The revolution in IT is economic not technological

NIST has come up with a cloud computing definition the first five items end with an economic pitch

Pay per use. Capabilities are charged using a metered, fee-for-service, or advertising based billing model to promote optimization of resource use. Examples are measuring the storage, bandwidth, and computing resources consumed and charging for the number of active user accounts per month. Clouds within an organization accrue cost between business units and may or may not use actual currency.

This is the real shift in computing and IT. Not the virtualisation, not the development environments but the shift towards a utility pricing solution. I notice the last line appears to have been tacked on as it doesn't fit the previous piece so much. If a transaction isn't using currency units then how on earth is it "pay"?
Business centric SOA represents that shift towards an economic approach to computing, it enables companies to understand where different forms of economic model work and the value that IT can bring. Cloud sits where IT becomes a pure utility, non-differentiating and available on demand. While at the moment these can be pitched as "value" elements that is simply because we are moving from a cottage industry of servers on racks towards an industrialised power supply business. Today we all run little mills by the river, cloud provides us with the power on demand to scale to ever larger demands. This does not mean however that cloud will differentiate us from our competition but our ability to use these new ways of work can.

Taking a business centric SOA look at IT and understanding the heatmap to focus people and understanding the value is about that shifting focus towards economic models which then allow you to understand where you invest and where you commoditise.

Clouds are not about value creation, they should be a low cost tool that enables you to create value from them. Equating the value with the tool is wrong, it is the application from which the value comes. Having a "cloud" does nothing, except reduce cost, unless you then work in other ways. To use the mill analogy, one company could take the new electricity supply and just run the old mill cheaper without the maintenance costs of the wheel and the issues with drought, another could use it to change the location to be nearer a larger population centre and away from the flood plain and devise a production line that creates the product for 1/3 the price. In both cases the utility is the same and in both cases it reduces a cost, in one however someone has learnt how to use the new low cost tool to drive new value for their business.

Economic models for IT are going to become more and more important in the next 10 years and understanding them, and making sure you are on the right side of them, will be very important for IT professionals who want a decent career.

Technorati Tags: SOA, Service Architecture

In a recession its even more about the services

Anne Thomas Manes has obviously taken a decent course in headline writing with her recent post SOA is dead long live services where she says that SOA has been killed by the economic downturn, but that this is a good thing as it means we can concentrate on the services.

Reading between the lines of what Anne writes I think I'd say that her statement is that vendors are moving away from SOA as they've flogged you enough stuff and now they want to flog you its offspring: mashups, BPM, SaaS, Cloud Computing. Now in another headline writing award winner Andy Mulholland wrote Innovation is Dead, long live cost cutting which acts as a cautionary tale to those who are hearing vendors claiming that BPM/mashups/SaaS/Cloud will magically reduce costs and solve all ills. The reality is that it is in fact the services that matter more at this stage than at any other.

This doesn't mean that SOA is dead, it means that the marketing fury of T-SOA has moved on as their just aren't that many more ESBs and Web Service tools that you can be sold. What remains is in fact what SOA was all along its Services are the starting point for SOA its not those pretty technologies. I've argued before that Web 2.0 requires SOA so building on the Anne and Andy posts I'd say that simply put.

If you adopt the new technologies without having a services mentality then you will create a degree of mess that will make the one that consultants and vendors got fat on with EAI look like a trivial problem. Doing Spaghetti inside your firewall in big applications is one thing, doing it over the internet and with thousands of small ones is a completely different scale of problem.

So in a recession you need to Identify your services, understand the business value that they deliver, understand the cost model to deliver that value and then decide on the right technology approach.

If that isn't SOA then I don't know what is. So in reality its the "other" SOA that is dead, not the SOA of today.

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Driving IT from the business

A short post here just to once again go over the basic principles of Business driven SOA. The goal here is that IT should be driven from the business this means

1. Understanding what the business is about
2. Understanding where and how IT can help the business
3. Letting the business interact and drive IT on its terms
4. Not thinking that the latest buzzword is the important thing
   

Now the goal is of course the same as before, you want to deliver an IT estate that

1. Looks like the business
2. Is costed based on the value it delivers to the business
3. And evolves like the business

This therefore is about understanding where to apply new technologies and where to just cut costs and cope with what you have, or even move towards outsourcing it because it just isn't important to your business at all.

