Customer Focus Meets Business Agility: The Business Case for SOA
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SOA in Action Imagine a customer contacting a call center to ask about the availability and pricing of an item with the intention of placing an order. In most cases, the customer service representative (CSR) may literally be opening and closing (or switching between) multiple applications, and perhaps cutting and pasting (or retyping) data from one to the other in order to complete the customers request. The customer may be asked to repeat information that was already keyed into the telephone while waiting in the call queue. She may sit on hold while the CSR hastily corrects data entry errors made while listening to the customer. Her aggravation may be increased by the inability of the CSR to answer straightforward questions about the product in question compared to her previous purchases. This experience is not customerfocused, and its hardly agile. But it is all too common. Lets look at this from the SOA perspective. Rather than interacting with a sequence of discrete applications, each discrete business process has been encapsulated into a service that interacts directly with other services. In turn, a standard interface is authored for each service. Only the interface and not the internal and hidden details of the service are exposed to the IT professional, specifying the number and type of inputs required and outputs generated. In addition, a standard communication protocol is adopted to allow messages (containing the inputs/outputs) to be dynamically exchanged among them at run time. For these reasons, services are said to be loosely coupled. As a consequence, one service may be easily swapped for another since each is independent and modular in nature, and services may be combined in new ways to solve unanticipated business requirements. And what about the customers and CSRs experience? When it comes to service, the customer seeks relevant answers fast. The CSR must be able to access the necessary information quickly and resolve the customers issue on the first contact. SOA enables both by eliminating redundant work steps and speeding up information flow. With relevant answers in hand right away, the satisfied customer believes the company is committed to meeting her needs. At the same time, the CSR experiences systems that are supportive of his everyday processes and workflow. Juggling too many screens and passwords, And what about the customers and CSRs experience? When it comes to service, the customer seeks relevant answers fast. The CSR must be able to access the necessary information quickly and resolve the customers issue on the first contact. SOA enables both by eliminating redundant work steps and speeding up information flow. With relevant answers in hand right away, the satisfied customer believes the company is committed to meeting her needs. At the same time, the CSR experiences systems that are supportive of his everyday processes and workflow. Juggling too many screens and passwords,And what about the customers and CSRs experience? When it comes to service, the customer seeks relevant answers fast. The CSR must be able to access the necessary information quickly and resolve the customers issue on the first contact. SOA enables both by eliminating redundant work steps and speeding up information flow. With relevant answers in hand right away, the satisfied customer believes the company is committed to meeting her needs. At the same time, the CSR experiences systems that are supportive of his everyday processes and workflow. Juggling too many screens and passwords, stumbling over error-prone manual data entry, and time-consuming repetition are gone. Its a win-win scenario. A company choosing to pursue SOA may decide to construct some of the services it requires, especially if it is appropriate to leverage elements of existing legacy applications. Complementing the in-house development of services, more and more organizations are seeking to first acquire libraries of service components in a domain area of interest, such as CRM. Doing so allows an organization to rapidly accelerate its migration toward SOA, because the task of IT primarily becomes one of sequencing and enabling communication among tested and proven units of functionality encapsulated in services rather than developing them anew. In this way, the organization can quickly implement functionality that is uniquely personalized to its needs combined with the strategic advantage of being able to select and utilize best-of-breed services from more than one solutions provider. |
Over the past several months, the buzz surrounding service-oriented architecture (SOA) has grown to an audible hum. Yet despite the attention, SOA causes many non- IT folks to scratch their heads rather than nod them. More importantly, SOA has yet to answer some tough questions: What is its value to the business? Why should a CEO sit down with the CIO to make SOA a core part of the enterprise? Why should CMOs care about SOA? The answers are tied to two must haves for survival in todays business arena: improved agility and deeper customer focus.
Consider this: By the time you are done reading this issue of Defying the Limits, 20 corporations will fail, 112 directorship (CEO, CMO and so on) job changes will occur, and 2,748 U.S. consumers will change their address. The lesson: Agility to quickly adapt to market opportunities and challenges is no longer an aspiration. It is becoming a business necessity. But there is another twist. The need for more agility is growing as the customerfocused age picks up steam. In todays hypercompetitive economy, organic growth and competitive advantage have become increasingly dependent on how well a company is able to get, keep and grow customers.
