© 2006 ibm corporation ibm business centric soa event soa on your terms and our expertise practical...

© 2006 IBM Corporation

IBM Business Centric SOA Event

SOA on your terms and our expertise

Practical Experiences : Delivering the value from SOA

Paul Campbell-KellyPartnerIBM Strategy and Change consulting group

2 SOA on your terms and our expertise


Be prepared for change. It’s the only thing you can count on.



Banks have to change

“The world is becoming turbulent faster than organizations are becoming resilient.”–Gary Hamel and Lisa Valikangas

“The Quest for Resilience” Harvard Business Review

“The world is becoming turbulent faster than organizations are becoming resilient.”–Gary Hamel and Lisa Valikangas

“The Quest for Resilience” Harvard Business Review

Top line growth is flattening

Efficiency ratios under pressure

Regulations

Acquisitions, mergers, disposals

Globalization

Issues forcing changeIssues forcing change“



Bank imperatives

Drive revenue growth

Adapt products and services to geographies

Reduce costs and inefficiencies

Provide a flexible business model

Reduce risk and exposure

“Every bank is dealing with three major issues: revenue, return on operations and regulation ... Every bank also recognizes that to successfully address these issues, they are going to have to make significant changes to their IT infrastructure.”

Maggie Scarborough, Manager Market Research for Corporate Banking,

Financial Insights

“Every bank is dealing with three major issues: revenue, return on operations and regulation ... Every bank also recognizes that to successfully address these issues, they are going to have to make significant changes to their IT infrastructure.”

Maggie Scarborough, Manager Market Research for Corporate Banking,

Financial Insights

Management prioritiesManagement priorities



Need for greater flexibility in bankingRigid bank IT models limiting business flexibility

Provide new and innovative products and services

Standardize, automate and integrate processes

Extend, without necessarily replacing existing systems

Scale quickly and cost-effectively reacting to business volumes

Adjust operations and reporting dynamically to new risk management requirements

Flexibility meansFlexibility means



SOA investment can follow several models

In the context of a clear business strategy, our clients have repeatedly identified five main drivers of SOA value:

Avoid duplication, generate re-use Generate process innovation faster, cheaper

Lower IT operational and development cost

Faster Time to Market, supporting business growth

Technology Based Business Flexibility

Deliver change in incremental, lower risk tranches



This is only achievable through a business driven approach

A large European Bank

– Been developing an IT driven SOA solution for a number of years

– Core systems are based on SOA

– Level of re-use 2%

Royal Bank of Canada

– Business led approach to SOA

– Models based approach before development

– Identified 58% re-use of services



New products, channels and geographies have made the business model increasingly complex

Growth has been through a combination of internal expansion and acquisitions

New products, channels, and lines of business are often only partially integrated

Organisations continue to be structured along product and/or geographic lines rather than customer segments

Product SpecificDelivery

Marketing Sales& Distribution

Operations

SharedFacilities

ProductManufacture

ProductSilo 1

ProductSilo 2

ProductSilo 3

Sub-PrimeSegment

Mass RetailSegment

Mass AffluentSegment

Private BankingSegment

Ultra HighNet WorthSegmentProduct Specific

Delivery


Operations

SharedFacilities

ProductManufacture

ProductSilo 1

ProductSilo 2

ProductSilo 3

Sub-PrimeSegment

Mass RetailSegment



Ultra HighNet WorthSegment



Even after process optimisation there is significant duplication of activities across products

