Aligning IT with Business Goals Through SOA

Keynote Presentation: Aligning IT with Business Goals Through SOA Garry Gomersall SOA Business Executive North-East Europe IBM Software 2008 IBM Corporation

Agenda IBM SOA Architect Summit SOA in the context of Business Agility and Innovation SOA Enterprise Architecture Best Practices SOA Reference Architecture SOA Methods & Best Practices SOA Governance What s Next for SOA Summary 2

Change the greatest challenge and greatest opportunity for CEOs Is Your Architecture Ready? A view from over 2500 CXO s CFO Study Human Capital Study CEO Study 3

Business Success Depends Upon Your Ability to Master Agility Top CFO concerns in enabling the business to be more agile, responsive and competitive: Driving cost reduction Identifying and executing growth strategies IBM Global CFO Study 2008 Different business scenarios driving to the same core strategic need Cost cutting & survival AGILITY Innovation & growth 4

Achieve Greater Agility Through Service Orientation Cost cutting & survival Innovation & growth Flexible cost effective processes Empower the business and differentiate products and service Cost control through end-to-end connectivity Deliver reusable assets maximizing return on IT investments Faster time to value though increased alignment between Business & IT Grain greater visibility and control across processes, and applicatoins 5

Reach Service Orientation From Multiple Onramps Business Architecture Business Processes SOA Foundation & Infrastructure Success requires the alignment of business & IT

Industry Frameworks Accelerate Service Orientation Software platforms based on business specific usage pattern: Standards-based industry-specific extensions Business Partner-provided assets Lowers project risk and cost Accelerates adoption of industry standards Framework Coverage Across Industries Available Now: Coming Soon: Telecommunications Energy & Utilities Retail Banking Financial Markets Automotive Electronics Aerospace & Defense Chemicals & Petroleum Healthcare Manufacturing Integration Media Hub Network Centric Operations Customs, Ports and Borders Insurance Process Automation Core Banking Renovation 7

The Smart SOA TM Approach Advances Capabilities for Increased Alignment Extend End-to-End Business IT Model and Simulate Transform Adapt Dynamically Aligned IT and Business result in DOUBLE the productivity gains of isolated business and IT efforts* Rapidly Deploy and Change Faster Value with SOA Entry Points Business Events Processing Detect correlations in business tasks to make earlier & more intelligent decisions Business Policy Determine & execute correct actions based on business conditions not hard coded rules 8 Continuously Optimize Monitor, Predict and Act *Source: London School of Economics McKinsey survey and analysis of 100 companies in France, Germany, UK and US

SOA Has Dramatically Grown in Popularity According to Gartner, Inc. SOA will be used in more than 50 percent of new mission-critical operational applications and business processes designed in 2007 and in more than 80 percent by 2010. SOA will rapidly become the architectural foundation for virtually every new business-critical application. SOA has dramatically grown in popularity, and adoption has expanded across vertical industries, geographies and organization sizes. The practical benefits of a well-implemented SOA are greater adaptability, faster time to deployment and lower costs for application development and integration. Gartner Press Release: Gartner Says SOA Will Be Used in More Than 50 Percent of New Mission- Critical Operational Applications and Business Processes Designed in 2007 April 25, 2007 9

What Benefits Are Organizations Seeing With SOA? Benefits Reported by Leading Edge Adopters of SOA Improved flexibility Reduced risk 71% Increased revenue 51% Cost savings 97% 100% Technical Business Source: IBM Institute for Business Value Study 10

Business & IT Align Through BPM & SOA To Drive Specific Business Outcomes Business Process Management Business Outcome F & A CRM Order Claims New Customer Check Availability Business & IT Alignment: SOA Governance Application View: Composite Business Service Oriented Architecture (SOA) 11

Business & IT Align Through BPM & SOA To Drive Specific Business Outcomes Business Process Management Business Outcome WHAT? WHY? F & A CRM Claims New Customer Order Check Availability HOW? Business & IT Alignment: SOA Governance Application View: Composite Business Service Oriented Architecture (SOA) 12

SOA Spans a Continuum From Basic to Advanced Aligning Service Oriented Approaches Foundational Extend End-to-End Transform Adapt Dynamically Smart SOA is about leveraging SOA principles at various levels to derive business value, applying them in a way that can grow as your needs evolve 13

