So a Business Value Proposition

Service Oriented Architecture
Business Value Proposition
Customer Version

Randy Langel

IBM Software Group Enterprise Integration Solutions (EIS)
http://www.ibm.com/webservices/eis

Table of Contents
1 2 3 4 5 EXECUTIVE OVERVIEW ............................................................................................... - 3 1.1 THE SHORT ANSWERS ......................................................................................................- 3 INTRODUCTION .............................................................................................................. - 5 WHAT IS A SERVICE ORIENTED ARCHITECTURE .............................................. - 6 3.1 A SCENARIO: THE SOA-ENHANCED BUSINESS TRIP ........................................................- 8 WHY INDUSTRY NEEDS SOA ..................................................................................... - 11 JUSTIFYING SOA........................................................................................................... - 16 5.1 THE BUSINESS VALUE AND BENEFITS OF SOA ..............................................................- 19 5.1.1 AGILITY: THE BIGGEST SOA BUSINESS BENEFIT ........................................................- 19 5.1.1.1 BUSINESS AGILITY SOA CATALYST: LOOSELY COUPLED .......................................- 20 5.1.1.2 BUSINESS AGILITY SOA CATALYST: REUSE ...........................................................- 22 5.1.1.3 BUSINESS AGILITY SOA CATALYST: EXTENSIBILITY..............................................- 23 5.2 ROI FOR SOA ................................................................................................................- 26 5.2.1 CUSTOMER & ANALYST EVALUATION OF SOA ROI ..................................................- 27 5.2.2 FINANCIAL RETURN ....................................................................................................- 29 5.2.2.1 REAL NUMBERS FROM IBM CUSTOMERS ................................................................- 29 5.2.2.2 REAL NUMBERS FROM PUBLIC SOURCES .................................................................- 30 5.2.3 CALCULATING SOA ROI............................................................................................- 33 5.2.3.1 SOA ROI FACTORS .................................................................................................- 34 5.2.3.2 SOA ROI AND BUSINESS CASE PROJECT ................................................................- 39 6 PROCESSES AS ASSETS (OR LIABILITIES)............................................................ - 41 6.1 6.2 6.3 6.4 6.5 6.6 7 THE IMPORTANCE OF PROCESS.......................................................................................- 41 ASSET AND LIABILITY PROCESSES ................................................................................- 43 IDENTITY ASSETS (OR LIABILITIES) ...............................................................................- 43 BACKGROUND ASSETS (OR LIABILITIES)........................................................................- 44 TIRED AND BROKEN PROCESSES: THE WORST KIND .....................................................- 44 CHOOSING THE RIGHT PROCESS TO INTEGRATE .............................................................- 45 -

CONCLUSION ................................................................................................................. - 47 -

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1 Executive Overview
You’re a business person starting to see the phrase “Service Oriented Architecture (SOA),” more and more in the press and hearing it bantered about by your Information Technology (IT) group. Since this appears to be more than a passing thought, you ask yourself the businessperson’s tried and true quadruplet. 1. 2. 3. 4. What is it? Why do I need it? What will it save? What will I give up if I don’t have it?

Your next thought could very well be, “is this the next bright idea from the IT industry? What in the world are they doing to me now?” ---- This paper answers these questions. 1.1 The Short Answers What is it? A way for different computers, from different vendors, with different programs, from different functional areas of the business to intelligently talk to each other (really). This can be done either within the company or externally to customers, suppliers or vendors. Why do I need it? SOA is today’s premier method to attain business agility through the reuse of your current IT assets and integrated processes. There are many business and technical benefits to an SOA but none as important as the capability to respond quickly (finally) and effectively to change and to leverage that change to competitive advantage. What will it save? Money, time, people and frustrations with IT. What will I give up if I don’t have it? It is quite possible that the functions below will be orders of magnitude easier with an SOA. An SOA could be the difference between the success and failure of: o The next department, intra-company or inter-company merger o Time to market for the next product or service o The addition of the next business partner, customer or supplier o Expanding globally o Competing SOA is a business and competitive differentiator. Is this the next bright idea from the IT industry? SOA’s are not a new idea – they have been around for at least a decade. That means there are no early adopter bugs to work out. SOAs have previously been implemented in proprietary (transla-3-

tion: expensive) ways. That means it was very difficult if not impossible for disparate computers to intelligently communicate with each other. So what’s different now? o SOAs have a long history of successful implementations. Even with their previous high costs they still provided economic value and functional flexibility within the company. The reason the term SOA has become so visible now is because a new implementation technique has arisen to make SOAs much more cost efficient and productive. o This new technique is called Web Services. It is important because it finally breaks the proprietary barrier between vendors and software programs. Major vendors like IBM and Microsoft have agreed to standards which allow their respective hardware and software to share information and data. Now this may spawn another thought such as: “OK that’s fine, but I don’t need to think about this now.” To that I present a summary of the legend of the death of King Richard III of England. For the want of a nail the horseshoe was lost, For the want of a horseshoe the horse was lost, For the want of a horse the rider (the king) was lost, For the want of a rider (the king) the battle was lost, For the want of a battle the kingdom was lost. How valuable was that nail to King Richard? If he could have anticipated the scenario would he not have given a treasure for that inexpensive nail? It is quite possible that an SOA is that same simple treasure for your business.

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2 Introduction
This document explains Service Oriented Architectures (SOA) in a business context. It takes a technical topic and shows how it can bring business agility to the enterprise – a quality absolutely required in this competitive climate. It addresses the business issues inherent in SOA and presents information, research analyst’s findings, and techniques to assist you in gaining SOA acceptance by your executives. This document has the following flow: • First we will provide an analogy to explain what a Service Oriented Architecture is. Then we will describe a business example of how an SOA might work in an organization by telling a story of a business trip that could occur in the near future. Secondly, we will look at a representative industry and see why it needs a SOA. While we will concentrate on the banking industry, all industries are fairly similar with their siloed implementations, and hence their integration requirements that can be accomplished by implementing an SOA. Following that we will talk about how to justify the implementation of an SOA. Our justification journey will lead us down the following paths: o We will look at the market analyst’s reports and summarize their recent SOA research. o Following that, we will examine the non-quantifiable business value attributes an SOA can bring to a company. o Finally, we will investigate what quantifiable returns might be expected from an SOA implementation. We will, in turn, investigate this in four parts. 1. 2. 3. 4. • Document customer and analyst evaluations of SOA ROI. Detail real customer financial return with numbers. Detail a set of ROI factors and how they might be used in a calculation. Discuss ROI methods and research currently underway.

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Finally, we will suggest a way to begin an SOA discussion with your business executive. This will revolve around the concept of processes, discussed in a new way that will hopefully be more comfortable for an executive to understand and relate to. We will also provide some “Rules of Thumb.”

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3 What is a Service Oriented Architecture
Service Oriented Architectures are all about connections. A good analogy to explain SOA is the connections used in audio-video (AV) systems as shown in Figure 3-1.1 Specifically, services in a SOA are to AV components as Web services are to the connections between AV components. For example, let’s take an AV system that has components that have been purchased over the years. Let’s assume you want to add a DVD player to the system. The system has the usual cable box, receiver, VCR, CD player, speakers, and television set. One of the oldest components is the receiver and the DVD has connections that the receiver can not handle, such as s-video and optical connections. It does, however, have the common three RCA connections. You decide at this point to upgrade all of the connections in the AV system to RCA connections.

“Web Services and Service Oriented Architectures, The Savvy Manager’s Guide, Your Roadmap to Emerging IT” ©2003, Douglas K Barry, pp 17-19.

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Figure 3-2 Audio-Video Analogy.

In figure 3-2, the entire picture represents the SOA. The services are the AV components and the cables #’s 2, 3, 4, 5, 6 represent Web services. These components could be connected in different ways, depending on what you want to do. For example, you could set up your cable connection to go through your VCR or split the signal so that you can watch one program and record another. It wasn’t too long ago when we had monolithic hi-fi or stereo systems. Then the industry settled on the various, components in a stereo system and later video was added. What does this have to do with SOA? Well, it's all in the connections. Web Services have provided an infrastructure for creating connections not unlike those we have with AV systems. And, just like AV systems, we will be able to assemble components in all sorts of ways because of those connections. A service-oriented architecture is essentially a collection of services. These services communicate with each other. The communication can involve either simple data passing

or it could involve two or more services coordinating some activity. Some means of connecting services to each other is needed. Those connections are Web services. If a service-oriented architecture is to be effective, we need a clear understanding of the term service. A service is a function that, is well-defined, self-contained, and does not depend on the context or state of other services. Over time, the industry will standardize on the capabilities of various services. The analogy to AV components fits well here. Each is well defined: the industry has decided what are the basic functions of a DVD player, a VCR and so on. Each AV component is self-contained; you do not need a VCR, for example, to use a CD player. Finally, one AV component does not depend on another component. For example, the television does not need to be on to record using the VCR. True, if you play the recorded tape, you cannot see what is being played when the television is not turned on. Nevertheless, the VCR still does not need to know the context or state of the television. The industry will define standard capabilities of Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), and other services. These will become standard services and could, in some ways, be seen as commodities. We may see these services come in various forms just as we see in buying AV components today. You can buy a DVD player bundled with a VCR or buy each component separately. Nevertheless, over the next few years, the industry will standardize the capabilities of various services much like the AV industry has standardized its components. Connections such as Web services are part of the inevitable evolution of interconnectedness. Consider how we can now exchange e-mail among disparate products. Although we could not do that at one time, we now take it for granted. This e-mail exchange is possible because of standards. Connections like Web Services (or the equivalent) will also be taken for granted some day because sets of standards will be developed.

