The Promise of Service-Oriented Architecture

Service-oriented architecture (SOA) is generating a lot of buzz these days. In fact, according to a new AberdeenGroup benchmark report, “Enterprise Service Bus and SOA Middleware,” nine of every 10 companies are adopting or have adopted service-oriented architectures.

SOA is a broad methodology within which enterprises build, deploy, and manage “services” or coarse-grained application components that can be called upon by other applications using standard protocols. In regard to business processes, the service could also be an actual service, such as gift wrapping, or even a supply chain function such as shipping. This methodology enables the creation of IT applications and process systems (think of the chain of processes that occurs in your DC or your supply chain as a whole) that are built by combining loosely coupled and interoperable functionality contained within one application or process segment but used by another solution. It allows users to take advantage of current IT and enterprise investments.

As SOA is integrated into enterprise-level technologies and processes, its effects–and benefits–are filtering into those systems used within the supply chain and the distribution center. SOA can help speed up the development and implementation of critical IT systems used within the DC. In a broader sense, SOA can also be applied to processes within distribution and the supply chain. Why incur greater expense and extend implementation time trying to build a service yourself when it can be accessed as needed from another source (sometimes internal) that has already created and maintains it?

The implications of SOA include a more agile IT application infrastructure and implementation of business processes that respond swiftly to shifting business demands. Service-oriented architecture also represents a shift in the relationship between business and IT. Usually it requires significant changes in resource allocation and new perspectives on planning and executing IT and new business process initiatives.

SOA promotes reuse and interconnection of existing assets rather than time consuming and costly reinvention of services and applications provided by existing, external or even internal sources. So it can help businesses respond more quickly and cost-effectively to changing market conditions.

Peter Kastner, Aberdeen’s president and research director for enterprise integration, notes a recent study reveals that integration represents 40% of pre-SOA IT budgets, but that those organizations adopting SOA methodologies can see a dramatic reduction in the bite integration takes out of their IT budgets. For the “best-in-class” companies that already have some of these costs under control, there’s a further reduction. “It looks to us like best-in-class organizations are reducing software maintenance costs from roughly 27% of the IT budget to 12% — a huge 15% of budget savings,” Kastner pointed out.

But migrating to an SOA doesn’t come without a price, the Aberdeen survey found. Redesigning business processes, high integration costs, and customization challenges are initially eating up a large percentage of their respective budgets. But it’s important for businesses looking to adopt SOA to not be focused strictly on the upfront costs of integration, but to also consider the long-range cost savings and efficiencies.

SOA is proving to work quite effectively in achieving today’s increasingly complex business goals. For some, SOA will come when their ERP vendor provides it. Others will invest in holistic, enterprise-level architecture modifications and service-oriented development environments. And still others will choose an incremental approach, building services that adhere to known standards using established best practices to take advantage of SOA opportunities as they present themselves and SOA comes of age.

Tom Lehmkuhl is chief technology officer and William Taylor is associate marketing director for Mason, OH-based supply chain consulting engineering firm Forte

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