Distinct Value Regardless of Where You Choose to Engage Value to Business Greater agility in specific, departmental business areas Optimization and innovation across end-to-end business processes Business model innovation to support the Globally Integrated Enterprise Predictive business automatically responding to market forces Scope Collaboration within a line of business Coordination across lines of business Enterprise-wide organizational cooperation Enact significant shifts without direct IT involvement Foundational Extend End-to-End Transform Adapt Dynamically Value to IT % functions expressed as services Focused, proven, high-roi projects <10% 14 End-to-end business process management to innovate and optimize <40% IT for strategic advantage and business model innovation <80% Based on 5700 customers using our SOA offerings Technology becomes invisible >80% % of services <5% <20% <50% >50% reused

IT s Architectural Evolution: Making IT More Responsive Pre 1950 s To 1960 s 1970 s to mid 1980 s 1980 s to Mid 1990 s Mid 1990 s to Early 2000 s Late 1990 s Today Monolithic Architectures Sub-routines /Remote Procedure Calls Remote Object Invocation Message Processing EAI / ORBs (SOA) Increasing Modularity to Achieve Flexibility 16

Older Architectures Do Not Support Flexibility Required by Current Business Environments Pricing Web Orders Sales Orders & Supply Chain 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 17

Component-based Architecture is Not Enough Pricing Customers Web Orders Inventory Shipments Sales Orders 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 components makes them fragile 18

Service Oriented Architecture Moves IT Logic Out of Pricing Customers Web Orders Inventory Shipments Sales Orders defined as units of business logic separated from Flow of control and routing Data transformation and protocol transformation 19

Why SOA Now? SOA is the next-wave architecture to drive the evolution of IT. Alex Cullen Principal Analyst for IT Management, Forrester Research Standards have been widely adopted Software is mature and available Governance is well-defined Best practices are in place 20

SOA Reference Architecture Supporting the SOA Lifecycle Business Supports enterprise business process and goals through businesses functional service Interaction Process Information Development Enables collaboration between people, processes & information Orchestrate and automate business processes Manages diverse data and content in a unified manner Management Integrated environment for design and creation of solution assets Enterprise Service Bus Manage and secure services, applications & resources Partner Business App Access Connect with trading partners Build on a robust, scaleable, and secure services environment Facilitate interactions with existing information and application assets Apps & Info Assets Infrastructure Optimizes throughput, availability and utilization 21

Leverage SOA Experience and Best Practices The SOA Entry Points When selecting SOA projects, focus on solving specific business problems as part of an evolving enterprise architecture IBM has a variety of assets and best practices around the SOA entry points, based on our extensive experience with customers People Entry Point: Interaction and Collaboration Information Entry Point: Information as a Service Process Entry Point: Process Automation Connectivity Entry Point: Securely and flexibly interconnecting Reuse Entry Point: Creating and reusing proven, high-value assets 22

Service-Oriented Architecture An SOA is composed of multiple layers services need to connect end-end Service Consumer Service Provider consumers business processes process choreography services atomic and composite service components operational systems AJAX Portlets WSRP B2B Other Packaged Application Custom Application OO Application Integration (Enterprise Service Bus Approach) QoS, Security, Management, and Monitoring Infrastructure Service Data Architecture and Business Intelligence Governance Composite Service Atomic Service Registry 23

Process Integrity Takes SOA to the Next Level Enabling Integrity of Transactions, Interactions and Information Foundational Extend End to end Transform Adapt Dynamically SOA Entry Points Process Integrity 24

Process Integrity is Critical to Advanced SOA Projects To Achieve Business Agility without Sacrificing Integrity Critical end-to-end processes require an SOA environment that can provide: Full transactional support across distributed systems Automated compensation and resynchronization Recovery at all levels (service bus, application, database, server ) Enterprise-class scalability to handle 1000 s service calls per minute CRM Supply Chain (internal) Supply Chain (external) Financial Application A Application B Application C Application D End-to-end Process Integration Connectivity (ESB, Messaging, Adapters, Registry/Repository, Standards) Process Automation (Choreography, Flow Control) Security Quality of Service 25

SOA Lifecycle Discover Construct & Test Compose Integrate people Integrate processes Manage and integrate information Gather requirements Model & Simulate Design Financial transparency Business/IT alignment Process control Manage applications & services Manage identity & compliance Monitor business metrics

9 Entry Points for a SOA Transformation, allow companies to identify the individually best suited starting point Business Model IT Transformation Start Start Business Transformation Processes Business Process Management Start Information as Service Start People Productivity SOA Roadmap & Governance Start Start IT Applications Start Application Connectivity Start Application Reuse IT Infrastructure Start Infrastructure Modernization 27