3.1 A Scenario: The SOA-Enhanced Business Trip2 This section is a story of a business trip that illustrates how a service-oriented architecture and Web Services might be used in the not-too-distant future. It provides a vision of how a service-oriented architecture might work in an organization. David is about to take a regular business trip. It involves flying to California from the Midwest-US, renting a car, and visiting several customers in different cities over 3 or 4 days. To plan his trip, David uses his browser to see all the possible customers he could visit within driving distance of his destination city. Although there are a few customers he knows he wants to visit, he also wants to make sure he is keeping in touch with as many customers as he can. Using his browser, he selects the three customers that he must visit. David sorts the remaining customers by the number of problems reported in the previous 3 months and by the amount of business David's organization has
“Web Services and Service Oriented Architectures, The Savvy Manager’s Guide, Your Roadmap to Emerging IT” ©2003, Douglas K Barry, pp 5-8.
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received from these customers. Using this list, he identifies ten additional customers he might see and they are listed in order of importance according to his chosen criteria. David adds the dates he wants to leave and return and selects the Submit button and moves on to working on other things. A little while later, David receives an e-mail message from his contact at one of the customers saying that dinner on Tuesday would be great, but the customer would need to meet an hour later than David suggested. David opens up his calendar on his browser and adjusts the dinner time already on his calendar and replies to the e-mail message. (You will note that David did not originally set up the dinner time; this was done for him by the software system.) As the day progresses, David gets a few more e-mail messages and he updates his calendar accordingly. Within a few hours, he also receives information on his flights, car rental, and hotel reservations at three cities. David again opens up his calendar on his browser just to check that everything looks okay. The arrangements are fine and he confirms the plans. At this point, his manager receives basic information about David's trip along with notes on her calendar about when, he departs and returns. David's spouse also receives updates to her calendar that include the departure and return trips along with the hotels where David will be staying and hotel phone numbers inserted in the appropriate days. This is something she likes to have handy when David is traveling. Figure 3-3 An Airline Reservation Scenario using Services and SOA for Business Collaboration 3

Traveler
Pla n Submit to Travel

Agent
Get Itinerar Select Airlin

Airline
Get Orde Reserv e

Order Ticket Receiv e Receive Confirmatio

Charge Credit Confir m Send Ticket

Send Confirmatio

“An Introduction to Service-Oriented Computing and its Impact for On-demand,” Ali Arsanjani ( PhD & Chief Architect IGS) and Kerry Hollie’s (DE and CTO IGS) 2004 PLTE presentation.

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The day before his trip, David downloads what he needs to his cellular telephone/palmtop computer. This includes the itinerary showing his flights, car reservation, hotel reservations, hotel contact information, details on each customer, a summary of all contacts David's organization has had with each customer, driving instructions from each stop along the way, and maps. David prints out the driving instructions and maps. He likes to have paper copies just in case his rental car does not have a Global Positioning System (GPS) driving assistant or the GPS doesn't work properly. David thinks it's always nice to have a paper map and driving instructions. When David arrives at his destination airport, he is pleased to see that his rental car has the GPS assistant that his car rental profile requests. He starts the car, and the GPS assistant is already programmed for his first destination that day-one of the customer sites. David's organization recently switched to this car rental company because they offered this feature. It beats having to punch in destination addresses every time. In this story, it was relatively recently that rental companies agreed on the data and the names to use when describing the data used to transmit itineraries for GPS assistants. David’s organization switched to the new rental company because of this feature, because the new company provided almost the same rates as their previous ear rental company. On his way to his first customer visit, David receives an instant text message on his cellular telephone indicating that someone at this customer just reported a significant problem with one of the products from David's organization. This is good to know before going into his first meeting. While in the customer's parking lot before the meeting, David calls the representative who is working on the problem for any additional information before heading into his meeting. David was able to address his customer's concerns on the spot. Back out at the parking lot, David sees that he has another instant message telling him that his itinerary has changed on the third day and that he should check his calendar. He takes out his palmtop and logs onto his online calendar, downloading what he needs. He sees that the last customer he wanted to see has canceled (an e-mail message explains why) and that two different customers were added to his trip. This change also necessitated changing hotels. Thankfully, David's spouse and manager also received the updates to their calendars automatically. The hotel reservations have been changed appropriately, too. When David started his car the following morning, the updated itinerary was also downloaded to his car's GPS assistant. Late that night, David was looking over the customer visits for the next day and saw something puzzling in the summary of contacts for one of the customers. For some reason, the same problem appeared to be reported multiple times. He used the monitor and keyboard in his hotel room to get more information on this contact from the online repository that contained all contact information for his organization. As David meets with customers, he makes notes on his palmtop about each of the meetings. At intervals, his palmtop transmits that meeting contact information and it is added to all the other contact information for each of the customers.

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By now, you have probably noticed that David’s organization has very current and detailed information on every customer contact. They found that in their industry, this makes a big difference in how well the employees can help their customers. It also identifies any need that the customer may have for additional products or services. This customer information comes from multiple sources, both internal and external to David’s organization. On the last day of his trip, David receives an instant message in the morning that his flight that afternoon has been cancelled, but that the airline has arranged an alternate flight that will leave an hour later. David’s calendars were updated to reflect the new arrival time that evening. David also used his palmtop to check any last minute flight change-, with his airline. A lot of technology is involved behind the scenes in this story. Also, there obviously needs to be agreements and standards among organizations to make this level of data interchange possible. This technology and the standards make it possible for David to be "connected" on his business trip.

4 Why Industry Needs SOA
The need for businesses to adapt quickly and establish tight integration with their business partners demands a level of IT responsiveness and integration that adoption of an SOA can provide. We will examine the banking industry but many other industries suffer from the same basics problems described here. The corporate tendency “to just make it work” has often spawned infrastructures with many applications (and departments) that work separately of each other as independent ‘silos. To interconnect these applications and departments, the organization often creates so many separate links across each unit that they look more like a bowl of spaghetti than a structured enterprise-wide system. Untangling this mess causes a “lack of agility” that seriously impacts the firm’s ability to grow and compete. Business realities (see Figure 4-1) are driving each industry’s standardization of services that is mirrored and nourished by complementary developments in IT technology. The IT industry’s focus on Internet protocols, XML based communication and Web services standards can be viewed both as a reaction to customer demand as well as a driver for further development of on demand networks.

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Figure 4-1 Evolution of the Financial Services Industry

The Financial Services Industry has evolved
from “Banks” to “Banking”:
From Monolithic Financial Institutions… …to Competency-led Enterprises operating in an On Demand world

Product Suppliers

•
Distribution

Bank

• • • • • • • • •

Captive channels Other Institutions Retailers Dealers Agents Airlines Franchises Communities Affinity groups

• • • Trade Finance • • Mortgages
Consumer credit

Cards Insurance Investment

Risk, Insight, Compliance

• • •

Portfolio, enterprise risk Customer insight Regulatory compliance

• • •

Processing Utilities
Core Banking Securities Payments

• • •

Lending Archival Fraud, AML

As advances in IT technology make further industry segmentation possible, affordable and common place, industry reconstruction will accelerate. At an enterprise level, industry reconstruction eventually leads to an inspection of the current business model and its components. These components are highlighted in Figure 4-2. Figure 4-2 Inspecting the Current Business Model
Distribution—customerfacing activities that leverages interactions Risk & Financial Management—manage aggregated risk and portfolio-based activities, Distribution Risk & Financial Management Insight—Planning, market research and data mining capabilities Manufacturing— development and assembly of products and services

Insight Processing

Infrastructure— technologies, processes and personnel

Processing— fulfillment processes and transaction support functions

Having gained this level of understanding, enterprises can start to prioritize and act on the business and technology opportunities and challenges confronting them. Successful companies typically adopt a portfolio approach, comprised of initiatives that exercise one or more levers of shareholder value: • Revenue growth opportunities challenged by the inability of existing systems to cope with new circumstances. • Reducing costs and shifting those costs from fixed to variable. This is doubly challenging when duplicate ‘silo’ organizations are not best-of-breed from a business or technology perspective. • Increasing return on invested capital by divesting in non-core capabilities (Background Liability Processes – See “Processes as Asset” section below) and revitalizing core assets (Identity Assets). • Lowering risk from internal organizations seeking compliance and the safety of doing business as usual. Enterprises have added new distribution channels (see Figure 4-3) as new enabling technologies emerged. In banking this is exemplified by the 80’s trend of online branch offices and the Web commerce sites of the late 90’s. These were built one at a time with the best technologies available. With 20-20 hindsight it would have been preferable if there had been an executable business and IT strategy that tied them together. However, these silos show us where obvious cost savings can be achieved by normalizing the technologies while adding significant improvements in the customer experience: Figure 4-3 Silo-ed Channels = Multi-Channel ROI Possibilities

…silo channels?
Inconsistent bank customer experiences
Bank Functional-

Customiza-

Channel Specific Infrastructure

CProprieDB & Comm Stac (Tan-

WebApp Server OraSNA Server Java+XM (AIX AT

LANDP,SN Comm DB2 C/C+ (PC

iPlanet OraeLin Java+Pro Script(HP

WebJav

DomServer (UNI Serve Farms Prod-

Online Bank-

Branc

Inter-

WAP/Dig.TV

Intra-

Line of business dataSource: Actual customer configuration

These benefits flow directly from the reuse of services and components in the context of a shared services oriented infrastructure (see Figure 4-4). From a development perspective, the shared - 13 -

services oriented architecture translates into an entirely new set of dynamics and economics for how ‘applications’ are built and maintained. Figure 4-4 Multi-Channel Integration: Shared Business Infrastructure

Multi-channel integration: Shared business infrastructure
Consistent bank customer experience
Same bank functionality across access points Channel Specific Infrastructure and Online BankAT Branc InterWAP/Dig.TV Intra-

CustomizaShared business logic and Infrastructure Open Standards Web technologies

On Demand Business

• • • •

Responsive in real-time Variable low cost structures Focused on what’s core and differentiating Resilient around the world, around the clock

• • • •

Integrated Built on open standards Virtualized Autonomic

Line of business dataSource: Actual customer configura-

Once the infrastructure has been installed and customized to fit the non-functional requirements of the enterprise, business functions may be added one at a time, any time and in a well disciplined manner (see Figure 4-5).

