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Business Transformation in Action

Joe McKendrick

Transcript: James Governor, IBM Virtual Global SOA Forum

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The following is a transcript of a presentation given by James Governor, co-founder of RedMonk, at the recent IBM Virtual Global SOA Forum, "Work Smarter, Take Out Costs In a Tough Economy."

James Governor, co-founder of RedMonk:

Today I'd like to talk about SOA and where we stand now. Clearly, this is a technology that has emerged some time ago, and has really matured over the last couple of years. We're seeing customers getting significant benefit from it.

I want to talk about language, I want to talk about change in terms  of  business flexibility. I want to talk about the benefits and expectations that one can expect from SOA... what exactly are we trying to achieve?

operational innovation.  The simple fact is that by doing some hard work, we can have a formal underpinning for the enterprise, that can really help our operations, in the way we can embrace, and absorb new technology waves.

I also want to talk about culture, because service oriented architecture clearly sounds like something technical, but really if you want to succeed, its going to be all about the people.

And finally, to talk about the SOA train, why we're on it, where it's going, and what those benefits are.

Why do I say, SOA the language of change? The simple fact is, when we started this journey to service oriented architecture, we understood that we needed to make businesses more flexible. Enterprise customers were concerned that their cost of integration was very high. Once they had built a system, effectively, they poured concrete onto it.

So SOA was a means to provide more business flexibility. Back in the '90s, we could talk about change... throughout the 2000 timeframe, and the last 9 years again, let's talk about change. But I tell you, we have not seen anything like, in the previous 15 years, the kind of change we've seen in the business environment in the last 6 months.

It's very important that the lessons we've learned, the investments we've made, in order to get where we are, are not forgotten. We've been through a very difficult time, the business environment is changing extremely rapidly, a buyer that was there yesterday may not be there today. A customer that was there yesterday may not be there today. Times are getting very triocky, and it really feels like it's accelerating.

We're going ..along this road, and its very improitant that we need frankly, a fast car that will keep us on the road. And SOA is a language that the business can talk to IT and systems, in order to stay on that road. In order to have alignment, so that we can move forward, and actually deal with change, and deal with these curves that we're being thrown.

So let's talk about benefits and expectations. I think SOA is clearly an acronym that is known and in some cases loved. What it really means its about standardizing the interfaces and introducing loose coupling into your application. If you build applications with the notion that they're never going to change, clearly they're not going to be flexible. So the notion of standardizing interfaces is very powerful.

I was recently talking to a very large European financial services company. And they've been in an interesting situation where they had built out a service-oriented architecture. They were putting in a new system into production. And it turned out that the enterprise service bus that they had planned to use was not going to deliver the capabilities they expected. They were able to chose an new ESB tool, drop that into the overall service oriented architecture, and it just worked.

That's a very powerful statement. How did they do that? it was all about architecture. It was the fact that they built the system to be loosely coupled, and clearly they wanted a choice of technology provider.

Now, one of the big effects that I'm seeing in discussions with enterprises about benefits of service oriented architecture as of late, is just simplifying that upgrade. As we all know, when you buy software, its very painful to go through the upgrade process. We've seen a lot of this in ERP particularly. Where trying to move from one version to another, was very, very painful... you had bought sap and you bought oracle, and there was a lot of extra work needed to be done. because if you modified anything, you modified the whole system. Again, as I said, you poured concrete onto it.

Customers that have SOA have found that their cost of upgrade has fallen. In the current business environment, that is an improvement.

What about sharing information? one of the things about service oriented architecture is, the notion that you can tie disparate systems together, which from a data standpoint is very, very important. ...about risk management at this point.

As we seen in financial services, if you allow your organization to run on independent, isolated, distributed spreadsheets, you can get into a lot of trouble. And quite frankly, if we'd invested more in integration over the last few years, and better data governance, we would have significantly reduced the risk in terms of our banking infrastructure, our credit infrastructure, the kinds of mortgages that went out there.

Let's talk a bit about mortgages. Again, another very interesting thing about SOA. It's easy to think of it as ..paper reduction. If you look at a lot of the mortgage approvals, many of them included information that was wrong. By working with a service oriented architecture by making sure that you digitized your information, we would have made better decisions, and reduced all risk. Clearly, that's a massive benefit.

Extending SOA. one of the things that's very clear, this is somewhat of a WebSphere-specific statement... I'm not saying that IBM is the only vendor doing this... but IBM as it extends its portfolio....thinking well se need business processing management functionality...  we need event processing and complex event processing. Were going to be managing more events....  and rules-based analysis...  

IBM is instantiating that within WebSphere, that's doing that by SOA. organizations that we've seen, looking at new technologies, are clearly watching the foundation in order to do the new stuff. And SOA is increasingly seen as that foundation.

From that point, I want to talk a little bit about operational innovation. There's an awful lot going on at the moment. There's an awful lot of change. Everybody's talking about the cloud, for example. Software as a service. Virtualization is a very hot topic.

Frankly, those technologies do talk to a service oriented architecture. So, it's not that you needed SOA and you want to dip a toes in the cloud. But if as an enterprise, you really plan to make extensive use of the cloud, for extending your workload, to really take advantage of the abstraction that you took into your systems, you do need a formal foundation for that. and SOA can be that foundation.

