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I am attending webMethods Integration World this week and blogging live from the sessions. Day 2 began with a keynote from John Hagel (who has a fun blog here) on "Loosely Coupled Business Architecture"

John had no slides (delightful) and discussed what he sees as an opportunity to move to a different approach to business process management. There is according to John a tendency of companies to focus on tight coupling of business processes where, perhaps, there is more opportunity in loose coupling of processes. He used a couple of examples on this:

• Lee and Fung manufacturers customized product and supply chains for clothes designers. Designs come in, they set up the production network. Very time and cost sensitive environment and complex as physical goods must be moved across national boundaries. They have some 10,000 business partners in 48 countries and focus on managing them and quality control. They developed tailored networks for customers and for specific product lines for each customer. Very flexible and dynamic.
  While Western companies are trying to reduce the number of participants in their supply chain for efficiency, Lee and Fung manages theirs by taking a very component focused approach to business process management. They design "components" with defined interfaces, measures etc. These can then be packaged rapidly with other components and so used to develop complex, custom processes. This approach prevents the problem of increasingly low returns from adding partners (caused by increased complexity).
• Motorcycle manufacturers in China (did not catch the names) competed with the big Japanese motorcycle vendors not by trying to create a better, tightly coupled product environment. They broke the design into pieces, relaxed the detail in the design (rough sketches only) but very strict about the design requirements and performance/reliability issues. They also told the partners to figure out the interdependencies themselves - they did not even define the "interfaces" between the components. This approach drove very deep specialization and some intense "friction" between the design companies (with the aggressive performance targets). This approach has driven the price of a motorcycle from $700 to $200 and now China makes 50% of the worldwide motorcycle market.
• Original design manufacturers (ODMs) in Taiwan also use this approach to develop electronics. Even things like an iPod have an ODM as a key partner. John did not go into much detail other than to say that this is how they develop a wide range of products with intense flexibility .

SOA is, he says, perhaps the first approach that supports this kind of loosely coupled design/process management philosophy because SOA too is loosely coupled. Although there is a short term benefit from SOA around leveraging existing resources and reduce existing complexity he feels that the long term benefit comes from enabling this kind of company-level loose coupling. John regards this as a long term competitive advantage that will allow companies to develop the flexibility they need to compete in a global economy. Great presentation and as I have said before I think control over the key decision points in a process, in a loosely coupled and reusable way, is going to be crucial and this is the core concept of decision management.

His book is "The only sustainable edge" with John Seely Brown

I am speaking at 2:45pm on "Automating High-Volume Business Decisions within an SOA"

Technorati Tags: business agility, business process management, composite application, service, SOA, webMethods

Posted by jtaylor in Business Agility • Business Process Management • Innovation • SOA |Digg This|Add to del.icio.us

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