Figure 4-5 Building Incremental Solutions

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Customize and extend infrastructure:

● ● ● ● ● ● ● ● ● ●

Implement Business Processes:

Security mechanisms Specialized services (encryption, validations…) Journaling Store and Forward Communication Services Hardware devices Print actions Non-repetitive operations Special GUI Widgets
Standards compliant service oriented infrastruc-

● ● ● ●

Build/reuse the views Build presentation operations Build/reuse business operations Build/reuse host transactions

Building the solution incrementally

Desktop Layout

Since these business functions are built on a shared set of services, the effort to develop new business functions becomes progressively less. Customers have seen cost and time savings from this development model starting at 10-20% and accelerating to 80%.

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5 Justifying SOA
As with any new technology, businesses need to feel reasonably comfortable that their investment will end up being a wise business decision, and yield significant tangible or intangible returns for the enterprise. In the case of SOA, it is really not a new technology but rather a previously proven architectural schema that has been reinvigorated by a new set of technologies that implement it – namely, Web Services. Many customers use the terms SOA and Web Services interchangeably. While technically inaccurate, from the perspective of SOA justification, the two are entwined. Consider the following statements: ________________________________________________________________________ “Organizations that have implemented a services oriented architecture will use web services to get more reuse out of the integration already built and be primarily focused on testing the standards and measuring how much they can additionally save in reuse and maintenance. Those companies that have not implemented a services oriented architecture will be looking to use web services to consolidate systems, build lightweight applications to solve integrated channel management solutions and test standards. From experimenting with web services, those organizations will see the benefits of reuse and move to an SOA to provide business flexibility and lower their cost of ongoing maintenance. The results for both will be the same: web services will enable organizations to migrate to service oriented architectures. It’s only a matter of time.” 4 ________________________________________________________________________ “85% of the firms we surveyed plan on using Web services, up from 71% a year ago (August 2002)… Only 3% of firms stated that they are unlikely to adopt any new Web services.” 5 Note: 76% of the survey respondents for Forester were from firms with annual revenues of greater than $1 Billion. The remaining respondents represented firms with annual revenues from $500 Million to $1 Billion. ________________________________________________________________________ “Incremental evolution where Web services are leveraged to realize the benefits of lowcost integration and service-oriented architecture (SOA) is what companies have embraced… All of our recent surveys show that the clear majority of those surveyed have adopted the technology. As a result, Web services will become more than just a check-off item for enterprises when evaluating vendor products: Enterprise architects will prefer products that are based on SOA and designed using service-based design.” 6 ________________________________________________________________________

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“Business Value of Web Services,” ©2003 CommerceNet, pp. 44-45 “Web Services Reach the Big Time,” Forrester Research, September 11, 2003 6 “Market Overview 2004: Web Services Solutions,” Giga Information Group, December 22, 2003 http://w3-3.ibm.com/software/analyst/articles/giga/gigawebsol.html

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“WS have begun to become mainstream, and the impact of the technology is beginning to be felt outside the world of traditional platforms, developers and integrators – into the world of business, business applications and deployment. The emergence of serviceoriented business applications (SOBAs) is driving this. SOBAs can be transformations of existing applications, new applications, and suites of applications or composite groups of applications that incorporate a service-oriented architecture (SOA)-centric design through modular, open and composite-based structures. Thus far, the success of WS has driven the emergence of SOBAs, which will have a significant business impact.” 7 ________________________________________________________________________ “Web services have become the most important technology enabler for SOA. Web services is only one way to implement an SOA, but it is certainly the most important of the several choices.” 8 ________________________________________________________________________ “Enterprises are under pressure to reduce the cost of applications and to shorten the time it takes to develop or modify applications. This drives increased interest in reusing data and code through service-oriented architecture and Web services.” 9 ________________________________________________________________________ “Through 2012, Web services will be in production in virtually all Global 2000 organizations. By 2005, Web services standardization will expand in scope to encompass the entire software environment and life cycle, from infrastructure (grid standards) to business process semantic standards, including some development/life-cycle and tool standards, to system and service management standards. Applications of service-oriented architectures using these standards will grow rapidly during 2004-2007.” 10 ________________________________________________________________________ By year-end 2005 Enterprises will deploy Web Services management platforms in 65% or more of major Web Services implementations (0.7 probability). 11 ________________________________________________________________________

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“Magic Quadrant for WS Major Vendor Influence, 3Q03,” Gartner, September 15, 2003. http://w3-3.ibm.com/software/analyst/articles/gartner/garvendorflumq 8 “Market Overview 2004: Web Services Solutions,” Giga Information Group, December 22, 2003 http://w33.ibm.com/software/analyst/articles/giga/gigawebsol.html 9 “Client Issues for Application Integration,” Gartner, November 13, 2003. http://w3-3.ibm.com/software/analyst/articles/gartner/garissueclients.html 10 “Integration & Development Strategies 2004/05 META Trends,” META Group Research, January 27, 2004 http://www.metagroup.com Requires creating a free ID/password. Then search for document. 11 “Predicts 2004: Web Services Drive Market Convergence,” Gartner, November 4, 2003. For a copy of the document, contact the Information Center at 914-642-6577 (t/l 224), or send an email to [email protected] http://w3.marketiq.ibm.com/tmarketiq.nsf/MiscDoc/Information+Center

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By year-end 2006 More than 70% of new applications will use Web Services in some part of their architecture (0.8 probability). Web Services standards and technologies will influence more than 60% of the $527 billion IT professional services market (0.7 probability). Note: This represents a CAGR of 7.6% since 2002

By year-end 2007 IT professional services will account for more than 50% of the revenue of large enterprise application software vendors, creating a convergence of the software and IT professional services markets (0.7 probability). 11

By year-end 2008 Services-oriented development of applications plus SOBAs (Services Oriented Business Application) will enable Type A enterprises to increase programmer productivity by more than 100% (0.8 probability). “SOA and Web services will be implemented together in more than 75% of new SOA or Web services projects (0.7 probability).” 12 “SOA will be a prevailing software engineering practice, ending the 40-year domination of monolithic software architecture (0.7 probability).”

“75% of SI projects will use SOBAs in place of traditional enterprise application software (0.8 probability)” 13 ________________________________________________________________________ From the statements above it becomes apparent that in order to justify SOA, we need to consider the justification of Web Services at the same time. Therefore, the following sections will highlight SOA benefits with a Web Services flair.

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“Service-Oriented Architecture: Mainstream Straight Ahead,” Gartner, April 16, 2003. http://knowledgegate.bitpipe.com/data/proxy?id=1050667244_527 13 “Service-Oriented Architectures Alter IT Services Market,” Gartner, February 3, 2004. http://w33.ibm.com/software/analyst/articles/gartner/garaltersoa.html

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5.1 The Business Value and Benefits of SOA SOA & Web services have the potential to free up money within an organization, by driving down integration costs, reducing expensive functionality duplication, and providing new revenue streams from existing functionality or data. Company data and processes can now be the basis for a competitive differentiator and new product or service offerings. In the past, companies wanted to unlock the value of tangible assets by spinning them off. The same can now be done with non-strategic Web service competencies. For instance, new subscription or pay-per-use business models are now possible. Even a project to study the possibility of using an SOA can be of great help to an enterprise because it can aid in: • Determining the company’s core competencies • Identifying an outsourcing strategy (Background and Liability Assets – see section 6) • Defining a plan to reduce complexity (i.e. cost) of the company’s shared IT infrastructure needs with its trading partner community 5.1.1 Agility: the Biggest SOA Business Benefit Enterprises are able to achieve several business benefits from SOAs, but the most important is business agility. There are many other business and technical benefits for an SOA but none as important as the capability to respond quickly and effectively to change and to leverage that change to competitive advantage. Change comes in many forms: in the marketplace, in technology, in the world at large. Companies that make effective use of a changing environment compete more effectively and thrive in any business climate. They are particularly adept in tough economic times, often finding opportunities in the midst of chaos. Information technology is at the center of business agility discussions. Achieving agility begins with removing the bottlenecks that impede it, and IT is usually where the bottlenecks are. In fact, companies are so used to the fact that IT creates a bottleneck within their organization that technology and its limitations often drive business decisions. To meet the needs of the agile enterprise, then, an SOA has the following core principles: • The business drives the services and the services drive the technology - In essence, services act as a layer of abstraction between the business and the technology. From the business perspective, the services represent the available software functionality, so that the line-of-business can focus on business goals, not systems and applications. Business agility is the fundamental business requirement - The ability to respond to changing requirements is the new "meta-requirement" for business. The entire architecture, from the hardware on up, must support the business agility requirement. Any bottleneck in an SOA implementation can substantially reduce the flexibility of the entire IT environment, and hence the business as well. A successful SOA is always changing – To visualize how an SOA is supposed to work, it is better to think of a living organism rather than the “building a house” metaphor that gave software architecture its name. An IT environment is undergoing constant change, and as a result, the work of the service oriented architect is never done. House-building assumes a state of completion and the ability to craft a design that will hold firm over - 19 -