Preliminary Customer Needs ID

Gather/Update

Cust. Data

Authenticate New

Customer

Detailed Customer

Needs Assessment

Validate Against 3rd Party Info

Set Up New Customer Security Profile

Create/Present

Customer Profile

Gather/Update

CPC Data

Obtain Customer Authority

Verify Internal

Information

Mortgage Refinancing

Mortgage Origination

Detailed Customer

Needs Assessment

2nd Tier Authorization

of Existing Customer

Score the Customer

Calculate Fee/Pricing

Produce Documentat

ion

Initiate Customer Contact

Gather/Update Product/

Transaction Level Data

Obtain Client Commitment

Select Option

Present Options

Approve Customer Request

Produce Reports

Review/Present

CustomerProfile

Gather/Update

Basic Cust. Data

Authenticate Existing Customer

Match Score with Request

Gather/Update

Secondary Customer

Data

Gather/Update Product

/Transaction Level Data

Capture/Store Cust

Docu-mentation

Score the Customer

Validate against 3rd

Party information


Present Options


Select Option\

Produce Docu-

mentation

Generate Physical Product

ObtainClient

Commitment

Check Customer

Docu-mentation

Capture/Store

Customer Documentat

-ion

Distribute Funds

3rd Party Data

Transfer

Fee Collection

Duplicated Activity

Duplicated Activity

This has the unintended consequence of increasing organisational and technological complexity

Approximately 67% of identified

activities in a bank’s Mortgage

Refinancing component are

shared in Mortgage

Origination

Source: IBM Institute for Business Value analysis




The move to Component Based Models enables businesses to define and accomplish transformation more quickly by enabling the decomposition of siloed processes into core components that can easily be shared across the enterprise

There is a strong drive in the industry for simplification of the operating model



Operations

SharedFacilities

ProductManufacture

ProductSilo 1

ProductSilo 2

ProductSilo 3

Sub-PrimeSegment

Mass RetailSegment



Ultra HighNet WorthSegmentProduct Specific

Delivery


Operations

SharedFacilities

ProductManufacture

ProductSilo 1

ProductSilo 2

ProductSilo 3

Sub-PrimeSegment

Mass RetailSegment



Ultra HighNet WorthSegment Product Specific

Delivery


Operations

SharedFacilities

ProductManufacture

ProductSilo 1

ProductSilo 2

ProductSilo 3

Sub-PrimeSegment

Mass RetailSegment






Operations

SharedFacilities

ProductManufacture

ProductSilo 1

ProductSilo 2

ProductSilo 3

Sub-PrimeSegment

Mass RetailSegment




Sub-PrimeSegment

Mass RetailSegment




DistributionSector differentiated marketing, sales and delivery

ManufacturingProduct options support and component based product manufacture

OperationsGeneralised operations and sharedfacilities

Paramerterised Product Assembly

Low Cost, High Quality Servicing

Sub-PrimeSegment

Mass RetailSegment




DistributionSector differentiated marketing, sales and delivery

ManufacturingProduct options support and component based product manufacture

OperationsGeneralised operations and sharedfacilities

Paramerterised Product Assembly

Low Cost, High Quality Servicing

ServiceCollaborations

3rd

PartiesService

Collaborations

3rd

Parties

Insource/Outsource

3rd

PartiesInsource/Outsource

3rd

Parties

Insource/Outsource

3rd

PartiesInsource/Outsource

3rd

Parties

RealignRealign LeverageLeverageDecomposeDecompose



Example of a Credit Cards Component Map

Source: IBM Business Consulting Services

Component Business Modelling (CBM) is the technique IBM uses to break down the enterprise into its constituent business components



Business component definition

Group of cohesive business activities to serve a unique purpose

Contains all resources (people, activities, know-how, technology, and assets) to accomplish its purpose

Creates specific value to other parts of the organization

Has a high degree of autonomy and is managed separately (often as a “black box”)

Linked to the rest of the organization through business services and integrated information systems

Represents real functions performed by discrete business areas

Business Component

Activities

Resources

Applications

Infrastructure

Business Purpose

Source: IBM Institute for Business Value, IBM BCS: CBM Component Talking Points, May 2003

A business component is a logical group of activities and the resources needed to accomplish a unique business function



Component Business Models are a key prioritisation tool to identify areas of high potential re-use, need for market responsiveness and flexibility

Services

Services

Services

Services

Services

Services

Services

ServicesServices

Services

IT Strategy

ProblemHandling and Resolution

Op

era

te a

nd

ex

ec

ute

Ta

cti

cs

(Dir

ec

t, R

ea

ct

an

d

Co

ntr

ol)

