The Strategic Value of SOA

Just as I thought my academic publication career was over, today I noticed that the International Journal of Information Technology and Management finally published our comparative case study on Service Oriented Architecture (SOA) in the banking sector.

The article is an updated and extended version of our ECIS paper from 2005 titled Extensible architectures: The strategic value of service-oriented architecture in banking. The article has been on its way for quite some time now (the publication process can be very slow in the academic world of information systems).  But, I think the updated article still has some valid insights on the different SOA-strategies organizations can peruse.

The 2010 journal article is titled The strategic value of SOA: a comparative case study in the banking sector. The abstract is inserted below – you can find a link to full article here.

Information and Communication Technology (ICT) has helped to drive increasingly intense global competition. In turn, this intensity increases the need for flexibility and rapid changeability in ICT to support strategies that depend on organisational agility. We report a comparative, cross-cultural case study of the implementation of Service-Oriented Architectures (SOA) at a Scandinavian bank and a Swiss bank. The strategic rewards in the adoption of SOA appear to go beyond marketplace issues of ICT capability acquisition, and unexpectedly arise in the creation of an extensible organisational ICT architecture. The extensibility of the ICT architecture that results from the adoption of SOA provides potential for greater organisational agility (and thereby competitiveness).

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2 Responses to The Strategic Value of SOA

  1. Hi Kristian,

    Your article is typical for the trap that many companies have fallen into with regards to SOA.

    The are focusing on the internal effecitiveness that SOA promises, but are not considering the competitive advantages external focused services can bring. Advantages that can change the competitive landscape in an industry.

    An external focused service is a service that your business partner can integrate directly in their own system, thereby enabling each individual Business Partner to “tailor” the interaction with the company exactly to their needs, instead of only having the option to interact through a “one size fits all” homepage.

    The issue is that the business people now understand what a homepage is, and understand that is it not a technical excercise but it is a channel to reach customers in a new way. This was not the understading in the nineties, where homepages often was developed by skilled IT specialist without direct conection to the business strategy.

    With services are we “back at the nineties”. Business people don’t understand the potential of external services, and leave it therefore to the IT-department to use this technology. IT use services to improve the internal system and thereby making the company more agile.

    The challenge of the tenthties (or whatever it is called) is to educate the business to understand the potential of using services to improve their competitiveness in the market

    My Danish blog “Have IT kipnapped SOA.” http://www.version2.dk/artikel/9666-har-it-afdelingen-kuppet-soa and the article http://dagenssynspunkt.blogs.business.dk/2010/05/12/internet-er-ikke-it-men-business is adressing this issue

  2. Hi Christian,

    Interesting article! The notion of SOA extensibility is certainly key to evolving a service ecosystem and an extremely important aspect to be conscious of.

    However, I couldn’t help thinking that while the article does address that sometimes changing business requirements dictate the need for interface versioning, it doesn’t dive into the derived challenges. It is fairly straightforward to see how to add new services or even add new data elements to existing services without breaking backward compatibility. But when an existing interface must be versioned because services are rendered obsolete or data elements change syntax or semantics, it gets far more complicated.

    In such a situation, the service provider will need to maintain a close enough relationship with consumers to notify them of the change, when to implement it, when the old interface will be turned off, etc. Even so, the provider may not be able to completely dictate the versioning perhaps because the relationship to the consumer is business critical. And when multiple consumers use the same interface, the complexity of interface versioning is multiplied. This is a whole other can of worms with the label “service-governance” stuck to it.

    To be fair, though, you did use the term service-evolution: revolutions are for freedom-fighters :)

    /Kåre

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