Where's the ROI?
A well-constructed SOA deployment can eliminate redundant systems, processes, and high maintenance costs and lower integration costs
by Chris Haddad

February 10, 2005

We are at a tipping point where concepts such as real-time enterprise and on-demand and network computing will provide increased productivity, efficiency, and revenue opportunities. Vendors are working to incorporate service-oriented architecture (SOA) concepts such as federation, service-interface descriptions, discovery, and loose coupling into their platform architecture. To create a net-centric computing environment today requires procurement of specialized components and changing development best practices to adopt an SOA mind-set.

Deploying SOA infrastructure provides a fabric used to interconnect all application portfolio assets and create a holistic architecture. Most organizations require a business case to evaluate whether to make the requisite investments, and stakeholders often struggle with constructing this financially oriented document. Building a flexible and responsive SOA foundation costs time, energy, and resources, but the investment is required for enterprises to gain advantage over the competition. Therefore, corporate executives, IT management, architects, and developers must work together to build SOA business plans that outline the benefits to the organization.

A critical part of the business case development process comes in understanding what supporting arguments upper management will or will not accept. IT managers are frequently told that soft costs or benefits are not considered when evaluating investment alternatives. Soft benefits are improvements that are difficult to quantify. However, the inclusion of soft benefits, or intangibles, can buttress the hard-dollar analysis and make the case even more compelling.

Examples of soft benefits include increased employee productivity, improved customer/partner service, and enhanced competitive standing. Hard benefits are quantifiable budget cuts based on reduced staffing levels as a result of making certain SOA investments. The description of intangible benefits should relate to a company's corporate objectives, IT strategic goals, or business unit strategic goals.

Business Benefits
Five categories of business benefits are applicable to SOA investments: improved user experience, cost savings, service life-cycle management, policy enforcement, and competitive advantage.

End users may be workforce members, partners, suppliers, or customers who desire access to business processes and information that crosses application, organization, and geographic boundaries. A frequent goal of SOA projects is to improve the end-user experience when interfacing with multiple, disparate systems. Workforce members can find information more effectively and efficiently when presented with customized views. Composite applications are used to aggregate content and data from multiple applications into a personalized view. Before composite applications, users were required to log on to each application and navigate between many, very different user interfaces to perform their tasks. With a composite application, users have an interface that provides a common look and feel, a single starting point to accomplish any task, streamlined workflow, and a single place of access to all relevant information.

Improved quality of experience (QoE), the perception of intuitive workflow, occurs as the enterprise tightens the integration between systems and addresses business process bottlenecks. By establishing end-to-end business processes, organizations can ensure that the systems interact in a cohesive and intuitive manner. QoE improvements can manifest themselves in several ways: increased customer retention, minimized errors, improved productivity, faster transaction response, and so on.

Workforces are increasingly mobile, heterogeneous, geographically diverse, and collaborative. SOA permits users to access business logic and information across multiple channels, platforms, and devices.

Initiatives to improve the user experience are often time consuming and increase complexity. Business processes and interfaces may need to be re-architected to be more interoperable, secure, open, and at a different level of granularity. Linking systems to build composite applications results in a more complex operational environment. Finding the root cause of failure can be more difficult than with traditional systems.

SOA investments can help to drive down operating costs (hard savings) and improve productivity (soft savings) in several areas. Implementing composite applications can streamline processing customer requests. End users are more productive because of fewer application-context changes and efficient access to information. Savings are accrued by reducing the customer service staff or eliminating the need to hire extra employees. Self-service systems can save costs in several areas by allowing direct end-user access to back-end information systems and eliminating manual processes. End users are more productive when information requests are completed through automation in a matter of minutes or hours instead of days.

SOA infrastructure should include reusable infrastructure services that limit the need for redundant identity and security functions in every application. Implementing centralized services eliminates redundant directories, reduces development burden, and lowers cost of operation. Web service standards eliminate the need for proprietary point-to-point application connections. Lastly, Web service-based middleware is traditionally less costly.

Most organizations find it difficult to propose cost savings when making a business case for SOA. The risk surrounding cost-saving promises is often cited as a reason to discount the promise of return on investment (ROI). For example, all anticipated savings might not be realized if all users or applications do not use sharable services and duplicate existing business logic or data. Increased training for development and operation teams initially offsets any savings derived from advanced SOA tooling. SOA project delays and cost overruns can arise if unanticipated coordination or governance issues are not dealt with as they surface.

Service Life-Cycle Management
SOA infrastructure can increase the service life of applications by extending the reach of the code to support new channels and constituents. Reusing existing services instead of new development can lead to a more mature and tested code base. Shared services (infrastructure and application) help reduce the potential for errors, redundancies, and omissions in data and transactions across systems. Management of the application portfolio is also improved when middleware gateways are used to inventory end points, services, and messages—and determine how to eliminate redundant components.

Understanding the purpose of an asset and optimizing the application portfolio is a difficult process. Ability to identify redundant business processes and data is dependent on establishing a common process and data model. Establishing semantic relationships is a prerequisite to normalizing the various application portfolio assets. When sharing a service across multiple applications, rigorous change control and quality assurance processes are required to ensure compatibility.

Strong policy enforcement controls are critical in an era of heightened attention to business operation efficiency and security. Enterprises must be more responsive than ever to demonstrate compliance with laws and regulations that mandate controls over access to information and processes. SOA infrastructure should monitor all interactions, secure resources, and provide reporting tools that demonstrate compliance to authorities. The infrastructure should use a centralized security framework, providing a consistent implementation of security policy. Sharing and reuse of business logic can result in comprehensive enforcement of business transaction rules. Service-level agreement policies pertaining to quality of service can be established and enforced by SOA infrastructure to increase customer satisfaction.

Inadequate audit and compliance may be the impetus for many enterprises to make SOA investment decisions. When making the business case for policy enforcement, organizations must choose SOA technologies that consolidate event information and reporting. Another risk when implementing policy enforcement is that the specifications to describe service policy in a standard and interoperable manner are immature; creating comprehensive policy enforcement architecture is not an easy task.

SOA technologies can provide competitive advantage to enterprises that leverage newer features and capabilities. SOA infrastructure can provide the framework for rapid deployment of internal and external applications in response to changing market conditions. Applications, services, and products can be offered more quickly and securely, giving an advantage over competitors. SOA can also enable easier and quicker collaboration with external business partners by providing readily consumable service interfaces. Manual processes can be eliminated, and integrating disconnected processes can accelerate end-to-end processing. Lastly, an organization may offer new products or services that were not possible or very difficult with traditional methods.

A competitive advantage may not be realized if an organization doesn't mitigate risk areas. For example, poor or incomplete data models can limit reuse and slow adoption of shared services. Coordinating policies across internal and external organizations can slow down service deployment and hamper the enterprise's ability to gain a competitive edge.

Making the Case
A well-constructed SOA business case describes its objectives in support of corporate goals. Illustrating the positive impacts of SOA technology on business agility, customer service, and other areas puts the business case in the context that management understands and relates to. Developing a business case that is meaningful to business people requires input from everyone that is potentially impacted by the proposed technology changes.

There are many hidden costs that SOA deployments can eliminate, including elimination of redundant systems and processes, replacing systems with high maintenance costs, lowering integration costs by implementing Web service standards, and many more.

Saving cost remains a major driver for business cases, but a properly constructed set of intangible benefits can also be persuasive. Successfully championing the ROI of SOA is as much an art as it is a science.

About the Author
Chris Haddad is practice manager and senior consultant at the Burton Group. Contact Chris at chaddad@burtongroup.com.