BPM / SOA Consortium Insights

@ Gartner AADI: SOA Success Stories: Delivering Business Value and a Go-Forward Foundation in a Tough Economic Climate

The SOA Consortium hosted two end-user panels at Gartner’s Application Architecture, Development and Integration Summit this week.  Notes taken during our SOA Success Stories panel follow.  Read about our Cloud Computing in the Real World panel here.

Session Abstract: Tough economic climates call for tough decisions. Instead of jeopardizing the future by cutting out all initiatives mentioning architecture, the organizations represented on this panel continue to invest in their business-driven SOA initiatives, resulting in near-term business value and creating a viable foundation for continued business optimization and growth initiatives. In this session, SOA Consortium and CIO magazine case study contest winners, along with leading members of the SOA Consortium, will share insight from their SOA success stories, including the business challenge addressed, achieved ROI, business participation, lessons learned and how they have, or plan to, incorporate complementary techniques such as BPM, event processing, business analytics and cloud computing.

Panelists: Tom Keen, CTO of BlueStar Energy, Leo Shuster, Director of Application Development at Safeguard Properties, John Woolbright, CIO for Omega Financial and Scott Metzger, CTO TransUnion Interactive

Moderators: Richard Soley, OMG/SOA Consortium and Daniel Sholler

Introductory Statements

Leo Shuster: Prior to Safeguard, was running SOA program at National City Bank.  National City has since been absorbed PNC.  National City was industry recognized leader in SOA, post-merger, PNC shut-down the SOA program.  However, everything that was delivered from the SOA program is running in production, adding value to the business.

Tom Keen: BlueStar Energy was a SOA Consortium 2009 Case Study Contest Winner, see the write-up of their winning case.  Took an engineering approach to this project.  Iterative plan for value delivery.  Technology stack is open source, about 98%.  Spent a lot of time on resiliency.  View the technology stack as temporal.  Some has been replaced out already, replacement also open source. 

Business success: explosion of product, entered new territories, new demographic market, all done in initial timeframe estimate.  Have had very little IT attrition with this approach.  Currently on 4th generation of NextStar.

Scott Metzger: Startup developing capabilities that needed to be delivered across multiple channels, in multiple regions.  Some capabilities were developed internally, others were third party sourced.  Startup was acquired by TransUnion Interactive.  The business, technical and change requirements were best met with SOA.  Now, some of the services are being offered to customers via the cloud, by creating APIs into the services.

John Woolbright: Previously, John was with Synovus Financial.  Synovus was the grand winner in the 2008 SOA Consortium Case Study contest, see the write-up.  John shares that Synovus is well positioned with SOA platform to emerge from economic downturn.

Q&A

Q: For Leo, why didn’t the new management embrace SOA? 

A: Cultural issue with acquiring bank.  PNC is siloed.  As acquirer, there was a bit of not-invented-here (NIH).

Q: For Scott, was your technology approach a reason for the acquisition?

A: Yes.  The agility the infrastructure offered allowed the acquiring organization to meet agility and growth goals.  Scott’s team, framework and approach became the “tail that wagged the dog”, driving SOA adoption within the acquiring company.

Q: Types of services, exposing services externally?

Leo: Majority of services were internal.  The services weren’t directly tied to revenue streams, like Synovus’ and TransUnion’s services are.

Q: BlueStar had enterprise architecture initiative at center of SOA, was that true for other panelists?

John: Started with centralized strategy, enterprise (shared) ESB.  Learned that a federated approach, with well-defined domains of control, and well-defined standards, was a better approach.  So, EA approach, but not centralized strategy.  EA provided investment protection, such as establishing contracts with key vendors.  Having well defined service standards saved them money in contracting the development of services.

Q: SOA as management approach versus technology approach?

Tom: A major building block in their success was business engagement.  The business has accepted responsibility for the delivery of NextStar.  The business speaks to IT in terms of business services, architecture and refactoring, when discussing new business opportunities and the work required to attain the new business capability (new product, new market).  Tom has so much support that asking for a 23% budget increase resulted in a 68% budget increase.  The business believes in the value of the architecture and program and understands that continued investment enables continued revenue growth.

Q: Role of master data management, BPM, etc in SOA success?

Leo: Successful SOA depends on services.  BPM became ancillary because the services layer was in place.  Services were created to expose master data.

John: Applied process thinking to the project.  How do you break out a project into a process approach.  How do you orchestrate the work across domains.

Tom: Leverage business rules, semantics from BPM in SOA.

An audience question on technology problems.  The theme of answers was the complexity of the distributed computing environment.  In one example, an unknown firewall blocked a service request for weeks.  In another, there was a code check-in miss on a bug fix.  Subsequent version of code reintroduced bug.  The key is to have visibility into your environment.  Integrate your service development processes into existing code and change management practices.

Another question called out the need for a proactive approach to SOA security.  Plan a security framework, don’t append security as an after thought. 

Another called out need to isolate impact of version or provider changes.  Implement a proxy layer to allow for seamless upgrades and backwards compatibility.

@ Gartner AADI: End-User Panel: Cloud Computing in the Real World

The SOA Consortium hosted two end-user panels at Gartner’s Application Architecture, Development and Integration Summit this week.  Notes taken during our Cloud Computing in the Real World panel follow.

Session Abstract: Is your organization considering cloud computing? Are you tired of hearing about simplistic (email and calendaring), enterprise irrelevant (Twitter, Facebook), and extreme (Google Datacenter) use cases? You aren’t alone. In this session, government and enterprise practitioners will discuss the cloud computing use cases they are considering, actively pursuing, and rejecting. In addition to the use case specifics, the panelists will share insights on financial benefits, true implementation costs, assessing and managing risk, governance, standards and their cloud computing wish list.