Business leaders are just starting to make sense of the twin pressures of greater agility and customer focus. For example, long gone are the multiyear strategic plans based on assumptions that tend to become quickly outdated. Forced by the speed of change in the marketplace and customer buying power, many executives now create strategic plans that can be executed (or updated) in sixmonth increments. Spending on customer initiatives is also in strong comeback mode. AMR Research reports that 91 percent of companies will either maintain or increase their customer management budgets in 2006. So whether their focus is on managing the customer experience across channels, providing analytics insight to customer-facing employees or retiring legacy systems that stand in the way of satisfying customers or all of the above executives are pulling the CRM investment trigger.
Can IT Deliver?
Most IT departments, however, are not in a position to enable a more agile, customerfocused enterprise. If you ask most executives, How well does IT respond to your business needs? youll get mixed reviews at best, says Kevin Nix, group vice president of industry applications for Siebel Systems.
But theres a lot riding on IT to deliver. According to Gartner Group research, twothirds of CIOs believe their job may be at risk because of a failure to deliver the expected value on IT investments. According to McKinsey research, the biggest concern among CMOs is an explosion of customer segments, products, media vehicles and distribution channels [that] has made marketing more complex, more costly and less effective. Finally, a Leadership IQ study finds that 22 percent of CEOs get fired for too much talk and not enough action, and 28 percent lose their posts for failing to demonstrate an intimate knowledge of customers, customer needs and developing trends.
How did IT arrive here in the first place? Historically, IT departments deploy applications such as CRM or analytics in a functional area of a business (marketing, sales or service) to solve a specific need, such as shorter marketing cycle times or more efficient sales resource allocation. However, almost all business processes involve two or more applications. At the same time, IT complexity has increased due in large part to the need for the custom programming required to link up applications. So rather than create a single, integrated web of applications, IT departments have built up isolated stovepipe applications that sap agility and stop a company from meeting customers needs fast. All told, the result is a rigid IT infrastructure, explains Nix. IT cant respond to business needs because a change to any one link of the infrastructure might have unexpected and severely disruptive effects. The IT architecture becomes more of a ball and chain than a strategic asset able to move in step with the business.
Enter SOA
This is exactly why SOA is so exciting, says Nix. If the problem is IT system rigidity hampering customer responsiveness, SOA is the most promising development in decades. SOA is not a piece of technology, a software package or a platform. Nor is it a panacea for all business-to-IT-related ailments, stresses Nix. SOA is a fundamental approach to the way in which applications and infrastructure are planned, produced and managed. In short, it allows all of the myriad applications in use across an enterprise to talk to one another much more easily than in the past.
Heres how it works. At its core, SOA breaks down disparate applications into functional components (self-contained pieces of code and/or data structures) that can be assembled and reassembled in different ways so that applications can connect. The approach works because each component is based on a common set of standards. Components are exposed as sets of services (the S of SOA). A service is defined as a self-contained unit of business functionality (for example, verify ordered item is in inventory) that is large enough to be easily understood, but not as large as an entire application (for example, order management). The level of abstraction or granularity of a well-designed service is, in fact, a business process. Stated differently, a service may be viewed as a digital abstraction of a business process.
Why is this important? Only through its processes does a business transform its strategy from thinking into doing, from vague concepts into cash. An architecture built around services (think processes) eliminates the obstacles that block information flow. By using SOA to connect applications into a unified web, applications information flows to the right place at the right time across the enterprise. Business processes and integrated applications can work much more closely together to enhance agility and customer focus.
Why Now?
The savvy reader will point out that the concept of SOA has been around for some time. What makes the current iteration of SOA so powerful is the presence of Web services. Web services is a collection of protocols and standards used for exchanging data between applications. It permits new levels of standardized communications within SOA to ease integration. Web services consists of three major elements:
- Extensible markup language (XML), used to convey metadata;
- Web services definition language (WSDL), used to describe the input/output interface to/from a service; and
- Simple object access protocol (SOAP), used to enable message communication between services.
Wrapped around it all is Business Process Execution Language for Web Services (BPEL4WS), a mechanism to specify an integration model of how business processes interact. With SOA, says Nix, a business manager and an IT professional can work side by side at a monitor using drag-and-drop tools. They can create business processes that are reflective of customer needs with a degree of agility that has, until now, been out of reach.
