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Today we are making a couple of announcements to provide further value to our customers around service-oriented architecture. These announcements are built on 5,700 customer engagements, which are the most customer engagements in SOA in the industry today. So we've taken the smarts, if you will, from those engagements and we created a set of guiding principles to help customers determine not only where to start, but where to start so they can grow and continue to derive value as they expand their SOA deployment. We've outlined what we call an SOA continuum. It goes from basic to advanced. It has the concept of simplicity and robustness running throughout it. It has four styles that we found that customers are going through in those engagements. So what are those styles?
The first is foundational, the basic path. Second is extending in an end-to-end process, not a functional process, but an end-to-end process. The third is around business transformation. And the fourth is around the ability to adapt dynamically. Can you go through each of those four styles and flesh out what they are?
Yes. Part of the value IBM brings and the reason that so many customers are coming to us is that continuum both on the business side and the IT side. It's really this concept of continuous alignment. Business and IT alignment are overused terms, but it's the thought of continuously working together, almost a blended relationship, that gives you success here. So starting with the foundational style, which is the basic style: we're seeing very focused, proven, high return on investment projects. From a business perspective you're thinking agility, but it's agility in a specific departmental business area. On the technology side maybe 10 percent of the functions are turned into a service. Less than five percent are being reused. So is foundational is about just getting started in SOA?
Most customers we believe are in that foundational area. As SOA matures, you've got certain industries that are crossing the chasm, but you still have a large group of customers that are still in that foundational stage. Can you give us an example of what an IBM customer is doing at that stage?
Yes. Let's take OAG [Worldwide Ltd.]. They are based in England. They have a content system for commercial aviation. Their business is to gather and manage all that volume of airline schedules, flight status for about a thousand different airlines. They store about 1.5 billion records of information. They have about 27 million flight departures over a year time frame. They keep historical data for anywhere from nine to 12 months. The business challenge for them was they needed to be able to provide customized real-time airline information from multiple sources of data, multiple languages. It's a lot of information. They started with a foundational solution to that complex problem by creating workflow processes that modularize the information into information as a service and then did choreography to meet that customized request, providing the information you need when you need it. What they've seen is an 80 percent reduction in the time to market for that service. So when someone requested information it took 80 percent less time to deliver that. They also had an increase in the accuracy of that information. So that's a foundational starting point of looking at a particular process and information as a service and leveraging that. Now, they've got plans to expand that moving forward. What's the next step or style?
The next style that we see is extending the end-to-end process. This is looking at an end-to-end business process, not a functional or siloed process, but looking at optimization and innovation across a business process, coordination across a business process in a line of business. Here we're seeing a lot of focus on the areas of business process management, for instance, where you're focusing on that entire management of a process. Are there early adopters there?
We're starting to see companies in this particular area. University of Florida had to extend its SOA deployment out to reach a partner doing a health assessment for students. So we're starting to see a lot more of that external integration. It's interesting because they started at the foundational level. Then they had a new business requirement that came from the head of a college that said all incoming students had to take a third-party pre-req health class. In order to do that, they started with a foundational project that was very focused on internal integration with SOA. Now, they need to integrate with an outside vendor to make sure the students met this pre-req. It had to be done before the students were allowed to register. They had to meet this pre-req. They had two months to implement the solution. So they figured out how to reuse what they had done in the foundational deployment. Because they'd already adopted SOA as the architectural style, they were able to integrate, to reuse some of their services, and take their existing systems via a set of Web services and were able to connect to this third-party vendor. They met the speed requirement to get this done. And on the technology side, 98 percent of their transactions deliver sub-second response time. They actually improved customer satisfaction for the students coming in by having them seamlessly pass their pre-req. What's the next style?
Transformation where you are getting into business model innovation and more enterprise-wide cooperation. You're using IT less as a cost center and more as a real strategic advantage, and to really help the business drive business model innovation and process innovation. Here you are looking at a goal of about of 40 to 80 percent of functions described as services with about 50 percent reuse. Do you have any customers at that stage?
Standard Life [Assurance Ltd.], which is a financial services company in the UK. They have 600 services today. They are using SOA to transform their businesses. They are using it to transform their model. They're starting a health care package and they've got 50 percent of their services being reused today. What would be an example of the transformation that they are doing?
They've added into their portfolio a new offering around healthcare insurance. It's a completely new model for them. It came out of two other offerings that they had. They sort of mixed and matched processes to come up with a new market for themselves. So now they offer a healthcare provider insurance package. So they took services they already had and simply re-packaged them?
Right. Which is the value proposition as well as you move forward, being able to reuse and mix and match different items.
Adapt dynamically. This one is the ultimate goal that a lot of companies want to get to, which is adapt dynamically, so you have a predictive business that automatically responds to market forces. It can interact without significant shifts, without IT involvement. The technology becomes invisible. On the IT side, you've got over 50 percent of your services utilized and probably 80 percent of the functions in your company represented as services. This for the most part is fairly aspirational, but we do have customers who are checking it out. One I would give as an example is the New York State Revenue Department that handles taxes. What they are doing is pursuing acceptance and processing of filings and payments via multiple sources and multiple channels and be able to respond based on the source and are able to adapt without re-programming or leveraging IT. They are able to respond dynamically and adapt dynamically to what's happening in their environment. Is the adapt dynamically area where business analysts will be able to configure applications?
Yes, it is partially that and partially one of the announcements we made last week was tools to give business leaders the ability to set their own KPIs, key performance indicators, and customize those. So that's a step in this direction where you can manage a shift without IT involvement. There's also Web 2.0 work where a business user can actually prototype what's happening. And they can do that without IT to see how it works before they go to IT for a very robust and scaleable solution. I know of one UK insurance company that's doing that today. I can't give you their name, but they have a line of business that prototypes a new business model for insurance. They created a model where you pay for insurance based on how long you actually drive your car. For me, I travel a lot, so I wouldn't pay for car insurance for those days when I'm traveling. I'd only pay for it on the days when I actually drove my car. They are playing around with our new SOA portfolio as a business user trying to mock it up in one small market, see if it works and if it does they are going to leverage that with IT. IT would then get involved to bring that into a scaleable solution. It's along the lines of the business being able to respond to a market force without IT, but there's still a step where IT is in there. Eventually that's where customers want to get to. So that's the ultimate goal having the business people be able to control and set up a lot of these things?
Right, but not all of it. I'm not saying it's going to be only business users, but the goal is for them to get to be a lot more self sufficient. In Part 2 on Thursday, Sandy Carter addresses the problems of the SOA skills gap and the direction she sees the services-oriented approach taking in 2008.