Moderators: David W. Cearley, Gartner and Richard Soley, OMG / SOA Consortium

Panelists: Clark Dorman of Next Century, Andy Lapkin of Kelley Blue Book, Joseph Larizza of Fieldpoint Private Bank & Trust

Introductions:

Clark Dorman: Specific use case, analyst in DoD collects a lot of images, genetic algorithm to review images.  Use cloud computing to optimize processing.  Started with in 18k server, got output in 8-14 days.  Now, use Amazon EC2, 100 images at a time, 12 hours, get run done for $130.  There is an opportunity to parallelize further and reduce runtime in half again.

Picked EC2 because it is the biggest.  Clark mentions Eucalyptus as way to hedge against lock-in.  Use Appistry to orchestrate startup and runtime execution.

Andy Lapkin: Looking at cloud, on premise they pay for availability, not for use.  Build KBB.com to peak.  This is expensive, for off-hours, plus hedge against growth.  Sized for extra 25%.  Example of unexpected traffic was “cash for clunkers” program.  A second use case is in data management.  KBB has a lot of data not shown on website that is used to produce website.  Also, data provider to car dealerships, etc.  Data management work is done in batch.

KBB uses Azure and SQL Azure for their cloud computing environment.  KBB is a Microsoft shop.  Now, testing KBB.com failover site in Azure in SQL Azure.  Biggest lesson learned: Transition to cloud is as good as your application maintenance. 

Joseph Larizza:  Customers are high net worth individuals, mostly from financial services industry.  The IT budget is a shoestring, similar to community banking.  Joseph has big banking background.  Some providers Digital Insight, Rackspace.  Full banking site, portal to members, all in the cloud.  Core competency is banking, not data center management.  Cost is critical factor.

Risk Question: Look at it as risk ledger.  Responsiveness of provider vs. key employee risk.  Compliance can be provided by cloud, more effectively than if done internally.  Surprise, the amount of support you need to do, such as patching, backups, security.

Online banking application, could have built their own.  But, not core competency.  Could never keep up with feature/function of a Digital Insight.  Instead, use Digital Insight, which is an Intuit company.  Core banking platform is all in the cloud. 

Implemented single sign-on across these applications; does have Fieldpoint branding.

Q: Security Concerns?

Joseph: Rackspace compliance and security, third party providers, learn their procedures.  They are careful about what data is stored in the cloud.  Didn’t elaborate further on this.

Andy: Security isn’t biggest concern, given the type of business application.

Clark: VPN on their side, SSH into Amazon.  Data isn’t classified, but still don’t want to “leak all over”.  Data is encrypted on the fly.  No data resides in the cloud.  Data is brought up at startup.  Have very specific startup process.  (Again, use Appistry)

Q: SLA with Amazon?  Is the data really gone when the images are shut down?

Clark: Matter of trust, trust that policy and agreements will be adhered to.  Security isn’t a thing, it’s a process.

Q: Cost of moving the data, latency?

Clark: For this use case, 6-8 hours of processing, 20 minutes worth of data movement isn’t an issue. 

Q: What is your interest in standards in the cloud computing space?  Cloud interoperability?  Avoid lock-in?

Joseph: Very interested in the ability to move cloud to cloud, for risk management, and to move work closest to current customer base (time zone).

Clark: Want to develop application at highest level you can.  Make the lower levels someone else’s problem.

Andy: Not moving everything to the cloud.  Will always have a mixed model.  Will always have datacenter to fall back on.  The real issue is the operations work to move from running on one cloud to another.

Q: New job roles?

Andy: Monitor the same way as on-premise.  Use Keynote for monitoring. 

Joseph: Think about operations (backup and security) differently.  Can’t just stick equipment in the mix.  Don’t have control over the equipment.

Clark: Systems administration changes to cloud administration.  Don’t worry about hardware layer, but still need to manage the environment (to deliver the application).

Q:  Old wine in new bottles?

Clark – what’s new is dynamic nature, speed that you can do things, low costs.  8 cents for CPU hour. 

Andy: Spin up new instance in 6 minutes.  Scale, knowing you can serve 14 million visitors a month.

Q: What needs to improve in cloud computing?

Andy: Azure needs third party support for management tools.  Doesn’t want to write his own.  Needs tooling to sift through all the log data.

Q: [for Clark]  Your project is a proof of concept, if DoD accepts this product, will it remain in the cloud, or move somewhere else?

Clark: It is up to the government to decide.  The government does have a few clouds – NIST, DISA Race, and GSA Apps.gov.  This application could land on existing government cloud.

Q: [for Andy] Considered running base load on premise, then burst peak to the cloud?

Andy: Something they are considering.

Q: [for Joseph] Said want to get to zero servers, does that mean Opex will outpace Capex?  Is that ok?

Joseph: Not for their size.  In general, economic model is service first, no related employee expense, if not appropriate, have inside.

Andy: KBB uses SaaS applications to run business, such as CRM (Salesforce.com)

What are real people doing with SOA?

A frequent question to the SOA Consortium is “What are real people doing with SOA?”.  Sure, folks see and appreciate the winning case studies.  But, what about the “every organization”.  What problems, or opportunities, are being resolved using a SOA approach?  What’s the best place to start?  Top-down from business strategy?  Bottoms-up from IT projects? Somewhere in the middle? 

This is best answered in three parts, starting by level-setting on business-driven SOA. 

By “business-driven SOA”, we mean three things:

1. Creating a portfolio of services that represent capabilities offered by, or required of, your organization.  Those capabilities may represent business, information, or technology concepts.

2. Composing, or orchestrating, those services along with events, rules and policies, into business processes and solutions that fulfill business scenarios.

3. Never proceed without a business outcome in mind.  That “business outcome” could be cost and complexity reduction via a rationalized IT portfolio.  In other words, “business-driven” doesn’t require a business person tapping you on the shoulder, it means executing for business reasons.

