Business Transformation in Action

Joe McKendrick

Transcript: Sandy Carter, IBM Virtual Global SOA Forum

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The following is a transcript of a presentation given by Sandy Carter, IBM vice president for SOA, BPM and WebSphere Marketing, at the recent IBM Virtual Global SOA Forum, "Work Smarter, Take Out Costs In a Tough Economy."

Sandy Carter, IBM vice president for SOA, BPM and WebSphere Marketing:

We're going to start first talking about IBM's vision for a smarter planet. And this vision is all based on how much smarter the world has become with all the technology that exists today. It is more interconnected. With over three trillion things connected into the Internet. More instrumented, with over a billion transistors per person in the world today. And more intelligent, with over 30 billion RFID events by 2010.

Now, this smart embedded into things that didn't use to be smart, applies to people, it applies to industries, companies, countries, as well as our own planet, if we think about some of the green efforts that are out there today.

Most importantly, smarter planet helps to position us as companies today, in today's economic situation, not just survival, but for success.

Take for instance a cheetah. I just saw a show the other day where researchers were quite surprised the cheetah has ended up on the endangered species list. The cheetah is the world's fastest animal. How could speed, something that can go so fast ever been on a endangered species list?

Where in fact, a chipmunk, very funny, has adapted to its environment. It's very agile in changing its food and living conditions, and optimizes to the environment around, and therefore has survived.. the changes that have occurred.

That's what the vision of smarter planet coupled with our smart SOA concept provides companies like yours today -- agility and cost optimization.

I know you're hearing this from every corporation today. I want to go into a little on why we believe that service orientation really is the key to agility and cost optimization. By extracting services from your applications, putting those business services in a reusable format, it allows you to quickly change, based on what's happening in the environment, or to invoke change yourself on the industry.

It allows you to flexibly connect information, because you isolate the business logic from the underpinning IT. and  then you can reuse.. not just the IT assets, but the business assets as well...

This allows you to unlock the power of your business resources, as well as your IT resources. And provide agility and cost optimization...

How do you  measure agility? You can run through our key agility indicators, KAIs. What is this all about?  if you're going to focus on agility, you need to be able to measure it. Now, we're all used to doing KPIs, key performance indicators, that are focused on efficiency and quality. But in today's flat world, we need to add to what we look at, key agility indicators. How quickly you can do something.

Case in point. IBM creating for its supply chain, a factory in a box all built on service orientation, that allowed IBM to go from onboarding a supplier from three weeks to two hours.

Another great example, Airbus, dealing with many events coming in. leveraging those events to see how quickly, how agile they were in dealing with those events. Enabling them to increase their competitiveness in today's marketplace.

We talked about agility, but you're probably still waiting for that cost optimization. I was just in the Middle East and Africa, and found that most customers today are focused on cost optimization, and this is true around the world.  In fact, Forrester released a report that said that 76% of IT budgets are spent on maintenance. Meaning only 24% is left for new investments. In fact, a lot of customers told me they don't even have that 24% anymore.

So how can service orientation and SOA help you with that? by allowing you and helping you to reduce the maintenance and management of your existing IT applications, we can cut costs over time, enabling you to spend money therefore on these business-driven uses of IT, that can help the overall business grow in its competitiveness and usefulness across the board. Makes it more competitive again. Not just to survive, but to thrive.

Talked about the two benefits, agility and cost optimization. Let's talk about the five ways that SOA projects can help you on those two value points.

Smart reuse. This has been one of the number one areas that were focused on.  And that is how do you reuse your applications and your assets that you currently have. I have sap, or I have oracle apps. I can't rip and replace those. What can I do in order to save those?

This is the great thing about IBM's Smart SOA strategy.  we enable you to service-enable that business logic so that it can play a critical role in your SOA deployment.

Let's do a small little case series. And this is looking at an enterprise service bus that really takes you away from doing point-to-point connections, and enables you as well to separate out the business logic from the IT logic. The benefits are clear in terms of cost optimization as well as agility. On the top you can add applications faster, because now you've got reusable services.

At the bottom you can change your current applications with no impact to your existing app, which enables you to cut your costs, especially costs in maintenance of connecting those applications and integrating those applications.

A report published by software strategies determined that use of an SOA in particular with an enterprise service bus and messaging could cut IT integration costs and maintenance by two to four times. In fact, what I found very exciting was that the more applications you're trying to integrate, the more you can save, over traditional using hand-written code, point-to-point code, or even extensions to FTP.  All of this depending again on the size of the project.

So cost optimization being top of mind, a customer who used this SOA approach with an ESB to both cut their costs and increase their agility. One company who's a customer of ours in Germany. They produce water spigots and faucets. What they've had was a brand new installation of SAP ERP, and they couldn't obviously rip that out.

They also had a lot of legacy with their inventory and their manufacturing, and they needed to reuse the intellectual capital that existed there. They also had 14 interfaces that were required, meaning that their application costs were very high.

They leveraged their ESB with WebSphere Message Broker, allowing them to also to service enable their ERP applications and their legacy to reduce their integration time by 84%. They also increased their availability, and they made available for future projects for agility this service enabled legacy content, that now can be used in a set of very flexible and agile processes.

Let's talk about another project that can lead to cost optimization as well as agility, and that is smart adaptation. We know in today's times is we have to adapt to changes that are occurring in the marketplace. And one of the ways we need to do that is to put into context the process information of hundreds of business processes so can leverage that breadth of expertise to adapt dynamically, addressing all external events that are applied to us.

There will be plenty of expert observations on SOA at IBM's upcoming "IMPACT" conference, to be held May 3-8 in Las Vegas.

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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