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Invoking the B-Word and the G-Word, Early and Often

This admittedly downbeat prediction was made by Jake Sorofman, vice president of product marketing for Systinet at the recent and well-attended Web services/SOA on Wall Street event held in New York City. The problem? Companies of all types and sizes will be attempting their first SOA-based implementations, but very often will be stymied by a lack of governance infrastructure to bring cohesiveness to the effort.

The G-word was heard early and often throughout the one-day conference, which Sorofman kicked off by making the case for comprehensive governance of SOA. He noted that the costs of non-governance were too high to ignore. The risks include lack of reuse by compromising trust, disruption of processes, and escalating calls to the help desk.

One large organization that has gotten its governance in order is Citigroup, one of the world’s largest financial services firms, with more than $1 billion in revenues every 11 days. Skip Snow, enterprise architect at Citigroup, noted that “if anyone told me four years ago that SOA would be as big as it is today, I would have laughed.”

SOA is no laughing matter these days, of course. And as Citigroup moved forward with Web services development efforts, the company quickly recognized that such standardization and integration efforts fell in line with its business goals. “We didn’t want to end up governing a bunch of Web services with no particular relevance to the business,” Snow said.

However, this was no easy task with four levels of CIOs and thousands of technology professionals. Citigroup realized that it “couldn’t create an SOA without a solid governance model,” Snow said. Such a process had to be designed from the ground up, however, as no previous model had ever existed. The SOA governance process could not exist “as a step-child to the current IT governance structure,” Snow said. “Our departments and sectors want to govern in a way that is autonomous, not ‘one size fits all.’”

As Citigroup’s SOA became a reality, the company recognized that this was an important way to reach its business goals, which included maximizing shareholder return, investing in new products, and organically growing new businesses within the enterprise. The goals for Citigroup’s SOA effort included the ability to respond to an evolving business climate, business service reuse, to drive down application costs, and to allow businesses to interoperate. On the last point, Snow stressed that the key to success of the effort was in business interoperability, versus system interoperability.

Citigroup’s SOA governance structure is federated in nature, with a “separation of powers” similar to the way the US federal government is structured, Snow explained. An “executive branch” (IT) oversees operational aspects, a “legislative branch” (executive management and board of directors) establishes the goals of the SOA efforts, and a “judicial branch” (enterprise architectural boards) deals with conflict resolution. In addition, there is a separation of powers between the federal (enterprise) level, state (divisional) level, and municipal (departmental) level.

Another advantage that SOA offers is that it automates many processes, Snow added. “SOA allows automated support and auditability of the decision-making process,” he said.

Also present at the conference was another Wall Street powerhouse, Merrill Lynch, which also turned to SOA to address the accessibility of its mainframe systems. Jim Crew, vice president of SOA Software and former chief architect for Merrill Lynch, described how 420 CICS programs supporting two million transactions a day were opened up as Web services.

“We wanted to build composite applications for the enterprise, not departmental applications. We had to think outside of the box,” said Crew. Merrill Lynch’s system, originally called X4ML (for XML for Merrill Lynch), was recently sold to SOA Software and rebranded as SOLA.

“We think it may be one of the largest mainframe Web services implementations in the world,” Crew explained. “We saved about half a million to $2 million per application through cost avoidance and direct savings. While Crew admitted that cost avoidance calculations are not an exact science, Merrill Lynch was able to calculate some hard-number savings. The firm calculated that it would have had to spend $800,000 to build systems with traditional technology, versus the $30,000 spent with the Web services solution.