Even small changes bring savings
As emphasized by recent turmoil in worldwide financial markets, business in the 21st century is characterized by change. Although the degree of volatility may vary by industry or geography, business leaders around the globe agree that organizational agility is crucial to their sustained growth and business performance.
More than eighty percent of CEOs expect to face substantial change in their business, according to the IBM Global CEO Study 2008. The vast majority (98%) of CEO's surveyed recognize the need to change their business models to remain competitive in this global marketplace. No longer can you differentiate on products and services alone.
An agile organization is one that can easily modify business processes, deliver new products and services to markets quickly, access new customers in new ways and maximize investments of time and money in existing IT assets. Transforming an organization to one of greater agility doesn’t have to be an invasive process. Often, the first step to an agile organization starts with connecting your applications in a service oriented architecture (SOA).
The integration of applications and information can be achieved through a series of small, incremental changes that address specific problems. Each change can deliver measurable results and smarter business outcomes. Small improvements can have dramatic effects on your bottom line. The difference between you and your competition may lie in your ability to take advantage of these opportunities.
Dealing with inflexible systems
For decades organizations have been using various enterprise information systems (EIS) from SAP, Oracle and other vendors to run their business. These large, monolithic applications provided end-to-end functionality and were once paramount to business process and operational performance. They are intended to provide general business processes and functions that can be adapted to a broad range of markets and clients, and may not address the unique requirements of any one user or market segment. Customizing these applications is often impossible or, at best, very difficult, requiring countless hours of custom coding, which can interject an entirely new set of problems.
The sharing of data and information between these applications is also problematic. As the number of applications grows, the number of interfaces into and out of each application multiplies. Through application upgrades and the installation of new applications that need to communicate with the others, interfaces become more complex. Over time these interfaces assume a life of their own and begin to overwhelm in complexity the application’s business logic itself.
The result is an IT environment and business application suite that is inflexible and difficult to maintain. Rather than supporting the line of business with new products and services plus innovative business processes, the IT department finds itself mired in ongoing maintenance.
What steps should a business take to improve its IT infrastructure? You can start by moving to a service oriented architecture to gain the business agility to respond to substantial changes in the marketplace. SOA provides IT flexibility by separating the applications that run your business from the infrastructure for connecting applications, which is what architects call the separation of concerns. It gives businesses a robust, reliable and flexible approach to designing and implementing reusable IT assets.
By taking this decoupled connectivity approach, businesses can reduce maintenance overhead on existing infrastructure, upgrade existing applications, install and integrate new applications and establish new connections without impacting business logic or existing data flows.
This decoupling enables key assets within your IT infrastructure to be viewed as individual services rather than deployed applications. These assets can be reused in new ways to address new opportunities. They can also be managed and maintained more efficiently for existing uses. Once that happens, your business will be on its way to becoming a more flexible and dynamic business underpinned by more agile IT resources.
Get started by connecting existing applications
The connection of existing IT assets is often the simplest and least intrusive way to start your SOA transformation and deliver flexibility to your organization.
SOA connectivity enables information to flow throughout your enterprise between disparate applications and systems. Business applications are broken down into components, providing access to functions that were once inaccessible as part of business processes defined by software vendors.
For example, you could supplement a customer relationship management application by including a credit check as part of adding or accepting new customers. With SOA connectivity, it is possible to automate and seamlessly integrate an external, third-party processed, credit check with the customer relationship management application.
The cornerstone of that SOA connectivity infrastructure is quite often a messaging backbone or enterprise service bus (ESB). These solutions provide a means for the reliable flow of information throughout your organization by routing information between systems, mediating between data formats and distributing events. Service enablement of packaged applications provides access to existing data and functions that can be distributed throughout your organization using the messaging backbone or ESB. For example, customer information that exists in a sales organization’s Siebel database can be accessed at its source by the marketing department. Or, an update to a customer record in SAP can be automatically propagated to other billing or accounts receivable systems.
These services can also be extended outside your organization through partner gateways and Web portals. Then, you can efficiently access business partners and customers in entirely new ways, opening up additional business opportunities and markets.
You can maximize the reuse of business applications and services by adding SOA capabilities such as service repositories, governance strategies or security tools, which help you to manage the deployment of services within your organization.
SOA in action at New York Power Authority
The New York Power Authority (NYPA) is the largest state-owned power organization in the U.S. The NYPA was designed to be a nonprofit source of electrical power from which New York's investor-owned utilities could buy power at no markup, provided by the NYPA's generating facilities. This has simplified power distribution throughout the state and benefited the consumer, reducing costs that could have risen had the state not stepped in at an early stage.
The NYPA was using four disparate systems for its billing processes while maintaining more than 120 external data flows implemented as point-to-point interfaces. The billing system was inefficient and error-prone, and the interfaces were quickly becoming unmanageable. Data integrity was a major problem, and a means for handling electronic data transmission errors was nonexistent. Billing runs were prone to errors, and customers were increasingly dissatisfied.
NYPA's goal was to establish a flexible and reusable enterprise system to streamline their billing processes, simplify the integration of SAP with dozens of external interfaces, and incorporate human workflow and data reconciliation into the business process.
To accomplish this, New York Power Authority consolidated its billing system, service-enabled SAP R/3-CCS and integrated four disparate systems through the use of IBM WebSphere® Message Broker, IBM WebSphere Process Server and IBM WebSphere Adapter for SAP Software. Through the use of this IBM Smart SOA connectivity portfolio, the organization was able to simplify connectivity and deploy a consistent set of business processes. NYPA has also laid the foundation for integrating other components of their business in future SOA projects.
NYPA realized these major benefits:
- Redeployment of 15 full-time billing staff to more meaningful tasks
- Reduction in development time for new applications and interfaces
- Increased productivity from IT and business professionals
- Improved data integrity, billing accuracy and customer satisfaction
Dennis Eccleston, NYPA chief information officer, stated "SOA enables us to leverage our billing staff on all sides of the house using one set of business processes that are consistent." He also noted, "We have consolidated four systems into one system, standardized and improved the maintainability of our interfaces, freed staff time for more valuable work, and have one version of the truth which makes us more efficient."
"Reusability means that we develop in weeks rather than months," according to Eccleston. "It's a tremendous improvement in productivity."
