assessing the risk of individual customers to prioritizing the
potential features of a new product in development.
It is becoming possible to design many business activities as Lego-like software components that can be easily put
together and taken apart. What’s primarily responsible is
service-oriented architecture, a relatively new way of designing and deploying the software that supports a business activity. The beauty of SOA is that it allows activities – or processes built from such activities – to be accessed using the now-ubiquitous internet in a standardized fashion. Whether the
capabilities that make up an activity are manual, fully automated, or somewhere in between, the SOA-based design of
their underlying software or electronic user interface allows
the activity to be turned into a de facto web service. This transformation makes it vastly easier to share discrete activities
and entire processes internally, to buy or sell them externally,
to delegate their execution to suppliers or customers, and to
update and maintain IT systems.
That said, obstacles to using SOA in this way exist. One is the
lack of a universal standard: Vendors and industries currently
use different versions of SOA. This is not a major issue, though,
because systems using those various versions can converse
with one another about most activities. Moreover, all signs
suggest that SOA will become a standard overseen by a governing body of professionals. “The world
is rapidly moving in that direction,” says
Mark Baciak, a senior technology architect at Microsoft, who pioneered SOA
work at the software giant and several
of its large customers.
A bigger obstacle is a familiar one:
the gulf between corporate leaders and
their IT departments. Chief executives
have tended to see SOA as merely the
next big thing being pushed by their
CIOs and to assume that it, too, will end
up costing a fortune without delivering
commensurate benefits. Partly because
of this fear and partly because CIOs
have not understood or have had trouble articulating what SOA makes possible, most CEOs have authorized their
IT departments to deploy it in a limited
fashion – to improve and lower the cost
of maintaining the software supporting existing processes. As a result, most
companies that have embraced SOA
have applied it without first rethinking the design of their businesses. This
omission means they have overlooked
SOA’s greatest value: the opportunity
to create much more focused, efficient,
and flexible organizational structures.
Companies with which we have
worked that have applied SOA only
after redesigning their operations have
eliminated huge amounts of redundant
software, reaped major cost savings
from simplifying and automating manual processes, and realized big increases
in productivity. Harvard Pilgrim Health
Care, the insurer, was able to shift nonstrategic, or noncore, activities such as
pharmacy-benefits management and
disease diagnosis to companies that per-
companies that have
embraced service-oriented architecture
have applied it without first rethinking
the design of their businesses.
