SOA Benefits – current research

Mark Skilton
Jun 26, 2006
5 min read

SOA ROI - current statistics and themes

Current key statistics from Research Analysts

Gartner

Forrester

Aberdeen Group

Gartner Savings report - SODA Reuse Model: ROI and Cost Savings 19 October

2004

Implementing service-oriented development of applications can lead to substantial benefits during a five year planning period.
Need to find style that works for organisation:
RAD,
ARAD (architected RAD) ,
AMD (Application model driven MDA,
Mixed
Greatest saving when mixture of ARAD and AMD together (governance, prototyping and model driven tools approach altogether)

This suggests for maximum SOA ROI

Use a 5 Year payback timeframe
Use a mix of architecture design control, governance, rapid prototyping based on a model driven tool set
An average of 30% reduction in IT costs over 5 years is saved in using SOA to develop projects. Growing from 8% to a full 50% reduction in 5 years
That applying ARAD drives governance and rapid ROI through better control of development than just using a AMD tool alone. We conclude from this that BPM / MDA tools alone are better maximised through SOA governance and RAD techniques
An average 4% reduction in IT Costs of enhancements is achieved through using a mix of techniques. This suggests that changing models and code is slightly more cost effective with SOA. The main benefit is in moving to a new development paradigm of prototyping , architecture governance and model optimisation tools which mitigates many of the old traditional water fall cascade IT practices.

Forrester – SOA Investment Strategies 2006 April 2006

SOA is creating a big impact on enterprise

67% will be using SOA by end of 2006

44% report implementing an SOA is a high or critical priority

70% will increase their use of SOA

Half of organisations using SOA use it for strategic business transformation

SOA is a critical foundation for IT’s future ability to meet the strategic needs of the business. The challenge for organisations is how to invest in SOA.

The overall “ROI on SOA” not really meaningful as a metric as the core issue of SOA is applicable to many business needs.

(Many other IT initiatives, business needs and technology investment are closely linked).

SOA provides an underlying infrastructure and access to IT assets and services that can be used in a wide variety of ways. This could be to support business to new markets or create better customer brand loyalty.

SOA can reduce application maintenance costs.

SOA value is based on two key dependent variable

SOA is highly dependent on the individual company situation
How many times will a govern service be reused
What is the value of getting a solution to market x days sooner
You must separate SOA value from solution value.
There are many ways that you could deliver a similar result without using SOA – to deliver tactical solution value.
You need to separate the business value of the solution itself from the value created because the solution was implemented using SOA

Approach 1. Strategic, cross-LOB funding for SOA

A portfolio approach is used to fund SOA. Various lines of business are considered versus technical developments. Four stages of maturity are seen

Part-time application road map development
Building credibility with the business
Joint business-IT strategic planning
Cross-LOB funding of SOA and other infrastructure

Approach 2. Top-down business models and bottom-up SOA frameworks

(SandVik) Reduced time to market by more than 25% through a bottom up technical development of SOA. They then realised more could also be achieved by taking a top down approach as well to business strategy and design. The used business process models and Information models as two key artefacts for capturing the business model.

Approach 3. Portfolio management with IT realignment

Redefine business strategy to operate in a modular fashion, building a unique combination of services for each customer from a portfolio of supply chain capabilities (warehouse management, shipping, customer clearance , inventory management etc). IT believes SOA provides:

A critical enabler for business modularity
A strategic focus for design and implementation of the firm’s business services

SOA benefits

A long term view to establish flexibility
Major business transformation investments drive SOA
Need flexibility and access provided by SOA infrastructure to support major business changes

Main benefits of SOA

Flexible access to high-volume core transactions
Strategic markets and better project delivery
Incremental pay-as-you-go business optimisations
A solution portfolio to achieve business strategy

Key recommendations for SOA investment

Guide your SOA investments with an application portfolio perspective
Guide your SOA investments with an SOA vision
Connect today’s projects to your SOA vision
Use clear business value to actively manage SOA migration risk

Aberdeen Group - SOA in IT Benchmark Report, December 2005

Estimate SOA adoption can save 25% of application deployment costs when a full lifecycle project is implemented. (overall reduction in IT budget costs)

But, this is dependent on level of reuse of the IT assets and the specific circumstances of the organisation.

The main SOA benefits for IT cited by companies in order of importance

Development of new capabilities / products (67%)
Re-usage of applications via web services (57%)
Management of IT complexity (43%)
Alignment with the business (33%)
Managing IT integration costs (20%)

SOA Benefits of IT

Management of IT complexity
Re-use of applications
Speed of IT implementations
Lower IT integration costs

SOA Benefits for Business

Faster reactions to change
Competitiveness

Shared SOA Benefits for IT and Business

Continuous alignment of IT and Business
Lower overall cost of IT
Lower IT maintenance costs
Lifecycle visibility into business process management
Development of new IT-enabled capabilities

Key business value findings

The role of the SOA architect is key, but not sufficient for managing SOA implementations
An SOA competency centre is a critical component of SOA success
A company cannot achieve business value from an SOA until it realises IT value from it first.
There will be a surge in IT spending because of the need to upgrade the IT infrastructure to SOA

Implications and Analysis

Experienced adopters are focusing on integration, application development, and business process modelling
Experienced adopters quantify the value of SOA according to
speed of deployment,
ease of integration,
faster customisation
Even best-in-class companies are not taking strategic approaches to SOA planning
Best-in-class companies show a much higher rate of adoption in composite applications development