Pla

nn

ing

an

d A

na

lys

isO

pe

rate

an

d e

xe

cu

teT

ac

tic

s(D

ire

ct,

Re

ac

t a

nd

C

on

tro

l)P

lan

nin

g a

nd

An

aly

sis

New Product Development Sales

Customer Management

and Care

Billing and Collections

Provisioning& Fulfillment

Service Assurance

NetworkResource

Development

Develop New Markets and Products Acquire and Manage Customers Develop and Provide Network Services Manage Enterprise

Billing & Collections

Management

Fulfillment and resource

Planning

Technology and Resource

Strategy and Capacity Planning

Service Testing and

performance management

Rating Customer

Billing

BusinessManagement

Strategic Enterprise Planning

Marketing

Supplier/ Partner

Settlement and Billing

ServiceConfiguration,Activation and Disconnects

Resource Provisioning

Device and Supplier Order Management

CustomerSLA / QoS

Management

ServiceProblem

Management

ServiceManagement

Enable resource provisioning

(Engineering and Construction)

Network Resource

PerformanceManagement

Supplier/ Partner Problem

Reporting &Management

Supplier/ Partner


Service Strategy and Readiness Planning

Product Portfolio Planning

Service Development

and Retirement

Customer Care Strategy

Account Planning

Partner Product Dev.

Strategy

Sales, Channel, and

AllianceManagement

Customer Contact Operations

Market and Brand

Strategy

Brand Management

Marketing Communicatio

ns, Advertising

and Promotion

Marketing Research and

Analysis

Product Development

and Retirement

Sales Channel Strategy

Execute Campaigns an d market fulfillment

Launch Product

Sales

Alliance Strategy

Fin

an

cia

l an

d A

ss

et

Ma

na

ge

me

nt

HR

Ma

na

ge

me

nt

Pro

cu

rem

en

t

Te

ch

no

log

y M

an

ag

em

en

t (I

T,

R&

D,

Dis

as

ter

Re

co

very

)

Stakeholder Mgmt/ Legal and Regulatory

Customer Care

Management

Customer Analytics and

product matching

Order Handling

Inventory Management

Customer Interface Management

Supply Chain/Value Net Strategy

Sales Problem B&C

Loyalty and Retention

Sta

ke

ho

lde

r a

nd

Ex

tern

al

Re

lati

on

s M

an

ag

em

en

t

SOMA

IBM’s Service-Oriented Modelling and Architecture method provides in-depth guidance on how to move from business models to the models required by an SOA



Viewing the business as a collection of components provides the framework for re-use by processes and the structure for governance

Services

Services

Services

Services

Services

Services

Services

ServicesServices

Services

IT Strategy

ProblemHandling and Resolution

Op

era

te a

nd

ex

ec

ute

Ta

cti

cs

(Dir

ec

t, R

ea

ct

an

d

Co

ntr

ol)

Pla

nn

ing

an

d A

na

lys

isO

pe

rate

an

d e

xe

cu

teT

ac

tic

s(D

ire

ct,

Re

ac

t a

nd

C

on

tro

l)P

lan

nin

g a

nd

An

aly

sis

New Product Development Sales

Customer Management

and Care

Billing and Collections

Provisioning& Fulfillment

Service Assurance

NetworkResource

Development

Develop New Markets and Products Acquire and Manage Customers Develop and Provide Network Services Manage Enterprise

Billing & Collections

Management

Fulfillment and resource

Planning

Technology and Resource

Strategy and Capacity Planning

Service Testing and

performance management

Rating Customer

Billing

BusinessManagement

Strategic Enterprise Planning

Marketing

Supplier/ Partner

Settlement and Billing

ServiceConfiguration,Activation and Disconnects

Resource Provisioning

Device and Supplier Order Management

CustomerSLA / QoS

Management

ServiceProblem

Management

ServiceManagement

Enable resource provisioning

(Engineering and Construction)

Network Resource


Supplier/ Partner Problem

Reporting &Management

Supplier/ Partner


Service Strategy and Readiness Planning

Product Portfolio Planning

Service Development

and Retirement

Customer Care Strategy

Account Planning

Partner Product Dev.

