SOA success - value over technology

There have been a bunch of articles around recently on SOA and judging the success but it was this one at HBR that best sums up the business view of what good looks like. Entitled Investing in the IT That Makes a Competitive Difference its all about companies being smart in the application of technology and choosing the areas where it drives differentiation. One of the bits I've gone on about in the book is value classification.

The point is that most companies have a distorted IT investment view with most of the investment going "below the line" and very little going above it. This is madness and is a major reason why businesses get annoyed. The point of the areas below the line is cost rationalisation and even elimination. SaaS is a good example of elimination, you eliminate the data centre and other support costs and switch it into a business metric charge (most often number of users). But you won't differentiate on any business services in this area as if you can do SaaS then so can the competition but it doesn't matter as this isn't where you really compete. Think of your phone system. Does it matter that you use the same mobiles as the competition? Nope. Lots of IT is in the same basket.

we believe that an overabundance of new technologies is not the fundamental driver of the change in dynamics we’ve documented. Instead, our field research suggests that businesses entered a new era of increased competitiveness in the mid-1990s not because they had so many IT innovations to choose from but because some of these new technologies enabled improvements to companies’ operating models and then made it possible to replicate those improvements much more widely.

So its about where technology impacts the operating model, not just about technology. They make a great play however on the importance of standardisation in driving successful change

First, deploy a consistent technology platform. Then separate yourself from the pack by coming up with better ways of working. Finally, use the platform to propagate these business innovations widely and reliably.

In the value classification this means keeping vanilla down the bottom and innovating at the top (where it has the most impact). Its the standardisation around things like SAP that give you the ability to then roll out change more widely, its not simply about having a new shiny technology. So with SAP the Basis platform is below the line, but is a consistent base. You then use Netweaver and new technologies above the line to give you the competitive advantage.

This is the SOA play. Making the business not care about the technology you are using but is asking for two things

1. Standardisation
2. Focus on investment

Standardisation means rationalisation, not just of the IT but most importantly of the business. The business needs to operate in line with the package, not the package in line with the business. Where they need (not want) to differ then you are looking to focus investment at these areas of competitive advantage.

This bit above the line is where you can start playing with Web 2.0 (a Web 2.0 invoicing process... I don't think so) to really understand where it makes an impact. Having it make the impact however is about enabling it to build on those stable foundations and foundations that are able to change in both business and IT in a coordinated manner.

So the conversation has switched from "SOA" and technologies towards a goal of competitive differentiation. It is however the SOA bit that makes the split between standardisation and innovation possible. Without this standardised glue and the business commitment to alignment below the line you are just building on quicksand.

This is a real judge of when SOA is successful, when the business doesn't care about the SOA programmes, when it doesn't care about BPEL/Web Services/REST/etc but what it does care about is that it exists when it becomes an integral part of the companies goal of differentiating itself by providing the platform between the standardised and the innovation and being the mechanism via which those changes can be rolled out across the business.

So if you are doing a service architecture make sure that you do the value classification so you can explain to the business where you want them to invest and where the business and IT need to rationalise and standardise.

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