Next, our take on “SOA initiatives”, which is, there shouldn’t be any.  Rather, there should only be business initiatives that (when appropriate) use a SOA approach.  Sure, it sounds like semantic nit-picking, but in actuality it’s a lesson from the trenches.  Focus on the business problem, not the SOA grand challenge. 

As you know, business initiatives can arise from strategic decisions, business architecture/design decisions, and/or operational results.  And since SOA can be applied to a variety of business situations, it only makes sense that SOA can appear at point, from strategy to operations.  In other words, there is no best starting point, only the best starting point for you.

As these business initiatives are further refined in planning and execution, business and implementation details are surfaced, which also may call for a SOA approach.  For example, Joint Business and IT Planning activities may surface common process, function and/or information needs, across projects.  These are potential drivers for a SOA approach.

This business and IT activity continuum is expressed by the blue, green and yellow boxes, and grey arrows and boundaries, in the diagram below.  While blue represents business activities, and yellow represents IT activities, we’ve learned that the most successful organizations spend their time in the green, where business and IT continuously collaborate.

Finally, the business scenarios.  Referring to the diagram below, in each column of the continuum, we’ve listed real world SOA approach drivers.  For example, strategic business initiatives that have benefited from a SOA approach include introducing new business capability, entering a new or adjacent market, integrating mergers and acquisitions, and introducing multi-channel strategies. 

We captured these drivers during interactions with practitioners (real people) over the last three years.  These interactions included our executive summit series, our community of practice discussions, invited speakers at our events, case study contest submissions, and the thousands of practitioners we’ve met via industry events, private forums, and in their conference rooms.

SOA Approach Drivers Diagram, October 2009 version

[Click on diagram to enlarge]

SOA Case Study Contest Special Recognition Winner: NY State Department of Taxation & Finance for e-MPIRE

Last week, we announced that NY State Department of Taxation and Finance is the special recognition winner for Government/Public Sector in the SOA Consortium | CIO magazine case study contest.  Highlights from the NY State Department of Taxation and Finance Case follow. 

Organization Background

The New York State Department of Taxation and Finance is responsible for the administration of the state’s tax laws, including the administration of related local taxes, and the management of the State Treasury.

Business Scenario

Modernization & Re-engineering: Existing systems had several business issues: User view into the system was not integrated across all platforms and systems, leading to longer training times and an inconsistency of service. The delivery or work was still paper based.  The expectations of both internal and external customers changed dramatically with the emergence of the Web. The department wanted to facilitate Web filing and change the processing model to transactional from its historical batch pattern.

Legacy Constraints: Meanwhile the technical side of the house was not only having trouble keeping up with the new demands, but was becoming unable to support all the different legacy technologies.  In fact the primary system for processing personal income returns dates back to 1970s and was built on a homegrown database system by experts who have all retired. 

Talent & Intellectual Capital: All the while, in both business and technical areas, experts were retiring with considerable undocumented enterprise intellectual capital.  The department was finding it hard to recruit the next generation of leaders, because the work involved was not as attractive as other offers. 

Cost Reductions: At the same time, the technical organization was being asked to cut costs and reduce total cost of ownership. 

e-MPIRE Project: The goal was to establish a 21st century government system and toolset. To meet these goals Tax brought in through RFP a vendor who proposed an Integrated Tax System. The solution was a black box with security, work management and written business rules all built into it. After reviewing the initial high-level design of the vendor, the department decided to dismiss the vendor and implement an approach that lead to a more open solution that leveraged existing assets.

ROI

Expected Value: The planned business value of e-MPIRE was to eliminate the risks of having the core departmental systems on unsupported platforms, give the user a single interface into all systems and build agility to adapt to changing legislative and business requirements. 

Agility: On the agility part, the annual legislative changes (referred to as annual cycles) for Corporation Tax historically had taken six weeks to code and more than two months to test.  Under e-MPIRE R2, and because of the externalized rules and improved testing tools, the annual cycle changes took two weeks to code and two weeks to test. 

Optimization: With the implementation of a workflow engine in R2, they found that individual work item time was reduced by 40%, exception inventories were reduced on average by 60% and backlog was reduced by 80%.  

Volume: In R3, the ability to process the high volumes of income tax returns and deliver refunds to taxpayers improved dramatically. Historically, barely 150,000 returns were processed a night, with a 24 hour delay for fraud detection.  e-MPIRE R3 hit a high water mark of 390,000 returns in a night (ran out of input), which includes a near real time evaluation for fraud. 

Project Organization

Business and IT Collaboration: The project team included managers and staff people from across the Department of Taxation and Finance, along with business analysts and programmers from the IT organization. 

Two enterprise wide IT organizations participated via dotted line to the project: Enterprise Architecture and Infrastructure.  Enterprise architecture had some embedded teams with the project, since the project was going to establish many standards and tools moving forward.  The User Interface Team, Java Framework Team and Technical Workflow Team were essentially Architecture’s Centers for Excellence on the project.   

The User Interface Team worked with business analysts and users to establish everything from navigation patterns to field naming conventions, all with the intent of having a consistent UI to simplify training and usage. 

The Java Framework Team worked with the programmers and architecture teams to develop the coding behind the navigation, tools to aid development (some code generation), develop consistent integration services (to Content Management, Workflow, Business Components, etc.) and with basic application development support. 

The Technical Workflow Team worked with business analysts, users and the Workflow team (non-technical team of business modelers) to develop common workflow services, monitor models and process patterns. 

The Architecture Team helped align the business with the project because they enforced the consistent enterprise view of process and look and feel (the two places the system touches the users). 

There were validation meetings with larger groups of users to validate the design and direction of the project. 

The Business Roles and Navigation team of users was established to build the tabsets (functions) for the user groups, establish roles, make sure the right roles have access to those functions, and establish that function in the overall navigational scheme of e-MPIRE.

