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Business Transformation in Action

Joe McKendrick

Shining Examples of SOA in Action in 2008 (1)

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One of the main things I hope to accomplish with this blog is to show you working examples of where SOA is making a difference, and we spotted quite a few examples over the course of 2008. Here is the first of a three-part summary of where we've been truly seeing "SOA in Action."

To cut IT costs through reuse. At Delta Airlines, SOA is cutting the cost of ownership by half for its various applications and systems. The company's experience with proactive governance also provides some valuable pointers for other companies wrestling with the politics of SOA. Reuse is one of the big drivers for our SOA environment," said Bret Martin, principal enterprise architecture for Delta Technology Inc. Delta's SOA, for example, is reusing the same customer and operational data across a range of systems, from the Delta.com Website to ticketing kiosks to ticketing counters and gate systems. "It allows check-in to happen in a uniform way," he explained. Another way services are being leveraged are by exposing services to vendors and partners, such as American Express or operations companies.Delta engaged a cross-enterprise governance team to perform all the tasks that are expected from an SOA governance group: managing registry and repository in making sure that services are registered, defining the policies that are going to go into the deployment of a service, defining security, defining service-level agreements.

To provide secure access for a range of data sources. One police department is employing SOA to enable remote access to applications via a common, standardized interface. The department commissioned a major redesign of its systems so officers and managers can use an SOA-based system as an interface to a dozen applications. The SOA enables better access from mobile clients, and will provide access to administrative and investigative tools such as intelligence systems, the Police National Database, vehicle and criminal records, and photo files. There are also plans to enable DNA file access.

Automation enhances service delivery. Carphone Warehouse, a mobile phone retailer based in the UK, credits a new design-time governance system with boosting the adoption of its SOA effort, now in its third year. The company recently acted to remedy the duplication and confusion within its service delivery by putting an automated governance system in place. Right away, things started falling in place. For starters, 95 percent of the service designs now being put into production conform to governance standards, according to Pawel Maszczyk, enterprise architect at Carphone Warehouse. Even better, by avoiding accidental duplication of services, the automated governance system (from HP Systinet) is projected to deliver savings of £526,000 over three years. Another £93,750 will come from time saved managing governance, and £113,500 from time saved reviewing services. That's a total of £733,000, or the equivalent of US$1.5 million at the current exchange rate.

To modernize government. Government work is getting busier than ever, and there are a lot of legacy systems and mainframes across agencies that need to be brought into the Web-centric era. Changing business requirements (such as the demand for cross-agency data exchange, cost management control and the necessity for enhanced citizen services) make IT modernization a necessity, observes Charles Krahling. "Economic drivers continue to spur government modernization initiatives, and SOA allows existing IT assets to integrate with many other languages and technologies. With SOA the required competitive edge can be created using COBOL or written in another language and then integrated into COBOL."

SOA increases "energy levels." The utility industry is now far more than your single, highly regulated monopolistic "local power company" that sends you electricity provided you pay your bills. Now, utilities and power providers are in highly competitive businesses that will success or fail on economies of scale and meeting market demand. Bluestar Energy Services' local distributors used a variety of formats for delivering customer usage data, including EDI, XML, FTP, Excel, and CSV files. Using open source software, the company established a b-to-b gateway that integrates all of BlueStar's partners and translates all of the different feeds and data formats for BlueStar's back-end systems -- a loosely coupled approach. "The b-to-b gateway is a distributed implementation of an ESB," says Guillermo Tantachuco, director of enterprise architecture at BlueStar. "We don't have a huge monolithic server that handles all this. These are a bunch of services scattered across our network that are pretty resilient. If one instance dies, another one is ready to take over."

SOA speeds up mergers and integrations. Dematic, a $1.5-billion global logistics company, recently replaced its core IT architecture in 72 days with a platform built on SOA and Information Technology Infrastructure Library (ITIL). Sound implausible? The company's IT department was given a 90-day mandate to integrate its systems when Siemens sold the company to Germany-based Triton in late 2006. CIO Allan Davies said the company saved money by abolishing legacy systems which Davis said chewed up a considerable amount of cash. "Our expense management system, hosted with Siemens, required four daysa month of manual data entry into our enterprise management system," he said. "SOA lets us basically plug and play. I know how painful legacy systems are and this means we don't need to mess around because we need to be very responsive. We have a lot of feeds from our systems that have to be managed and we tended to write a lot of interfaces -- we have eliminated the legacy systems."

To consolidate payment systems. In the banking world, centralized payment systems is one of those things on everyone's wish list, but a long way until reality. The challenge for banks is that noncash or electronic payments have been growing at a rapid clip. Plus, the range, scope, and complexity of customer channels has increased, making it difficult to untangle these systems. Centralized payments systems that can support increased volumes as well as business intelligence can point to new revenue streams and increased cost efficiencies. SOA, along with other approaches such as imaging, and real-time data access now offer financial institutions ways to invest in payment systems that can access existing systems without a lot of ripping and replacing. A typical financial institution could save between $450,000 and $5.6 million.

To modernize a 40-year-old system. Until recently, both Lufthansa and United Airlines -- part of a consortium called the Star Alliance -- were using a 40-year old reservation system, written in Assembly language. The airlines migrated their green-screen-based systems, which couldn't integrate with other systems and services to SOA, which covers the product suite for reservations, inventory and passenger check-in. The mirgrationw as the equivalent to a "heart transplant," said Shama Patel, business program manager of the SOA effort for United and Lufthansa, called Horizon Project. The key to the project's success is good governance, Patel said. Eventually, Lufthansa and United plan to roll out a common platform that can also be used by other members of the Star Alliance. "The modernization project will impact 20,000 people in 350 locations in a three- to four-year time frame, and it will touch 20 company divisions."

In this blog (formerly known as "SOA in Action"), Joe McKendrick examines how BPM and related business and IT approaches can promote business transformation.

Joe McKendrick

Joe McKendrick is an author and independent analyst who tracks the impact of information technology on management and markets. View more

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