The Economics of SOA

If SOA is altering how enterprise software is being designed and deployed, it also promises a superior economic model for enterprises.

Commenting in Windley's Enterprise Computing Weblog, Phil Windley notes some comments from John McDowall, CTO of Grand Central Communications, writing in Fast Takes, that SOA is evolving to the point where new applications will not be deployed as monolithic instances but will become a collection of services woven together in a loosely coupled framework.

"The heart of John's argument, I think, is a very telling phrase in the centre of his document: 'a significant part of the cost of enterprise software provides no significant business value to the enterprise'," Windley writes. "That's true of many products. We all pay for things when we only need part of their functionality. We do this because the convenience of having things pre-integrated is worth the cost of the parts we don't need. The promise of SOAs is that the integration cost will go down and consequently we'll be more likely to demand unbundled functionality that we can put back together in a custom implementation."

While some disagree, Windley sees this trend as already having "significant legs" outside software, with the modern corporate organization already much more likely to outsource much of the manufacturing and provide the initial engineering, the final integration and the sales and marketing than their counterparts of 20 years ago.

"Where [car maker] GM used to do everything, they now manage a supply chain. John's making the argument that this same trend will extend to IT and that SOA is a significant enabling technology. I think he's right," Windley writes.

Meta's Sholler notes designing for SOA involves thinking of the parts of a given system as a set of relatively autonomous services, each of which is (potentially) independently managed and implemented, that are linked together with a set of agreements and protocols into a federated structure. Not only does this describe the way many organizations think about their value chain, it is also clear these structures enable the business to be very efficient in its operations (each piece can focus on providing the service in an efficient way) and that such thinking can be applied at nearly all levels of scale, from participants in a worldwide extended supply chain, to linking HVAC building control machinery.

"Just as a business can be viewed as a network of independent components all operating together to deliver some valued good or service, IT systems can be designed based on that same principle," Sholler says.

Wiggins agrees one of the main reasons that companies are looking at SOA is because it provides them with a layer of abstraction that allows them to replace implementations of any part of their system at any point in time, without affecting the rest of their systems. That in turn leads to lower maintenance costs and greater agility. For instance SOA involves repackaging reusable business processes so that they can be built into workflow. A vendor asked to tweak a product for a client who might once have lost the sale because the work would have taken too long and been too expensive can now model the changes in the office, drag and drop a few elements, and generate the code to support it, he says.

With systems based on SOA designed around turning modelling based on workflow and flowcharts into executable code, businesspeople are - once they have suitably adjusted their mind-set and systems - doing that design work by themselves.

A case in point is CLSA, the emerging-markets arm of Credit Lyonnais, which implemented a major service-oriented architecture project that provided return on investment in just seven months. The project, begun with a clear vision and understanding of the high-level business requirements and the involvement and commitment of the business throughout, delivered business agility and time-to-market benefits beyond expectations.

CLSA sought to integrate its front-office order management system with its legacy back-office settlement system, its trade order processing system and Nova, its new settlement system, through message routing from multiple worldwide offices. The completed project would automate business flow, eliminating the need to rekey information and providing confirmation of trades in real time. The project delivered business agility and time-to-market benefits beyond expectations according to Wiggins, who has prepared a case study on the work.

"The project went live on May 1, 2002, as scheduled. CLSA reports that, overall, the platform works well and is stable. As anticipated, some performance issues arose in production after the volume of transactions increased. These issues were largely resolved by replacing the generated J2EE code in 'bottleneck' areas with optimized, handwritten J2EE code. Some minor reworking of components was necessary to make them more flexible.

"The overall flexibility and agility of the system has exceeded CLSA's expectations," Wiggins writes. "CLSA received a return on its investment after only seven months - far earlier than the 18 to 24 months that it had projected."

In Australia, Wiggins says the uptake has been relatively good. There were 300 people at Gartner's June conference, many of whom were deploying SOA.