Lessons

NY State Department of Taxation and Finance cites four reasons for success:

1. Executives (commissioner, deputies and CIO) were committed to the creation of a system that will grow with the department for the next 20 years.  This is the most highly visible application at Tax and the one that has the largest impact on the citizenry ($3.5B in refunds in the economy). This was a risky system. It took real commitment and belief to pull the trigger.
2. A shared vision of what the system had to be. 
3. A department culture that facilitated success.  The cultural advantages they had were a trust of IT across the department, a history of working together, and within IT a culture of reuse of services (again a pattern of how they work together). 
4. The considerable effort expended by their users, programmers and partners.

SOA Case Study Contest Special Recognition Winner: FINRA for NYSE & NASD Member Regulation Merger

Earlier this week, we announced that Financial Industry Regulatory Agency (FINRA) is the special recognition winner for Regulatory in the SOA Consortium | CIO magazine case study contest.  Highlights from the FINRA Case follow. 

Organization Background

The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States.  Created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the New York Stock Exchange, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services.

Business Scenario

Merger/Consolidation: The Financial Industry Regulatory Authority (FINRA) SOA project consolidated the New York Stock Exchange Member Regulation systems with the NASD Member Regulation systems. FINRA is the largest private independent regulator for all securities firms doing business in the United States. FINRA oversees nearly 4,850 brokerage firms, about 173,000 branch offices and approximately 649,000 registered securities representatives.

The primary challenges:

1. Consolidation of the two organizations’ application portfolios that support the member regulation business.  Each application portfolio was sizable and heterogeneous. At the onset FINRA had ~160 applications and NYSE Member Regulation was supported by 86 applications.
2. Reconciliation of two sets of legacy business processes into a final-state business process.
3. Final-state business processes must seamlessly integrate new systems and existing systems from both legacy organizations. The existing systems required enhancements.
4. Business teams were distributed across the United States in district office locations.  The development team was located in New York City and the Washington D.C. area.

The objectives:

1. The final-state business processes of the merged company required seamless operation.
2. The team needed to ensure a continuity of business operations while transitioning in phases to the new final-state business processes.
3. Performance and reliability of the systems was a key requirement in maintaining core mission success.

Why SOA:

1. The size and complexity of the project required multiple teams in different locations working effectively in parallel to meet the aggressive schedule.
2. A SOA approach reduced risks presented by the large team size.
3. The end-state systems had to be flexible and provide the ability to quickly deploy changed and new business process without breaking the architecture.
4. It was anticipated that the approach would deliver significant savings in both cost and time when compared to competing approaches.

ROI

The Member Regulation function of FINRA (the new, merged regulator) benefited greatly from the new system.  Broker regulation tasks were simplified and accelerated, and delivered cost savings for the business.

The key business values achieved are:

Time to Market – Project delivery was greatly accelerated by allowing development teams to conduct parallel development of 10 major services with minimal interaction and dependencies. The service oriented approach and detailed overall vision allowed each team to rapidly deliver individual services that were seamlessly integrated and tested by the system team.

Reduced Risk – The SOA approach mitigated many of the risks associated with large development teams (100+ staff) by facilitating parallel development while minimizing team interdependencies and setting clear team responsibilities. The key to reducing risk is the early definition of business service interfaces and responsibilities.

Cost Savings – The modular SOA architecture of the new system consolidated business functions into a common set of business services that are leveraged across many business processes, resulting in cost savings for construction, deployment and maintenance of the system. 

Improved Agility – The business-centric service design and modularity of the SOA approach provides flexible deployment to support current business processes and to rapidly adapt to support future business process. Current business centric services include data sourcing, analytic surveillance and case management.

Resilience – Fault tolerant business-continuity is achieved using guaranteed message delivery, as individual business services are moved off-line for maintenance and restored.

Process Optimization – Technology duplication is eliminated through the consolidation of functionality into discrete standardized business services. This also provides a uniform approach and consistent results across all the business processes.

Project Organization

FINRA used a three-tier approach to organize the project:

Tier 1 was comprised of business analysts that spanned the various business processes.

Tier 2 consisted of 10 distinct service teams that defined the function of their service based on the business analysis and under the supervision and guidance of architecture and program management.

Each service team was individually sponsored by the organization and was a cross-functional team comprised of business analysts, architecture, development, and testing. The collaboration and alignment of technology and business staff on each individual service team was key to their success.

Tier 3 was comprised of the system architecture team and program management who provided overall vision, governance, and timeline. The overall vision provided business-centric services spanning many business processes. This naturally created emphasis on major business functions such as analytic surveillance and case management.

Lessons

1. The single most important lesson from this SOA project is that extremely large, time critical applications can utilize a SOA approach to segregate and compartmentalize common services and allow for massively parallel work by independent teams. Not only does this approach increase organizational productivity but also mitigates some of the risk presented by a large project.
2. The SOA approach gave the teams a measure of insulation, helping ensure decisions on one component did not negatively impact other components or the project.  The de-coupling allowed teams to deliver well-defined components on an aggressive time line required for project success.
3. Understanding the underlying business problems and processes is crucial to creating well-defined services that are reusable and exhibit the correct level of granularity.  The payoff for this is a flexible business process that can change and grow without changing the architecture
4. A concise architectural vision shared between system architects and application architects is key in large projects. Effective governance, along with well-defined services with clear functions and interfaces, is essential. Since the interfaces will change over time, it is important to develop a plan to handle this early.
5. For projects that use process orchestration, identify and document those processes early in the project.  This will help ensure that they operate in conjunction with the business function they automate and avoid problems that would be more costly and difficult to solve later in the project.
6. The combination of an ESB and BPM is a robust and powerful enterprise pattern. This combination greatly simplified several of the tasks of adapting existing capabilities into a new unified SOA system.