IBM has techniques to help accelerate business innovation Business priority Drive growth and achieve differentiation by leveraging core competencies Assess current SOA adoption maturity level of the organization to make it run as an integrated and seamless part of the business Develop a flexible set of business-aligned IT services that collectively fulfill an organization s business processes and goals while leveraging existing IT assets IBM technique Component Business Modeling SM CBM SIMM- Service Integration Maturity Model SIMM Service-Oriented Modeling and Architecture SOMA Outcome Developing the business case for transformation by creating a logical representation of a business, making it easier to analyze business process performance and define differentiating components Identify the pain points for the scoped projects Identify the Gaps and build the SOA Roadmap An SOA design recommendation that includes a detailed description of the SOA service model and solution architecture 28

Component Business Modeling SM (CBM) Summary What it is: Analytical technique that breaks business functions into a structured collection of components Identifies services that are differentiating by applying objective evaluation criteria Generates views ( heat maps ) that show where transformation opportunities lie Develops business case for IT and business transformation opportunities What it entails: In-depth analysis of enterprise structure and component processes 70 IBM proprietary templates for 17 industries and sub-industries Collaborative, consultative engagement Typically spans 3-4 months What you can expect to get out of it: A business case for transformation Component Business Map with logical description of business functions, highlighting those which could provide competitive differentiation Transformational map that suggests which projects to tackle first to achieve desired results 29 Strategy Tactics Execution Product Management Category/Brand Strategy Category/Brand Planning Brand P&L Management Matching Supply and Demand Marketing Development & Effectiveness Product Ideation Concept/Product Testing Product Development Product Management Marketing Execution Consumer Service Product Directory Customer Relationship Customer Relationship Strategy Customer Relationship Planning Assessing Customer Satisfaction Customer Insights Account Management Value-Added Customer Account Servicing Retail Marketing Execution In-store Inventory Mgmt Customer Directory Manufacturing Manufacturing Strategy Supplier Relationship Management Production and Materials Planning Manufacturing Oversight Supplier Control Make Products Assemble/Pkg. Products Plant Inventory Management Manufacturing Procurement Supply Chain & Distribution Supply Chain Strategy Supply Chain Planning Distribution Oversight Inbound Logistics Outbound Logistics Distribution Center Operations Transportation Resources En route Inventory Management CBM Decide Break Finally, what s down prioritize differentiating Then, your your business analyze transformation vs. what s into costs its simply components initiatives operating Seek external provider/external utility Strategic High capital differentiation area Consolidate and/or create internal utility Competitive High cost area parity Integrate and redesign Basic High cost & capital area No action Business Administration Corporate Strategy Corporate Planning Alliance Management Line of Business Planning Business Performance Management External Market Analysis Organization and Process Design Legal and Regulatory Compliance Treasury and Risk Management Accounting and GL Indirect Procurement Facilities and Equipment Management HR Administration IT Systems and Operations * Example of a CBM map for a consumer products company

The SIMM helps create an incremental SOA transformation roadmap Business Silo Isolated Business Line Driven Integrated Business Process Integration Componentized Componentized Business Componentized Business Provides & Consumes Composite Processes Provided & Consumed via Composite Business services Virtualized Outsourced services; BPM and BAM Dynamically Re-Configurable Mix & match business capabilities via context-aware services Organization Methods Applications Ad hoc LOB IT Strategy & Governance Structured Analysis & Design Modules Ad hoc Enterprise IT Strategy & Governance Object Oriented Modeling Objects Common Governance processes Component Based Development Components Emerging SOA Governance Today Service Oriented Modeling SOA and IT Governance Alignment SOA Project Service Oriented Modeling Applications composed of Composite SOA and IT Infrastructure Governance Alignment How Do I Get Here? Service Oriented Modeling for infrastructure Virtualized Governance Implemented using automated Policies Grammar Oriented Modeling Dynamic Application Assembly; context-aware invocation Architecture Monolithic Architecture Layered Architecture Component Architecture Emerging SOA SOA Grid Enabled SOA Dynamically Re- Configurable Architecture Information Infrastructure Application Specific LOB or Enterprise Specific Canonical Models Information as a Service Enterprise Business Data Dictionary & Repository Virtualized Information Semantic Data Vocabularies Context-aware Common Project-based SOA LOB Platform Platform Common SOA Event-based Reusable SOA Environment; Specific Specific Environment Sense & Infrastructure Environment Sense & Respond Respond Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 30

