This POV helps business leaders to review the financial benefits of the Responsiv Cloud Automation Platform

The Case for Digital Transformation

This point of view provides information and an example framework for creating a cost-benefit analysis for the Responsiv Cloud Automation Platform (RCAP). It allows you to consider various categories of cost and benefit that might be impacted by the platform and use them to derive a comparison between the status-quo and Responsiv Cloud Automation Platform.

As with all IT projects, measures may be significantly affected by availability of skilled IT professionals to configure the platform, and your management focus to deliver to deadline.

Strategic advantage is difficult to predict in different markets, however illustrative sources of value are listed here to properly show how measurement regimes can be developed.

Business leaders must determine when to consider information and coordination to be critical capabilities.

In the early days, a growing administrative team, a few errors in invoicing, or losing a few customers can be early indications that a more strategic approach to information and coordination is required.

Business leaders must determine the point at which the company should begin to consider information and coordination to be critical capabilities.

Business Scenarios

This cost-benefit analysis assumes that your business has been operating for long enough to have accumulated a varied and complex technology landscape. Typically, companies acquire capabilities as they are needed and operate them as separate functions, along with manual operators.

As the volume of manual work exceeds the capacity, delays creep into the operation, and systems become out of step with one another, error rates increase, and people become under pressure.

The Value of Information and Coordination

Unfortunately, the benefit of coordination (process automation, case management, orchestration) become most attractive when the existing IT landscape has already become complex, and the teams are under pressure to deliver beyond their capacity.

Automation promises consistency, reduced manual effort, reduced error rates, and improved customer satisfaction. Immediate cost reduction may be available through the avoidance of recruitment. Businesses that can efficiently access the right information at the right time and in the right format have a significant advantage in terms of the cost of information, and in the quality and timeliness of their decisions.

Immediate Benefits of Responsiv Cloud Automation Platform

Responsiv Cloud Automation Platform reduces the cost, improves quality, reduces time spent building, and avoids many tasks and activities normally associated with these types of environments.

For example:

Symptom
Loss/Duplication of Orders
Lack of Trust in Stock Levels
Lack of Technical Agility
Software Does Not Set Policy
Development Efficiency
Cause

Lack of transactional integration

Lack of automated controls for process

Detection may be difficult if reconciliation is not included in the integration layer

Security in stores and warehouses

Inaccurate stock entry or untimely replication of entries

Inability to consolidate stock or manage status of items

Complex integration with many cross dependencies and sources of failure

Lack of architectural isolation leading to contagion from failures and changes

Testing and change scope not limited due to lack of separation of concerns

Software that is not capable of adapting to new requirements

Poor implementation that restricts change by lack of control

Software or applications developed without regard for future compatibility demands

Difficulty in test and multiple dependencies that are difficult to identify or manage

Products that are not designed to support multiple development teams

Resolution

Timeliness/Completeness/Accuracy

Move to a real-time from batch and polling

Remove stability issues and cost to the business – by having the data in the right place at the right time.

Enable event triggered data exchanges.

Provide up to date, accurate information for better business decision making.

Ensure accuracy, quality, and timeliness of data across all of our systems i.e., the right data in the right format in the right place at the right time.

Enable event triggered data exchanges.

Have the capability to connect to new channels & applications at pace.

Ensure the team have knowledge to support/add/update interfaces and deliver new integrations.

Providing the right data at the right time to business applications and partners.

Having a single up to date version of the truth for key data sets e.g., stock, product, Price, orders, customers, finance. The increasing desire to connect the channels and offer the customer multiple fulfilment options equally demands a new approach to integration.

Be clear about the role of the software regardless of its capabilities

Build architectures with good and complete isolation and separation

Ensure that changes can be made that do not require complete or big-bang change

Speed - quickly and cost-effectively integrate processes and solutions and reduce project risk and complexity

Choice - Integrate the best-in-class applications that support your business and IT strategy.

Flexibility - Establish a flexible IT infrastructure to control costs and to integrate new technologies with legacy systems

Integrate channels and re-orchestrate processes in support of business change.

Responsiv Integration

Real-time integration across multiple protocols.

