Nishit Rao Group Product Manager FMW Markus Zirn Sr Director, FMW Product Management

1. Savings Calculator for SOA A tool to compute savings in SOA based Integration projects Nishit RaoGroup Product Manager FMW Markus Zirn Sr Director, FMW Product Management

2. SOA Savings Calculator computes IT cost savings for integration projects by comparing costs between a SOA/BPEL implementation and a Proprietary Integration Broker implementation over life of solution using TCO.

3. Features and Benefits • Simple tool to highlight key SOA concept – Agility. • Connect the dots between Marketing - “Reduce costs” and Customer – “IT Agility” • TCO over 5-7 years is a common industry justification. • Allows for strategic discussion with customer. • Positions Oracle as a thought leader. • White Paper & Customer Case Study backs it up. • Analysts, Industry and even major Competitors agree on savings. • Levels or differentiates from Competition. • Arms IT with concrete number to make case with CFO

4. Integration is top SOA priority

5. What is value of SOA? • SOA Business Value = • Bottom line benefits + Top Line benefits. • Top line / Revenue is difficult to measure and pin the benefits to SOA. • Higher sales, Risk reduction, Time to market etc. • Among Cost Savings, IT saving is tangible, can be benchmarked *and* pinned to SOA. • Software services, Hardware and software licenses

6. Integration Cost Study : Zapthink

7. Compare TCO over Traditional SOA based Integration : Business Driven Broker based Integration : Data Driven Custom Flows BPEL Business User Services Services Tightly coupled, zero re-use, function calls Reusable decoupled Services WSDL WSDL Custom Custom ERP CRM ERP CRM • Standards Based: BPEL & Schemas. • Align to business – high ROI, low risk. • Reusable services. • Custom data, adapters and flows. • Expensive coding, vendor lock in, limited re-use and limited tooling • Low ROI data integration.

8. Underlying Model n TCO = A + P.V.  ( Si + Hi + Gi +Ci – Ri ) i = 1 A = SOA CapEx acquisition cost P.V. = net present value Si = Software License costs in year i Hi = Hardware costs in year i Gi = Governance Costs in year i Ci = Services (consultants) costs in year i Ri = Savings from Reuse in year i where SOA CapEx acquisition cost includes one time capital expenditure on Software licenses, and Governance Costs includes recurring Architecture, Training and Governance expenditure. SOA Savings = TCOTRADITIONAL - TCOSOA

9. ERP Custom Component CRM Inside an Integration Process Multi Step Process Bind Bind Bind Interfaces exposed by endpoints Endpoint Endpoint Built by in-house Developers

10. Services Effort Defaults

11. Oracle Customer Validation • Helio: • Saved weeks when endpoint change did not impact process. • 45% reuse. • Hartford: • .NET to Java integration took hours compared to weeks earlier. • Each service re-used saved 4-6 weeks in development costs. • QA/Regression efforts reduced from weeks to days. • Bug fixing reduced from weeks to days • US Navy : • $1M savings in maintenance. • 40% savings in development effort. • Cattles Bank: • 195% increase in revenue deploying BAM and BPEL. • SQL is automatically wrapped as Web Services savings weeks. • ING Lease: • Project completed in 6 months compared to average 2 years. • PSI: • $500K in development savings. • 30% reuse.

12. Public Sources Validation • AXA Financial: • Saved $55 Million using SOA - CIO Bill Lavine, Computer World Feb 2004 • Providence Health: • Can save $1M / yr - Mike Reagin Dir R&D, Network World Mar 2004 • Fedex: • Cost of inquiry down to 4c from over $2 • Dollar Rent A Car: • Integrating to South West Airlines yielded millions in revenue. • Mark & Spencer: • Lowered dev costs by 66% and yielded first year ROI of 415%

13. Analyst Validation • Ken Vollmer & Mike Galpin, Forrester. • SOA reduces Integration Project Development and Maintenance by 30% or more from reuse. • Zapthink • Reduced time to get data from mainframe from 3-4 months to minutes by exposing CICS transactions as web services. • Gartner • Strategic Planning Assumption: Organizations that employ a services-driven approach will achieve a 6-1 return on investment over a five-year period (0.7 probability). • Web services standards will lower the cost of developing basic connections into new application systems. • Low-cost assembly of new business processes.

14. Why SOA integration costs less • Maintenance costs are lower (decoupling of process and end point) • Standardization reduces product cost and services cost • Standardization delivers Rich interoperable tools • Integration outside the firewall ($ B2B) is simplified with std interfaces. • Reuse reduces cost by approximately 30% • Architecture changes do not ripple across systems. • Increased visibility – monitor, manage, escalate, comply and audit

15. 3 Steps to TCO

16. Step 2 - Benchmarks

17. Step 3 : Your Savings SOA Approach saved 28% over traditional methods

18. Change & Maintenance lead in savings • Maintenance accounts for 39% of savings.

19. Small Company / Departmental Scenario • Small Company, a small financial services F2000 company has legacy applications and needs to focus on fast response to Customer while leveraging partners to reduce costs. • Departmental Enterprise wide SOA effort, integrating back office, partners and automating 10s of processes across 10s of end systems (approx 15-20). • Projects include • CRM to mainframe integration for a 360 degree view of customer • Claims process automation (includes mainframe access). • Documentum integration to claims process to access lease documents. • Outsource imaging function and automate process (imaged document from partner to Documentum). • Link to partner web-sites for authorization / validation.

20. Traditional Cost – Small Company

21. SOA Costs – Small Company

22. Big Company /Enterprise Scenario • Global manufacturing F100 company has numerous silo-ed applications and plans to harmonize broken processes to ensure consistent delivery of services to customer. • Enterprise wide SOA effort, integrating back office, partners and automating 100s of processes across 10s of end systems (30-60). • Projects include • CRM to ERP to Supply Chain integration to optimize value chain. • Six Sigma processes to ensure consistent processes across business units. • Enhance self service for customers, partners and suppliers.

23. Comparison to SOA Benefits Kit

24. Risks • Benchmarks may not match customer scenario • SOA Case Study shows commonalities across 100s of customers. • Real measurement takes time. • Most customers need ballpark measurements. • Gartner / Analysts suggest “Beware of ROI” • But, there are ROI studies from Forrester, Burton, etc • Biased to Oracle Products • Not really – biased (if at all) to Standards based products

25. Next Steps • Roll out to field as appropriate • Place it Online (Flash) • White Paper • Create a detailed customer case study (ROI). • Additional Features • Add savings from SOA manageability. • Go beyond SOA Integration (Composite Apps) • Benchmarks on Product Value (BAM + BPEL). • Capture business benefit.

26. Feedback: nishit.rao@oracle.com Q & Q U E S T I O N S A A N S W E R S

27. Where Calculator can help • IT needs to show business value to CFO • Customer buying more integration broker licenses or building pt-pt solutions. • Competitor showing ROI numbers. • Avoid ROI spreadsheet competition • Get Customer aware of long term costs. • Connect the dots between Marketing - “Oracle SOA Suite helps reduce IT costs” and Customer – “my silo-ed apps unable to deliver business needs”

28. Applied SOA: Measuring Business Value, Michael Barnes Gartner

29. Compares pt-pt with traditional integration brokers