•

•

time. For the architect used to building houses, tending a living organism requires a new way of thinking.14 Agility will be enhanced as services are used to remove the constraints of a static IT infrastructure, creating greater flexibility for strategic planning. Over time the world of large, monolithic software installations may well be replaced by just-in-time systems implementation, where business applications are implemented using Web services from a portfolio of internally and externally published services. Just-in-time system implementations could support new business models in which rapid IT response to changing business requirements is an accepted norm.15 An SOA provides business agility in three ways: loose coupling, reuse, and extensibility. 5.1.1.1 Business Agility SOA Catalyst: Loosely Coupled Loosely-coupled services are ones that no longer require the same technological implementation at each end of the connection. A simple mechanism connects applications regardless of the devices they use or their location. Table 5-1 Loosely Coupled Benefits of an SOA16 Business Benefit Enables real-time business capabilities Changes the way IT costs are distributed Increases the feasibility of real-time, remote access to original source of information which then provides up-to-the-minute information to the process that called it Leads to a better dialogue between the CIO and line of business executives by forcing IT workers to think in terms of business, and not exclusively the technical, architecture Integration projects are driven by business needs rather than technological possibilities By exposing and sharing information across once-siloed applications/departments, companies can extract more business performance data in real time, improving business intelligence Improves time to market as connections to partners and customers can be made faster,
14 15

IT Benefit Lowers the cost of connection Reduces complexity of integration Delivers platform and technology independence. No longer will the business need to select a specific platform, in order to integrate with established systems IT agility is improved by deploying smaller, standards-based business applications only as they are needed and avoiding large, monolithic software applications that often are not fully utilized Support for multiple client types Building loosely-coupled services enforces a discipline on developers because they can’t make assumptions about the system on the other end because they don’t control both ends as they once did Change IT architect’s attitude from, “If you’ve seen one project, you’ve only seen

“Growing an agile Service-Oriented Architecture,” Zapthink, September 2003. “Executive’s Guide to Web Services,” ©2003, Eric A. Marks & Mark J. Werrell, p. 90. 16 Excerpts follow from “Web Services Roadmap,” CBDI, September 22, 2003, pp. 33-39, http://w33.ibm.com/software/analyst/articles/images/interactlogo.gif

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even dynamically

Makes it easier for partners to do business with your company Makes it easier for customers to find you and your services Makes it easier to find new partners and services Digital dashboards can provide clear visibility into operating data for executive review Enables less technical business people (e.g. a business analyst) to “assemble” software solutions without the need for coding An SOA backbone allows costs to be reported very granularity. Departments can be held more accountable.

one project.” to “If you’ve seen one project, then the results may be used in another project.” Higher availability Reduces development effort as consumption of service is largely automated Reduced impact of change Services can be consumed dynamically without developer intervention Eliminates need to rip and replace

Simplified middleware

Facilitates grid computing. If services are on separate machines in different locations, the workload is being distributed Allows for IT governance model that balances centralization with the uncontrolled client-funded approaches Better testing with fewer defects Enabler for process modeling and automation at an enterprise level Data is distributed not duplicated Much lower cost of maintenance Easily incorporate new technologies into SOA, reducing risk and expense while speeding development of new applications Better concurrent development Decreased implementation time Response to changes can be automated Not locked into proprietary technology

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5.1.1.2 Business Agility SOA Catalyst: Reuse Reuse is one of the most significant advantages of an SOA. The reuse of software, hardware, processes, code, services and infrastructure provides some of the most measurable factors for an SOA ROI calculation. See “ROI for SOA” section later in this document. Dr. Jeffrey S. Poulin is a recognized and much quoted authority on software reuse. His book, Measuring Software Reuse, is a watershed work in this area. In his presentation entitled, Selling Software Reuse to Management, he states; “We believe in "truth in metrics." Realistic and honest assumptions combined with a simple, easy to understand business model provide all the necessary evidence to sell reuse to management. Our model starts by asking "how much effort could you save by reusing something rather than writing it yourself?" The answers might span a wide range, usually from 50-100%, and depend heavily on factors such as the environment and type of application. Based on a plethora of hard data we find a reasonable savings due to reuse to lie right around 80% (allowing 20% effort for locating, understanding. and integrating the reused components). At an industry average cost to develop new software at around $100 per line, a Development Cost voidance of 80% will get management's attention every time.”17

17

“Selling Software Reuse to Management,” Jeffrey S. Poulin, 5th International Conference on Software Reuse. http://home.stny.rr.com/jeffreypoulin/Papers/JCIS98/sellingreuse.html

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Table 5-2 Reuse Benefits of an SOA18 Business Benefit Processes are more consistent Increased quality through competition on implementation A wide choice of suppliers Hardware, software, data and process assets are all reusable Reduced impact of change Focus is on business processes rather than technical implementation Decreased cost of business integration System change is not a constraint on business change With an SOA backbone, applications and infrastructure can be viewed as a portfolio of assets SOAs new flexibility is an asset for innovation not a constraint on change. Publish once, consume many times IT Benefit Eliminates need to rip and replace Reduced cost through commoditization Cost savings through consolidation Use industry standard protocols with universal support Broad applicability reduces the number of protocols, tools, skills, etc. required Consistent approach in all scenarios Common infrastructure can be leveraged across all scenarios – e.g. security With fewer application interfaces, maintenance is greatly reduced Infrastructure managers can begin to realize incremental value of reuse while offering tangible incentive for developers to begin to use services in their own applications Leverages the Internet and other existing transport mechanisms (whether in-house or external) for low cost communications Code is mobile

5.1.1.3 Business Agility SOA Catalyst: Extensibility Extensibility is defined by Webster’s as “the ability to enlarge scope or operation.” One of the primary business benefits of SOA is the ability to easily expand internal operations with new functions and to easily access organizations outside the enterprise. Over the years the interaction with trading partners has gone thru a few iterations. The goals of B2B have changed from reduced transaction costs to improved process efficiencies to finally the SOA world of connection ease.

18

Excerpts follow from “Web Services Roadmap,” CBDI, September 22, 2003, pp. 33-39, http://w3-3.ibm.com/software/analyst/articles/images/interactlogo.gif

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Figure 5-1 Business interaction models approaches compared Traditional EDI or B2B Marketplace Architecture SOA Approach

Integrate point to point

Integrate once to the hub Integrate once to the Network Subscribe to limited services Publish service to others Subscribe to others

Business services are about the provisioning and consumption of business interactions. Understanding what is contextual and what is core is essential. A business service is a process or subprocess within or between enterprises. Defining a service and configuring it to be customerspecific is what business services are about. SOA and Web services technology can be utilized to enable enterprises to provision and consume business services. The technology can be utilized to enable enterprises to: • Provision: Create business services that leverage existing core competencies of companies that can be offered to existing or new trading partners. • Consume: Consume business services from another trading partner that they view as better suited to provide such a service (i.e. Outsource background liability processes to an organization for which they are an identity asset – see section 6). In extending outward from the enterprise an SOA can significantly aid in reducing costs. “Enterprises attempting to further justify eBusiness initiatives look to web services technologies to enable a lower cost to connect. (SOAs provide up to a 30 percent reduction in B2Bi investment). Examples include driving more transaction throughput from existing trading partners and adding more trading partners to existing processes. Enterprises wanting to create new sources of value and revenue are looking at investment of $250K to $2M to launch new services ventures, either as consumers or producers of outsourced services.” 19

19

“Business Value of Web Services,” CommerceNet, March 2003

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Table 5-3 Extensibility Benefits of an SOA20 Business Benefit Available to all sizes of organizations, lowers barriers to entry Not industry specific IT Benefit Same technology can be used for internal or external connections Leverage ubiquitous Internet protocols and infrastructure Leverage existing transport infrastructure Deliver Web services over reliable, well tested, robust, fast transport mechanisms

Country and language requirements eased Low cost means limitless small partners, suppliers or a branch network can now be integrated Supports globalization and the integration Options for both internal and external Web of geographically dispersed organizations services Mobile devices with wide or narrow bandwidth can be integrated with established systems or utilized for the first time Customer, partner & employee enablement Reduce the cost of establishing and using 3rd party marketplaces. Multiple buyers and sellers can congregate at will to exchange goods and services. Enables and facilitates new business models Transition software deployment models from big-bang, high-footprint implementations to just-in-time applications that are appropriate to the business challenge being addressed. Participants can upgrade or introduce new products/services on the fly for an instant or for an extended period Makes it easier to add or change partners By easing connectivity, data exchange and process integration between disparate systems, Merger & Acquisition activity can be accelerated Exposed services bring possibility of new revenue sources Transcend organizational and political boundaries Companies can integrate on the fly for a single or multiple instances

20

Excerpts follow from “Web Services Roadmap,” CBDI, September 22, 2003, pp. 33-39, http://w3-3.ibm.com/software/analyst/articles/images/interactlogo.gif

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SOA allows greater freedom to outsource not only IT functions but also entire parts of the organization to specialized providers, reducing the scope of the organization and enabling it to concentrate on core competencies. Exposing core competencies as services will foster better customer relationships as data is easily viewed and shared. SOA and Web services make plumbing (infrastructure) ubiquitous. With ubiquitous plumbing, business services can be provisioned and offered to any trading partner. Enterprises are deploying Web services in the context of migrating to an SOA to drive more connections with their trading partners, which can make a better case for ROI. Lower connection costs are driving the case. One last thought on SOA benefits. Right now the business climate is favorable to Web services and SOA. Increasing positive (see analyst’s research throughout this section) exposure makes getting executive project buy-in simpler. The point is this: now is the time to talk to your organization about SOA.