Transactional integrity for once-only delivery of data

Ability to asynchronously request stock information from across the supply chain

Assured once-only delivery

Transactional support

Clear interfaces that support introspection

Clean integration between public APIs and internal interfaces

Separation of public facing interfaces and internal integration logic.

Maintain complex location and data dependent details outside of the DMZ

Integrated industry software platforms

Pre-built solution accelerators

Open standards

Ecosystem of partner content

Responsiv Cloud Automation Platform and Responsiv Unity are demonstrated to support multiple development teams

Financial Benefits

Consideration
Asset Cost
Upgrade Management
Product Maturity
Cost of Development
Solution Predictability
Availability of Experienced Enterprise Practictioners
Cost of Surrounding Infrastructure
Description

Cost of the software and its support over the expected lifetime of the product.

This includes the cost of the platform; products that are not efficient will require more power and more compute capacity to operate, they may also increase maintenance costs by requiring several instances without the benefits of clustering that are inherent in the Responsiv solution.

The Responsiv solution as proposed has two nodes that are both active and load balanced. This delivers a level of fault tolerance and high availability but also provides for “round-robin” upgrades that do not require downtime.
The maturity of a product and wide use across many industries is a good measure of the amount of testing and refinement that has been applied. Even to solve the same problem different organisations approach the development and basic problem in different ways. Different industries apply their own perspectives on a problem leading to products being exercised in many different directions. The result is improved stability and availability.

Technology projects must often develop functionality that clearly delivers business benefit as well as functions like error handling and parsers to read messages, that are supporting components that are not directly adding value.

The measure of the development efficiency of a product is the amount of supporting code needed to deliver a business result. The same metric is a key indicator for the cost of maintenance and TCO

Memory leaks and batch or polling behaviour will undermine the predictability of the resulting platform. Some work-items will pass through very fast while others meander for no apparent reason.
Regardless of technology it is possible to build an overly complex and inefficient integration platform that will be unstable, and difficult and expensive to change. The Responsiv products are designed to reduce the amount of bespoke code and architectural components needed to deliver a well governed solution; however, the right architecture and governance regime is critical to success.
For some products the cost of the product and its efficiency is compensated by the additional cost of infrastructure and the need to refresh the estate to address scaling. IIB can achieve significantly higher throughput and scalability, on less hardware than its competitors. The Forrester report found throughput and scalability showed that the open source ESB alternative would require at least 100% more servers than the Responsiv based solution.

Responsiv Cloud Automation Platform

Responsiv Unity Automation Node

Responsiv Unity Integration Node

Responsiv Cloud Automation Platform subscription includes the cost of software, hosting capacity, and management. Our pricing reflects the efficiency of the software and its reliability.
Responsiv Unity allows upgrades to be incrementally deployed and tested without needing the system to be completely closed.
Responsiv Cloud Automation Platform has embedded IBM technology that has been actively refined over the last 20 years. New components, extended protocol support, removal of pre-requisites, and improved performance.
Responsiv has parsing and stream handling, error traps (you need to tell it what to do with the error) and transaction management built in as standard. Programming effort is focused almost entirely on delivering the business need; for example, the specific transformation, enrichment, or routing.
Adopting a real-time approach will reduce the unpredictability inherent in batched solutions. Our solution has been extensively tested over the years for memory and other misbehaviours.
Responsiv has extensive experience with installation and project delivery across many industries to deliver many different outcomes.
Responsiv solutions have extensive potential for customisation. Recognising the need to refresh the current IT estate, having the widest options will reduce the development cost of new technology adoption and reduce the risk of excluding a preferred technology due to lack of, or difficulty in, integration capability.

Understanding Total Cost of Ownership (TCO)

Total cost of ownership (TCO) looks at the whole life costs of a solution, while total cost of acquisition (TCA) considers just the start-up costs.

TCO is the sum of all direct and indirect costs associated with purchasing, maintaining, operating, and decommissioning an asset.

Total cost of ownership (TCO) is the sum of all economic costs for the lifetime of a product. It should be discounted to a Net Present Value (NPV) to account for differences in timing of cost and profit flows[1]

Responsiv Cloud Automation Platform is a cloud platform provided on a subscription basis. This means that costs normally associated with software purchase and installation, hardware procurement, acquisition of skills to install and operate the platform, and ongoing patching and incident response are all included in the annual fee.

