an approach to extract the business value from soa services

© 2011 IESS-1.1 University of Vienna

Natalia Kryvinska, Lukas Auer, Christine Strauss

Content


Introduction

  Many enterprises have been long time struggling with the complexities and duplication

inherent in countless redundant systems across multiple business units.

  Thus, a single instance of a service, e.g., centrally developed, maintained, tested, and

could be shared across an unlimited number of business units is a highly desired.

  This is also the core of SOA’s value proposition, with services needed to be developed

once only, and then made available to the rest of the enterprise through a registry.

  Moreover, with web-based services it is necessary to implement an API in one place

only.

  The developers can build a series of components around a web-service that the

enterprise applications can further use.


Benefits from Components Reuse in SOA

Number of Services/Projects


Increase of SOA Business Value with Number of Projects


SOA “Business Value” Features Tree

Decrease Costs

Increased Profitability

Increase Revenue

Generate new revenue

Increase existing revenue

Reduced processing

time

Reduced errors

Reduced system

downtime Enable new product

development

Ease of integration

Improved flexibility

Reduced integration

cost

Increased reuse

Reduced integration

time

Reduced time-to-market

Improved Ability to Change

Protect existing revenue

Reduced maintenance

cost

Improved ability for

compliance

Reduced Operational

Risk

Profitability value drivers

Flexibility value drivers


  Today’s businesses depend on electronic processes at every level.

  An organization’s ability to stay competitive relies heavily on being able to adapt its

electronic processes fast - to improve productivity, reduce costs, deliver higher-

quality information, and accelerate routine tasks.

  For these enterprise needs, SOA offers protocol independence, meaning that different

consumers of computing services - such as:

-  an application,

-  a server system, or

-  a human end user

  can communicate with the same service in a different way to obtain the data or

functionality desired.


Reference architecture


  From an organizational perspective, it is difficult to place a concrete value on many

decisions, actions, or investments because the effects are too distributed or too

moderated by other factors to measure them easily or accurately.

  Thus, arises a question - what does it make measuring SOA strategic value so

difficult?

  A simple answer is that there are too many ways to measure it.

  Every consultant, practitioner, or faculty member has a unique method for capturing

SOA value.


Accounting rate of return Critical success factors Quality engineering Activity-based costing Customer resource life-cycle Real-options valuation

Analytic hierarchy process Decision analysis Return on management Application benchmark

techniques Delphi evidence Requirements costing techniques

Application transfer team Executive planning for data processing Schumann’s method Accounting rate of return Critical success factors Quality engineering

Activity-based costing Customer resource life-cycle Real-options valuation Analytic hierarchy process Decision analysis Return on management

Application benchmark techniques Delphi evidence Requirements costing techniques

Application transfer team Executive planning for data processing Schumann’s method Benefits-risks portfolio Investments portfolio Socio-technical project selection

Benefits assessment grid Information systems investment strategies System dynamics analysis

Break-even analysis Knowledge-based systems for information systems evaluation Systems measurement

Boundary value Management Information Systems (MIS) utilization technique Time-savings-times-salary

Costs-benefits analysis Multi-objective, multi-criteria methods User utility function assessment Costs displacement/avoidance Options theory Value analysis Costs-effectiveness analysis Potential problems analysis Value chain analysis

Costs-value techniques Profitability index Ward’s portfolio analysis Costs-revenue analysis Process quality management Wissema’s method

Methods for Valuing IT/SOA Investments


Components of SOA “Business Value”

Costs

Benefits

SOA Business Value

Techno- logy

Organiza- tional

Integ- ration

Human Recources

Servicifi- cation

Business Process

Services/ Recources

Re-use

Integra- tion

Architec- ture

Flexibility

Open Standards

Human Recources


  Risk factors that can impact investment decision process:

-  Organizational factors - complex program networks, misalignment of (or

conflicting) internal goals, lack of leadership support;

-  Business process factors - impact on existing process, fear of changing work

assignments;

-  Technology factors - rapid changes in technology, interacting with parallel

systems, scale and complexity.

  Furthermore, project failures are the result of the multiplicity of risks inherent in

software project environment.


Risk Analysis Example


Total revenues line Breakeven Point

Operating income

Operating loss

Total costs line

Number of Services

Tota

l Rev

enue

/Cos

ts


Serv

ice

Dev

elop

men

t Cos

ts

Economic Advantages

SOA

Fixe

d C

ost

New business capabilities become economically feasible

Traditional Approach

SOA Approach

Number of Services Break-even Point


where: π - profits, p – price, q – quantity, c = unit cost (average variable cost), f - fixed costs.


Conclusions

  In order to maximize the intended benefits of SOA implementation, organizations need

to develop a well-articulated SOA quality strategy to promote trust and reuse.

  However, building an effective SOA platform requires tight integration between new

and existing product categories, and it may require large investments.

  For this reason, conventional investment valuation methods need to be combined with

other modern techniques to reflect SOA’s long-term strategic investment nature.

  Thus, in this paper, we apply modified BEP method developed under the BVA umbrella

for the evaluation of SOA projects, in particular for the services reuse related.


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an approach to extract the business value from soa services

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