Creating the Real-time Enterprise

1. Creating the Real-time Enterprise How a Service Oriented Architecture Delivers An On Demand Advantage Jason Weisser, PHD CTO, Vice President SOA Advanced Technology IBM Software 4-Oct-14

2. Information Age Evolution On Demand Era Organizational Productivity Client / Server Personal & Departmental Productivity Mainframe Administrative Productivity 1960 1970 1980 1990 2000 Source: U.S. Department of Commerce

3. e-business Evolving to On Demand Enterprise Integration Access On Demand Connect to the Internet... Buying, not browsing... working, not surfing, ….. Optimize operations... Transact Integrate Internally Integrate Externally Adapt Dynamically Access Publish An on demand business is an enterprise whose business processes – integrated end-to-end across the company and with key partners, suppliers and customers – can respond with speed to any customer demand, market opportunity or external threat

4. Mainframe PC/NT apps Unix apps Vendor Setup 3rd Party Interface Vendor Process Servers Maintenance Budget (Imaging) Analysis Tool Printer S20-Sales Maintenance Polling Printer PO Insertions S01 - Sales AIS Reports Orders Corrections AIS Calendar I06 Warehouse Due Dates Print Costing Depository Management General Invoice App Banks Broadcast Maintenance Stores & Mrkts Filter Smart Plus I17 Customer Perceived M03 - Millennium 3.0 Smart Plus UAR - Universal Account In-Stock NEW Soundscan Sterling VAN Launcher Reconciliation NPD Group Roadshow Mailbox (Value) Mesa Data AIG Warranty Guard I03 Return to I13- Auto I15 Hand Scan Vendor M02 - Millennium S06 - Credit App Replenishment I06 - Customer Apps Order P15 EES Employee Change Notice L02-Resource Scheduling E13 E01-EDI (Campbell) Fringe PO E3 Interface P14 On-line New Hire Entry S04 - Sales Posting S07 - Cell Phones P16 - Tally Sheet P09 - P17 D01 Post Load Cobra Cyborg Billing CTS Equifax Stock Options Prodigy S09 - Digital I12 Entertainment Satellite Software Banks - ACH and Pos to System A04 - Cust Pay L01-Promo Refund Chks 1 Analysis Plan Administrators B01 - Stock Spec Source (401K, PCS, Life, Status SKU Tracking Unicare, Solomon AAS V02-Price Smith Barney) Resumix P01- Marketing Washington, Employee Support RGIS, Masterfile Ntl Bus Systems I01 PO Frick S11 - ISP CTO2.Bestbuy. Receiving Scorecard - HR Co Tracking I10 Cycle Physical com I04 Home Inventory ACH Deliveries V04-Sign S03-Polling System U18 - CTO I02 - POS X92-X96 Transfers Host to AS400 Communication I11 Price I09 Cycle Counts Testing Supplier S08 - Vertex Compliance S02 - NPD, Intercept Sales E02-Employee Layaways SoundScan Tax Purchase G02 - General Spec Ledger Source SKU Performance V03- Mkt Reactions L60 MDF P09 Coop I05 V01-Price Management SKU Selection Bonus/HR Inventory Info System Tool I35 - CEI K02 Customer Repair ASIS Arthur Planning I35 Early Warning Tracking System I18 Rebate SKU Rep Journal Entry Tool Kit Transfer A05 - AP I55 SKU I07 Purchase Information Store Order Ad Expense ELT Monitor INVENTORY CONTROL APPS - PC INVENTORY CONTROL APPS - PC ACCTS REC APPS - PC PowerSuite Code Alarm DPI/CPI 990COR Debit Receivings OTHER APPS - PC IC Batching Bad Debt Store Devo Sales AP - Collections/Credit Inventory Adj/Count Correct Beneficial Fees Scorecard Display Inventory TM - Credit Card DB Inventory Control Reports Beneficial Reconcile Sign In Home Inventory Levels Texlon 3.5 JEAXF Junkouts Inventory Roll System JEBFA Merchandise Withdrawal Merchandise Withdrawal JEBKA NARM PSP I14 Count Corrections Promo Credits Open Receivings JEDVA Store Budget RTV Accrual PI Count Results JESOA Reporting Shrink PI Time Results from Inv JEVSA Connect 3 Valley Media AP Research - Inv Cntrl Price Protection JEVSF B02 Merchandise AP Research-Addl Rpts Sales Flash Reporting NSF U16-Texlon In-Home CopyWriter's Book to Perpetual Inventory Analysis Shrink Reporting TeleCredit Fees BMP - Bus Data Warehouse Close Out Reporting Repair SKU Gross Margin Workspace Connect 3 Connect 3 performance Mngt Computer Intelligence Data SKU Shrink Level Detail (Interfaces to and from the EDI Reports PDF Transfe Count Corrections USM Data Warehouse are not Cross Ref for VCB Dnlds Coordinator VCB Downloads displayed on this diagram) Warranty Damage Write Off Billing Debit Receivings Merch Mngr Approval DFI Vendor Database System Batch Forcasting Display Inventory Reconcile AIMS Prepared by Michelle Mills Display Inventory Reporting Ad Measurement AIMS Admin Cellular Rollover AIMS Ad S05 - House Reporting Launcher Charges US Bank Recon Optika File C02 - Capital Projects ICMS Credit SiteSeer Cash Receipts/Credit F06 - Fixed Misc Accounting/Finance Apps - PC/NT Assets COBA (Corp office Budget Assistant) Star Repair PCBS(Profit Center Budget System) Cash Over/ Short Merchandising Budget Complexity is Forcing Change Actual Application Architecture for Consumer Electronics Company