Responsiv Cloud Automation Platform must be configured to your specific needs to deliver any business value. This is done in a series of short-medium projects, each focused on delivering a specific capability, and timed to match the business demand.

Elements of TCO are listed in the table below.

Cost
Capital
Maintenance
Run Cost
Cost of Change
Cost of Retirement
Cost of Regulatory Demonstration
Cost of Failure (MTBF)
Description
Capital cost of hardware and software purchase, and of build activity.
Ongoing cost of maintenance payments to maintain software currency and support
Ongoing cost of providing support (in-house) or paying for PaaS. This does not include project costs.
This is the incremental cost associated with development of new capability (by function point) and its deployment to the architecture.
The cost of removing a component or sub-system from the architecture.
This refers to the cost of gathering evidence from the architecture to satisfy regulatory requirements.
Average time between major failures of components of the architecture. This metric includes cost of recovery, damage to reputation, missed opportunities, and associated fines.
Key Drivers and Mitigation

• Efficiency of code

• Removal of duplicated effort

• Separation of concerns leading to independent scaling of capability

• Choice of hardware and software products

• Removal of ineffective workload – unnecessary tasks

• Choice of hardware and software products

• Support teams and facilities to maintain the system

• Number and diversity of problems

• Consistency/inconsistency of the architecture

• Level of self-protection and architectural isolation

• Reduce scope of impact analysis

• Reduce scope of testing required

• Reduce complexity and separation of responsibilities

• Provide test facilities and strong release controls

• Reduce the scope of impact of change

• Mediate (isolate) components

• Design for obsolescence

• Force communications through mediation that can gather data and provide oversight in a consistent and demonstrable manner

• Isolation and horizontal scaling of components

• Separation of data custodianship from UI

• Strong security and self-protection ethos

• Strategies to contain the effects of change and failure

Calculating Total Cost of Acquisition (TCA)

Tendering process

Our experience suggests that a typical enterprise software procurement lasts 9 months from first engagement with vendors to decision and purchase. Assuming that the company takes a further 3 months to prepare for the tender the total delay for tendering once a need has been identified is 12 months.

This TCO calculation uses the concept of an FTE or full time equivalent to represent 12 months of effort from one or more individuals. In this example we assume two FTEs are needed to run the process and complete all of the required activities, for example reading proposals, providing technical input, collecting and documenting requirements.

Activity
Duration
People
Salary/Month
Activity Cost
Preparation for Tender
3
2
£6,000.00
£36,000.00
Request for Information
3
2
£6,000.00
£36,000.00
Request for Proposal
3
2
£6,000.00
£36,000.00
Tendering Process
3
2
£6,000.00
£36,000.00
£144,000.00

Responsiv Cloud Automation Platform acquisition and first year costs

The average cost of purchase for a platform to perform integration, process automation, and includes system monitoring is between £200,000 and £500,000 (2020 pricing). This investment is expected to deliver a platform that can support around 30 users with high availability and perhaps 1,000,000 transactions per day. In this case, a transaction is one communication between two parties, and there are often many more of these than expected.

Production hosting will require approx. 10 cores across multiple machines with virtualisation. The average ongoing cost of hardware and virtualisation is £1,000/core/year, assuming a five-year life expectancy. You will need around 30 cores to provide production, test, and development environments. The figures below assume a 5% annual inflationary uplift.


Capital
Year 1
Year 2
Year 3
Year 4
Year 5
Total
Responsiv Cloud Automation Platform
Requirements
£150,000 £150,000.00
Onboarding Project £15,00 £15,000.00
Software and Hosting
0
£90,000
£94,500
£99,225
£104,186
£109,395
£497,306.00
Software Support (S&S)
0 0
Management
0 0

0
£105,000.00
£94,500.00
£99,225.00
£104,186.00
£109,395.00
£662,306.00
Alternative
Requirements
£150,000 £150,000.00
Software
£300,000 £300,000.00
Onboarding Project £120,000 £120,000.00
Software Support (S&S)
0
£60,000
£63,000
£66,150
£69,457
£72,930
£331,537.00
Hosting (Rental)
0
£31,500
£33,075
£34,728
£36,465
£38,288
£174,056.00
Management/Admin
0
£72,000
£72,000
£72,000
£72,000
£72,000
£360,000.00

0
£283,500.00
£168,075.00
£172,878.00
£177,922.00
£183,218.00
£1,435,593.00

Total Cost of Acquisition and Operation

The cost of operation assumes that there are no significant outages, and that the platform is in a steady state until the need for a refresh.

