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Previous: The Problem of Service Description as Seen in the Pizza Shop Blueprint

SOA Governance and the Warren Buffett Principle
27th Apr 06:

Warren Buffett, the second richest man on Earth, has a lot to say about SOA governance. Make sure your investment is in something durable and explainable.

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"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage."

- July 1999 at Herb Allen's Sun Valley, Idaho Retreat

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This quote speaks to one of the most important ideas in SOA. Unlike the Nick Carr IT-as-commodity view of the world, SOA enables externalities such as competition, regulation, customer preferences and the fastest changing aspects of the business environment to be modeled as agile metadata process artifacts or as declarative policies or contracts.

This means that the components underneath the service interfaces can be commodity-such as ERP and the atomic structure of your software universe-but that the elements that strategically differentiate your offering from the competition can be modeled in a much more business agile way. By doing so, an organization can realize sustainable, evolutionary, adaptive competitive advantage that translates into extraordinary returns in the long haul. Companies without strategic IT capabilities will become acquisition targets.

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"I never buy anything unless I can fill out on a piece of paper my reasons. I may be wrong, but I would know the answer to that. "I'm paying $32 billion today for the Coca Cola Company because..." If you can't answer that question, you shouldn't buy it. If you can answer that question, and you do it a few times, you'll make a lot of money."

- Spring 1991 lecture to Notre Dame faculty

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This could be called the foundation rule of SOA governance. SOA is about aligning business with IT. How does that alignment occur? It happens through the increase in abstraction that services provide. This enables the conversation between IT and business to be about business-not about IT. The SOA governance axiom that goes with this quote is "Never invest in an SOA project you don't understand." I see a lot of SOA projects that go down pretty far into complexity, and this is a good reason to sound a note of caution. If IT can’t explain it in business terms to the business-the business should not fund it.


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Comments

Your article on Pizza and this are contradictory

SOA Enthusiast

Saturday 29 April 2006

In your so called "Pizza Article" you talk about separating interfaces from implementation didn't solve the real issue. In your words "The thing that's really interesting about this is that while the implementation doesn't matter (you can convince me of this if you try hard enough), the outcome matters a LOT."

So how do you expect an organization to take decisions based on abstraction of services. In your own words "This could be called the foundation rule of SOA governance. SOA is about aligning business with IT. How does that alignment occur? It happens through the increase in abstraction that services provide."

Mr. Pizza Man please put your facts right!!

T

Miko Matsumura

Saturday 18 August 2007

Thanks for your comment!!! Very astute, sorry I didnt see this earlier.

Yes, there are two concepts here--one is that the interface is not completely seperable from the implementation in all cases. This was evidenced by the Pizza Shop Blueprint.

http://www.soacenter.com/?p=33

This is really a way of helping nudge technical users to understand the business dynamics of service consumption behavior. Clearly, implementing a real pizza store with this kind of "method signature" interface is designed to show how much human behavior relates to the consumption of services.

So it's true, you cant completely seperate interface from implementation.

However, this does not mean that the warren buffett principle does not apply. It just means that if you plan to invest in a service, you need to understand what's under the abstraction.

For example, investors invest in abstractions. A prospectus is an abstraction. A ticker symbol, like NASDAQ:SUNW is an abstraction. Similarly, a business service, no matter how well described is an abstraction.

All I'm saying is that as an investor, you need to understand what exactly you are investing in. This is the same reason why you dont want to shove money into a cardboard box hoping you'll get pizza.

Let me know if this isnt clear or well explained...

Thanks,
Miko