This article was originally published as the last article in a series on SOA in my ebizQ blog IT Directions (http://www.ebizq.net/blogs/it_directions/archives/2007/02/taming_the_mino.php).
In the series, I tried to explain what is missing from current approaches to SOA, and from business modelling in general - and how filling this gap can lead to enormous efficiency improvement, particularly with regard to SOA adoption.
A cornerstone of my argument is that an organization cannot be properly understood by talking only about the services it provides, either internally or externally. Rather, an organization can only be understood as a network of interacting objects. Contrary to what you might expect, it is IT people who seem to be insisting on the simplistic service-based approach, and business people who naturally see the world as a system of "things" and relationships between them.
But what, you may ask, about Porter's famous "value chains", and the competitive advantage to be gained by optimizing them? Are not these just what IT people call "services"?
Yes and no. Value chains may look like services, but trying to model an organization on a service basis leads only to disaster. To help explain why, I am going to hand over to Paul Harmon, and quote at some length from a recent one of his "Business Process Trends Advisor" mailshots, that of 30 January 2007 (you can subscribe to these very useful mailings at bptrends.com):
"Operational effectiveness", as Porter uses the term, means performing similar activities better than rivals perform them. In essence, this is the "best practices" approach we hear so much about. Every company looks about, determines what appears to be the best way of accomplishing a given task and then seeks to implement that process in their organization. Unfortunately, according to Porter, it isn't an effective strategy. The problem is that everyone else is also trying to implement the same best practices. Thus, everyone involved in this approach gets stuck on a treadmill, moving faster all the time, while barely managing to keep up with their competitors. Best practices don't give a company a competitive edge - they are too easy to copy. Everyone who has observed companies investing in software systems that don't improve productivity or price, but just maintain parity with one's competitors, understands this. Worse, this approach drives profits down because more and more money is consumed in the effort to copy the best practices of competitors. If every company is relying on the same processes then no individual company is in a position to offer customers something special for which they can charge a premium. Everyone is simply engaged in an increasingly desperate struggle to be the low cost producer, and everyone is trying to get there by copying each other's best practices while their margins continue to shrink. As Porter sums it up: "Few companies have competed successfully on the basis of operational effectiveness over an extended period, and staying ahead of rivals gets harder every day."