SOA=MBA

These days, one of the most prevalent of such terms is "services-oriented architecture." And judging by the flurry of vendor announcements, SOAs are hot, hot, hot. In the past four months, BEA Systems, IBM, Sun Microsystems--as well as a host of application integration providers--have unveiled their visions (emphasis on "visions") of an SOA future. Why the hype? Because SOAs actually could represent the most important computing model to reshape how IT systems are designed and implemented. With an SOA, companies can carve out highly functional business processes that can be reused across the organization. Voila! An IT system that delivers greater efficiency and agility. When it comes to devising an SOA, business rules, well, rule.

To reach this IT nirvana, though, companies will have to fundamentally change the way they develop and manage IT, which will create an equally dramatic change in where they direct their IT dollars. "We believe that at least 60 percent to 70 percent of the dollars now being spent on traditional integrated middleware and object-oriented technologies will shift to SOAs in the next three to four years," said Ron Schmelzer, senior analyst at researcher ZapThink, Waltham, Mass. As a reference, Gartner estimates the application integration middleware market will approach $6.3 billion in license revenue by 2006. Moreover, products to create, orchestrate and manage Web services"the building blocks of SOAs"represent a growing segment for solution providers serving large and midsize companies (see bar chart).

Yet, to date, vendors have done a remarkably poor job of explaining the whats, whys and hows of implementing an SOA. So now, VARs and systems integrators are stepping in to help SOA get on the road to realizing its full potential. "Vendors have been making a lot of promises," said Jeff Mitchell, managing director of Bearing Point's Integration Services, Ft. Worth, Texas. But they haven't been delivering on those promises, he said, adding, "The technology to create [the architecture] is there, but not from any one vendor."

As Kevin Pollari, a Dallas-based lead partner in Accenture's Global Architecture and Core Technology practice, put it: "This isn't business process integration in the way IT generally thinks about it. It's business processes around [business operations] like order management, service delivery or the integrated view of the customer."

The irony is, this latest term to flummox potential business customers places greater emphasis on understanding business operations than has any computing model before it. "Implementing an SOA is a stretch in skill set because you have to think about the business perspective first, understand which functions span across the organization, and then design services around our business processes and our business architecture," said Jeff Gleason, director of IT strategies for the Financial Markets division of Transamerica Life Insurance Co., based in Cedar Rapids, Iowa. A member of the Aegon Group, the division began work on an SOA about a year and a half ago.

"Having to think about things differently has been one of the bigger challenges we've encountered. That's why systems integrators are important," Gleason said. "I think you have to really examine their processes and methodologies when picking an SI."

Consider what Gleason is saying for a minute, because he's revealing both the challenges and opportunities of working with clients that actually are crafting services-based architectures. Clearly, customers will rely on VARs and systems integrators to offer procedures and guideposts as they blaze these unfamiliar territories. And given the depth of internal knowledge that's required, solution providers can neither assume most of the design responsibilities themselves, nor paint the architecture as more than a way to frame computing resources.

"We aren't trying to sell SOA, but offering it as a strategy," Pollari said. "Perhaps the biggest benefit from SOAs is they lay the foundation for solving practical problems today. But you don't just want to replace point-to-point EAI [enterprise application integration] with Web services. If you don't think about the architecture first, you're just repaving the cow path. Done right, SOAs help you with the mess in front of you."

Services With A Grimace
First, let's be clear. The term Web services is not synonymous with services-oriented architecture. Called "Web services" because they make use of XML, http, SOAP and other Internet-related technologies, Web services serve two purposes: They describe low-level actions, such as "show customer's credit rating."

These actions can then be exposed to, and combined with, other functions via the Web. Adapters, APIs and some legacy-based functions can also be turned into services.

If this sounds familiar, you're showing your age. The concept has been around since the early 1980s, first with the Distributed Computing Environment and later with the Common Object Request Broker Architecture (CORBA), both of which relied on proprietary technologies. A critical mass of agreed-upon Web-based standards now offers the potential for services' widespread use.

But the real utility of services starts when they can be combined into more complex functions. Such components--or composite applications, as they're sometimes called--are the raison d'etre of the SOA. They provide repeatable, reusable processes that, themselves, can be loosely coupled to mirror business operations. "In an SOA, you look at the different sets of available services, and you decide which you want to bring together to form the functions you need," Mitchell explained. "Once you have that component, you expose the services those components provide and can build your SOA from it. That's where SOA takes off."

Poised to take off might be more like it. Because, despite all those SOA visions dancing in vendors' heads, remarkably few enterprises are actually engaged in the effort. "One thing we've become aware of is that the term SOA is getting a lot of traction, but it still has low awareness," acknowledged Scott Cosby, IBM's program director of WebSphere Business Integration. "Even executives who should understand it because of their position, don't know."

Many systems integrators reckon that only between 5 percent and 10 percent of their clients are actively working on the architecture. So much for the whiz-bang factor.