A feature of TCO that is often missing is the knowledge of cost-per-transaction and information that informs decisions about retiring applications that are used but not paying their way. The structure and basic rules embodied in the Responsiv Cloud approach include the opportunity to collect and analyse this data and to identify candidates for retirement as well as simplifying the retirement activity.

Total Cost of Development


Year 1
Year 2
Year 3
Year 4
Year 5
Total
Project 1: (5 systems) System Integration
£200,000
-
-
-
-
£200,000.00
Project 2: (5 processes) Key Process Deployment
-
£200,000
-
-
-
£200,000.00
Project 3: Refine Processes
-
-
£200,000
-
-
£200,000.00
Project 4: (5 processes) Secondary Processes
-
-
-
£200,000
-
£200,000.00
Project 5: Ad-hoc Small Processes
£80,000
£80,000
£80,000
£80,000
£80,000
£400,000.00
.
.
.
.
.
.
£1,200,000.00

Conclusion

Adopting a foundational technology to support cooperation and to share information across the enterprise is cost effective and reduces the rate of generation of technical debt. The immediate returns are significant, but the strategic benefits are more impressive.

Platform
Cost

Platform deployment

Maintenance

Refresh

Benefit

Time to platform availability

Simple support / Deployment

Reduced complexity

Projects
Cost

Project development

Design, Build, Test, Operate

Refresh, extension

Benefit

Foster reuse of assets

Consistent deployment model

Developer support

Business
Cost

Changes to working practice

Disruption/distraction

New skills required

Benefit

New business opportunities

Time to Market and Value

Fixed/known cost structure

Speak to Responsiv

Responsiv Consulting can support your journey towards having a coordinated and informed business. We provide experienced consultants who can discuss the art of the possible, support business reviews and gap analysis, and be there throughout your digital transformation journey.

Our developers and managers are highly experienced in the subtle arts of integration and automation solutions. They will encourage, mentor, and deliver.

Our cloud platforms, on-premises platform, and remote support offerings assure that your solution has the longevity critical to business success.

Responsiv offer flexible and innovative contacts that can help align your costs and benefits and reduce the financial impact of moving to our cloud platforms.

We offer:

  • Responsiv Cloud Custom Platform: We fix the cost of moving to Responsiv Cloud, including development of the first integration and automation application for a maximum committed term of 5 years.This protects you against inflation and includes all connectors, up to a defined capacity. Development costs are spread across the agreed term up to 4 years.
  • Time and materials: We provide skilled resources to develop applications and the Cloud or On-premises platform is paid annually. You can terminate at any time.
  • Shared Risk: We provide the cloud platform and develop the applications. You pay for development and commit to a minimum annual spend with transactional costs incrementing to a capped price for a defined maximum capacity. This means that we deploy a maximum capacity, and you pay 30% for 30% of that capacity. Incremental charges are levied as your demand and business grows, until you reach the defined capacity, at which time the charge remains constant.
  • Spread Cost: We provide the cloudplatform and develop the applications. You pay a fixed annual fee and commit to a minimum additional annual project spend. The cost of development is spread across the 4-year term and the annual fee is fixed at the start with a known annual increment.

    [1] A project that costs £100 today and returns value in 12 months is not as compelling as one that costs half as much but returns the value in one month.

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      Richard Whyte

      Richard Whyte

      Richard Whyte has been building enterprise IT solutions for over 20 years. He is known for creating innovative practical solutions that provide a strong foundation for future development, whilst solving immediate problems. Previously the European CTO and Principal Architect for IBM Systems Middleware at IBM, he has an MBA, a degree in Statistics and Computing, is a Chartered Engineer, a Chartered IT Professional, and Fellow of both the Institute of Technology and the British Computer Society.