The Business Value of SOA
Deeper customer focus and improved business agility are compelling benefits, but in the whats in it for me era, it makes sense to briefly examine the potential payoffs of SOA to different business decision makers.
CIO
The challenge: Show real business value by transforming IT from order taker to true partner for the business side. Over the past several years, CIOs were focused on cutting costs and gaining efficiencies, explains Mark Sunday, CIO of Siebel Systems. Today, they also have to show business growth from their initiatives. Its up to CIOs to promote effective systems and processes that collect data from any source and deliver dynamic and accurate information to the right person at the right time in any format.
What SOA Can Do
- Run natively on both .NET and J2EE platforms. Best-in-class SOA goes beyond just interoperability. As a result, CIOs can get more from previous IT investments and avoid having to rip and replace legacy systems, and they no longer have to lay out a kings ransom for an entire technology stack.
- Settle the best of breed vs. CRM suite debate. Backed by SOA, CIOs can have the best of both worlds: to buy or build bestof- breed applications that can be tightly integrated across the enterprise.
- Eliminate the need for custom code to link one application directly to another. Firms that use SOA can cut integration project development and maintenance costs by 30 percent or more, reports Forrester.
CMO/VP of Sales or VP of Service
Their collective challenge: collaboration across all customer-facing fronts to manage the customer experience, deliver on the brand promise across the entire customer life cycle, and drive revenue, all without incurring additional costs.
What SOA Can Do
- Open a range of options on how to enhance the customer experience. Since the organization is no longer hindered by architectural inflexibility, marketing, sales and service can collaborate around customers to provide a seamless customer experience, regardless of how, when or where a customer interaction takes place.
- Compress the product and customer life cycles. The time from the detection of a customer need to actually meeting that need is reduced, thereby enhancing the firms ability to quickly and effectively market, sell and support its offerings.
- Enable coordinated business processes to deliver on the brand promise.
CEO
The challenge: To grow the value of the enterprise and surpass competitors by building a more agile business around customers.
What SOA Can Do
- Bring IT up to the speed of strategy. Strategic plans based on six-month increments wont gather dust.
- Put the IT and business sides on the same page. Services now become the output delivered by IT, which are tightly aligned with what the business is about.
- Increase the likelihood that other technology investments will pay off. The fear of front-end applications existing in silos is reduced, as SOA ties frontoffice and back-office solutions together more cleanly.
Getting Started
The best way to approach an SOA initiative is to work incrementally, says Nix. Identify the areas of your business most in need of integrated applications and tighter processes. Match these up with the areas of the business most likely to drive the highest benefits in the short term. By tying the SOA initiative to these business drivers, organizations tee up the highest returns early on. More business value is captured faster, which justifies the initial SOA investment and points the way to ongoing improvements.
From Audible Hum to Deafening Roar
SOA has come of age as a business approach for building an agile, customer-focused enterprise. Investment trends indicate that a growing number of companies have conducted their own SOA business cases, and the results are loosening the purse strings. According to Yankee Group, 75 percent of enterprise decision makers planned to invest in SOA in 2005, and Gartner reports that in three years more than 60 percent of businesses plan to use SOA as a guiding principle when creating mission-critical applications. The motivation behind the investment is a matter of fact: The ability of a company to rapidly adapt its own behavior to meet customers needs is now the battleground for competitive advantage. Its just a matter of time before the audible hum of SOA becomes a deafening roar.
Siebel Component Assembly Enables Custom-Built SOA Solutions
Siebel Component Assembly is a new product offering allowing customers to rapidly build enterprise-class application software from prebuilt components. The product consists of a robust application foundation and a productivity- optimized, graphical developer workbench for rapid application development. Siebel Component Assembly is built on an SOA; runs on industry-standard technology, including .NET and J2EE; and leverages open standards, including Web services. In addition, the product offering consists of robust prepackaged application components for assembly of CRM and universal customer master solutions. These components encompass more than 10 years of Siebels industry-leading domain expertise, reducing development time, while allowing companies to leverage best-ofbreed functionality. Rather than work entirely from scratch, this approach provides an organization with all the foundational services to construct a robust, enterprise-class SOA application, combined with the ability to quickly assemble prebuilt best-of-breed components into a tailored, custom-built solution set that enables the companys unique customerfocused business strategy.
