1. advising on IT-business alignment Enabling innovation through SOA IBM Business Centric SOA event 6 th June - London Neil Ward-Dutton, Partner

2. © Macehiter Ward-Dutton 2006www.mwdadvisors.com2 “As often as not, I've seen the senior business managers questioning why the IT organization *doesn't* use SOA.” - Architect, US Central Government Agenda  Business trends and pressures, and the effect on IT  SOA: more than just another buzzword  Learning from the leaders: lessons from the front line

3. © Macehiter Ward-Dutton 2006www.mwdadvisors.com3 advising on IT-business alignment Business trends and pressures, and the effect on IT

4. © Macehiter Ward-Dutton 2006www.mwdadvisors.com4 30,000 ft: Business pressures are driving business change in new ways  Globalisation –Customers, partners, suppliers – and competition –Connectedness driving sophisticated value chains  Transparency –Industry regulations, consumer pressure and competition driving openness  Service focus –Differentiation and shareholder value increasingly derived from service experience

5. © Macehiter Ward-Dutton 2006www.mwdadvisors.com5 Some local examples  Globalisation –Offshoring impacting UK tech labour market –>4000 (+400/year) UK-Sino joint ventures –UK Government to reimburse overseas treatment costs for patients (05/06) –Tesco enters mortgage market with First Active (11/04) –Vonage launches UK VoIP service (01/05)  Transparency –City of London contractor rates hit 4-year high, compliance drives demand (02/06) –EU Data Retention Directive (02/06) –International Financial Reporting Standards (IFRS)  Service Focus –BT launches mobile music service with UBC Media and Virgin Mobile (06/05) –Amazon to underpin M&S e-commerce systems (04/05) –…and Waterstone’s insourcing e-commerce from Amazon! (05/06)

6. © Macehiter Ward-Dutton 2006www.mwdadvisors.com6 10,000 ft: The business-IT interface Business  Increasing desire for some business activities to change direction rapidly  Desire for more flexible business models and “footprints”  The freedom to innovate and involve others in innovation IT  Shifting focus of enterprise automation requirements –From business support functions to product and service differentiation –From “execution” to supporting management and strategy  Alignment of sourcing and spend with business priorities –Leveraging industry and technology maturity for portfolio-based approaches

7. © Macehiter Ward-Dutton 2006www.mwdadvisors.com7 The killer: innovation and efficiency have to go hand in hand  Total IT budgets are not growing significantly  Investment in support of innovation can only come from successful efficiency measures  Moreover, efficient organisation of resources is a key innovation enabler Sourcing and spend alignment …through… Standardisation Consolidation IT Governance / Portfolio management etc BeforeAfter Support for differentiating processes Support for non- differentiating processes Operating and maintaining existing investments If you don’t know where you are, it’s difficult to know where you can go next!

8. © Macehiter Ward-Dutton 2006www.mwdadvisors.com8 advising on IT-business alignment SOA: more than just another buzzword

9. © Macehiter Ward-Dutton 2006www.mwdadvisors.com9 Organisations are investing in SOA to improve efficiency AND flexibility 0%10%20%30%40%50%60%70%80% More rapid and flexible IT response to changing business needs Enhanced ability for IT to drive and/or support business innovation Cost savings from more efficient delivery of IT Protection of past and future IT investments by delaying obsolescence Improved operational service levels to the business Experienced adopters All respondents Which of the following would you regard as significant business level drivers for investing in SOA?

10. © Macehiter Ward-Dutton 2006www.mwdadvisors.com10 The IT automation focus is shifting away from structured, predictable processes E E E M M S E E E M M S Increased structure, predictability Increased collaboration, ad-hoc nature Non-differentiatingDifferentiating Shift in focus Execution Management Strategy

11. © Macehiter Ward-Dutton 2006www.mwdadvisors.com11 The nature of IT investment is shifting FromTowards Build, or buy vs. build Project implementation Buy AND build AND integrate Back office Business area investment focus Front office and beyond “Personal productivity” desktop IT access environment Productivity desktop + global access to resources Data processing Technology innovation focus Communication, collaboration, integration Outsourcing vs. in-house delivery Capability supply “Multi-sourcing” Scale of IT concern: from point functions to organisations and ecosystems

