Enabling innovation through SOA IBM Business Centric SOA

Enabling innovation through SOA IBM Business Centric SOA event 6 th June - London Neil Ward-Dutton, Partner advising on IT-business alignment

“As often as not, I've seen the senior business managers questioning why the IT organization *doesn't* use SOA. ” Agenda § Business trends and pressures, and the effect on IT § SOA: more than just another buzzword § Learning from the leaders: lessons from the front line © Macehiter Ward-Dutton 2006 www. mwdadvisors. com - Architect, US Central Government 2

Business trends and pressures, and the effect on IT © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 3 advising on IT-business alignment

30, 000 ft: Business pressures are driving business change in new ways § Globalisation – Customers, partners, suppliers – and competition – Connectedness driving sophisticated value chains § Transparency – Industry regulations, consumer pressure and competition driving openness § Service focus – Differentiation and shareholder value increasingly derived from service experience © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 4

Some local examples § Globalisation – Offshoring impacting UK tech labour market – >4000 (+400/year) UK-Sino joint ventures – UK Government to reimburse overseas treatment costs for patients (05/06) – Tesco enters mortgage market with First Active (11/04) – Vonage launches UK Vo. IP service (01/05) § Transparency – City of London contractor rates hit 4 -year high, compliance drives demand (02/06) – EU Data Retention Directive (02/06) – International Financial Reporting Standards (IFRS) © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 5

10, 000 ft: The business-IT interface Business IT § Increasing desire for some business activities to change direction rapidly § Desire for more flexible business models and “footprints” § The freedom to innovate and involve others in innovation § Shifting focus of enterprise automation requirements – From business support functions to product and service differentiation – From “execution” to supporting management and strategy § Alignment of sourcing and spend with business priorities – Leveraging industry and technology maturity for portfolio -based approaches © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 6

The killer: innovation and efficiency have to go hand in hand § Total IT budgets are not growing significantly § Investment in support of innovation can only come from successful efficiency measures § Moreover, efficient organisation of resources is a key innovation enabler Before After Support for differentiating processes Support for nondifferentiating processes Sourcing and spend alignment …through… Standardisation Consolidation IT Governance / Portfolio management etc Operating and maintaining existing investments If you don’t know where you are, it’s difficult to know where you can go next! © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 7

SOA: more than just another buzzword © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 8 advising on IT-business alignment

Organisations are investing in SOA to improve efficiency AND flexibility Which of the following would you regard as significant business level drivers for investing in SOA? 0% 10% 20% 30% 40% 50% 60% 70% 80% More rapid and flexible IT response to changing business needs Enhanced ability for IT to drive and/or support business innovation Cost savings from more efficient delivery of IT Protection of past and future IT investments by delaying obsolescence Improved operational service levels to the business Experienced adopters All respondents © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 9

The IT automation focus is shifting away from structured, predictable processes Strategy S S M Management M E Inc Execution e ea s r dc o ll r abo S as cre E e at , ad io n t hi f tr ds in u ho u f oc , ure ct e t ur a cn M s d pre M ic lit abi t y E E In E E Non-differentiating Differentiating © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 10

The nature of IT investment is shifting From Back office Towards Business area investment focus Front office and beyond “Personal productivity” desktop Productivity desktop + global access to resources Communication, collaboration, integration IT access environment Data processing Technology innovation focus Outsourcing vs. in -house delivery Capability supply “Multi-sourcing” Build, or buy vs. build Project implementation Buy AND build AND integrate Scale of IT concern: from point functions to organisations and ecosystems © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 11

The technology requirement: managing a broader scope & scale of interactions Business process Data design tightly coupled to application design, and application design to “user requirements” – very restricted view of process needs © Macehiter Ward-Dutton 2006 Business process Towards Reducing “access friction” From Loosely-coupled resources provide services which are designed to support the interactions that take place within a business process www. mwdadvisors. com 12

Architecture is more important than ever It has to be focused on efficiency AND flexibility § Process integration – Improving efficiency in the “back office” and “middle office” – Improving service quality in the “front office” § Service Oriented Architecture (SOA) – Building a common language between IT and the business – Open, integrated software systems that fit today’s needs § Data integration / Master Data Management (MDM) – Unified views of process-critical information – Customers, bills, etc § Rich user experiences – Access to information and function in a variety of contexts – “Right-sized” – offline and online; rich experience with small management footprint – Functionality arranged around the user, not around “applications” © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 13

There is clear value in SOA beyond technical issues Can SOA help business and IT people communicate more effectively through a common vocabulary? 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Yes Possibly No Unsure Experienced adopters All respondents © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 14

SOA: the foundation for bridging the gap between IT and business IT defines and delivers “business level” services which support the right processes, the right way IT Managed IT service sp ro ce ss Bu sin es sp ro ce ss sp es Bu sin es Bu s in es sp ro ce ss Business processes form the foundation of a common language STRATEGY sp ro ce ss BUSINESS Bu sin es Business Managed IT service APPLICATIONS & INFORMATION INFRASTRUCTURE © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 15

Four steps to maximise SOA business value A service-based approach enables an environment in which system value can be readily understood by the business 4 Value visibility A service-based approach enables an environment in which IT capabilities can be easily understood and specified by business analysts 3 Comprehensibility A development lifecycle that promotes reuse of services End-to-end management of the service lifecycle which “joins up” activities from design to operation Reusability 2 Flexibility An architecture approach that promotes service designs which are business-meaningful A service-based approach creates software assets which can be reused across projects, making systems cheaper and lower-risk to build 1 A service-based approach creates modular systems which are easier and quicker to change © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 16

Learning from the leaders: lessons from the front line © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 17 advising on IT-business alignment

“Keep the faith and avoid the buzzword soup. ” - Architect, Swiss Bank © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 18

Making the SOA business case “SOA isn't an investment it's an architectural decision. If the system justifies the architecture and the business case can be made then it is the right thing. SOA isn't and shouldn't mean a sweeping replacement of systems. ” “Talk about how IT will be given a clear and concise mapping to business needs that just wasn't possible before with other architectural approaches. ” “Stress agility and the ability of business to comprehend what IT is delivering. ” “Focus on the benefits of reuse and reduced TCO, not the technological / definition arguments. ” “Align SOA with a business activity: either a new opportunity or improve an inefficient one to prove the benefits, then deploy more widely, and don't underestimate the formal methods and tools required. ” SOA is not like many technology investments: the case must be made from both a project and an architecture perspective © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 19

Key challenges associated with SOA adoption “Funding necessary infrastructure in a project-based cost model. ” “Mainly political issues. SOA is a leveller and threatens people who like to build little empires in an organization. ” “Poor communication to stakeholders. ” “Changing funding models to support shared services rather than one-off projects. Establishing governance structures. ” “Loss of momentum after the initial enthusiasm. Reversion to perceived faster time to market traditional approaches. ” “Getting consistent policy and standards across projects. ” “S-E-C-U-R-I-T-Y. ” “In a large IT organisation, with a command control structure, it is difficult to break through the comfort barrier. ” Overwhelmingly, the main challenges cited relate to good governance © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 20

Thank you www. mwdadvisors. com www. freeformdynamics. com © Macehiter Ward-Dutton 2006 www. mwdadvisors. com 21 advising on IT-business alignment