Perspectives on SOA ROI

1. Karsun Solutions Robert D. Bryan {robert.bryan@karsun-llc.com} Brand K. Niemann {brand.niemann@lmco.com} Kartik Mecheri {kartik.mecheri@karsun-llc.com} Perspectives on SOA ROI April 8, 2011

2. Some Perspective On SOA • "SOA is a natural step in the computing trend towards integrating and reusing capabilities rather than reinventing them, SOA holds the promise of making an IT portfolio more efficient and agile.“* • Departmental perspective - the investment required for SOA might indeed seem large. • Organization-wide perspective - the return on investment due to efficiency becomes evident. • “Instead of 10 different departments building 10 similar software services from scratch an organization can build it once, build it well, and share it.“ • Success w/ SOA really boils down to "we are successful together or we fail together" *Geoff Raines mitre.org/news/digest/enterprise_modernization/09_08/external.html

3. Why You Do SOA ... In This Order Business Objectives - First ... Second ...etc. Technology Objectives Count For Little If No Business Outcome *Anne Thomas Manes – Gartner - SOA Symposium –Berlin -October 2010

4. Gartner - What’s the Business Value of SOA?* Difficult to build a generalized SOA business case • •SOA has an indirect impact on business outcomes • -SOA enables development of systems the organization needs to achieve its goals • -The business benefits of these systems are a second order outcome of SOA investment • •Comparisons across projects or organizations are problematic • •Baseline metrics are seldom available *Anne Thomas Manes – Gartner - SOA Symposium –Berlin -October 2010

5. Difficulty Proving the Business Value of SOA* • •In a 2009 Gartner survey, 36% of respondents say lack of business justification impedes SOA adoption • Only 1% said they measured benefits • •Very difficult to measure value of a “SOA initiative” • •Requires TCO metrics (which few people measure) • •Much easier to measure the value of specific projects, although this undervalues SOA** • •SOA projects should be measured in business outcomes that translate into hard cash • •IT leaders must work with business leaders/finance to establish a solid business value metric system *Anne Thomas Manes – Gartner - SOA Symposium –Berlin -October 2010 **Companion Guide To Software AG’s SOA Value Assessment Using SOA And BPM To Drive Business Optimization – Forrester Research - 2007

6. Others - What’s the Business Value of SOA?* SOA Experience • Requires only 20% additional cost to build core reusable services (e.g., Relative Cost of Writing for Reuse - RCWR for Reuse=1.2) • Save 90% of development costs for each reuse of a SOA service (e.g., Relative Cost of Reuse - RCR =.1) • Quickly increase levels of reuse by 2.5x on applications. • Lead to further, as yet to be quantified savings in quality, productivity, and time-to-market.** *“ROI of SOA - Based on Traditional Component Reuse” – Poulin – 2006 ** Query in to Poulin regarding more recent findings on time-to-market

7. Multiple Conflicted Views Regarding ROI • On One Hand : *ROI must be calculated uniquely for each organization, and it must address the financial implications of the following – there is NO single ROI formula for SOA: • • The number of siloed applications affected. • • The number of business process (and nested sub-processes). • • How much business logic needs to be separated from computer logic. • • The amount of value currently contained in packaged applications. • • The number of adapters and “black box” components needed; the amount of effort required to carve out and build in reuseability for each. • • The scope of business applications that can be integrated. • • The number of duplicate software processes that can be rationalized. • • The number of data definitions that need to be harmonized. • • The value in regulatory compliance and better audit procedures. • • The value of increased agility or responsiveness to change; the value in being able to change business processes (and the related software processes) to meet strategic opportunities. • • The extent to which future changes become easier (and less costly). • • Changes in training requirements. • • The time horizon for SOA development. • On The Other Hand : Some basic ROI calculations appear to be available - Jeffrey Poulin** (this has not been confirmed / tested) *Companion Guide To Software AG’s SOA Value Assessment Using SOA And BPM To Drive Business Optimization – Forrester Research – 2007 **LM Certified Systems Architect, IEEE Certified Software Engineering Professional, Lockheed Martin, Owego, NY http://jeffreypoulin.info/html/reucalc_basic.html

8. Recommendations from Gartner* • Don’t focus on proving the value of “SOA” • -SOA benefits are too abstract, hard to prove causally • •Do focus on proving the value of SOA projects • -Use rigorous metrics to measure business outcome • -Aggregation of SOA projects will eventually prove SOA value • •Define standard business value metrics • -Work with business/finance • -Measure impact on the bottom line • •Measure the business value of each SOA based business need that is met, then measure how SOA helped produce that value • •Business value is seen in both positive metrics and cost avoidance • •Decide upfront on the metrics for each project • •Communicate the value of SOA on an ongoing basis • -Don’t wait for “big-bang” benefits; all results are good *Anne Thomas Manes – Gartner - SOA Symposium –Berlin -October 2010

9. 2009 Survey of SOA Objectives** **Anne Thomas Manes – Gartner - SOA Symposium –Berlin -October 2010

10. Maintenance is 92% of TCO * The Collision Course of Portfolio Bloat** *Andy Kyte. “A Framework for the Lifetime Cost of Ownership of an Application.” Gartner.30 March 2010 **Anne Thomas Manes – Gartner - SOA Symposium –Berlin -October 2010

11. Immediately Available Tactical Ways Forward Possible Ways Forward • Systemically Compare Costs and Time** • Estimate Projects Using SOA • Estimate Projects Using Legacy • Implement Measures of Effectiveness* (MOE) • $$$ For Innovation (Expanded Or Recapitalized Business Capabilities) vs. $$$ For O&M • Cycle Time From Management Approval To Implementation Of A Solution Could Be Integrated or Closely Aligned With PMO’s Portfolio Management Function) *“Enabling the Mission” A Practical Guide to Federal Service Oriented Architecture p. 22-23 **Gartner AADI User Panel: Measuring the Value of SOA - June 2008 - http://www.soa-consortium.org/podcasts-webcasts/Gartner-08/podcast-p1.htm

12. Examples Of Possible Efficiency Metrics* *Anne Thomas Manes – Gartner - SOA Symposium –Berlin -October 2010

13. Credible Reuse Metrics - Examples Use Metrics That ‘Fit’ Your Organization And Focus Heavily On Business Outcomes* – Not IT Outcomes! *Anne Thomas Manes – Gartner - SOA Symposium –Berlin -October 2010

14. Top 10 Reasons SOA Fails* Failures Are Usually Due To People And Cultural Issues More Often Than For Technology Issues *http://www.cio.com/article/438413/Top_10_Reasons_Why_People_are_Making_SOA_Fail?page=1&taxonomyId=3016

15. Typical Opportunities For Action • Establish an active, substantive, senior-most executive-supported Community Of Practice (COP) from which SOA practitioners can build the necessary bridges across the organization • Secure senior-most executive support / sponsorship for SOA • Engage ‘the business’ and make sure they understand: • The potential for SOA but not ‘oversold’ • The timeframe for SOA benefit realization (ensure expectations are managed) • Integration of SOA COP with the Corporate and CIO PMO / Portfolio Management function