5. Start is by deconstructing your business model- breaking it down into discrete business processes and functions These processes and functions are what we call service components Each service component serves a unique purpose and interacts with other service components in the business model, using agreed-upon cost structures and service levels Controlled Transformation

6. Why does SOA Governance lie at the heart of any successful Solution? Business Choreography This process defines the sequence and dependencies of interactions between multiple roles to compose and implement a business Process composing multiple web services. Choreography describes the sequence of interactions for Web services messages - it defines the conditions under which a particular web service operation can be invoked. WSDL describes the static interface and Choreography defines the “Dynamic” behavior external interface from a global view. BPEL4WS primarily focuses on orchestration, while WSCI focuses on choreography. With SWCA each participant in the message exchange defines a SWCI interface. With BPEL4WS you describe an executable process from the perspective o one of the participants. Business Collaboration This process defines the sequence and dependencies of interactions between multiple roles to implement a business Process composing multiple web services. Choreography describes the sequence of interactions for Web services messages - it defines the conditions under which a particular web service operation can be invoked. WSDL describes the static interface and Choreography defines the “Dynamic” behavior external interface from a global view. BPEL4WS primarily focuses on orchestration, while WSCI focuses on choreography. With SWCA each participant in the message exchange defines a SWCI interface. With BPEL4WS you describe an executable process from the perspective o one of the participants. Business Workflow & Coordination This describes an extensible framework for providing protocols that coordinate the actions of distributed applications. Such coordination protocols are used to support a number of applications, including those that need to reach consistent agreement on the outcome of distributed transactions. This process(es) enables an application service to create a context needed to propagate an activity to other services and to register for coordination protocols. The framework enables existing transaction processing, workflow, and other systems for coordination to hide their proprietary protocols and to operate in a heterogeneous environment. Business Orchestration This process defines the control and data flow between web services to achieve a business process. Orchestration defines an “executable process” or the rules for a business process flow defined in an xml document which can be given to a business process engine to “orchestrate” the process, from the viewpoint of one participant. Business Process Management This relates to the differential process of managing the various dependencies of interactions between and among multiple services, including security, policies, and web services. Business process management includes the various activities both in the initial decomposition of the web services, and the administration of the security or event policy, all within the context of a services framework.

7. Deconstruct & Conquer: The Component Business Model First, break down your business into its components 2 3 4 1 Example: eGovernment Tax Service Citizen Relationship Supply Chain & Distribution Business Administration Manufacturing Supply Chain Strategy Corporate Strategy Citizen Relationship Strategy Manufacturing Strategy Category Corporate Planning Supplier Relationship Management Strategy Alliance Management Supply Chain Planning Category Citizenry Relationship Planning Line of Business Planning Production and Materials Planning Business Performance Management P&L Management Assessing Citizen Satisfaction Distribution Oversight External Market Analysis Manufacturing Oversight Matching Supply and Demand Citizen Insights Inbound Logistics Outbound Logistics Tactics Organization and Process Design Effectiveness Account Management Supplier Control Legal and Regulatory Compliance Service Ideation Make Products Treasury and Risk Management Concept/Service Testing Value-Added Services Distribution Center Operations Accounting and GL Assemble/Pkg. Products Service Development Citizen Account Servicing Indirect Procurement Execution Service Management Plant Inventory Management Retail Marketing Execution Transportation Resources Facilities and Equipment Management Marketing Execution In-store Inventory Mgmt HR Administration Manufacturing Procurement Citizen Service En Route Inventory Management IT Systems and Operations Citizen Directory Service Directory