Service-Integration Maturity Model (SIMM) Summary SIMM What it is: A step-by-step method for assessing an organizations Integration maturity and identify the required capabilities and initiatives to mature the organizations service integration maturity to the next level and the benefits achieved by transforming to the next level. What it entails: A 7 X 7 matrix with detail characteristics and attributes to measure an organizations maturity in service integration. The assessment technique to define the As-is and To-be IT environment. Engagements range from 2 weeks to 8 weeks for defining a SOA Transformation Roadmap. What you can expect to get out if it: Current IT Environment To-Be IT Environment The Gaps in current IT environment SOA Transformation Roadmap Business Organization Methods Applications Architecture Information Infrastructure Silo Isolated Business Line Driven Ad hoc LOB IT Strategy & Governance Structured Analysis & Design Modules Monolithic Architecture Application Specific Integrated Business Process Integration Ad hoc Enterprise IT Strategy & Governance Object Oriented Modeling Objects Layered Architecture LOB or Enterprise Specific Componentized Componentized Business Common Governance processes Component Based Development Components Component Architecture Canonical Models Componentized Business Provides & Consumes Emerging SOA Governance Service Oriented Modeling Emerging SOA Information as a Service Composite Processes Provided & Consumed via Composite Business services SOA and IT Governance Alignment Service Oriented Modeling Applications composed of Composite Enterprise Business Data Dictionary & Repository Virtualized Outsourced services; BPM and BAM SOA and IT Infrastructure Governance Alignment Service Oriented Modeling for infrastructure Virtualized Grid Enabled SOA Virtualized Information Dynamically Re-Configurable Mix & match business capabilities via context-aware services Governance Implemented using automated Policies Grammar Oriented Modeling Dynamic Application Assembly; context-aware invocation Dynamically Re- Configurable Architecture Semantic Data Vocabularies Context-aware Common Project-based SOA LOB Platform Platform Common SOA Event-based Reusable SOA Environment; Specific Specific Environment Sense & Infrastructure Environment Sense & Respond Respond Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 SOA 31

CBM and SOA need to be connected to define a logical, and consistent, path for change. Service-Oriented Modeling and Architecture (SOMA) provides indepth guidance on how to move from business models to the models required by an SOA. SOA Business Reference Architecture Model Tactics Operate and execute (Direct, React and Planning and Analysis Control) Develop New Markets and Products Acquire and Manage Customers Develop and Provide Network Manage Enterprise Customer Network New Product Billing and Provisioning Service Marketing Sales Management Resource Development Collections & Fulfillment Assurance and Care Development Product Sales Portfolio Channel Planning Strategy Market and Technology and Fulfillment Service Brand Resource Customer and resource Strategy and Strategy Partner Strategy and Care Strategy Planning Readiness Product Dev. Capacity Alliance Planning Strategy Planning Strategy Brand Management Product Development Sales, Billing & Service and Channel, and Network Collections Management Retirement Alliance Resource Management Management Customer Performance Care Device and Management Management Supplier Order Management Marketing Account Customer Communicatio Planning SLA / QoS ns, Supplier/ Management Advertising Partner and Promotion Performance Loyalty and Retention Management Service Development Customer Interface Management Supplier/ and Partner Enable resource Marketing Order Handling Retirement Customer Contact Operations Problem provisioning Research and Reporting & (Engineering and Analysis Sales Problem B&C Service Management Construction) Customer Configuration, Analytics and Rating Activation and product Customer Disconnects Service Testing matching Billing and Problem Service performance Sales Handling and Supplier/ Problem management Execute Resolution Partner Resource Management Campaigns Settlement Provisioning an d market Launch Product Inventory and Billing fulfillment Management SOA Solution Modeling Business Management Strategic Enterprise Planning Supply IT Strategy Chain/Value Net Strategy Stakeholder Mgmt/ Legal and Regulatory Financial and Asset Management HR Management Procurement Technology Management (IT, R&D, Disaster Recovery) Stakeholder and External Relations Management User Business Development Interaction Enables collaboration between people, processes & information Partner Connect with trading partners Business Business Innovation & Optimization Process Orchestrate and automate business processes Enterprise Service Bus Business App Build on a robust, scaleable, and secure services environment Infrastructure Information Manages diverse data and content in a unified manner Access Facilitate interactions with existing information and application assets IT Service Management 32