SOA Case Study Contest Special Recognition Winner: BlueStar Energy for NextStar™

Yesterday, we announced that BlueStar Energy is the special recognition winner for Energy/Utility in the SOA Consortium | CIO magazine case study contest.  Highlights from the BlueStar Energy Case follow. 

Company Background

BlueStar Energy is an independent retail electric supplier, certified to sell electricity in Illinois, Maryland and the District of Columbia. In addition, BlueStar provides green power and energy efficiency solutions to home and business customers.

Business Scenario

Business Agility: BlueStar’s business is in a very fluid regulatory environment. Business conditions change all the time, and the IT infrastructure has to adapt to those changes immediately. The BlueStar executive team formulated a strong strategy and needed a foundation for business execution.

Unite Business & Technology: In mid 2006, BlueStar sponsored an enterprise-wide SOA initiative to unite business and technology based on a strategic enterprise vision to increase competitive advantage. The goal was to provide BlueStar with a rock-solid IT platform and digitized business processes to automate the company's core capabilities.

Enterprise Architecture Evolution:  BlueStar adopted the concepts of a mature EA methodology and embraced service orientation (SOA) as their enterprise architecture style. The EA methodology allow the CTO to make tough decisions about which processes BlueStar had to execute well, then implement the IT systems needed to automate those processes.

NextStar™: The enterprise architecture would be named NextStar™ (for the “next” BlueStar) with the goal of streamlining and automating core business processes including eCommerce, B-to-B Integration, Accounting, Automated Provisioning, Risk/Energy Management, Pricing and Product Management, Sales Force Automation, Customer Relationship Management and Billing Systems. Millions of dollars in revenue are tied to timely access to information and the ability to act on that information.

Incremental Delivery: Key to BlueStar’s success was thinking big and starting small—partitioning BlueStar into narrowly defined business domains, processes and services, building out features iteratively, and, showing early value and success—instead of attempting to define the architecture for the entire company at once.

Their services and applications have been architected leveraging SOA constructs such as standard-based interface, consumer heterogeneity, loosely coupling, and, composability, among others. Said services and applications as well as existing legacy systems, workflows and third-party service providers interact with each other in a standard, loosely coupled manner via their Business Integration Suite, which consists of open source distributed, scalable and reliable components such as enterprise service bus, business process management system and messaging fabric.

ROI

BlueStar’s CEO Guy Morgan attributes much of the company's recent growth to the NextStar initiative. BlueStar has grown 12,197% over five years.

In addition to growth contribution, between the adoption of enterprise architecture, open source and offshore development, the company estimates saving $24 million over the course of five (5) years.

Business benefits:

• Improve business agility by streamlining core business processes, accelerating supply chain integration and providing business tools to offer new products in new geographies for new demographics, at an attractive price
• Reduce business operational expense and cycle time through automation of manual processes and seamless integration with trading partners and value-added vendor-supplied services
• Position the company to compete with Illinois utilities to serve residential and small-business customers after the discounted rate the state required utilities to charge for 10 years, ended in January 2007
• 50% reduction in billing staff
• Met per account operational cost targets for small business and residential customers through 100% automation of account management
• Ability to cope with frequent regulatory requirements changes from states where BlueStar operates
• Ability to enter new energy markets such as natural gas
• Ability to either in-source or outsource business processes to respond to market conditions
• Facilitate merger and acquisition (M&A) activity due to likely industry consolidation

IT benefits:

• Ability to scale from thousands of customers to tens of millions of customers nationwide
• Serve as a foundation for massively scalable solutions
• 10% reduction in IT expense associated with enrollment and billing processing
• Reduced IT capital investment and ongoing operational expense through 100% use of open source technologies

Project Organization

Business & IT Collaboration: From inception to deployment, this project has been a collaborative effort between business and technology teams. As a first step in the governance and change management areas, BlueStar established a Steering Committee comprising the company’s executives. Then, with executive management sponsorship, the company formed several domain-based change control boards consisting of multi-disciplinary teams including business, legal and IT members. The change control board members meet weekly to discuss prioritization, progress, change and control management, and release planning.

In-house Effort: NextStar was developed 100% in house. The Chief Technology Officer, Director of Enterprise Architecture and Lead Solutions Architect worked in Chicago, IL. Software Engineering and Quality Assurance teams worked in Lima, Peru.

Enterprise Architecture: The Enterprise Architecture team was responsible for providing leadership, mentorship and oversight of the Business, Solutions, Information and Technology Architectures, all of this under the SOA paradigm.

Lessons

BlueStar discovered early on that these actions would make the project more successful:

• Increased focus on program management (strategy) versus project management (tactical)
• Importance to address and agree on budgetary planning and allocation
• More strict adoption of the architecture and software engineering methodologies
• More strict management and governance of IT assets

SOA Case Study Contest Winner: Cisco Systems IT for Commerce Transformation

Moments ago, we announced that Cisco Systems IT won top honors in the SOA Consortium | CIO magazine case study contest.  Highlights from the Cisco IT Case follow. 

Company Background

Cisco Systems, Inc. designs, manufactures and sells hardware, software and services to create Internet and networked based solutions.

Business Scenario

Inconsistent, Disconnected Business Processes: Cisco’s legacy infrastructure had more than 400 diverse applications, many of which supported products and services that had been developed and acquired over the years. Consequently, several core business processes such as product ordering and pricing were becoming inconsistent, monolithic, complex, and inflexible to change. A lack of comprehensive end-to-end monitoring was also a concern.

Disjointed Customer Experience: While customers could initiate nearly all their orders electronically, most still required employee assistance for completion. Customers also had to use multiple online applications. The overall customer experience was far from unified, essentially impeding the flow of company revenue. Numerous initiatives were underway to improve the situation, further complicating the process.

Quest for Unified Customer Experience: Cisco wanted to create a consistent, unified ordering experience for users of its online commerce applications. Ideally, customers, partners, and sales representatives could visit a single Cisco site to securely register an opportunity, configure products, place and track orders, renew maintenance agreements, or evaluate leasing options, all from a unified interface. Cisco also wanted to improve operational efficiency by reducing the number of online transactions that required human intervention.

