Why should SOA be adopted? For successful adoption what all are required? Maximum benefits can be obtained only with executive level support, proper training and implementing process discipline. SOA is essential for service bureau industry. Prime brokers, fund administrators in the financial services are prime candidates, where customization, integration and speedy problem resolution are critical. SOA takes commitment, time and patience.

1. Seeking High Octane
Productivity
Raman Kannan
rk2153 AT gmail DOT com Economics of SOA 1

2. MultiDimensional
People
Products
Process
Productivity = Qualified people engineering superior products using
appropriate technologies.
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3. Imperatives for success
• Build what the business needs
• People and corporate knowledge is the
key – culture of kaizen and learning org.
• Continuous and iterative I/T alignment and
process/technology/people improvement
• Adopt new technologies resulting in firm
wide competitive advantage
• Adaptive culture – innovative
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4. Why projects fail
• Fail to understand the business needs
• Fail to evangelize best practices firmwide -
- top/down
• Lack of accountability and lack of
ownership at all levels to try new things
• Lack of challenge at work – intellectual
boredom or unreasonable burden – high
stress
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5. More reasons for failure
• Too little too late – being responsive
• Lack of appropriate performance attribution
• Lack of discipline/focus, purpose and sense of
belonging and ownership
• Lack of objective introspective, post/pre analysis
– Integrating and active feedback
• Lack of planning and failing to execute
– No one plans to fail, most fail to plan
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6. Adopting new technologies
• Technologies Now
– Services Oriented
– Cloud Computing
– Mobile Computing
– Grid Computing
Client/Server
then Object oriented/reuse
Distributed/Remote (RPC)
CORBA/OMG
Concurrent/parallel
Not all of them are necessarily new…reincarnation of old ideas…
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7. Next wave already on shore
• Social networks
– Aol/aim, myspace, facebook, twitter etc
• Integrated media
– Streaming, podcast
• kindle, netbooks, SaaS
– Google-apps, basecamp
• CMS -- joomla/drupal
Restless and infinite
Who could have imagined searching could translate into revenue
Those who imagined created google, those who believed work there
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8. Service Oriented
Service Oriented Architecture is an evolution of interface driven
programming, same ideas applied at higher level of abstraction.
programs (independently executable elements) instead of
procedures and functions
entire business transaction
advent of substrate technologies – time is right
-- internet, http, app containers
-- xml/json
-- java/dot net
-- php/perl/python
dominated by public domain/standard driven software
Evolving group sourcing and virtual corporation
New products created by new processes
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9. Components vs Services
• Components are freeform…anything
– Like classes without interfaces
– Adding/Removing a component
• Lack of standards
– Each had their own private little component model
– Interaction between two different enterprises is hard
• Services are not freeform
– Evolution of frameworks
– Structured method of adding service
• WSDL – standards for specifying a service
• Standard implementations – JBOSS/SOAP
• Designed for integration
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10. Economics of SOA
• Business is changing – constant
• IT must evolve and be the catalyst
• Service Oriented Architecture
– Drives Marginal Cost of new Service down
– Fixed cost – setup cost
• Made for – Service Bureau Industries
– integration
– customization
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11. Marginal Cost
• For a Service Bureau,
• profitability is inversely proportional to the cost of adding one additional
service, the marginal cost.
• Total cost is and always will be positively correlated with number of
services.
• Cost incurred to add one additional service reveals more about the
efficiency of operations, technology and resources.
• Smaller the marginal cost higher the profitability.
– Constant or decreasing
Can you drive the marginal cost down?
So your profitability goes up as you increase client base
Are you able to onboard and operate as well as you signup
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12. Traditional Model
TM do not
Scale linearly
What
happens
Starts out Sooner or later adding additional
linear
Total Cost services becomes prohibitively
expensive.
Initial setup cost
No Of Services deployed
Marginal Cost is a suitable measure for analyzing profitability of service bureau.
Marginal Cost is the cost of adding one additional service to the service bureau
Keeping all other variables constant. Service Bureau is about Scalability.
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13. SOA Model
Traditional Model
Non linear Marginal cost
Opportunity Cost (potential profit)
SOA Marginal Cost (SOA.MC)
Worst case Scenario – linearly increasing MC
Marginal
Cost
Higher initial setup cost
Best case Scenario – decreasing MC
No Of Services deployed
We expect the SOA.MC
To go down with no of
Services deployed due
to learning effect
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14. Other Benefits
• Operational stability
• Satisfied customers
• Happy and Productive knowledge
workforce
• Higher tech ROI
• Competitive advantage
– More investment/more profits
– Ahead of competition
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15. Summary/references
• http://bluehawk.monmouth.edu/monmouth/academic/dna/se-edu.htm
• Constant introspection, metrics, measurement, goal setting
• Change must be rooted in culture/process and technology
• Merely adopting better tools and improvements at a tactical level will result in better
qualified individuals who will eventually leave
– in the absence of
• an adaptive strategic level support
• adaptive policy frameworks
• reward/recognition incentives
• All change adoption must be companywide top/down – while change may be
instigated/initiated and championed by any one who sees an opportunity
• Change must be encouraged from all quarters and all levels
• Risk taking should be rewarded and inaction penalized
• Non linear performance gains can be achieved by optimizing at the highest levels
– Old frameworks that contributed to the inefficiencies must be actively identified and replaced
by new – in perpetuity
– Change/Adaptation are the only constants
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