Business driven SOA is about using the right tool for the right job in the right place in the right way. Its fundamentally got to be about the delivery of technology inline with the overall business. This means it must be constrained by what can be delivered and must be inspired by what could be delivered.

As we hit the down-turn this becomes more important. Taking a technology approach is just burning company money and applying new technologies where they don't deliver the benefit is just intellectual masturbation, but worse as you are wasting the business' money doing it.

So look at the business model, look at the business services and think

"If I had half the budget what could I do and what would really have an impact"

Then look at the saving areas, look at SaaS, look at outsourcing and mainly look at how you measure and reward people to cut costs. After that think about the top line

"Now that I've saved that 50%, where can I invest 25% to drive the company upwards"

That is where you look at impact and look more at modern technologies and approaches.

To do this you have to shift your mind out of IT for a bit and look from the business side. Use your experience and knowledge to frame the approaches and answers but don't forget that the goal here is for the business to be driving.

Business SOA is hard, it requires a real breadth of skills, this isn't delivery to PowerPoint its delivery to live. The business doesn't want to drive a video game, its a real business and it needs a real solution.

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Nodding dog alignment - the perils of aligning to people not business

I've seen a several organisations over the years that boast proudly of their business alignment but who still have an unsuccessful IT department. The litany in these IT departments is always the same

We are aligned to the business because we deliver what the business wants

When you delve deeper however what they are actually doing is aligning to business people rather than to the business goals. In effect the IT department just turns into a nodding dog and says yes to all requests made by anyone who can claim to be a business person. This is what leads to hideously configured packages because "the business said so" and to a fragmented IT estate and ever increasing IT spend for ever decreasing business value.

What alignment should mean is actually aligning to the Business Value and then making the tough decisions based on that. If there isn't the business drive to differentiate in an area then don't. Almost no-one will ever admit their area isn't actually strategic so doing what business people say is not the same as IT being aligned to the business. IT is there to govern and manage how IT is implemented and operated that means saying "No" as well as "Yes" and it means understanding the business objectives rather than the personal goals of individuals.

Business alignment isn't about people alignment.

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Using SOA to understand competitive advantage

One of the bits that I've talked about at various conferences and in the book is using SOA to understand the business value that various services have.

I was chatting on the phone today with someone around this topic and I thought it was worth a post on why treating SOA as a technology thing missed the real power and opportunity of what IT can deliver. There was a research report from the Economist recently that said that IT would need to move away from reducing cost and towards delivering value and of course that the business and IT have different views on how this will happen and what the barriers would be.

But lets start first with the IT department being expected to deliver value, this means that you have to understand the bits that add value, and of course the bits that don't. If you are viewing SOA as a technology thing then it really isn't going to help, as you can't really start ascribing value to a WSDL or a BPEL process, its just to low level to consider investment or cost cutting down there.

This means you have to have some way of understanding the business, some way of understanding what you will need to deliver to the business, and therefore some way of understanding the different values and drivers of the different parts of the business. Some people might say "That is what enterprise architecture is for" but I'd have to disagree as its really just the first step in enterprise architecture and its also the first step in actually managing an IT department, and I don't see the concept of "value" early on in the likes of Zachman or TOGAF .

This is why I argue for a simple approach to the business service architecture, because it quickly gets us to the stage where we can understand what the services are and we can then use that information to understand the business value.


By understanding which services are "under the line" and which are above the line you can quickly understand where you should cut cost, and where the business would appreciate suggestions as to added value. Speaking to someone from work a week or so ago he mentioned working with someone who did a similar exercise a few years back and found that they had over 50 projects in areas below the line.

As the business starts expecting IT to deliver more value its going to be essential for IT to understand more about which parts of the business deliver actual value, and which are just IT things that we think add value but in fact no-one actually cares.

For instance, how many Finance or HR services would live above the line? How much competitive advantage is there in having a customised Invoicing process? How much advantage is there in having an EAI tool or an ESB? How much value is there in REST v WS? Once you understand the value you can start delivering actual benefit and realising that the technology isn't important, its the end-game that matters.

For SOA to give competitive advantage it means knowing what advantage looks like.

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