sydney, 17 july 2007 ibm soa executive summit. ibm soa © 2007 ibm corporation dollars & cents,...

Sydney, 17 July 2007

IBM SOA EXECUTIVE SUMMIT

IBM SOA

© 2007 IBM Corporation

Dollars & Cents, Justifying Your Business Flexibility Project

Matt English Strategy & Change Consulting Leader Australia / New ZealandIBM

IBM SOA

3

Justifying and Financing Investments in SOA

Many companies have realized the benefits of aligning IT and business via SOA – as demonstrated in IBM proprietary research

These benefits are crucial for justifying the business case for the investment in SOA – a framework for measuring those benefits

Financing hurdles can be overcome with flexible financing solutions to meet the funding requirements of SOA projects - and help deliver business value rapidly

IBM SOA

4

We collected data from over 35 projects, in 5 sectors covering 11 industries world wide

Global34%

Asia Pacific9%

Europe6%

South America

3%

North America

48%

Financial Services

33%

Industrial19%

Communication10%

Distribution38%

Project Breakdown by Sector Project Breakdown by Geography

Source: IBV analysis

IBM SOA

5

Our thought leadership confirms the drivers of business value that we have seen consistently in SOA engagements

Benefits Resulting from SOA Solution

97%

71%

51%

43%

26%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Enable Compliance

Enable New Products

Increase Revenue

Reduce Risk

Decrease Cost

Improved Flexibility

% of Projects


IBM SOA

6

We used the study findings to create a framework for looking at the business value of a Service-Oriented Architecture

Reduced Risk

Compliance

Increased Profitability


Reduced Risk

Compliance

Increased Profitability


Select a group of simplified benefits

Structure cost benefits around three basic cost scenarios

Calculate simple return using benefits and costs first

Select cost scenarios for second and subsequent implementations

Look at the return for second and subsequent implementation (keeping benefits constant) relative to first implementation

Source: IBM Institute for Business Value “The Business Value of Service-Oriented Architecture” 2006

IBM SOA

7

The intuitive framework guides the examination of the business benefits of SOA for the non technical user

Decrease Costs

IncreasedProfitability

IncreaseRevenue

Generate new revenue

Increase existing revenue

Reduced processing

time

errors Reduced

Reduced system

downtimeEnable new product

development

Ease of integration

Improved flexibility

Reduced integration

cost

Increased reuse

Reduced integration

time

Reducedtime-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

IBM SOA

8

To gain these benefits, you will incur costs in one of the following patterns

Change or build Front-end application $A

Infrastructure software $

Hardware (as needed) $

Implementation (labor) $

Total infrastructure $B1

Develop new or alter existing application $

Generate interfaces $

Total Service Provider $B2

Scope A: Service user Scope B: Service provider

+

Scope C: Scope A + Scope B

Full Implementation

Service ProviderService User

ServiceInterface

SOA Infrastructure

Business Application

Front-end Application

IBM SOA

9

A simple return can be calculated using the business value trees and the cost scenarios

