Tuesday, April 01, 2008

SOA pricing needs to have a business model

One of the challenges of SOA when its adopted across an enterprise is who pays for what, one of the big gaps in most SOA environments is anything that sensibly measures this. Part of the challenge is that in a distributed environment it is hard to always say who is actually using something. As many "security" policies are just application to application (or at best service to service) all you know is that "EmployeeManagement called Payroll". Does this mean that HR (owners of EmployeeManagement) should pay? Or does it indicate a "normal" request that is covered in the costs of finance? What if we use proper end-to-end user security? Does the user pay?

The point here is that creating a pricing model which fairly attributes the costs is a hard problem, but not an unsolvable one. Today there are, within most businesses, areas which are considered "cost centres" and others which are "Profit & Loss" the costs of the "cost centres" are normally centrally allocated and considered overhead which the business has to spend, but where the focus is on cost reduction. In the P&L
areas they are expected to manage themselves for business advantage, this means that when they have impacts from other areas it impacts their profitability. The end result is that a cost model for an organisation needs two things
  1. Utility Pricing
  2. Attribution
The first is complex, it means you need to know genuinely how much something costs, how many CPU cycles it will take up, how much storage it takes and of course any implicated costs in the interaction. This has an obvious first impact which is that infrastructure (including hardware and software) needs to be measurable at a single interaction level. If one person does a search for a specific entity then its a cheap thing, if they search for a million things then it might be expensive.

The second element is very hard indeed if you try and do it end to end. The "simple" way of handling this is that cost is incurred by the consumer, if this consumer is another service then that service has a decision on whether to pass the cost on, or to absorb the cost. Effectively this means that instead of Transaction management spanning an enterprise there need to be cost management facilities.

Shifting IT onto a business footing means that IT needs to change the way it works. The goal of IT should be to deliver an IT environment that looks like the business, evolves like the business and is costed like the business. Right now there is nothing that is really helping with the later.

While IT continues to be funded via projects and support it will struggle to really adapt to the business, by changing its funding and costing to an integral part of its operation will help IT really deliver the value that it can.

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