8. Deconstruct & Conquer: The Component Business Model Next, decide what’s differentiating and what is simply operating 3 4 1 2 Example: Consumer Packaged Goods Product Management Customer Relationship Supply Chain & Distribution Business Administration Manufacturing Supply Chain Strategy Corporate Strategy Customer Relationship Strategy Manufacturing Strategy Category/Brand Strategy Strategic View Corporate Planning Supplier Relationship Management Strategy Alliance Management Supply Chain Planning Category/Brand Planning Customer Relationship Planning Strategic differentiation Line of Business Planning Production and Materials Planning Business Performance Management Brand P&L Management Assessing Customer Satisfaction Distribution Oversight Competitive parity External Market Analysis Manufacturing Oversight Matching Supply and Demand Customer Insights Inbound Logistics Outbound Logistics Tactics Basic Organization and Process Design Marketing Development & Effectiveness Account Management Supplier Control Legal and Regulatory Compliance Product Ideation Make Products Treasury and Risk Management Concept/Product Testing Value-Added Services Distribution Center Operations Accounting and GL Assemble/Pkg. Products Product Development Customer Account Servicing Indirect Procurement Execution Product Management Plant Inventory Management Retail Marketing Execution Transportation Resources Facilities and Equipment Management Marketing Execution In-store Inventory Mgmt HR Administration Manufacturing Procurement Consumer Service En Route Inventory Management IT Systems and Operations Customer Directory Product Directory

9. Deconstruct & Conquer: The Component Business Model Then, analyze costs 2 4 1 3 Example: Consumer Packaged Goods Product Management Customer Relationship Supply Chain & Distribution Business Administration Manufacturing Supply Chain Strategy Corporate Strategy Customer Relationship Strategy Manufacturing Strategy Category/Brand Strategy Financial View Corporate Planning Supplier Relationship Management Strategy Alliance Management Supply Chain Planning Category/Brand Planning Customer Relationship Planning High capital area Line of Business Planning Production and Materials Planning Business Performance Management Brand P&L Management Assessing Customer Satisfaction Distribution Oversight High cost area External Market Analysis Manufacturing Oversight Matching Supply and Demand Customer Insights Inbound Logistics Outbound Logistics Tactics High cost & capital area Organization and Process Design Marketing Development & Effectiveness Account Management Supplier Control Legal and Regulatory Compliance Product Ideation Make Products Treasury and Risk Management Concept/Product Testing Value-Added Services Distribution Center Operations Accounting and GL Assemble/Pkg. Products Product Development Customer Account Servicing Indirect Procurement Execution Product Management Plant Inventory Management Retail Marketing Execution Transportation Resources Facilities and Equipment Management Marketing Execution In-store Inventory Mgmt HR Administration Manufacturing Procurement Consumer Service En Route Inventory Management IT Systems and Operations Customer Directory Product Directory

10. Deconstruct & Conquer: The Component Business Model Finally, prioritize your transformation initiatives 2 3 1 4 Example: Consumer Packaged Goods Product Management Customer Relationship Supply Chain & Distribution Business Administration Manufacturing Transformational View Supply Chain Strategy Corporate Strategy Customer Relationship Strategy Manufacturing Strategy Category/Brand Strategy Corporate Planning Supplier Relationship Management Strategy Alliance Management Supply Chain Planning Category/Brand Planning Customer Relationship Planning Seek external provider / external utility Line of Business Planning Production and Materials Planning Business Performance Management Brand P&L Management Assessing Customer Satisfaction Distribution Oversight Consolidate and/or create internal utility External Market Analysis Manufacturing Oversight Matching Supply and Demand Customer Insights Inbound Logistics Outbound Logistics Tactics Organization and Process Design Marketing Development & Effectiveness Account Management Integrate and redesign Supplier Control Legal and Regulatory Compliance Product Ideation Make Products Treasury and Risk Management No action Concept/Product Testing Value-Added Services Distribution Center Operations Accounting and GL Assemble/Pkg. Products Product Development Customer Account Servicing Indirect Procurement Execution Product Management Plant Inventory Management Retail Marketing Execution Transportation Resources Facilities and Equipment Management Marketing Execution In-store Inventory Mgmt HR Administration Manufacturing Procurement Consumer Service En Route Inventory Management IT Systems and Operations Customer Directory Product Directory