Commerce Transformation Initiative: The aptly named “Commerce Transformation” initiative is based on SOA principles that have allowed Cisco IT to create a solid architectural and technology foundation for both existing and future application development. Commerce Transformation was chosen as a key proof point for SOA adoption for several reasons. Support for large business priorities was driving significant IT application investment. Numerous business capabilities were identified that would be ideal as reusable services - and the IT organization was ready to embrace SOA principles. Cisco also wanted to achieve differentiated business capabilities to maintain its leading market position.

Early Use Case: Since most of Cisco’s revenues come through partner channels, one of the first projects developed within the Commerce Transformation initiative was the Partner Deal Registration (PDR) application. Before PDR was developed, application access to business services such as pricing and configuration resided behind Cisco’s firewall. This required Cisco employees to manually help partners integrate these services into their systems, prolonging deal cycle times.

PDR was designed to give partners secure access to Cisco pricing concessions and programs, leveraging reusable enterprise-class business services such as corporate pricing, configuration, and partner profiles that were coupled with flexible business rules for price lists, contractual discounts, and promotions, among others. Existing functionality such as pricing could be wrapped into a reusable business service that partners could easily incorporate into their own processes. Granular services could then be combined to provide composite services, with the ultimate goal of an agile Business Process Management (BPM) implementation. The expectation was that developers could effectively combine services to quickly offer new value-added capabilities.

At the same time, this approach would ensure that key business services were available consistently and securely across the enterprise and would simplify their incorporation into partner commerce portals.

ROI

The Commerce Transformation initiative is already delivering scalable solutions, enhancing customers’ experiences, and providing the partner ecosystem with secure access to business services like pricing, promotions and configuration tools. It also allows Cisco to more easily and cost-effectively support new business models and enter new markets.

The solution leverages reusable enterprise-class business services such as corporate pricing, configuration, and partner profiles, coupled with business rules such as price lists, contractual discounts, and promotions.

Key benefits achieved from the PDR project:

• Improved process agility: The way quotes are priced can be rapidly changed, enabling processes such as stacking discounts and promotions.
• Growth: There has been steady growth in the number of partners, deals, and bookings. Six months after initial project rollout, the system had more than 9,000 partner users worldwide and had processed 37,000 deals worth $1.2 billion. Nearly a year later in June 2009, there were close to 20,000 partner users, and 56,000 deals worth $3.92 billion net had been processed.
• Productivity: Deal cycle time has been reduced by 50 percent, allowing sales representatives to focus on providing customers with value-add solutions and services. The volume of time consuming non-standard deals has shrunk by using upfront pricing and incentives. Since the project’s pilot rollout in September 2007, the company has realized estimated savings of $12.7 million through improvements in discounting trends and reductions in non-standard pricing. More than 18,000 man-hours of productivity have been gained by eliminating unnecessary administrative tasks for field sales team members.
• Detailed tracking: A SOA dashboard provides deep visibility into service usage and delivers data that enables service architects to continually improve services.
• Improved customer experience: The number of clicks and time to place an order have been reduced. Users receive consistently correct pricing regardless of quoting or ordering process, making it easier to conduct business with Cisco. Pricing functionality can be smoothly integrated into partner systems.
• Increased back-end efficiency: Almost 70 percent of quotes are processed with no human intervention. The pricing service is now centrally managed to reduce overhead. Business Rules Engine integration provides faster, more accurate decision-making.
• Faster time to market: The reusable pricing service improves time to market as the company sells into new markets and embraces new business models.
• Better compliance: Built-in compliance processes provide the required audit trails.

Partners now have self-service access to incentive programs, promotions, and return merchandise credit capabilities that previously required direct contact with a Cisco salesperson. Quotes initiated by partners through PDR can now be shared with Cisco sales representatives using Salesforce.com for further opportunity collaboration, increased productivity, and reduced cycle time. The PDR application has been localized in 15 different languages in 150 different countries around the world.

Project Organization

Boards and Councils: Cisco’s “boards and councils” governance model was critical to the success of the Commerce Transformation initiative. Cross-functional councils comprising business and IT leaders were tasked with the planning and execution of an integrated capabilities roadmap. The roadmap was developed collaboratively across teams representing different functional groups, initiatives, and capabilities.

Before the roadmap was defined, pricing capabilities were spread across multiple IT and business organizations. To provide reusable SOA-based pricing services that could be used by the PDR and other applications, the councils had to identify business rules and processes that led to the definition of a target pricing service.

SOA Project Team: Once the roadmap was finalized, a SOA project team consisting of their Enterprise Architecture team, Business Architects and IT Architects evaluated the use of SOA. As functional, operational and compliance requirements were assessed, the need for a companywide SOA platform was established. Several areas of concern associated with developing pricing as a set of business services were identified, including availability, performance, security, operational excellence, and governance. The team also evaluated existing capabilities and gaps in technology.

SOA Framework & Platform: Working closely with their business and IT counterparts, the EA team began building a framework for the identification, creation, reuse, governance and monitoring of services and composite applications. The SOA platform and framework were developed by matching Cisco’s business needs and long-term strategy with products and solutions available in the market. This early work greatly streamlined the implementation of new capabilities for many other teams within Cisco and generated positive feedback from business stakeholders.

Center of Excellence: The EA team acts as the Center of Excellence for SOA and BPM and is responsible for building the foundation for all current and future SOA and BPM initiatives. They focus heavily on the areas of concern identified during the SOA assessment to ensure a solid foundation for enterprise-class business services.