12. © Macehiter Ward-Dutton 2006www.mwdadvisors.com12 The technology requirement: managing a broader scope & scale of interactions From Data design tightly coupled to application design, and application design to “user requirements” – very restricted view of process needs B u s i n e s s p r o c e s s Towards B u s i n e s s p r o c e s s Loosely-coupled resources provide services which are designed to support the interactions that take place within a business process Reducing “access friction”

13. © Macehiter Ward-Dutton 2006www.mwdadvisors.com13 Architecture is more important than ever It has to be focused on efficiency AND flexibility  Process integration –Improving efficiency in the “back office” and “middle office” –Improving service quality in the “front office”  Service Oriented Architecture (SOA) –Building a common language between IT and the business –Open, integrated software systems that fit today’s needs  Data integration / Master Data Management (MDM) –Unified views of process-critical information –Customers, bills, etc  Rich user experiences –Access to information and function in a variety of contexts –“Right-sized” – offline and online; rich experience with small management footprint –Functionality arranged around the user, not around “applications”

14. © Macehiter Ward-Dutton 2006www.mwdadvisors.com14 There is clear value in SOA beyond technical issues Experienced adopters All respondents 0%5%10%15%20%25%30%35%40%45%50% Yes Possibly No Unsure Can SOA help business and IT people communicate more effectively through a common vocabulary?

15. © Macehiter Ward-Dutton 2006www.mwdadvisors.com15 SOA: the foundation for bridging the gap between IT and business Business IT Business process Managed IT service Managed IT service Managed IT service Managed IT service Managed IT service A P P L I C A T I O N S & I N F O R M A T I O N I N F R A S T R U C T U R E B U S I N E S S S T R A T E G Y Business processes form the foundation of a common language IT defines and delivers “business level” services which support the right processes, the right way

16. © Macehiter Ward-Dutton 2006www.mwdadvisors.com16 Four steps to maximise SOA business value Flexibility A service-based approach creates modular systems which are easier and quicker to change 1 End-to-end management of the service lifecycle which “joins up” activities from design to operation Value visibility A service-based approach enables an environment in which system value can be readily understood by the business 4 An architecture approach that promotes service designs which are business-meaningful Comprehensibility A service-based approach enables an environment in which IT capabilities can be easily understood and specified by business analysts 3 Reusability A service-based approach creates software assets which can be reused across projects, making systems cheaper and lower-risk to build 2 A development lifecycle that promotes reuse of services

17. © Macehiter Ward-Dutton 2006www.mwdadvisors.com17 advising on IT-business alignment Learning from the leaders: lessons from the front line

18. © Macehiter Ward-Dutton 2006www.mwdadvisors.com18 “Keep the faith and avoid the buzzword soup.” - Architect, Swiss Bank

19. © Macehiter Ward-Dutton 2006www.mwdadvisors.com19 Making the SOA business case “Focus on the benefits of reuse and reduced TCO, not the technological / definition arguments.” “SOA isn't an investment - it's an architectural decision. If the system justifies the architecture and the business case can be made then it is the right thing. SOA isn't and shouldn't mean a sweeping replacement of systems.” “Talk about how IT will be given a clear and concise mapping to business needs that just wasn't possible before with other architectural approaches.” “Stress agility and the ability of business to comprehend what IT is delivering.” “Align SOA with a business activity: either a new opportunity or improve an inefficient one to prove the benefits, then deploy more widely, and don't underestimate the formal methods and tools required.” SOA is not like many technology investments: the case must be made from both a project and an architecture perspective

20. © Macehiter Ward-Dutton 2006www.mwdadvisors.com20 Key challenges associated with SOA adoption “Mainly political issues. SOA is a leveller and threatens people who like to build little empires in an organization.” “Loss of momentum after the initial enthusiasm. Reversion to perceived faster time to market traditional approaches.” “S-E-C-U-R-I-T-Y.” “Poor communication to stakeholders.” “In a large IT organisation, with a command and control structure, it is difficult to break through the comfort barrier.” “Changing funding models to support shared services rather than one-off projects. Establishing governance structures.” “Funding necessary infrastructure in a project-based cost model.” “Getting consistent policy and standards across projects.” Overwhelmingly, the main challenges cited relate to good governance

21. © Macehiter Ward-Dutton 2006www.mwdadvisors.com21 advising on IT-business alignment Thank you www.mwdadvisors.com www.freeformdynamics.com