IBM Software Group Real Insights Real Results Software

IBM Software Group | Rational software Business and product innovation today will require a significant investment in software § For businesses and institutions everywhere, there have never been so many new possibilities § Imagine the amount of software necessary to: 4 Deliver a green world 4 Take advantage of information base explosion 4 Communicate with a trillion devices 4 Drive on-going product differentiation 4 To seize new global market opportunities § Leaders everywhere are deploying increasingly intelligent software, systems and products § Accelerating innovation and enabling effective change is highly dependent on our ability to manage effective software delivery IBM Confidential 2

IBM Software Group | Rational software What could you do if all objects were intelligent… …and connected? IBM Confidential 3

IBM Software Group | Rational software What could you do with unlimited computing power…for pennies? Could you predict the path of a storm down to the square kilometer? IBM Confidential Could you identify another 20% of proven oil reserves without drilling one hole? 4

IBM Software Group | Rational software What could you do with a million-person product development lab… IBM Confidential …or with a billionperson workforce? 5

IBM Software Group | Rational software Do we surf or sink? Software development process and discipline must accelerate IBM Confidential 6

IBM Software Group | Rational software Economic conditions add significant pressure to the reality of software and systems delivery Changing the IT Cost Structure Will Become a Business Imperative “Business expects greater agility from IT. The current approaches to project prioritization, resourcing, agility and governance are not satisfying customer needs. A new approach to IT delivery models and sourcing options is required that allows IT organizations to be more responsive to the needs of the business. ” – Barbara Gomolski, Gartner, October 14, 2008 “Changing the Cost Structure of IT Will Become a Business Imperative for Most CIOs” Why This Technology Recession Will Be Different “Transformation and innovation will lead recovery. When we come out the other side of this crisis, companies will look different – technology will have been a catalyst in those changes. – George Colony, Forrester Research, October 26, 2008 “Why this tech recession will be different” The Growing Demand for Product Innovation with Profitability “Companies successfully addressing the challenges [of delivering product innovation from software] are driving higher profitability. Best-in-class companies decreased development time 25% compared to a 5. 5% increase for others”. – Michelle Boucher, Aberdeen Group, March, 2009 “Embedded Systems Development” IBM Confidential 7

IBM Software Group | Rational software Rational strategy can bring focus in uncertain times § Provides measured, short-term Return on Investment § Enables longer-term management of Return on Assets § Delivers a platform and processes to make those returns come to life § Encourages and informs, rather than dictates § Supports incremental improvement, leading to faster decision making IBM Confidential 8

IBM Software Group | Rational software However, challenges to effective software delivery remain and expand Individual Challenges § Lack of standards impacts ability to collaborate, automate and report § Frequent asset updates and complex dependencies IBM Confidential Team Challenges § Geographically dispersed teams § Effective crossorganizational visibility and synchronization Organizational Challenges Business Challenges § Greater need § More granular service for market experimentation functionality and composite applications § Blind adherence to process insensitive to potential business § Growing number of trade-offs assets including custom, outsourced and packaged § Need for agility@scale 9

IBM Software Group | Rational software A maturing approach to software and systems delivery based on measurement Modernize Enterprise Assets Transform Information Technology Differentiate Products Unleash exponential gains in innovation Business Value Efficiency Global effectiveness and collaboration Control Productivity through automation Individual IBM Confidential Predictable governance and asset utilization Software investment management aligned with business and operational priorities Optimizing software “supply chains” Team Organization Business 10

IBM Software Group | Rational software Realized by continuous improvement on business objectives Modernize Enterprise Assets Transform Information Technology Business Value § Accelerate progress § Reduce scrap / rework § Reduce cost of change Efficiency § Reduce human error § Reduce manual tasks § Improve release quality Control § Improve team productivity § Reduce custom training and tooling variants Global effectiveness and collaboration Productivity through automation Individual IBM Confidential Differentiate Products § Improve business flexibility and lower costs / risk § Improve stakeholder satisfaction & output Predictable governance and asset utilization Software investment management aligned with business and operational priorities Optimizing software “supply chains” Team Organization Business 11

IBM Software Group | Rational software Invest to manage risks and optimize measured outcomes Improve Automation Improve Collaboration Improve Process Cost to Implement: Very predictable Predictable Some culture change Much culture change Productivity: Timeframe = Days Timeframe = Weeks Timeframe = Months <5% ECONOMIC IMPACTS Business Value 5 -25% 5%-10% 15 -35% 10%-35% 25 -100% Increase Flexibility & Investment Value 25%-50% 50 -200+% Timeframe = Years Efficiency Control Implementation costs are person per year IBM Confidential Individual Team Organization Business 12

IBM Software Group | Rational software Pragmatic steps we took to mature our own software delivery 1 Established business and operational objectives 2 Prioritized practices and defined implementation roadmap 3 Accelerated practice adoption with Rational products and programs – “Tools, Not Rules” 4 Reported, analyzed, and regularly acted on our results IBM Confidential 13

IBM Software Group | Rational software 1 Established business and operational objectives Business Objectives § Improve market share § Achieve profit margin § Reduce time-to-value Operational Objectives § Heighten responsiveness and increase linkage to customers § Innovate to differentiate and capture new value § Increase quality § Shorten project development cycle times § Improve schedule predictability IBM Confidential 14