$

$

Simple

ROI=Full Implementation


ServiceInterface

SOA Infrastructure



Decrease Costs


IncreaseRevenue



Reduced processing

time

Reduced errors

Reduced system


development

Ease of integration


Reduced integration

cost

Increased reuse

Reduced integration

time

Reducedtime- to-market



Reduced maintenance

cost


compliance

Reduced Operational

Risk

Decrease Costs


IncreaseRevenue



Reduced processing

time

Reduced errors

Reduced system


development

Ease of integration


Reduced integration

cost

Increased reuse

Reduced integration

time

Reducedtime- to-market



Reduced maintenance

cost


compliance

Reduced Operational

Risk

IBM SOA

10

Subsequent implementations = less spend

Second & Subsequent Implementations

First Implementation

$$$Full Implementation


ServiceInterface

SOA Infrastructure



Full Implementation


ServiceInterface

SOA Infrastructure



$$Full Implementation


ServiceInterface

SOA Infrastructure



or

$Full Implementation


ServiceInterface

SOA Infrastructure



IBM SOA

11

Over time, cost decreases & return increases

Number of implementations

Retu

rn

First Implementation

Second & Subsequent Implementations

Return of succeeding SOA Implementations

$$$$

$$$

Decrease Costs


IncreaseRevenue



Reduced processing

time

Reduced errors

Reduced system


development

Ease of integration


Reduced integration

cost

Increased reuse

Reduced integration

time




Reduced maintenance

cost


compliance

Reduced Operational

Risk

Decrease Costs


IncreaseRevenue



Reduced processing

time

Reduced errors

Reduced system


development

Ease of integration


Reduced integration

cost

Increased reuse

Reduced integration

time




Reduced maintenance

cost


compliance

Reduced Operational

Risk

Full Implementation


ServiceInterface

SOA Infrastructure



$$$$

$$

Decrease Costs


IncreaseRevenue



Reduced processing

time

Reduced errors

Reduced system


development

Ease of integration


Reduced integration

cost

Increased reuse

Reduced integration

time




Reduced maintenance

cost


compliance

Reduced Operational

Risk

Decrease Costs


IncreaseRevenue



Reduced processing

time

Reduced errors

Reduced system


development

Ease of integration


Reduced integration

cost

Increased reuse

Reduced integration

time




Reduced maintenance

cost


compliance

Reduced Operational

Risk

Full Implementation


ServiceInterface

SOA Infrastructure



$$$$

$

Decrease Costs


IncreaseRevenue



Reduced processing

time

Reduced errors

Reduced system


development

Ease of integration


Reduced integration

cost

Increased reuse

Reduced integration

time




Reduced maintenance

cost


compliance

Reduced Operational

Risk

Decrease Costs


IncreaseRevenue



Reduced processing

time

Reduced errors

Reduced system


development

Ease of integration


Reduced integration

cost

Increased reuse

Reduced integration

time




Reduced maintenance

cost


compliance

Reduced Operational

Risk

Full Implementation


ServiceInterface

SOA Infrastructure



IBM SOA

12

An example


SOA Implementations

Re

turn

Example A Example B

1 2 3Company A 63% 107% 350%Company B 67% 233% 648%

Implementation

Company A

- Insurance, Group Products Division, SOA investment used across Life, Disability, and Long Term Care Company B

- Insurance, Property & Casualty Division, SOA investment used for personal property quotes, agency interaction, and quotes extended to auto

=

$

$ Full implementationService ProviderService User

Inte

rfa

ce

SOA Infrastructure

Inte

rfa

ce



Decrease Costs


IncreaseRevenue



Reduced processing

time

Reduced errors

Reduced system


development

Ease of integration


Reduced integration

cost

Increased reuse

Reduced integration

time




Reduced maintenance

cost


compliance

Reduced Operational

Risk

Decrease Costs


IncreaseRevenue



Reduced processing

time

Reduced errors

Reduced system


development

Ease of integration


Reduced integration

cost

Increased reuse

Reduced integration

time




Reduced maintenance

cost


compliance

Reduced Operational

Risk

IBM SOA

13

SOA business value outweighs the problems and challenges

Significant business value can result from well-managed SOA solutions- Measure, but simplify and measure long term!

Don’t abandon building a business case for SOA- Take a simpler, more intuitive approach

- Measure beyond the first implementation

A sea-change for system communication and collaboration will drive equal change in business processes- Industry structure change is inevitable

- Collaboration within and between industry players will increase

- Table stakes!

IBM SOA

14

Full study details and white paper

IBM Institute for Business Value

Available on the web: http://www.ibm.com/iibvttpContact Information:

Jay DiMare [email protected]@us.ibm.comAssociate PartnerIBM Global Business Services, Institute for Business Value

Service-Oriented Architecture: A practical guide to measuring return on that investment

IBM Global Business Services

Service-oriented architecture

A practical guide to measuring return on investment


Application Innovation Services


Service-oriented architecture

A practical guide to measuring return on investment


Application Innovation Services

© Copyright IBM Corporation 2006



Service-oriented architecture: A practical guide to measuring return on that investment

An IBV Value Realization Study

October 23rd, 2006

sydney, 17 july 2007 ibm soa executive summit. ibm soa © 2007 ibm corporation dollars & cents,...

Documents

integration time reduced

business benefits of

soa investment

new revenue

reduced system downtime

soa engagements benefits

ibm soa executive summit

business value of service