an approach to extract the business value from soa services
DESCRIPTION
Natalia KryvinskaTRANSCRIPT
© 2011 IESS-1.1 University of Vienna
Natalia Kryvinska, Lukas Auer, Christine Strauss
Content
© 2011 IESS-1.1 University of Vienna
Introduction
Many enterprises have been long time struggling with the complexities and duplication
inherent in countless redundant systems across multiple business units.
Thus, a single instance of a service, e.g., centrally developed, maintained, tested, and
could be shared across an unlimited number of business units is a highly desired.
This is also the core of SOA’s value proposition, with services needed to be developed
once only, and then made available to the rest of the enterprise through a registry.
Moreover, with web-based services it is necessary to implement an API in one place
only.
The developers can build a series of components around a web-service that the
enterprise applications can further use.
© 2011 IESS-1.1 University of Vienna
Benefits from Components Reuse in SOA
Number of Services/Projects
© 2011 IESS-1.1 University of Vienna
Increase of SOA Business Value with Number of Projects
© 2011 IESS-1.1 University of Vienna
SOA “Business Value” Features Tree
Decrease Costs
Increased Profitability
Increase Revenue
Generate new revenue
Increase existing revenue
Reduced processing
time
Reduced errors
Reduced system
downtime Enable new product
development
Ease of integration
Improved flexibility
Reduced integration
cost
Increased reuse
Reduced integration
time
Reduced time-to-market
Improved Ability to Change
Protect existing revenue
Reduced maintenance
cost
Improved ability for
compliance
Reduced Operational
Risk
Profitability value drivers
Flexibility value drivers
© 2011 IESS-1.1 University of Vienna
© 2011 IESS-1.1 University of Vienna
Today’s businesses depend on electronic processes at every level.
An organization’s ability to stay competitive relies heavily on being able to adapt its
electronic processes fast - to improve productivity, reduce costs, deliver higher-
quality information, and accelerate routine tasks.
For these enterprise needs, SOA offers protocol independence, meaning that different
consumers of computing services - such as:
- an application,
- a server system, or
- a human end user
can communicate with the same service in a different way to obtain the data or
functionality desired.
© 2011 IESS-1.1 University of Vienna
Reference architecture
© 2011 IESS-1.1 University of Vienna
© 2011 IESS-1.1 University of Vienna
From an organizational perspective, it is difficult to place a concrete value on many
decisions, actions, or investments because the effects are too distributed or too
moderated by other factors to measure them easily or accurately.
Thus, arises a question - what does it make measuring SOA strategic value so
difficult?
A simple answer is that there are too many ways to measure it.
Every consultant, practitioner, or faculty member has a unique method for capturing
SOA value.
© 2011 IESS-1.1 University of Vienna
Accounting rate of return Critical success factors Quality engineering Activity-based costing Customer resource life-cycle Real-options valuation
Analytic hierarchy process Decision analysis Return on management Application benchmark
techniques Delphi evidence Requirements costing techniques
Application transfer team Executive planning for data processing Schumann’s method Accounting rate of return Critical success factors Quality engineering
Activity-based costing Customer resource life-cycle Real-options valuation Analytic hierarchy process Decision analysis Return on management
Application benchmark techniques Delphi evidence Requirements costing techniques
Application transfer team Executive planning for data processing Schumann’s method Benefits-risks portfolio Investments portfolio Socio-technical project selection
Benefits assessment grid Information systems investment strategies System dynamics analysis
Break-even analysis Knowledge-based systems for information systems evaluation Systems measurement
Boundary value Management Information Systems (MIS) utilization technique Time-savings-times-salary
Costs-benefits analysis Multi-objective, multi-criteria methods User utility function assessment Costs displacement/avoidance Options theory Value analysis Costs-effectiveness analysis Potential problems analysis Value chain analysis
Costs-value techniques Profitability index Ward’s portfolio analysis Costs-revenue analysis Process quality management Wissema’s method
Methods for Valuing IT/SOA Investments
© 2011 IESS-1.1 University of Vienna
© 2011 IESS-1.1 University of Vienna
Components of SOA “Business Value”
Costs
Benefits
SOA Business Value
Techno- logy
Organiza- tional
Integ- ration
Human Recources
Servicifi- cation
Business Process
Services/ Recources
Re-use
Integra- tion
Architec- ture
Flexibility
Open Standards
Human Recources
© 2011 IESS-1.1 University of Vienna
© 2011 IESS-1.1 University of Vienna
Risk factors that can impact investment decision process:
- Organizational factors - complex program networks, misalignment of (or
conflicting) internal goals, lack of leadership support;
- Business process factors - impact on existing process, fear of changing work
assignments;
- Technology factors - rapid changes in technology, interacting with parallel
systems, scale and complexity.
Furthermore, project failures are the result of the multiplicity of risks inherent in
software project environment.
© 2011 IESS-1.1 University of Vienna
Risk Analysis Example
© 2011 IESS-1.1 University of Vienna
© 2011 IESS-1.1 University of Vienna
Total revenues line Breakeven Point
Operating income
Operating loss
Total costs line
Number of Services
Tota
l Rev
enue
/Cos
ts
© 2011 IESS-1.1 University of Vienna
© 2011 IESS-1.1 University of Vienna
Serv
ice
Dev
elop
men
t Cos
ts
Economic Advantages
SOA
Fixe
d C
ost
New business capabilities become economically feasible
Traditional Approach
SOA Approach
Number of Services Break-even Point
© 2011 IESS-1.1 University of Vienna
where: π - profits, p – price, q – quantity, c = unit cost (average variable cost), f - fixed costs.
© 2011 IESS-1.1 University of Vienna
Conclusions
In order to maximize the intended benefits of SOA implementation, organizations need
to develop a well-articulated SOA quality strategy to promote trust and reuse.
However, building an effective SOA platform requires tight integration between new
and existing product categories, and it may require large investments.
For this reason, conventional investment valuation methods need to be combined with
other modern techniques to reflect SOA’s long-term strategic investment nature.
Thus, in this paper, we apply modified BEP method developed under the BVA umbrella
for the evaluation of SOA projects, in particular for the services reuse related.
© 2011 IESS-1.1 University of Vienna
© 2011 IESS-1.1 University of Vienna