While SOA (service-oriented architecture) is still new enough to have the ring of another technology buzzword, the concept of taking an architectural, holistic approach to business IT isn’t a new one. But ever-tighter budgets and the usual pressures to deliver change within those constraints, has resulted in businesses taking a silo and near-term view to IT investment. As a consequence, a ‘buy now, worry later’ approach has prevailed.
A survey of CIOs and IT managers conducted by Capgemini recently showed an overwhelming consensus about the benefits of adopting an SOA approach. But while 89% of those questioned believed such an IT architecture could increase efficiency, flexibility and business agility, only 18% had implemented an SOA strategy – a statistic that isn’t surprising given the near-sighted view often taken to IT investment.
Nor is it surprising, given that the average company is spending 75% of IT budget on maintaining current systems and only 25% investing in new systems to drive business change. Furthermore, due to decades of continued upheaval and rapid change, that 25% doesn’t go as far as it could, with change made difficult by existing systems.
This means the board, looking to deliver immediate results and meet the demands of shareholders and investors, is more concerned with solving short-terms problems, rather than investing to achieve higher levels of productivity and service. And even when a large scale IT investment has been justified, the apparent cheapest approach is often adopted, as companies don’t consider the medium and longer term investment needed to realise sustainable value for money.
An SOA approach can help organisations make targeted and longer-term IT investment decisions. In doing so, IT becomes an infrastructure for delivering business services which simplify management and improve efficiency.
Key benefits of SOA include increased business agility (providing the means through which you can continuously adapt your business); increased access to your services for customers, suppliers and partners; and crucially, reduced IT operating costs – all of which are music to the ears of any board.
So with such clear benefits, the question is why haven’t all businesses taken on SOA and what’s holding them back? Cost is a concern, as ever, but other factors present greater barriers. Of those we questioned in the Capgemini survey, 61% felt intimidated by the complexity of SOA as an enterprise-wide initiative and 55% cited a lack of relevant skills.
More key still are the changes in business practice and culture needed to affect what is, for many companies, not only a completely new way of designing and implementing IT, but also designing and implementing business operating models.
Until recently the tendency within IT has been to adopt ‘packages’ that can be brought in to solve a particular problem. While working adequately on a project-by-project level, this has resulted in higher cost and lack of flexibility for businesses to undertake change. Software vendors are working hard to make SOA a reality for their products so they can improve overall IT and business agility.
However, to make SOA a reality requires an ‘enterprise architecture’. That can be defined as the organising logic of the business processes and IT to realise the business strategy. By establishing this enterprise view, organisations can drive ‘service-oriented architecture’ change into a business, project-by-project.
CIOs I speak to are often frustrated they don’t have the relevant tools to justify the consequences of extra spend to the board, who are naturally focussed on driving margin up while reducing costs. When buying in and managing IT systems the CIO needs the tools to say that if, for example, an extra 5% is spent this year, then the yield will be 10% savings in the next year. Indeed, CIOs should be accountable for the medium and long-term impacts of their decisions, and an enterprise architecture perspective allows measurement and scope for this.
To enable this process, organisations are building mixed-discipline IT/business teams, with enterprise architecture providing a common language accessible to both. From this common ground investment planning can be undertaken for short, medium and longer term benefits, with the enterprise architecture process itself becoming established in different parts of the business incrementally.
Certainly the rewards are there if businesses are able to make the switch. IT projects undertaken with an enterprise architecture approach have a 90% success rate (being delivered successfully, on time and on budget), as opposed to the 60% success rate for IT projects more generally. But to achieve this requires a new focus and way of operating.
Fundamentally, it’s about understanding the new strategic business and IT options SOA presents and adopting a mature enterprise architecture approach and collaborative business practices to realise the benefits of SOA.