Service Oriented Analysis, Modeling, and Design Top Down Approach Business Requirements can be rendered as a Business Process Model Articulate and model the business intent as a process Process model becomes an input for service design Bottom Up Approach Existing IT assets are discovered and evaluated as possible services Identify existing components as candidate services Assets can be transformed into service interfaces and implementations Meet-In-The-Middle Approach Identification of business goals and sub-goals Goals and sub-goals correlate to candidate services UML Profile for Software and RUP SOMA enforces discipline in designing software services 33

Service-Oriented Modeling and Architecture (SOMA) Summary SOMA What it is: A step-by-step method for creating a service-oriented architecture Supports the delivery of a company s core and differentiating business processes Enables the identification, specification and realization of the services offered by the business and the components that realize those services What it entails: A collaborative, consultative engagement, which may include: SOA strategy, identification of the business services, SOA design, development and/or implementation Engagements range from 6 weeks to several months for strategy and planning, or longer if design and implementation are required What you can expect to get out if it: SOA design and transition recommendations Detailed specifications of the SOA service model components SOA solution architecture Steps in a SOMA approach << Input : Business Componentization & Analysis (e.g., CBM) >> Identification of candidate and Flows Specification of, Components, Flows Realization Decisions << Output to: SOA Implementation >> 34

Align business architecture and IT architecture Business Architecture CBM Assess & Plan SIMM Service Modeling SOMA SOA Realization Break down your business into components Decide what is strategically important, and what is just operations in the value chain domains Analyze the different KPIs attached to these components Prioritize and scope your transformation projects Assess your current SOA adoption maturity level Identify the pain points for the scoped projects Define the As-Is environment for the scoped projects Define the To-Be environment for the scoped projects Identify the Gaps and build the SOA Roadmap Define a Service Model Identify your services based on your business components Specify the services and components accordingly Make SOA realization decisions based on architectural decisions Implement a Service Model Develop a service-oriented architecture to support the Componentized Business Implement service based scoping policy for projects Implement appropriate governance mechanism 35 Business-Aligned IT Architecture

From Business Modeling to Implementation Business Assets Component Business Model Heat maps Business Processes Business Process Models Functional Assets Reference Architecture Model Use Case Model, Service Components, etc. Operational Assets Operational Model Technical Transaction Maps Performance Model Component Business Model Service Oriented Architecture Solutions Realized on SOA Foundation Industry CBM Maps Industry Imperatives Business Solution Priorities Leverage CBM Tool SOA based applications architecture Repeatable, Standard, Model driven development approach Service Oriented Modeling & Architecture (SOMA) Leverage SOA-Integration Framework Standards based Deployment Units SOA Foundation 36

Extending the SOA Platform Light weight consumer platform Facilitates creation of user-defined situational servicebased applications Robust infrastructure for Enterprise QoS Service management and governance Facilitates creation of composite applications Enables dynamic, industry-specific business services Facilitates creation of next generation applications Web 2.0 Platform SOA Foundation Business Platform 39

Extending the SOA Consumer Platform: Web 2.0 Mash-ups and Situational Applications Composite Applications Employee Customer Partner Web 2.0 Platform 40

Extending The SOA Provider Platform: Business Service Oriented Applications Service Orchestration Business Level Agility Dynamic assembly and delivery of services based on business context Reusable building blocks at a business level Incremental approach to business solutions that lowers risk SOA-Enabled Process Automation Process driven choreography of services Process automation with associated business logic encapsulated within the business process Improved flexibility and manageability with your SOA Business Choreographed Standardsbased Integration Simplify Integration Easier integration and connectivity Standardized components and Web services Based on well accepted technical standards Basic Business Platform 41

Agenda IBM SOA Architect Summit SOA in the context of Business Agility and Innovation SOA Enterprise Architecture Best Practices SOA Reference Architecture SOA Best Practices SOA Governance What s Next for SOA Summary 42

SOA is a team sport Different focus areas within SOA to meet customers'priorities Business Driven Development Enabling clients to govern the business process of software development Maximizing People Productivity within an SOA Delivered through a natural, intuitive, adaptive user experience Business Process Management Understand, improve, and manage your business processes to enable rapid operational change Information as a Service Achieve new levels of information flexibility, consistency and availability IT Service Management Manage your IT infrastructure, to more effectively and efficiently deliver IT services 43