Lessons

• SOA is not about technology, but rather how you implement, operate, and govern it. A large-scale enterprise SOA rollout requires maturity from people, processes, and technology as well as grassroots-level adoption.
• SOA and BPM go hand-in-hand. Plan for it in advance.
• A combination of iterative top-down and bottom-up approaches results in faster realization of SOA benefits.
• SOA introduces additional challenges with distributed business services. The SOA technology platform must be architected for the enterprise rather than focusing on a project-by-project basis.
• The organizational model of councils, groups and collective decision-making was initially painful but important to the success, funding and adoption of this project.
• Initial success stories go a long way in creating awareness, confidence and enterprise adoption of a SOA platform. The team has seen tremendous adoption of the SOA platform after the initial success of the highly visible PDR project.
• High availability, performance and end-to-end visibility of services infrastructure are paramount for long-term sustainability of SOA-based solutions.
• When you are a large company, most of the benefits will come from volume, so target simple things (services) with high volume.
• Governance is most needed when you are about to be most successful. If you don’t have it, you will fail.

To learn even more about Cisco’s SOA approach, check out this podcast of Lead Architect Harvinder Kalsi, recorded at the December 2008 SOA Consortium meeting.  Don’t have time for the podcast, at a minimum grab the slides.  The service lifecycle approach slide is outstanding.

Announcing the SOA Consortium | CIO magazine Case Study Contest Winners

This morning, at the inaugural SOA | BPM Symposium in San Antonio Texas, we announced the winners of the 2009 SOA Consortium | CIO magazine case study contest.  As we’ve shared previously, the purpose of the contest was to highlight business success stories and lessons learned to provide proof points and insights for other organizations considering or pursuing SOA adoption.

To qualify, organizations must have solutions in production based on a SOA approach, which have demonstrated business results. We judged the submissions on business problem solved, value achieved, business and IT collaboration, usage of SOA technology and lessons learned.

And now, the winners…

We are pleased to announce that Cisco Systems’ IT Organization is the overall winner of the 2009 contest.  Cisco successfully applied a SOA approach to their Commerce Transformation Initiative:

Cisco Systems, Inc. designs, manufactures and sells hardware, software and services to create Internet and networked based solutions. Cisco wanted to create a consistent, unified ordering experience for users of its online commerce applications. The “Commerce Transformation” initiative is based on SOA principles that have allowed Cisco IT to create a solid architectural and technology foundation for both existing and future application development. One of the first projects developed within the Commerce Transformation initiative was the Partner Deal Registration (PDR) application, since most of Cisco’s revenues come through partner channels. Among the many benefits of this application, deal cycle time has been reduced by 50 percent. The Commerce Transformation initiative is already delivering scalable solutions, enhancing customers’ experiences, and providing the partner ecosystem with secure access to business services like pricing, promotions and configuration tools. It also allows Cisco to more easily and cost-effectively support new business models and enter new markets.

In addition to the overall winner, we have three special recognition winners representing Energy/Utility, Regulatory, and Government sectors.

Special Recognition in Energy Utility: BlueStar Energy

BlueStar Energy is an independent retail electric supplier, certified to sell electricity in Illinois, Maryland and the District of Columbia. In addition, BlueStar provides green power and energy efficiency solutions to home and business customers. BlueStar sponsored an enterprise-wide SOA initiative to unite business and technology. BlueStar adopted a mature enterprise architecture (EA) called NextStar™ with the goal of streamlining and automating core business processes. The NexStar project has helped BlueStar grow 12,197% over five years and has contributed to $24 million in estimated savings over five years.

Special Recognition in Regulatory: Financial Industry Regulatory Agency (FINRA)

FINRA is the largest independent regulator for all securities firms doing business in the United States. FINRA’s SOA project consolidated the New York Stock Exchange Member Regulation systems with the NASD Member Regulation systems. The size and complexity of the project, which involved combining large application portfolios and legacy business processes, required multiple teams in different locations working effectively in parallel to meet the aggressive schedule. Using an SOA approach enabled FINRA to deliver the project faster and reduced the risks inherent to large development teams. The business-centric service design and modularity of the SOA approach provides flexible deployment to support current business processes and to rapidly adapt to support future business process.

Special Recognition in Government: New York State Department of Taxation and Finance

The New York State Department of Taxation and Finance is responsible for the administration of the state’s tax laws, including the administration of related local taxes, and the management of the State Treasury. The goal of the e-MPIRE project was to establish a 21st century government system and toolset. The planned business value of e-MPIRE was to eliminate the risks of having the core departmental systems on unsupported platforms, give the user a single interface into all systems and build agility to adapt to changing legislative and business requirements. The e-MPIRE project gave the department the ability to process high volumes of income tax returns and deliver refunds to taxpayers at a dramatically improved rate, with a near real time evaluation for fraud, up from 24 hours with the old system.

To learn more about the contest winners, please visit the contest center on the SOA Consortium website.  As well, keep an eye here for deeper excerpts and opportunities to meet the winners.

Inaugural SOA & BPM Symposium, September 15-16 in San Antonio, Texas

The SOA Consortium and BPM Consortium are co-hosting a two-day symposium, September 15-16 2009, in San Antonio Texas.  The program features invited speaker talks, case studies, panels and group discussion on using SOA and BPM, individually and together, to achieve business value.

Invited Speaker Sessions:

Clay Richardson, Forrester, Analyst Keynote on The future of BPM and SOA

Dr. Wolfram Jost, Executive Board Member, IDS Scheer on Survival of the Process Fittest

In times of turmoil, change, and volatility – people and technology are in flux, but business thrive on the processes they run on. The consistency, speed, and quality of processes are what drives the delivery of products and services to customers and improves the bottom line. The companies surviving the economic storm have been process oriented all along. But becoming “process-fit” is more than applying BPM technology; it’s a cultural mindset.  This presentation focuses on what it takes to effectively use BPM to better survive troubling economic circumstances with a process-oriented mindset, culture, and technology.