11. The Vertical Silo Problem Division “A” Division “B” Division “C” Division “D” Division “E”

12. Where Are We Heading – Service Oriented Architecture Customer Division (s) Shared Services Supplier Outsourced

13. Need for a Services Oriented Architecture Pricing Sales Orders & Supply Chain Web Orders • Monolithic Business Applications – built historically • Must periodically synchronize on inventory information • Pricing information into each inserted differently based on application structure • No common customer database, inventory or flexibility in business processes

14. Component-based Architecture is Not Enough Customers Pricing Web Orders Inventory Sales Orders Shipments • Services defined as units of business logic, but …. • Flow of control – bound into service logic • Transformation of data formats bound into service logic • Tight coupling between services makes them fragile

15. Move IT Logic Out of Services Customers Pricing Web Orders Inventory Sales Orders Shipments • Services defined as units of business logic separated from ….. • Flow of control and routing • Data transformation and protocol transformation

16. SOA: The Next Step on the Connectivity Evolution Direct Connectivity Message Queuing Message Brokering Service Orientation Connectivity, Mediation and Additional Logic Connectivity Logic Connectivity and Mediation Logic Mediation and Additional Logic Connectivity, Mediation and Additional Logic Lines of code Additional Logic Application Services Application Application Application All connectivity, mediation and additional logic buried in the application. Abstracts the connectivity logic from the application Abstracts the connectivity + mediation logic from the application Reduces application to its core business functions (i.e. a service) Degree of Flexibility and Reuse

17. IT’s Architectural Evolution: Making IT More Responsive 1980’s to Mid 1990’s 1970’s to mid 1980’s Mid 1990’s to Early 2000’s Pre 1950’s To 1960’s Late 1990’s Today Monolithic Architectures Sub-routines / Remote Procedure Calls Remote Object Invocation Message Processing EAI Services (SOA) Increasing Modularity to Achieve Flexibility

18. Economics:globalization demands flexibility Business Processes:changing quickly and sometimes outsourced Growth:at the top of the CEO agenda Reusable Assets:can cut costs Information:greateravailability Crucial for flexibility and becoming an On Demand Business Why SOA for Business Flexibility and Reuse? Traditional Business* Today’s World-Class Business* *Sources: CBDi

19. How Are Customers Thinking Technically About SOA?The SOA Lifecycle • Discover • Construct & Test • Compose • Integrate people • Integrate processes • Manage and integrate information • Gather requirements • Model & Simulate • Design • Manage applications and services • Manage identity and compliance • Monitor business metrics • Financial transparency • Business/IT alignment • Process control

20. Robust Capabilities Connected in an Open, Flexible Manner Modularproduct portfolio built on open standards IBM Integration Reference Architecture Development Services Functionally rich,adopted incrementally Business Innovation & Optimization Services Interaction Services ProcessServices Information Services Simpleto develop, deploy and manage Integratedrole-based tools for development & administration Connectivity Services Partner Services Business Application Services Application and Information Assets …delivering the value of SOA, today Infrastructure Management Services

21. Development Services Business Innovation & Optimization Services Interaction Services ProcessServices Information Services Portal Federated Query Connectivity Services DB Access CommunityManager App EJBs Oracle Adapter SAP Adapter DB Access Partner Services Business App Services App & Info Assets IT Service Management Composite Application Development Through SOA Business Dashboard Business Innovation & Optimization improves Composite Applications IT impacton processes

22. Business Process + Standards + Technology is Driving Change Business Driven • Increase revenue • Provide flexible business model • Drive down cost • Reduce cycle times • Integrate across the enterprise • Reduce business risk & exposure Network Centric Client Server Mainframe On Demand Computing Styles Evolve Over Time Providing Ever Increasing Value SOA Enabled