But although vendors have indeed promised more than they've delivered, standards--along with a combination of diverse products from the likes of Actional, Amberpoint, Informatica, SeeBeyond and Sonic Software--appear to manage most of the technical hurdles for creating, cataloging and coordinating services.

What remains is the hard slog as companies canvass their business operations, map existing applications and systems to find redundancies, unearth high-value business processes and then create the appropriate composite applications. "There are no more technical challenges around this," said Rhonda Louise Hocker, senior vice president and CIO of BEA Systems, who--with Accenture's help--began her SOA odyssey nearly two years ago. "It's around business skill sets and governance. CIOs who've had trouble raising their organizations' soft skills will find the problem has become amplified."

Practically Speaking
So what goes into the effort of building an SOA? At online discount brokerage firm Wall Street Access, it's things like mapping the life cycle of an order that can put people, and the composite applications they craft, through their paces.

That's because a simple-sounding function can comprise up to 20 different tasks in today's trading environments, said Peter Underwood, CIO of the New York-based brokerage. Specializing in the trade of large, complex orders, Wall Street Access has separate lines of business for active traders, small to midsize hedge funds, a wealth management advisory group, and a fund of funds for investors with a spare $150 million to pool. Now, imagine when one client wants to exercise a trade across accounts.

But wait, before you do, throw in a dizzying array of rules and regulations governing different aspects of each trade, a series of back-office queries to validate cash balances, a different query to grab realtime market quotes, a high-speed and complex tracking system, and another system to formulate the trade and then stream it to the point of execution. And, oh yes, a second or two of delay can have enormous cost ramifications. We're talking one heck of a lot of services in a composite application.

During the past two years, Underwood has worked with IBM and with consulting partner Jensyn Services, New York, to break down and expose these different tasks into a series of repeatable business processes. "We had to decide what those composites can provide and what we can get out of them. By doing that, we can define our interfaces," Underwood said. "That's the most important thing in an SOA architecture. The idea is you have a service that can change and grow and do what it needs to do"but the interface to that service can never change. It's not so simple."

To start, Wall Street Access divided its IT resources into six not-so-easy pieces: order routing and order management, back office, security, market feeds (such as Reuters), data and rules. Such rules can define where to route an option trade, or prevent a trader without a margin agreement from buying stock for twice the amount of cash in his or her account.

The high-level abstraction that comes from separating business logic and processes from the data allows the firm to use the same interface for, say, "get stock quote," regardless of market feed.

This past June, Wall Street Access released active@ccess, the first commercial fruit from its SOA labors. With it, active traders can stage and send multiple orders while continuing to use their desktop applications to conduct research and monitor the markets.

On The Road Again--And AgainSystems integrators and their customers typically describe the exercise of building an SOA as "painful." Why would early adopters willingly go through the experience?

At the Huntington National Bank, Columbus, Ohio, the primary answer is improved usability, said Tim Scholten, senior vice president and business systems director. Scholten has more experience than most CIOs now venturing into SOA land. Working with integration software and services provider Synoran, also of Columbus, the bank has been slowly converting to a services architecture over the past four years.

In the past, customers were lucky if they received the same account balance from the teller, telephone system or ATM. Today customers can get consistent answers because those delivery channels are all calling the same service. In fact, Huntington's voice-response system, call-center platform and new CRM application also now call into the same composite applications.

"With Web services I can add business intelligence and logic to turn a 10-step process into one," Scholten said. "That means our associates can have deeper relationships with clients, instead of spending all of their time navigating the system.

"Yes, this is painful, but the benefits are simple--it's easy to use for our customers and associates. What's that worth? It's substantial. We have more than 1 million customers. If we assume it's a 1 percent improvement in our retention, then the investment pays for itself," he said.

Huntington projects a 100 percent ROI in the first 12 months and a 144 percent hard-dollar ROI in five years. The bank has already achieved a 25 percent decrease in call-center volume and first-call resolution; an increase of more than 10 percent in sales effectiveness; and a reduction of nearly 75 percent in expenses for upgrading ATM, telephone, online and other delivery channels.

"With an SOA implementation at this level, to the entire enterprise, you need to make sure there's security, journaling, tracking and logging--with financial and operational reporting off of that information," said Harsha Kolli, director of marketing for Synoran. "At this size, you need to go through at least three iterations before you put anything into production."

Given those four years, you'd think the bank would be nearly finished. But you'd be wrong. "On the greater journey, we are still in the early phases because this is an enterprise adventure," Scholten said.

It's a common sentiment, expressed by nearly all of the people interviewed for this article. What's more, few are at the stages of Huntington, which can finally point to a measurable payback. Yet they point to a return later--with greater flexibility, agility and ability to transform their businesses to meet unexpected challenges.

"We will never be done," Gleason said. "This is not a destination as much as a journey. The business will continually change."

Clearly it's time to take the term SOA off the secret decoder list. Judging from vendors' lack of success, it's up to the channel to give the concept real utility.