Unleashing Business Value through IT
After the 1990's tech boom turned into a massive IT hangover, many business leaders find that their organizations haven't realized the full value from their IT investments in application stacks like ERP, CRM, SCM and the cadre of other applications known by 3-letter acronyms that are undecipherable to most. Through industry consolidations, many organizations are stuck with redundant applications and overlapping business processes.
How many large organizations have one customer ID? A single customer bill? One integrated call center application with full, easy access to marketing and support information?
"Many of the business leaders within these organizations view their IT departments as out of step with the realities of the business, unresponsive, slow, focused on maintaining the status quo. The buzz over whether or not IT matters has been replaced with the notion that IT is the problem.
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In sharp contrast, some corporations have begun to tap into the power of a service oriented architecture (SOA) to solve business problems using industry standard software. The key technology behind an SOA is Web services, a poorly named term for easily identified and encapsulated business processes delivered over the web. These Web services started deployment in many organizations as a grass roots effort in the bowels of the IT department as a way of doing more with less.
"As Web services become more pervasive it is changing the way business decisions are made and implemented. Simply put, business leaders who are not aware of SOAs will likely lose a competitive edge in the marketplace as more nimble competitors take advantage of this new, enabling technology.
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The business value SOAs provide is so great that analysts predict in just a couple of years enterprises will spend $21 billion on software and services to achieve these benefits.
The reason is simple. SOAs are strategically centered at the intersection of business and technology to enable enterprises to adapt quickly to changing environments. An SOA allows the IT department to literally keep pace with business imperatives as it automates business processes by abstracting the process from the underlying application and IT systems. This separation of automated process from IT creates enormous business flexibility, allowing business leaders to take greater control of how business is transacted within the enterprise and with partners, suppliers and customers.
"With an SOA, an organization can provide services to employees, customers and business partners without the time and expense involved in past proprietary efforts. Because everyone follows the same set of standards, enterprises can be responsive, flexible and competitive, potentially realizing the dream of an on demand business.
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Too often, systems built by different operating divisions, business units or departments focus on their own business problems-without any regard to sharing information or coordinating business transactions to further the goals of the enterprise as a whole. Just think of all of the valuable information locked inside an ERP or CRM application that provides no real benefit outside of that single application. SOA will bring an end to this silo mentality. While horizontal integration efforts are not a new concept, past efforts have been difficult, expensive and inflexible.
Traditional IT systems typically involve so many business processes and transactions that making a change can often unravel the entire infrastructure. With an SOA, individual components are defined and form building blocks that can be used to construct and recombine functions and processes in a seemingly endless array of combinations. That makes it easy to change a business process or the way a transaction occurs without ripping out an entire application interface or engaging in countless hours of reprogramming.
The results can be significant. For instance, an insurance company can change claims forms used by agents in the field without having to rewrite software. An aerospace firm can accept invoices and purchase orders in different formats from multiple suppliers, yet all the data will flow correctly into its ERP system. And an electronics manufacturer that's involved in an acquisition can combine two companies' technology systems instead of spending months revamping the entire IT infrastructure.
"An SOA can also handle more elaborate tasks. A retailer, for example, could reroute trucks automatically based on a weather report. If snow or flooding were forecast, getting shovels or sandbags to home-supply stores in affected areas could take place seamlessly-based on preexisting business rules. This would help eliminate the inevitable shortages that occur during severe weather conditions. Other applications range from managing third-party
billing to overseeing outsourcing arrangements. All of these services can be handled automatically, without manual intervention.
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"An SOA provides a dynamically reconfigurable architecture that is designed to enable enterprises to respond quickly and flexibly to market changes, thereby supporting innovation and business growth. Ultimately, this increases the potential for an improved return on IT investments and a more robust bottom line.
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