5.2 ROI for SOA A McKenna Group study found that companies were most successful with Web-based applications when they spent $200,000 or more on their projects. This included the costs associated with hardware, software, and services. It did not include the costs of personnel. McKenna also concluded that there was a definite correlation between the size of the Web investment and the application’s return on investment. In other words, the larger the investment, the greater the probability of a larger return on investment. Interestingly, the applications which provided the lowest ROI are the most popular Web-based applications today (e-mail, workflow, product configurators). The applications with the best ROI (Figure 5-2) were those such as an electronic catalog, transaction processing, and legacy integration. These were the most likely to generate revenue.21 Figure 5-2 Internet Return on Investment for a McKenna Group study

While ROI is an illusive goal, SOA and Web services are producing incredible tangible results.

21

“The Business Case for e-business,” Keith Rutledge, pp 74-75.

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5.2.1 Customer & Analyst Evaluation of SOA ROI Here are what some of the analysts, consultants and customers have to say about ROI for SOA and Web services. ________________________________________________________________________ “The business value of IT comes from the ability to conduct business processes more reliably, faster and at lower cost, and to control inventories, increase revenue, reduce time to market, improve customer service and provide information that enables better decisions. However, once any new initiative is implemented, the value becomes embedded in the process, and unless pre- and post-implementation metrics are clearly defined, it becomes impossible to measure and report the value of a new application. What remains apparent are the ongoing support costs.” 22 ________________________________________________________________________ “More than 20% of enterprises will avoid establishing a strategy for Web services use until the ROI is predictable, even though such procrastination will stifle competitive advantage (0.7 probability)” 23 ________________________________________________________________________ “Although leading economists are forecasting a robust economic recovery in the US (projected full recovery in 2H04), CIO’s will continue to be under pressure to communicate IT investment value to the business. CIO’s should consider the EVA (economic value added) concept to calculate the real costs of IT spending. Integrating the total cost of capital employed by using the EVA formula of WACC (Weighted Average Cost of Capital) x Capital Employed in the IT scorecard can help the business visualize the IT ROI.” 24 ________________________________________________________________________ “Enterprises that want to level the walls separating dissimilar applications in 2004 will turn to service-oriented business applications (SOBAs) to do so. SOBAs are business applications designed to work in and among emerging service-oriented architectures (SOAs)….Type A enterprises (aggressive adopters of technology) will notice the initial benefits of composite SOBAs [Service-Oriented Business Applications] within 6 months of implementation, and will achieve a rapid ROI within 12 months of investment” 25 ________________________________________________________________________ “Don Buskard, Senior VP & CTO of AXA Financial states “the benefits of easier integration and increased agility lead to greater ROI. Buskard says he’s achieved a 200 percent return on his SOA investment. One of AXA Financial’s most popular SOA-based services is Get Client, in which any front-end app can issue a command and, after probing around
22 23

“The Elusive Business Value of IT,” Gartner, August 2, 2002. See http://www.gartner.com “How Web Services Provide ROI,” Gartner, May 30, 2003. http://knowledgegate.bitpipe.com/data/proxy?id=1054555247_702 24 “Economic Indicators Up, But CIOs Remain Under Pressure,” META Group Research, December 23, 2003. http://www.metagroup.com/us/displayArticle.do?oid=45902 25 “Service-Oriented Business Applications Break Down Barriers,” Gartner, February 17, 2004. See http://www.gartner.com

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the legacy systems, come back with a complete picture of a customer’s investments. Buskard says that Get Client is one example of how AXA achieves its ROI – developers design services to be generic enough that they can work with an array of front-facing systems, reducing development time and freeing developers to spend more time on business solutions. In addition, IT workers can easily incorporate new technologies into the SOA, reducing risk and expense while speeding development of new applications” 26 ________________________________________________________________________ “How much effort could you save by reusing something rather than writing it yourself? Typical answers span a wide range (usually from 50% to 100% savings) and depend on factors related to your environment and existing applications. With this in mind (and based on a lot of hard data), we estimate that a reasonable savings due to reuse is approximately 80% of the cost needed to develop the same software development asset (SDA) for one-time use. At an industry-average cost to develop new software of around $100 per line, this means that every 1,000 lines of reused code yields a Development Cost Avoidance of $80,000!.... A service-oriented architecture requires developers to design services that have the proper granularity and generality for reuse.” 27 ________________________________________________________________________ “Take for example a prominent investment firm that built an enterprise-class SOA to expose thousands of mainframe transactions. Instead of gradually rolling out Services, they decided to build an SOA that offered Web Services that were discoverable in a UDDI registry. They coded thousands of Services in directly in COBOL to provide interfaces to existing CICS transactions. This company improved the response times for CICS transactions by 10 to 20 times, by building a sophisticated caching mechanism that brought information from the mainframes into a centralized location. They also increased throughput by a factor of 10 times, and reduced the percentage of cost for infrastructure and integration from 90% to 65%, increasing the percentage devoted to business logic to 35%, by migrating middleware functionality from Intel-based servers to Linux virtual environments on the mainframe. This migration also reduced software licensing costs. Finally, they reduced the time to write programs to get data off of mainframe from 3-4 months to a matter of minutes, by exposing CICS transactions as Web Services that were discoverable via a UDDI registry.” 28 ________________________________________________________________________

26

“What you need to know about Service-Oriented Architecture,” CIO Magazine, Jan 15, 2004. http://www.cio.com/archive/011504/soa.html 27 “The business case for software reuse,” Jeffrey Poulin and Brent Carlson, Computerworld, February 2, 2004, http://www.computerworld.com/managementtopics/roi/story/0,10801,89602,00.html 28 “The Path to Successful Web Services: Navigating the Pitfalls,” Zapthink, October 2003. http://www.zapthink.com/report.html?id=WP-0119

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5.2.2 Financial Return IDC conducted a study in 2002 with in-depth interviews of seven IBM customers implementing Web Services. The overall results of the analysis were:
“On average, major benefits projected over three years include a reduction in costs of $39.7 million on an investment of $1.8 million, 22% faster time to deployment of key new applications, and an increase of 47% in developer efficiency.”

For most, time to market was the key driver. The ability to deliver services online to employees, customers, partners, and suppliers quickly and easily, using simple interfaces across disparate systems, holds universal appeal. In addition, the ability of external parties to manage their own account information via a self-service model was also valued. The IDC study29 also found: • On average, developers became 47% more efficient and companies were able to save $2.2 million annually through reallocation of developer assets or meeting increased demand for applications without hiring additional developers. In addition, companies with call centers were able to increase the efficiency of their operations by 15%. Because Web services are standards-based, it also protected prior investments in technology. Companies were not locked into specific service or platform providers. Investment estimates from each organization interviewed found that companies spent, on average, $6.76 per user for their Web services projects. Costs ranged from $0.17 to $17.50 per user. Users were defined as anyone in contact with the applications launched via Web services and included employees, partners, distributors, consortia members, customers, and regulated companies.

•

5.2.2.1 Real Numbers from IBM Customers The following are some data collected from IBM customers showing the financial returns of Web services: • • One large financial services company was able to save three weeks of time (2,700 hours) and $170,000 in costs by introducing new applications via Web services. An online retailer reduced the time required to set up the extranet relationships critical to getting its business off the ground from six months to two months. This time savings allowed the company to gain four additional months of revenue. For this online retailer, the competitive advantage came from being first to market. A medical service replaced a paper-based forms process where medical forms were sent in for verification. In automating this business process, its partner companies were able to reduce the time required to process claims by 50% through the elimination of paper handling. Many members were able to raise productive time by approximately 2,400 hours annually, resulting in collective savings of $1.1 million. The increase in productivity

•

29

The complete study can be found at http://www-306.ibm.com/software/solutions/webservices/pdf/May13_IBM_WebServices.pdf

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had other significant benefits as well that could not be measured directly. For example, many clerical errors were eliminated and lost documents due to misfilings and misroutings were reduced. Employees had more time to review forms and implement qualitycontrol measures, which resulted in more accurate work, faster turnaround, and higher customer satisfaction. • An online retailer estimates that its revenue increased by 2% due to its distributors being able to create better B2C applications. The customer has only 10 retail stores, and it generates about 80% of its business from online sales. Web services technology lets the company get its distributors online faster by using simple interfaces, accelerating time to market. Setup time for initiating extranet relationships has been reduced by 33%, going from one year to eight months. Since Web services can be deployed using industry standards, an added benefit has been that the technical staff among its distributors is more eager to build applications than in the recent past. A government agency used a Web-enabled ecommerce system to standardize and automate the reporting format and data requirements for the companies that it regulates. In turn, the automation increased the efficiency of the government agency and the companies being regulated by 20–30%. Today, only 10–25% of the companies are involved, and the government agency estimates that by the time all companies are part of the system, it will have avoided hiring 10–12 people to monitor regulatory compliance An online retailer now has more of its distributors using online systems and estimates that a significant portion of its call center operation, about 100 people, are approximately 25% more efficient. The ability to reuse software through a Web services architecture makes feature exposure easier across company borders for this company's 200 developers. As a direct result, 50 developers will become 30% more productive over the near term.

