Soa Meets Roi

SOA meets ROI David S. Linthicum

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What is a Service-Oriented Architecture?
Access software via Services that are easy to find and connect to
Web Services provide a s tandard way of building and accessing Services
Developers & integrators can build applications out of Services

The “Rat’s Nest” Architecture FBT PAY G NTS TRDS Client Customs RRE IPS Integrated A/C Refunds RBA Def Payments Excise CR PKI ECI ADD AWA ELS Client Staff Remote Staff TAX AGENTS GCI Call Centers WOC CCD TASS Staff Phone Compliance Staff BOA Ref material Bus. Intel NTS A/c BEP CDCC CWMS BANK DDDR 1 Data……. Penalty Business IVR 1

IT: Fulfilling Business Requirements
Business Requirements
Service Customers
Manage Operations
Increase Worker Productivity
Communicate with market
Ensure reliable and secure operations
Develop new products and services
Respond to new business drivers
IT Capabilities
Implement CRM Systems
Implement ERP Systems
Manage desktop environments
Manage server environments
Manage email systems and web sites
Manage network and storage operations
Develop applications

However, it rarely works that way…
Requirements change
Interpretations often inaccurate or limited
Lengthy development cycles impervious to change
Implementations “cast in concrete”
Result: IT that places limitations on Business

The Economics of Integration

Business Benefits of Loosely Coupled Approach

The Value Proposition of a SOA
We implement SOA for two major reasons. First is the ability to save development dollars through reuse of services. Second is the ability to change the IT infrastructure faster to adapt to changing needs of the business, or agility .

Reuse
Under the concept of service reuse, we have a few things we need to determine to better define the value. These include:
The number of services that are reusable. Complexity of the services. The degree of reuse from system to system.
The number of reusable services is the actual number of new services created, or, existing services abstracted, that are potentially reusable from system to system.
The complexity of the services is the number of functions or object points that make up the service.
Finally, the degree of reuse from system to system is the number of times you actually reuse the services. We look at this number as a percentage.

So, What do you Do?
In order to determine their value we must first determine the Number of Services that are available for Reuse (NSR), the Degree of Reuse (DR) from system to system, as well as the Complexity (C)of each service, as described above.
The formula to determine value looks much like this:
Value = (NSR*DR) * C
Thus, if you have 100 services available for reuse (NSR=100), and the degree of reuse at 50 percent (DR=.50), and complexity of each service is, on average, at 300 function points, the value would look like this:
Value = (100*.5) * 300 Or Value = 15,000, in terms of reuse.
Moreover, the amount of money saved depends upon your development costs, which vary greatly from company to company. Typically, you should know what you’re paying for functions or object points, and thus it’s just a matter of multiplication to determine the amount of money we are saving by implementing a particular SOA.

Agility
Agility is a strategic advantage that is difficult to measure in hard dollars, but not impossible. We first need to determine a few things about the business, including:
The degree of change over time is really the number of times over a particular period that the business reinvents itself to adapt to a market. Thus, why a paper production company may only have a degree of change of 5 percent over a 5 year period, a high technology company may have an 80 percent change over the same period.
The ability to adapt to change is a number that states the company’s ability to react to the need for change over time. The notion being that the use of an SOA provides a better ability to change IT to adjust to needed changes in the business.
Finally, the relative value of change is the amount of money made as a direct result of changing the business. For instance, a retail organization’s ability to establish a frequent buyer program to react to changing market expectations, and the resulting increases in revenue from making that change.

Closing Thoughts
Determining an SOA’s ROI is not an exact science, but with some analysis and some realistic data points, you can figure out how much value your SOA implementation has brought you, or will bring you.
Again, we need to cost justify the use of this approach and technologies, and the information presented here should help you along the road to creating your own business case.

Thanks!

Soa Meets Roi

by David Linthicum on Sep 17, 2008

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Soa Meets Roi — Presentation Transcript