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Business Transformation in Action

Joe McKendrick

SOAs Too Big to Fail

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In a new article out of American Banker, Steve Bills discusses how service oriented architecture initiatives at the two biggest banks -- Bank of America and Citigroup -- have overcome the limitations of legacy systems.

At Citigroup, Steve describes how the company's CitiDirect BE (for "banking evolution") cash management platform includes user-generated content and a video channel. The result is a "flexible portal" that serves more than 300,000 business users worldwide.

At BofA, the bank "is developing a payments hub that it expects to handle transactions for a wide range of cash management customers, domestic and international, from small and midsize businesses to large corporate and trust clients." BofA will  use the payments hub to streamline its internal systems into a single payment-processing platform that spans all customer channel.

Citigroup is no SOA novice. A couple of years back, I heard Skip Snow, enterprise architect at Citigroup, talk about Citi's first embrace of SOA -- creating a lot of best practices and examples for the rest of financial services and industries in general. As Snow described it at the time, as Citigroup moved forward with Web services development efforts, the company quickly recognized that such standardization and integration efforts fell in line with its business goals. "We didn't want to end up governing a bunch of Web services with no particular relevance to the business," Snow said.

However, this was no easy task with four levels of CIOs and thousands of technology professionals. Citigroup realized that it "couldn't create an SOA without a solid governance model," Snow said. Such a process had to be designed from the ground up, however, as no previous model had ever existed. The SOA governance process could not exist "as a step-child to the current IT governance structure," Snow said. "Our departments and sectors want to govern in a way that is autonomous, not 'one size fits all.'"

As Citigroup's SOA became a reality, the company recognized that this was an important way to reach its business goals, which included maximizing shareholder return, investing in new products, and organically growing new businesses within the enterprise. The goals for Citigroup's SOA effort included the ability to respond to an evolving business climate, business service reuse, to drive down application costs, and to allow businesses to interoperate. On the last point, Snow stressed that the key to success of the effort was in business interoperability, versus system interoperability.

Citigroup's SOA governance structure is federated in nature, with a "separation of powers" similar to the way the US federal government is structured, Snow explained. An "executive branch" (IT) oversees operational aspects, a "legislative branch" (executive management and board of directors) establishes the goals of the SOA efforts, and a "judicial branch" (enterprise architectural boards) deals with conflict resolution. In addition, there is a separation of powers between the federal (enterprise) level, state (divisional) level, and municipal (departmental) level.

Another advantage that SOA offers is that it automates many processes, Snow added. "SOA allows automated support and auditability of the decision-making process," he said.

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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