Business Transformation in Action

I want to surface one of ebizQ colleague Brenda Michelson's most recent posts because I think the ideas she raises are powerful.

That is, she relates a discussion point from the SOA Consortium group that services being enabled via SOA principles and practices should be determined by and subject to market forces, be they from inside or outside the organization fostering them.

Let the market drive service creation. This has implications for SOA, and certainly moves us right into the cloud paradigm, which is essentially global SOA.

Here, we see the intersection of social media and SOA and cloud. Brenda also surfaced an extremely compelling concept that one of her SOA Consortium colleagues is exploring: Employing prediction market technology for service portfolio rationalization. Prediction markets -- such as Intrade -- have been shown to be highly accurate barometers on the course of upcoming events, because they involve the investment of money. Intrade predictions are applied to many events, from elections to Oscars to the general course of the economy.

Can an enterprise version of "Intrade" assist in predicting service adoption?  This is a compelling instrument that can help focus SOA efforts on where they are needed most.

As any economist will tell us, the market is the most efficient mechanism for resource allocation around, so the application of market forces to SOA efforts may also help alleviate service sprawl and other wasteful outcomes, Brenda relays. As she described the discussion:

"It was noted that in organizations where sprawl exists, or M&A activity is underway, the services marketplace can provide a mechanism to contain further sprawl and promote (Darwinian) rationalization, even before formal rationalization assignments/efforts are underway." 

There is a strong governance component to market-driven SOA as well. Brenda picked up "strong support for the advertising aspect of the services marketplace, letting people know a service existed, its purpose, current usage scenarios, community ratings etc." 

Not everyone is on board with the service marketplace concept yet. Brenda notes that "call participants from enterprises expressed concerned that a pure services marketplace - introducing competing code - is not behavior a development organization can afford to participate in." 

There may be some hesitancy in some organizations, but SOA, Web services and cloud open up new possibilities and opportunities for developing an entrepreneurial culture within organizations, as well as spurring new ideas for start-ups. More than anything, these forces are paving the way for the composite or loosely coupled company - which may be an entity that exists purely as an aggregation of third-party services, provided on an on-demand basis to meet customer demands.

Is this entrepreneurial spirit something that larger enterprises, particularly the Global 1000, would be capable or willing to digest? After all, larger enterprises usually have their own humongous internal IT development shops. But, some observers point out that some of the largest and most progressive companies may, in fact, be the most enthusiastic embracers of the virtual, componentized way of doing business.

To access services they require, companies may find their best option is to turn to third-party marketplaces that can provide the necessary software on demand. Cloud vendors offer online marketplaces in which enterprises can tap into services that they may or may not have the time or inclination to build.

Cloud computing is pushing some software vendors to change their models to component delivery, perhaps based on a micropayment business model as I alluded to above. This makes plenty of room not only for small start-ups, but also for development shops within traditional enterprises that have great ideas. We'll see the emergence of the corporation-as-service-orchestrator phenomena.