IBM Software Group | Rational software 2 Prioritized practices and defined implementation roadmap Change and Release Management Requirements Management § § Shared Vision Use-Case-Driven Development Requirements Management Business Process Sketching Governance and Compliance § Risk-Value Lifecycle § Practice Authoring and Tailoring § Performance Measurement IBM Confidential § Team Change Management § Formal Change Management Agile Core § § § Iterative Development Two-Level Project Planning Whole Team Continuous Integration Test-Driven Development Initial Rational Focus Area Quality Management § § § Concurrent Testing Test Management Independent Testing Performance Testing Application Vulnerability Assessment Architecture Management § § Evolutionary Architecture Evolutionary Design Component Based Software Architecture Design Driven Implementation 15

IBM Software Group | Rational software 3 Accelerated practice adoption with Rational products Leveraged Agile Core practices to improve cycle times and predictability § Required adoption of agility@scale 4 2, 000+ developers, testers, managers 4 Varying team sizes 4 Geographically distributed locales 4 Diverse development contexts § from mature products to Web 2. 0 apps § Embraced Rational Team Concert 4 Since May of 2008: § Growth of 423% to 148 projects § Growth of 410% to 2, 810 users IBM Confidential 16

IBM Software Group | Rational software 4 Reported, analyzed, and regularly acted on our results Aggregated data from multiple sources to provide new insight Executive and Operational Dashboards Jazz Integration Architecture: Using REST Open Services / ODBC / XML Rational Rational Quality Rational Clear. Quest Requirements Team Concert Manager Test Manager Requisite. Pro Clear. Case Composer Project Headcount Sales & Data & Financials Pipeline RATIONAL Customer Manual Support Data THIRD-PARTY Data Sources: Quantitative and Qualitative IBM Confidential 17

IBM Software Group | Rational software Leveraging our experiences to help you… Start here! Phase 1 § Establish business and operational objectives Phase 2 § Prioritize practices and define roadmap Phase 3 § Accelerate adoption with tools and services Phase 4 § Report, analyze and act on results Start next incremental improvement IBM Confidential 18

IBM Software Group | Rational software IBM Rational Acquires IBM Rational Transformation Application Security & Compliance software IBM Rational Acquires Customer Needs & Lifecycle Management for Software Systems IBM Rational Acquires Software Delivery Process Automation & Compliance Application Security and Compliance Management Project & Portfolio Management First Wave Offerings IBM Acquires Team Collaboration and Requirements Definition Enterprise Modernization Standardization Practitioner Flexibility & Productivity 2002 IBM Confidential Software Development Platform & Processes Accelerating Global Software Delivery 2004 System i & z Tools Integrated into Rational Governing the Business Process of Software Delivery 2006 SOA Lifecycle Management New SOA quality, architecture & asset management solutions Visibility & Collaboration in Software Delivery Driving Greater Value from Software Investments 2008 2009 Rational Historical Performance (Estimate of four quarter rolling total revenue) 19

IBM Software Group | Rational software Changing Rational to address real needs of development Analyze business opportunity and the impact of change and effectively manage organizational transformation by better aligning business and development priorities Deliver quality solutions and improve efficiency through real-time team collaboration, automation and reporting and leveraging proven best practices IBM Confidential Build consensus through business and development collaboration making good decisions based on real-time and accurate information across all stakeholders 20

IBM Software Group | Rational software Capture and connect the web of information Unify multiple perspectives to ensure alignment to changing business objectives Use Rich-text Documents to capture structured and unstructured information (links, images, emails) Remove ambiguity on business and technical terminology with shared Glossaries Collaborate in real-time using Wiki-like discussions, to quickly achieve sign-off Diagram and elaborate Use Cases to frame requirements in the user’s perspective IBM Confidential Capture the current and propose future state with Business Process Diagrams Visualize the user experience with Storyboards 21

IBM Software Group | Rational software Process Awareness Project Manager Developer / Build Engineer Tester IBM Confidential 22

IBM Software Group | Rational software Work Items Project Manager Developer / Build Engineer Tester IBM Confidential 23

IBM Software Group | Rational software In Context collaboration Project Manager Developer / Build Engineer Tester IBM Confidential 24

IBM Software Group | Rational software Iteration Planning and Execution Project Manager Developer / Build Engineer Tester IBM Confidential 25

IBM Software Group | Rational software Team Build Project Manager Developer / Build Engineer Tester IBM Confidential 26

IBM Software Group | Rational software Web Client Project Manager Developer / Build Engineer Tester IBM Confidential 27

IBM Software Group | Rational software Web Project Dashboard Project Manager Developer / Build Engineer Tester IBM Confidential 28

IBM Software Group | Rational software The road ahead Jazz offerings in 2009 and beyond Rational Enterprise Reporting Rational Project Management Rational Method Composer Rational Clear. Quest, Build Forge & Requisite. Pro Rational Clear. Case Gain insight based on real-time and historical trend information Manage global projects and resources Dynamic process, enactment and management Realize the strengths of ALM through Jazz integrations Extend collaboration capabilities Offerings Web 2. 0 Rational Clear. Quest Rational Integrations Rational Asset Manager Rational Requisite. Pro IBM Confidential Rational Build Forge Powered by § Rational Software Architect § Rational Application Developer Rational Clear. Case More dynamic integration leveraging Jazz “Open Services for Lifecycle Collaboration” services § Rational App. Scan & Tester portfolio § Rational Enterprise Modernization including System z and IBM i support 29

IBM Software Group | Rational software Other IBM sessions at CEE-SECR 2009 Keynote session: Grady Booch 29 October from 9: 30 -10: 00 AM Best Practices in Software Architecture Technical Sessions: 28 October from 3: 00 -3: 30 PM § Evolution of Application Lifestyle Management (ALM) Solutions 29 October from 5: 30 -6: 00 PM § MCIF – Structured Approach to Improvement of Software Development Process IBM Confidential 30

IBM Software Group | Rational software IBM Confidential 31