•

•

5.2.2.2 Real Numbers from Public Sources The following are some real numbers from public sources on the financial returns of implementing SOA and Web services: AXA Financial: • • • Industry: $7.5 Billion insurance and financial services company Application: Services-based IT infrastructure “Sticking to a vision has its rewards. For AXA Financial Services LLc, those rewards add up to about $55 million, which is what IT executives figure they’ve saved by adhering to a blueprint for the services-based computing architecture the company first laid out in 1990….The bottom line is that AXA has saved a lot of money, says CIO Bill Levine. ‘We spent about $35 million on our architecture, and we estimate it would have cost us about $90 million to do the same thing had we not had an architecture in place,’ Levine says.” 30

30

“Building an IT architecture for the long term,” Computerworld, February 09, 2004.

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Providence Health System: • • Industry: 606,000-member system of hospitals, clinics and assisted-living complexes in the Northwest. Application: Providence is using Web Services to create “a network of reusable components that likely will save it more than $1 million per year, lead to better patient care and potentially save lives…The project will make medical and other records, which are spread across disparate systems, accessible to patients and physicians through portalbased applications.” The system “pulls together in no more than 3 seconds all the electronic medical records a patient’s primary care physician has stored…The system aggregates data from 27 physician offices.” “ ‘This is more of a business-based ROI based on what this new technology will allow physicians to do,’ says Mike Reagin, director of research and development. ‘It is significant to say that potentially making this technology available to physician can save us $700,000 per year.’ That’s in addition to savings Providence gets with its Profile Manager Web service introduced two years ago.” “As its Web services effort has evolved, Providence has created its version of a serviceoriented architecture (SOA) built on component collection that provides simple and reusable interfaces for incorporating patient data into an application.” 31

•

•

•

Bekins Company32: • • • Industry: Moving company Application: Logistics management Tonnage Broadcast Exchange (TBE)—the focus of this case study—solves a longstanding problem of how to tender shipping jobs to Bekins agents. In the past, jobs had to be tendered by phone or fax, often causing delays and sometimes a feeling of unfairness on the part of the agents. TBE automates this process by offering the opportunity to all qualified agents at the same time and enabling an agent to instantly claim the job (making it no longer available to anyone else). Reduced operating costs results in improving profitability by $1M. TBE enables Bekins to pass on lower-margin freight more efficiently to its business partners, reducing its carrying costs up to 2 percent while maintaining high levels of customer service. Reduced cycle time by 25 percent and improved customer satisfaction and loyalty. Through the use of advanced Web Services tools and technologies from IBM, which provided extensive sample code, Bekins shaved two thirds off the development cycle. This saved an estimated $100,000 compared to building the solution from scratch. 33

•

• •

31 32

“Web services project protects healthcare provider,” Network World, March 15, 2004. More IBM customer references are available at http://www306.ibm.com/software/solutions/webservices/applicationbriefs.html 33 IBM Application Brief http://www-306.ibm.com/software/solutions/webservices/pdf/bekins_appbrief.pdf

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Nintendo Australia: • • • Industry: PC and Video Game creator Application: Software maintenance “Odyssey has the potential to save Nintendo around one million Australian dollars over the course of four to five years,” Stroud [information technology (IT) Manager at Nintendo Australia] predicts. This year, Nintendo Australia stands to save about AUS$20,000 in maintenance costs alone on ancillary software packages that it no longer needs. For example, the distributor can generate all of its documents electronically, in PDF format, eliminating the need for paper processing, sending, archiving and storage facilities.34

Marks & Spencer35: • Industry: Retail merchandise • Application: Fraud detection • Result: Lowered development costs by 66%; 415%-1st year ROI Ingram Micro • Industry: Technology products wholesale distribution • Application: eCommerce/B2B integration with product retailer • Result: Lowered development time by 45% FedEx • Industry: Package delivery service • Application: Package tracking inquiry • Result: Cost of inquiry reduced from $2.14 average to $0.04 (est. volume > 600K tracking inquiries annually) Dollar Rent-A-Car: • Industry: Transportation rental • Application: Connect existing mainframe reservation system to access and integration with business partners (e.g. direct link to Southwest Airlines link) • Result: Opened up another sales channel that has yielded millions of additional rate requests and resulted in thousands of new rentals per year, equating too many millions of dollars in additional revenue. Ceridian: • Industry: Managed Human Resource services • Application: Build front-end to its legacy mainframe payroll processing system in 4 months replacing (6) front-end applications and 200 databases with a single user interface into a single Microsoft SQL Server 2000 database containing all customer data

34

IBM Application Brief ftp://ftp.software.ibm.com/software/websphere/webservices/10701281_nintendo_hr.pdf The next six company experiences come from http://www.rtr.com/Ready-to-Run_Software/Web_ServicesROI_Notes1.pdf
35

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•

Result: Greater than $12M per year savings in mainframe related costs; an additional several million dollars per year in employee productivity; increased customer satisfaction; complete elimination of 100 error-prone, manual processes.

TSYS, subsidiary of Synovus: • Industry: Electronic payment processing and financial services • Application: Workflow management solution • Result: Built in less than six months based on XML and Web Services, TSYS has delivered 80 percent lower software costs, 95 percent lower hardware costs, and a 50 percent reduction in time required to bring customers on-line; in addition, the 600 person call center achieved a 15% increase in productivity or an equivalent of $2.7M per year; most importantly, the new application allowed access to new market segments of the $600 billion business process outsourcing space. 5.2.3 Calculating SOA ROI In project justification and business case analysis, ROI is still usually considered the ultimate goal. With something as specific and unique as a customer’s business processes and SOA, it is impossible to have a one-size-fits-all formula. According to a ZDNet Tech Republic article36: “If any company is trying to sell you a fixed formula for return on investment of Web services, throw it out of the window,” said Gunjan Samtani, the divisional vice president for IT at UBS PaineWebber, a financial services firm. That’s because there’s no fixed formula. You must create a unique ROI formula because no one else knows the parameters of your project or understands the business of your company. Within your ROI formula, you must look beyond what the technology could provide. Samtani explained that you can’t depend on technology alone to produce the benefits calculated in any ROI matrix for Web services. And as with any ROI analysis, the benefits must be weighed against risk factors that will impact the bottom line. If every investment could be precisely quantified in terms of its return, the business wouldn't be taking enough risk, and competitors would gain the upper hand in innovation and value creation for their business partners, customers, and employees,” Samtani said.” However, that doesn’t mean there are not guidelines to estimating ROI. In the first part of this section, we will discuss some of the factors that should enter into an ROI calculation. In the second part, we will share with you the research and work that is currently going on in this area.

36

“ROI for Web services: Risk Factors,” Tec Republic, November 19, 2002. http://www.zdnet.com.au/insight/0,39023731,20270041,00.htm

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5.2.3.1 SOA ROI Factors37 There is little doubt that the first Web service is the hardest to implement. The cost and difficulty level in business process integration can be high, although this issue is typically small, and fades away with the implementation of subsequent Web services. Companies can, thereafter, enjoy the fruits of incremental cost reduction inherent in using XML-based standards and SOAs . Whatever the underlying technology for which ROI is being calculated, there is always a set of business and personnel factors that have a great impact on it. We cannot stress enough the fact that technology alone will not produce the quantifiable results and benefits as projected in any ROI matrix or calculation. Several business factors, such as the speed of rollout and systems adoption rate, play a critical role in determining the final numbers. How do you measure the ROI of an SOA or Web services? Well, there is a right way and a wrong way to measure ROI. The wrong way is to measure the time employees save in reduced paper work, or in revenue the company saves by reducing the need for data entry. The right way is to measure the amount of reduction in operational and developmental costs. The ROI on SOA and Web services comes from the increased operational efficiency and reduced costs that are achieved by streamlining and automating business processes, reduced application development cycle time, and increased reusability of applications in the form of services. Some of the benefits of SOA and Web services extend beyond the confines of the ROI Calculation. Measuring ROI for SOA and Web services presents a big obstacle irrespective of the model, because the new processes they bring to the firm are an important benefit; because these processes are new, existing measurement tools may miss those benefits. This argument is compounded by the fact that benefits from multi-year technology implementations are inherently difficult to measure. The factors to be used in the ROI calculation fall into three areas. 1) Costs and expenses 2) Technical benefits 3) Business benefits Costs and Expenses Here we examine the principal costs in the ROI calculation. 1) Hardware Requirements - Find out the difference in hardware requirements in developing an application based on Web Services and your current architecture. Look for the following parameters in the development, quality assurance, and production environments. o Number of servers required. o Configuration of the servers required. o Estimated percentage increase or decrease in the performance of the existing hardware through the usage of SOA.
37

“Return on Investment (ROI) and Web Services,” Gunjan Samtani & Dimple Sadhwani’s chapter in “Web Services Business Strategies and Architectures,” ©2002, pp 9-22

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o Estimated cost reduction or increment. o Estimated person-hour savings for the administration of reduced hardware. o Estimated increase in person-hour expenses due to increased hardware requirements. 2) Software Requirements o The support for Web services by your existing application servers and integration brokers, and whether other software is needed to support your SOA. o The cost of upgrading your current software. o The cost of bringing in new software. o Any associated additional operational costs. 3) Training Requirements o The total cost of training developers, architects, project managers, and system and network administrators on SOA, Web services and supporting tools and servers. 4) Network Bandwidth Requirements o Estimate the load that Web services via SOA put on your network bandwidth. o Calculate the investment that will be required to meet the additional network bandwidth requirement. o Determine the maintenance and ongoing operational expenses for the same. 5) Monitoring Tools o The investment required to buy and maintain additional monitoring tools. 6) Operational Costs and Vendor Consulting o Estimate SOA and Web services related software products installation, administration and configuration expenses. o Estimate the cost of external vendors or consultants throughout the project.

