The Next Big Thing
Posts about next generation technologies and their effect on business.

Why SOA Is a Competitive Necessity

While SOA has emerged in the IT industry as a technology for composition and integration of computer applications, it is really an architecture for business design. If we approach SOA as an architecture for offering and consuming services across organizational boundaries, it is about integration of business entities. An offer of a service implies a capability to deliver a service with business value; this is more than simply executing an application or an application component, it is about providing a business capability. I call the business unit that offers a service and manages the associated capability a service unit.

An entire enterprise can be composed of service units. Each service unit consists of people, business processes and other resources, including computer applications. A service unit may use other services to perform its services, and it may use other services to maintain its capabilities. For example, an order fulfillment service unit may use a shipping service to deliver products, and it will be supported by a payroll service to pay its employees.

If we look at the enterprise as a composition of service units, we can then examine each of the capabilities they manage and how those capabilities can be offered for use in different contexts, such as for different lines of business. This provides opportunities for consolidation. Furthermore, if we look at how services are linked to deliver a result to end customers, we can start to understand how different services affect the cost, quality and delivery time for customer products-the production value chain. A recent article in Harvard Business Review describes this integration of service units as "Plug and Play Business" (The Next Revolution in Productivity, HBR June 1, 2008).

Based on this business perspective, SOA as a business discipline will become a competitive necessity:

Economies of scale. Similar business capabilities can be consolidated to serve in different business contexts resulting in reduced duplication of effort, better utilization of resources and more effective problem resolution.

Governance. Accountability and control can be more effectively focused on appropriate capabilities because service unit responsibilities are more clearly defined. Performance of service units can be evaluated in the context of various uses and can be related to delivery of customer value. Application of policies and regulations can be more focused.

Optimization. Value chains can be optimized by understanding the impact of individual service units and the consequences of changes to a service unit on the multiple products or lines of business it serves.

Delegation. Service units have well-defined responsibilities for the services they provide and are loosely coupled to minimize interdependence. As a result, they can take initiative for improving their individual performance through internal process improvement and effective management of resources.

Agility. Service units become building blocks for enterprise endeavors that can be incorporated into new pursuits to leverage existing capabilities. Value chain models for new pursuits will provide insights on capabilities, risks, costs, quality and timeliness.

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About the Author(s)
  • Steve Simske is an HP Fellow and Director in the Printing and Content Delivery Lab in Hewlett-Packard Labs, and is the Director and Chief Technologist for the HP Labs Security Printing and Imaging program.
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