This document provides guidelines for creating a business case for a service-oriented architecture (SOA). It outlines 7 steps: 1) Identify the current business-level strategy, 2) Identify the value chain, 3) Select business processes to scope the project, 4) Create performance indicators, 5) Design the solution, 6) Identify stakeholders and their benefits, and 7) Make calculations to analyze costs and benefits. Key aspects include analyzing processes based on cost leadership or differentiation strategies, selecting processes that improve value, setting SMART performance goals, and calculating financial metrics like net present value to evaluate the project.

1. Creating a Business Case for SOA
Guidelines

2. Steps
1. Identify current Business-level Strategy
2. Identify the Value Chain
3. Select the Business Processes – Scope
4. Create performance indicators
5. Design the solution
6. Identify stakeholders and their benefits
7. Make the calculations
2

3. Identify current Business-level Strategy
Cost Leadership Differentiation
Broad
Target
Integrated Cost
Leadership/Differentiation
Narrow
Target
Focused Cost Leadership Focused Differentiation
3

4. Business-level Strategy
• Cost leadership strategy
– Sell no-frills, standardized goods or services
– Candidate processes are:
• Inbound logistics
• Outbound logistics
• Support activities (e.g. procurement, HR)
• Differentiation Strategy
– Sell differentiated products or services at competitive costs
– Candidate processes are:
• Design
• Marketing and Sales
• Operations
4

5. Identify the Value Chain
Firm Infrastructure
Secondary
Activities
Human Resource Management
Technology Development
Procurement
Inbound Outbound Marketing
Operations Service
Logistics Logistics and Sales
Primary Activities
5

6. Select the Business Processes - Scope
• Select the link in the Value-Chain and then breakdown to
analyze the business processes involved
Define rules
Select
providers
Create RFI
Procurement
Create Receive
catalogue orders
6

7. Selecting Business process
• Ask questions as following:
– Is the process designed to achieve competing advantage in terms
of differentiation or low cost?
– Does the process eliminate steps that do not add value?
– Does the process maximize customer value as perceived by the
customer?
– Will the process win orders?
• Tools
– Flow Diagrams
– Time-function mapping / Process mapping
– Value-stream mapping
– Process charts
– Service Blueprint
7

8. Create performance indicators
• Accordingly to the business strategy:
– Differentiation strategy
• Focus on Revenues indicators
– Cost Leadership
• Focus on Costs indicators
• Look for industry benchmarks
• Indicators must be SMART
(Specific, Measurable, Achievable, Relevant, Time-Bound)
• Use this indicators to estimate the cash flow from the project
8

9. Design the solution
• Classify the process accordingly the matrix and follow the order
1 2
Value
3 4
Cost
• Focus on KPI
• Different presentations accordingly to the audience
– IT
– Business
9

10. Identify stakeholders and their benefits
• Identify Organizational Structure
• Match with the Business Process
• Identify benefits
– Tangible X Intangible
– Quantitative X Qualitative
10

11. Make the calculations
• Calculate the cash flow expected from the project
– The increase of revenues or decrease of costs
• Decide the timeframe (3 years, 5 years)
• Choose the discount rate*
– Based on Industry
– Risk of the project
* the rate of return that could be earned on an investment in the financial markets with
similar risk
11

12. Make the calculations (cont.)
• Calculate the Net Present Value
N
Ct
NPV t
t 0 (1 r)
t = the time of the cash flow
N = the total time of the project
r = the discount rate
Ct = the net cash flow
• Evaluate the NPV
– If NPV > 0, the project must be accepted
– If NPV < 0, the project must be rejected
– If NPV = 0, the project does not add nor remove value
12

13. Making assumptions
• Look for similar projects to assess the risk
• Always keep the business sense
– Is it feasible?
– Does it make sense?
• Just assume when something is find to research, if not
research it!
13

14. Thank You
rodrigo_nascimento@infosys.com
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