versata customers are better equipped to exploit strategic opportunities. Technology thus enables as opposed to hinders creating strategic value.