David Broadbent, Business Process Consultant, Parity Solutions on How to Overcome Resistance to Change in Change Programmes

There have been many papers written about how business process management can yield benefits to organizations but not enough about dealing with the people aspects of change. David Broadbent presented a case study at the OMG BPM Think Tank in Putten Holland in November 2008 looking at the aspects of culture on change programmes, describing culture as the ‘forgotten variable’ in change programmes. Following ongoing work with a number of clients this talk will take some of the thoughts he presented to the next stage, namely how to resolve the ‘Resistance to change’.

Olivier Brousseau, IT Chief Architect, Oilfield Services IT division of Schlumberger, on Information for Excellence journey at Schlumberger, a SOA case study

Schlumberger launched at the end of 2007 a program called "Excellence in Execution" with a goal to deliver flawless execution to its customers. In 09, this remains a key strategy to ensure that the company comes out of the downturn changed and more competitive. Schlumberger’s customers are executing more difficult and much larger projects in more remote locations. This implies huge advances in technology to be able to recover hydrocarbons cost effectively. It also implies that the value of reliability in operations to our customers has increased dramatically.

Recognizing that Information and IT systems will play a key role in improving the business processes required to support this program, VP Quality and CIO of Schlumberger called for a step change in delivering information and IT systems. IfX, Information for Excellence, is the New standard to drive the organization towards field efficiency. The IfX will ensure that applications are field-friendly, that they minimize redundancy of information entry, improve control, and streamline field operations and processes.  The talk presents the IfX Journey at Schlumberger, and how SOA is a key enabler to deliver IfX compliant systems.

Tushar K. Hazra, PhD, Principal and Solution Architect, Distinguished Engineering Group Federal Consulting Practice, Computer Sciences Corporation, on Leveraging BPM and EA Connections for Building Your Transformation Enterprise, a case study

In today’s transformational business world, process innovation and improvements are keys to the successful delivery of tangible business values, agility, and performance.  Many companies and agencies start their BPM (business process management), EA (enterprise architecture), and SOA (service oriented architecture) initiatives independently to achieve such goals.  However, when BPM, and EA or SOA projects are connected early, significantly higher business benefits can be achieved than the outcome of their individual completions.  Practitioners can gain a deep understanding of processes from BPM. This knowledge can subsequently be utilized to establish a roadmap for building a transformational enterprise through EA and or SOA projects, in many occasions concurrently.

This session presents a case study of an ongoing joint BPM and EA initiative that leverages the true significance of managing business processes involved in EA.  The case study offers a commentary of the “what”, “how”, and “when” aspects of the initiative and shares relevant lessons learned.   

Fred A. Cummins, HP Fellow, on SOA for Business

SOA is about accessing shared business capabilities across organizational boundaries.  This means SOA is about the architecture of business, not just the composition of IT solutions.  The implications of this are far-reaching and affect not only the structure of business processes, but the structure of the organization and the means by which the enterprise is optimized and transformed.  This talk will provide an overview of SOA from a business perspective: the specification and integration of services, the implementation of business processes, the analysis of value chains, and the changes that are needed in enterprise governance for the enterprise to fully exploit the enabling technology.

Aleks Buterman, Principal, SenseAgility Group on Integration Capability Portfolio as Means of Competitive Advantage

What if you could integrate major mergers in weeks, rather than years?  What if you could accurately forecast integration value, cost and timelines?   Any organization armed with this set of core competencies would have a sizable competitive advantage in the marketplace.  These questions are not meant to spur debate, nor are they academic.  Processes and tools have progressed far enough over the past decade where building a capability portfolio focused on integration is no longer a state of the art.  Assessing and improving the effectiveness of this capability portfolio is crucial to organizations who use M&A as part of their growth strategy and investment professionals who underwrite and finance these deals.  This presentation will outline how capabilities enabled by Service Oriented Architecture (SOA), Business Process Management (BPM), and Master Data Management (MDM) can be assembled into an Integration Capability Portfolio that can be leveraged at any time, and with great velocity.

In addition to the above sessions, there will be panel discussions, an introduction to Business Ecology, the announcement of the SOA Consortium Case Study Contest winners, and open discussion time.

The SOA & BPM Symposium is a public event.  For more information on the agenda and registration, please go here.

SOA Case Study Contest Deadline Extended until July 20, 2009

By popular demand, the deadline for the SOA Consortium | CIO magazine SOA Case Study contest has been extended until July 20, 2009.  The contest is a great way to recognize your organization, garner industry-wide praise for your hard working project team, and as Dave Linthicum suggests, contribute your knowledge and experience to further industry best practices. 

The entrance requirements and submission are simple.  To qualify, your organization (business or government, any size) must have successfully delivered business or mission value using a SOA approach. That’s it.  No membership, no fees, just brag about your success.

As for the submission itself, we understand your time is in high-demand.  To submit your story, merely answer the following 7 questions:

1. What was the business challenge or problem addressed by the SOA project, and why was SOA selected to address this? (500 words max)

2. When was the project started, how large was the project and how was it funded, and how long did it take to see results? (300 words max)

3. What was the planned and achieved ROI/Business Value (ie, improved agility, innovation, flexibility, optimization, resilience)? (500 words max)

4. How was the SOA Project team organized and what types of business staff were on the team? How was cross-organization collaboration (Business/Technical) achieved? Was a Center of Excellence or Competency Center created? (300 words max)

5. What technology or software was used in the project? What vendors were involved? Was service reuse taken into consideration? What was the most complex technical challenge encountered? (300 words max)

6. What were the most significant lessons learned from the SOA project? (300 words max)

7. How has the challenging economic climate influenced your SOA project? (300 words max)

Need more information?  Learn more about the contest, read about last year’s winners or get the scoop on last year’s judging.  Still more?  Check out what the SOA-rati are saying – Dave, Joe, and ZapThink.

Ready to start your submission?  Go here.  Good Luck!