Three reasons SOA will increase outsourcing

Todd Biske felt my pain in recent posts as I attempted to sort out the potential effects of SOA on outsourcing. Will it create more outsourcing, or less?

Todd didn't take a stand on whether SOA will suppress or energize outsourcing, but he did offer up this perspective: Since SOA better defines the boundaries of technology, "an appropriately constructed SOA allows an organization to make more appropriate outsourcing decisions."

The trouble with outsourcing to date has been the "poorly defined" boundaries of IT environments, Todd explained:

"There is redundancy in the processing systems, tight coupling between user interfaces, business logic, and databases, etc. An environment like this makes it difficult to be successful with outsourcing. If the definition of the work to be performed is vague, it becomes difficult to ensure that the work is properly done."

"With SOA, the boundaries get defined properly. An organization can choose to implement the logic behind that boundary on its own, knowing that it may be needed for a competitive advantage or requires intimate knowledge of the enterprise... Or, it may either have a third party implement the logic, or purchase a product that provides the logic."

Thus, by having that boundary appropriately defined, opportunities for outsourcing can be more easily identified, Todd said. "It may not mean any more or any less outsourcing, but it should mean a higher rate of success."

Todd also made it clear that any discussion of outsourcing needs to cover both design time and runtime of applications. My own previous discussions in this blog have focused on the development side, but trends such as Software as a Service definitely invoke runtime outsourcing arrangements.

Some additional thoughts here: As more enterprises adopt service-oriented architecture principals and practices, outsourcing may become an easier, more manageable option. I think SOA will boost outsourcing for three reasons:

• Busy IT shops -- especially those with large enterprise systems -- may not have enough human resources to effectively deploy SOAs. IT managers, analysts, and architects will need to become business analysts, and spend a good deal of their time working with business units. They will either turn to third party firms for assistance with SOA, or to take on IT-centric tasks to free up IT to better pursue SOA. 
• Infrastructures based on SOA will lower the barrier of entry for outsourcing providers, which will in turn multiply their numbers, heightening competition and lowering prices. This will energize the outsourcing market.
• The growing standardization and "hot-swappability" of SOA components makes it easier to outsource -- perhaps as SaaS -- pieces of the IT infrastructure. This may make outsourcing less of the onerous either/or business decision it has been, as chunks of applications or services can be outsourced or brought in house as the situation fits, with minimal disruption to IT operations and priorities. As a result, we'll see more "micro-outsourcing" and less big-ticket-turn-the-whole-operation-over types of deals.

SaaS, as a matter of fact, is the ultimate expression of outsourcing via SOA. Doug Henshen, writing in Intelligent Enterprise, recently observed that SOA and SaaS are joined at the hip.

SaaS is the old application service providers (ASPs) plus SOA. (Expressed in mathematical terms as SaaS minus SOA = ASP.) 

"From a SaaS delivery perspective, SOA is what separates the current generation of SaaS providers, epitomized by the likes of Salesforce.com and NetSuite.com, from the failed application service providers (ASPs) of the dot-com era. From a consumption perspective, you certainly don't require a SOA to use SaaS, but if you want to effectively mix and match external services with on-premise assets and services, SOA will make it possible to efficiently build, deploy and manage composite apps."

Henshen opined that if predictions come true and 25 percent of business software is delivered via SaaS within the next five years, it will be because SOA will have addressed the major issues of SaaS, including reliability, scalability, and transparency.