Strategy

Sales, Channel, and

AllianceManagement

Customer Contact Operations

Market and Brand

Strategy

Brand Management

Marketing Communicatio

ns, Advertising

and Promotion

Marketing Research and

Analysis

Product Development

and Retirement

Sales Channel Strategy

Execute Campaigns an d market fulfillment

Launch Product

Sales

Alliance Strategy

Fin

an

cia

l an

d A

ss

et

Ma

na

ge

me

nt

HR

Ma

na

ge

me

nt

Pro

cu

rem

en

t

Te

ch

no

log

y M

an

ag

em

en

t (I

T,

R&

D,

Dis

as

ter

Re

co

very

)

Stakeholder Mgmt/ Legal and Regulatory

Customer Care

Management

Customer Analytics and

product matching

Order Handling

Inventory Management

Customer Interface Management

Supply Chain/Value Net Strategy

Sales Problem B&C

Loyalty and Retention

Sta

ke

ho

lde

r a

nd

Ex

tern

al

Re

lati

on

s M

an

ag

em

en

t

SOMA

Source: IBM Institute for Business Value analysis


Gather/Update

Cust. Data

Authenticate New

Customer

Detailed Customer

Needs Assessment



Create/Present

Customer Profile

Gather/Update

CPC Data


Verify Internal

Information



Detailed Customer

Needs Assessment



Score the Customer


Produce Documentat

ion


Gather/Update Product/Transaction Level Data


SelectOption

Present Options


Produce Reports

Review/Present

CustomerProfile

Gather/Update

Basic Cust. Data



Gather/Update

Secondary Customer

Data



Capture/Store Cust

Docu-mentation

Score the Customer


Party information


Present Options


Select Option\

Produce Docu-

mentation


ObtainClient

Commitment

Check Customer

Docu-mentation

Capture/Store

Customer Documentat

-ion

Distribute Funds

3rd Party Data

Transfer

Fee Collection



Gather/Update

Cust. Data

Authenticate New

Customer

Detailed Customer

Needs Assessment



Create/Present

Customer Profile

Gather/Update

CPC Data


Verify Internal

Information



Detailed Customer

Needs Assessment



Score the Customer


Produce Documentat

ion


Gather/Update Product/Transaction Level Data


SelectOption

Present Options


Produce Reports

Review/Present

CustomerProfile

Gather/Update

Basic Cust. Data



Gather/Update

Secondary Customer

Data



Capture/Store Cust

Docu-mentation

Score the Customer


Party information


Present Options


Select Option\

Produce Docu-

mentation


ObtainClient

Commitment

Check Customer

Docu-mentation

Capture/Store

Customer Documentat

-ion

Distribute Funds

3rd Party Data

Transfer

Fee Collection


IBM’s Service-Oriented Modelling and Architecture method provides in-depth guidance on how to move from business models to the models required by an SOA



The critical issues to focus on include:

A focus on

– Re-use

– Flexibility hotspots of strategic value

The matrix of Functional and Process views

Judging appropriate service granularity

– To deliver business relevance

Basic Essentials

– Models, naming conventions and catalogues

• Components, Processes, Activities, Data

– A repository to manipulate this meta-data



Growing the top line while increasing efficiency Royal Bank of Canada

Challenge:

Transformation focused on superior client experience, growing revenue and improving organizational effectiveness

What they needed:

– Models of re-usable business processes and business activities to efficiently and effectively pursue transformation projects in Deposits, Financing, and Investments

Outcomes:

Business Benefits

Process and integration models from IBM Information FrameWork applied to create 180 customized RBC processes which have common business components

58% reuse of models within the future state Enterprise Library

Process modeling artifacts achieve accelerated development through the identification of reusable processes and business activities

Simplify and streamline processes



Banks taking a models based approach to SOA



A final word from Standard Life, an early adopter of Service-oriented Architectures

© 2006 ibm corporation ibm business centric soa event soa on your terms and our expertise practical...

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