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Technical Benefits Here we examine the principal technical benefits in the ROI calculation. 7) Software Development Automation o Estimate the number of applications/systems that can reuse Web services. o Estimate the total software development savings in terms of person-hour effort through the usage of SOA. o Estimated savings in productivity. 8) Streamlining of Middleware Technology o Estimate the reduction in hardware expenses o Estimate the reduction in software expenses o Estimate the reduction in personnel expenses 9) Usage of Standards-based Integration o Estimate the total number of proprietary interfaces you will avoid building, deploying and maintaining if you use SOA and Web services. o Determine the savings in person-hours, hardware and software though the use of standards based interfaces. 10) Integration with Applications and Business Process Management o Estimate the total savings resulting through using a platform-neutral application integration technology. o Determine the savings of automating and orchestrating business processes as Web services through the SOA. 11) End of Duplication of Software Code Leading to Reusability o Estimate the total number of groups and the systems they manage that are working in silos. o Analyze how many of these systems and applications are redundant and overlap each other. o Calculate the savings (hardware, software and personnel) that would result from eliminating redundancy. o Calculate the savings (hardware, software, and personnel) that would result if the remaining useful systems can be exposed in a standard way. Keep in mind that the information of all the exposed interfaces can be published to a central repository, so that all the groups within the IT department can find and use them.

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Business Benefits Here we examine the business benefits in the ROI calculation. 12) End User Productivity – There is no direct formula for calculating increase of decrease in end user productivity. Try instead to measure factors such as the reduction in the amount of human intervention required by building an SOA and applications via Web services, the overall improvements in response time and the availability of applications. o Estimate the number of end users using the application in consideration. o Determine the percentage productivity increase in their performance. o Extrapolate that to the total cost savings through the usage of user oriented Web services. 13) Participation in Dynamic Business o Estimate the number of new business relationships. o Determine the percentage increase in the business revenues due to new, dynamic business relationships from using Web services via an SOA. 14) Collaborative Business Activities o Quantitatively calculate the cost efficiency resulting through collaborative commerce. o Measure the cost savings as a result of increased inter-enterprise visibility in the whole supply chain. o Project the revenue and expenses incurred in new product development through collaboration among companies of the same sector using Web services and SOA technology. 15) Better and Cheaper Customer Service o Estimate the increased revenue generated through targeting the marketing of products and services for each customer. o Measure the cost savings as a result of automated customer services done using Web services and SOA technology. 16) Other Benefits o Estimate the benefit of a faster time to market. o Estimate the increased process efficiency. o Estimate the increased efficiency through business process automation.

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Now that we have discussed all the costs and expenses along with the technical and business benefits of Web Services and SOA, it is time to apply the numbers to an ROI formula. We will arrive at the numbers through a series of simple steps: 1) Calculate the total cost of the implementation. Sum up all the expenses that we listed from point 1 through 6. 2) Determine the total savings resulting through the technical benefits by going through points 7 to 11. 3) Determine the increase in productivity, efficiency, and revenues through the business benefits, traverse through points 12 to 16. The last step is to categorize the results from Step 1 through 3 under the following headings: o Project costs including capital expenses, implementation labor, management and support, operations and contract expenses (A). o Project benefits including net tangible benefits (B).

Using the following formula, we apply the figures as follows: ROI for Web Services and SOA = (B - A)/ A * 100 The desired result for using Web Services and SOA will be if you get some or all of the following benefits: • • • • • • • Increased Revenue. Decreased Cost. Improved Efficiency. Higher Profitability. Shorter Payback Period. Higher IRR. Less Risk.

This scenario will make a business case for Web Services and SOA. It may be the case, however, that not all the factors listed above prove favorable. In this case, you will have to weigh all the options and make a decision based on the short and long-term goals.

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5.2.3.2 SOA ROI and Business Case Project The previous section is a simplistic view of ROI but it does highlight the areas to be measured. This still leaves us with the question, “How do I determine the numbers needed?” We too have been frustrated by the lack of a definitive method. Therefore, the IBM EIS (Enterprise Integration Solutions) team (the group bringing you this document) is currently actively involved in a project with IBM Research to determine ROI from a more formal perspective. This project also includes an effort to build a business case for SOA that can be used worldwide. In this section we will share some of our current thinking. Software Reuse Reuse is a key area in SOA and it appears to be our best option to quantitatively determine real dollar savings. There are a number of documented cases both internal and external demonstrating savings in reuse. Some examples include: o Nippon Electric Company (NEC) achieved 6.7 times higher productivity and 2.8 times better quality through 17% reuse. They improved software quality 5-10 times over a 7-year period through the use of unmodified reuse components in the domain of basic system software development and in the domain of communication switching systems. o GTE Corporation saved $14 million in costs of software development with reuse levels of 14%. o A study of 75 projects written in the Ada programming language in 15 firms, totaling over 30M lines of code (LOC), found reuse resulted in 10 times higher quality with reuse levels of 10-18%. o Toshiba saw a 20-30% reduction in defects per line of code with reuse levels of 60%. o Hewlett-Packard (HP) cited quality improvements on two projects of 76% and 24% defect reduction, 50% and 40% increases in productivity, and a 43% reduction in time-to-market with reuse levels up to 70%. o CAP-Netron documented over 90% reuse from reusable MIS "frames" using COBOL. o Raytheon achieved a 50% productivity increase in the MIS domain from 60% reuse using the COBOL programming language. o Software Architecture and Engineering, Inc. achieved 80-90% reuse in distributed applications using the C programming language. o A study of nine companies showed reuse led to 84% lower project costs, cycle time reduction of 70%, and reduced defects. 38

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“Measuring Software Reuse,” Jeffrey Poulin, ©1997, pp 6-7.

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IBM EIS and IBM Research are working together to integrate the following pieces of intellectual capital into one method/tool. o Well documented empirical formulas calculating software reuse savings. We are adapting these equations to SOA. o IBM Research’s mathematical model for supply chain called the “Business Value Modeling Tool.” It contains extensive financial measurements highly desirous by a CFO. We are currently revising this to a more general SOA model. o IBM WebSphere has an ROI model that compares IBM products to Microsoft’s .NET model to determine real world return. o IBM Application Management Services has a model showing the value of legacy application reuse. o IBM’s IT Optimization Center of Competency has invented the IT Value Model that assists in determining how IT investments affect business value. This model contains extensive formulas and equations to be evaluated for applicability. o Recently completed Component Based Models for seventeen (17) industries. The CBMs specifically identify business componentization for each industry. o IBM’s Life Sciences Solutions has a Pharmaceutical ROI model. This work relates specific industry executive concerns to IT strengths. It proves this by using WebSphere Business Integration Modeler to simulate the AS-IS and TO-BE processes and then perform a gap analysis. This tool could be modified for other industries. o We are also investigating some theories (and their corresponding equations) in the stock market options field. They deal with risk determination and they may have applicability in determining some of the intangible benefits of an SOA. SOA Business Case Along with the ROI model, we are constructing SOA business case templates to be used worldwide in conjunction with the ROI calculations.

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6 Processes as Assets (or Liabilities)
Any SOA discussion, by default, engenders a discussion on processes. The usual starting point for an SOA business discussion is in the process arena due to the typical requirement to integrate, or simplify, an area of the company. However, the concepts and ramifications of “process” can be tedious and boring to an executive. Therefore, to ease the conversation, we will show you how to present process in a different way – one more comfortable to understand from a business perspective. We will also list some “Rules of Thumb” to follow that are high-level, easy-to-remember, insights to aid in making basic process decisions. They are meant to be guidelines rather than hardand-fast rules. We then show you a quick way to determine what process might be a good candidate to use as the foundation of your SOA/Web services project. First, let’s look at the concept of treating processes as assets. This may seem a bit foreign at first, but in the enterprise body, if SOA is the skeleton, then processes represent the life blood. To justify an SOA model, you need to present the concepts surrounding “process” in a different light. You need to acclimate yourself to the idea that processes have business value as an asset. Therefore, as any other business asset, they must be managed, improved, measured, prioritized, and, in some cases, eliminated. It’s probably reasonable to bet that you never thought of a process as an asset. Process sounds like a business, technical or administrative method and asset conjures up a fiscal image. In the new virtual, integrated workplace they are entwined. To be successful in this new arena a company must commit to thinking of processes as actual business assets, or they will not be competitive. They may think their product is important, but it is a distant second to the process that produces it. Why? Because today, the process is the product. 6.1 The Importance of Process Process is a popular term right now, but does that make it important? It used to be that a business strategy and a hierarchical organization were all a company needed to be competitive. Change was something to be dealt with by reorganizing the tried-and-true hierarchy. Structure followed strategy. Today, processes have stepped to the forefront in an atmosphere where products have become commodities. Products were once distinguished by quality or performance. Now, these are basic minimums to even be a player in the game, and brand names don’t carry the balance sheet anymore. If something isn’t there to differentiate a company, the firm will quickly find itself an empty logo.

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What is that something? Whatever you sell to your customer has already been “qualitized” to the nth degree. So what’s left? It is the way you handle your customers, and the services you provide. Service is key, and services are processes. If you want to create or maintain a competitive advantage, you need to have a service advantage, which means you need a process advantage. In other words, the process has become the product.
Rule of Thumb: The process is the product, tuned to satisfy the customer and maximize invested capital.