For systems operational innovation, that's really important to understand. The early wave of clouds have been some pretty simple systems. we're going to move on too much more complicated ones. And again, for a lot of organizations, they are looking for, if not control, at least that management layer. And SOA allows you to start absorbing and working with some of these other technologies in a more effective way.

I like to talk about pace layering. This is an idea by stewart brand, famous for the idea of the long now. And the simple fact is, we don't want to build everything in an organization in one technology. Enterprise IT has tended to be too homogenous. The simple fact is that different technologies can address different values. You don't want to necessarily build everything in java, for example. Well, there is a way, you can allow your enterprise IT to evolve at different paces. And that's what I mean by pace layering.

So we thought about building architecture. You've got the site, well that's been there for a million years. The building is something is just 20 years old. The wiring inside is just five years old. Different parts of the tooling, different parts of the architecture, each evolve at different paces. And in order to get that kind of flexibility, you do need to do some work, and that is service oriented architecture.

At that point, I do want to talk to the "A" word, and that's architecture. They call it service oriented architecture for a reason. I talked about service standardization interface, that's really important. But frankly, the architecture word is really important. Enterprise architecture is not going out of fashion, it's very important. And in order to do it, you really need to drive a culture of service orientation into your business. We begin to actually see this manifest itself in business services as well. If you have Shared services for human resources for example, or shared services for marketing.

And so thinking about how you can centralize, consolidate, and drive your business functions, and how those are aligned as services is very important.

I can't overstate enough the importance of investment in skills, training and governance, if you want to build out a successful SOA. successful SOA, by enterprises that I've spoken to, invariably they've always invested in that upfront work. You have to do hard work. There's no shortcut to SOA. very clearly, you've got to stay firm on your enterprise architecture, on your data model. Understanding how the different parts of data and information in your organization flow together. What are your business processes? What are the business processes you could potentially have?

I just want to talk a little bit where we are now, and where do we go next. Clearly, SOA's a train, we've got on this train. Enterprises, certainly in the fortune 500, but many in medium size businesses as well, there have been massive investments in SOA, and they are really beginning to drive efficiencies now. And that's the important thing to understand about SOA. is we've spent a lot of time in these last years, learning skills, learning the technologies, learning how it's done. now we can begin to reap those benefits in this very difficult environment.

So how do we cut costs?  Again, efficiency. We've got business process, and SOA ...flexibility so you can drive more efficient business processes... .

From an operations standpoint...  ...through technologies like virtualization...   ...increase the efficiency of your IT operations as a whole....

...reducing cost of your portfolio... I've spoken about application...  maintenance..   ...invest in currency of applications, in conjunction with SOA.

...quite frankly, that's one of the biggest benefits you can currently get from SOA...  its very clear you can immediately go to the bottom line...

you got to consolidate...  ...definitions in your data models...  once we've done that we can begun to look at ...reuse... reuse if a big promise. We always don't want in every case...  ...I've seen coverung the mainframe for 13 years now, since 1995.... call me a Johnny come latterly. ...I see more and more investments in the mainframe.... Why is that? because it is service enabled.

...because it's been service enabled. So in terms of reuse for systems like IMS, CICS, mainframe, DB2, very clearly, the enabling work that's been dne on the mainframe just within the application is enabling reuse of componentry in a way that it's not been possible before. And that is the benefit.  For the near term, you have to do the work to understand the service so you can reuse it, but that's a real benefit.

Once you've done that, I think the understand about this difficult business environment, clearly we need to cut costs. But you know what? Nothing is sustainable if you're not driving new revenue streams, if you're not able to get new customers. Very clearly, from SOA, you're able to reach out to new customer sets. With ... for example, taking a mainframe application that was originally intended to be used by an internal call center being exposed to the Web. That's kind of a classic canonical example. But doing that in a more flexible fashion, very important.

Finally, convergence. I think this idea of new revenue streams is very important. I had a great example of this at a recent IBM event. Around the IBM service provider delivery environment, which is the telcos, and is in the WebSphere family. What's interesting to IBM, and they had not expected this, was that the companies were coming to them, and saying, look, we used to just be a telco, but now we're moving into a different part of the energy market for example. If you look at energy and utilities, these billing companies, are all looking at new lines of business.

They wanted to, for example, in fact, let me take a step back, this thing is triple. I have a company that ...emerging media. And they want to sell the range of things. And billing that is hard, provisioning that is hard, but it's convergence of different kinds of business.  That's where they try to create and understand and deliver on new revenue streams.

From getting the kind of flexibility to drive new convergence, that's the kind of thing we can get with SOA. it's really hard work, nothing is easy, it really does require significant investment, but if you can lower your costs and find new revenue streams in the kind of business environment we're currently facing, you're in pretty good shape.

There will be plenty of perspectives and case studies presented on SOA-based implementations at IBM's upcoming "IMPACT" conference, to be held May 3-8 in Las Vegas.

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From getting the kind of flexibility to drive new convergence, that's the kind of thing we can get with SOA. it's really hard work, nothing is easy, it really does require significant investment, but if you can lower your costs and find new revenue streams in the kind of business environment we're currently facing, you're in pretty good shape.

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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