Old world hierarchies are accustomed to competing with products they can touch and feel. Today, it is the process that is important—the way a product is manufactured, the attitude of the salesperson, the responsiveness of the help desk, or the follow-up after the sale. Processes are all around us and we have worked with them for years. So why is everyone suddenly actively talking about them now? One reason is a reversal in the scope of work between the Information Technology (IT) group and the rest of the company. In the old world hierarchy, the scope of work (the process) of nonIT groups was considerably different from that of IT itself. Departments were enmeshed in methods that concentrated on a single, event-driven task. The order entry department would only take an order, and then pass it off to accounting that would only do the billing, and so on. Customers asking about the status of their orders would have to deal with multiple departments, each knowing only a small part of the answer. IT could help solve these cross-functional queries because their management charter required crossing traditional structural boundaries. IT became the only group that handled multiple interdepartmental tasks. When a business unit asked them to build a computer program, IT would take the requirements from all affected parties, balance it against other company needs, and, eventually, hand over the finished software. Today, IT can no longer fulfill the boundary-crossing, trans-silo function alone. What has happened is that IT and non-IT departments have switched process roles. This means boundarycrossing will be sanctioned, accepted, and, ultimately, commonplace throughout the organization. Consequently, old processes will be eliminated or streamlined and new processes built to address customer, competition and capital investment issues. All the right things. At the same time, IT realizes it must also take a different view of processes. For example, rather than building new software for each department, it is more manageable and economical to reuse existing programs from any group in the company. With today’s technology, these existing programs, that represent pieces of the process, can be integrated across the organizational silos for a complete end-to-end process. This does not mean the role of IT has diminished. If anything, its role has become even more important because somebody has to know what pieces to buy, what pieces to make, what pieces to reuse, and how to put them all together. Enter now, Web Services, Service Oriented Architecture and the Enterprise Services Bus. These entities together, form the proven and reliable business catalyst to implement cross- boundary integrated processes and create the optimum enterprise business value.

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6.2 Asset and Liability Processes 39 An asset process is one in which a significant amount of capital has been invested with the intention of adding economic value. Conversely, a liability process is one that ties up a lot of capital and generates a negative economic value.
Rule of Thumb: A company process is either an economic asset or economic liability, and must be treated as such.

It is critically important to consider processes as assets or liabilities in order to properly manage, promote, integrate, or eliminate them. Today’s workplace is influenced by: • • • The choice of the right process to integrate, usually made by ranking the process’ relative importance, or irrelevance, to the firm’s strategic goals. The proper use of capital. Value perceptions by shareholders and potential investors.
Rule of Thumb: Integrating the wrong process correctly is just as bad as integrating the right process incorrectly. Integrate the right process correctly.

Executing a process well does not necessarily mean it is good for the company, or by extension valuable for the company’s investors. If a process is using more capital than the amount of economic value add it generates, it simply will not be beneficial for the firm. If this situation (more capital going in than is created) continues, investors will eventually realize it and drive the stock price down. 6.3 Identity Assets (or Liabilities) Identity processes define “who” a company is, what makes it different and why it stands out. Examples of identity assets are Federal Express’ guaranteed next day mail service and Dominos’ Pizza (a US firm) 30-minute delivery policy. You know these companies by these traits. It’s their claim to fame.
Rule of Thumb: Every company with a competitive advantage has an identity asset that doesn’t necessarily appear on a financial statement.

One of the only problems with identity assets is that they have this unique property of turning into identity liabilities if the asset is not safeguarded. As court judgments against a few Dominos’ pizza delivery drivers for recklessness demonstrate. The once positive characteristic can quickly become a negative if the company is not careful to protect it.
Rule of Thumb: Identity assets are the best places to begin a Web Services process integration project.

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Much of what follows was influenced by conversations with the noted author and consultant, Peter G.W. Keen and his book, “The Process Edge.”

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6.4 Background Assets (or Liabilities) Background processes are carried out by the firm as a normal part of business, e.g., administration, paperwork, accounting, facilities, etc. They are dominated by easily definable workflows and usually, mountains of waste. As such, they are the first candidates examined for possible alteration. While changing a background process may indeed generate economic value add, is it the most expeditious use of capital? Could investing the capital in an identity process bring more value to the company? Selecting a background process to integrate is often a tactical move. Think strategically. Look to identity assets.
Rule of Thumb: Outsource background liability processes to an organization for which they are an identity asset.

One last thing concerning asset/liability processes. When you start to evaluate your company’s processes, take note of your viewpoint. You or your department might think a process is an asset, but your customers and shareholders may actually view it as a liability. Don’t deceive yourself into believing that, just because your company does something well and you feel good about it, investors and clients will feel the same way. Don’t think in terms of what the customer should want, but in terms of what the customer does want. And if you don’t know, find out.
Rule of Thumb: Integrated processes are real economic assets to a company.

6.5 Tired and Broken Processes: The Worst Kind Have you ever seen a person sitting in front of a computer screen, typing the data from another computer’s printout? Doesn’t this seem to be the height of inefficiency and wastefulness? Transcribing is not even a resume enhancing skill. Why can’t the two computers talk to each other and exchange the information in seconds versus the hours required for manual entry? This is an extreme example of a tired process. People in Southern California have been blessed with more than their share of natural disasters lately. The summers of 1993 and 2003 were especially bad fire years. In 1993 the town of Laguna Beach was hit hard. One of the most incredible stories to come out of the fire is that much of the damage could have been averted if a process had been simplified. California National Guard fire-fighting planes and a dozen US Marine helicopters sat on the ground only 20 miles from the fire because the process to activate them was so complicated. Pilots manned the airplanes but were denied permission to take off because local civilian clearance could not be obtained. By the time they made it through the paper process, over 300 homes had been destroyed. That’s an example of a broken process. Tired and broken processes need to be immediately investigated as to their relative worth to the company. You will probably find many of them unnecessary. Others can be integrated into an effective end-to-end process that satisfies customer desires. It’s disappointing to see valuable capital wasted on useless processes because nobody wants to take the political step to junk them. If you ever need motivation to attack such a process, think of those planes sitting on the runway while Laguna Beach burned.

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6.6 Choosing the Right Process to Integrate Today, unfortunately, processes that don’t significantly affect the company’s strategic goals are being selected for integration. Processes are chosen based more on workflows than capital improvement. Streamlining workflows can be exactly the right thing to do for a specific department, but a waste of time and money as far as the corporate bottom line is concerned. Many integration efforts to date have gotten the wrong process right. You need to get the right process right.
Rule of Thumb: The most beneficial process integration project is one that eliminates, streamlines, consolidates, interlinks, franchises, outsources or changes the appropriate process(es).

Our integrated process project Rule of Thumb begs two questions: 1) What is an appropriate process? 2) How do we find it? Let’s attack the first one. To know if a process is right or appropriate to integrate, you need to examine: A. How strategic is it to the long-range plans of the company? B. How much capital is invested in it? C. Is it currently producing economic value added? D. How many organizational boundaries does it cross? The answers to these questions above will help narrow the number of processes to consider for integration. They give you an idea of which processes really make a difference in your company and the range of capital and effort required to change one (see Figure 6-1). Notice that workflow is not contained in the question set. This is not to say that workflow is unimportant—in many cases it is. However, too often people rush to analyze the work path of a process because it is easy to document. They then jump to the conclusion that shortening it will bring benefits. Getting their administrative form through the system in half the time may be beneficial to the specific department generating it, but is it perceived as valuable by people outside the company? Customers and shareholders, people like that? Benefits are not value. A process that can generate real economic value add by its elimination, streamlining, consolidation, interlinking, franchising or outsourcing, is the right process to integrate.
Rule of Thumb: Benefits are not value. Analyze the economic value add that a process generates versus the TOTAL capital invested, not just what is expensed.

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Figure 6-1 Determining Which Process to Integrate
Determining What Processes to Integrate
Does the Process define your firm to customers, employees & investors?
Yes No

1st Process to Integrate
Is excelling at the Process critically important to business performance?

Yes

No

2nd Process to Integrate
Does the Process provide necessary support to other processes?

Yes

No

The Process is Tired or Broken – eliminate it.
No

3rd Process to Integrate
Yes

Does the firm execute this Process due solely to legal requirements?

4th Process to Integrate
Source: Central theme suggested by Peter G.W. Keen, “The Process Edge,” p47

7 Conclusion
Quite simply, SOA can make and save you money. It shows you how to use your current IT assets and integrated processes to compete far more effectively. SOA provides businesses with the ability to adapt quickly and establish tight integration with their business partners. This business agility in accomplished in three ways: loose coupling, reuse, and extensibility. SOA & Web services have the potential to free up money within an organization, by driving down integration costs, reducing expensive functionality duplication, and providing new revenue streams from existing functionality or data. The factors to be used in SOA ROI calculation fall into three areas: Costs and expenses; Technical benefits; and Business benefits. With the SOA model, you can calculate ROI in several areas of benefit: increased revenue, decreased cost, improved efficiency, higher profitability, shorter payback period, higher IRR, and less risk Integrated processes, the construction of which SOA accelerates, need to be treated as any other business asset. Thus, they must be managed, improved, measured, prioritized, and, in some cases, even eliminated, as per the necessities of the business. ______________________________________________________________ If you only are going to remember one thing from this paper, understand that an SOA is today’s premier method to attain business agility. There are many other business and technical benefits for an SOA but none as important as the capability to respond quickly and effectively to change and to leverage that change to competitive advantage. ______________________________________________________________

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