Analyst: ROI doesn't apply to SOA

Analyst: ROI doesn't apply to SOA

Summary: Cost-justifying SOA would be like building a car, then trying to calculate the ROI of the nuts and bolts of the car, rather than the completely assembled machine.

SHARE:

I like the way Niel Macehiter once summed up the value of ROI calculations, as it relates to SOA or any other IT project: it's a formula usually conjectured after the fact to justify expenditures. 

Cost-justifying SOA is like building a car, then trying to calculate the ROI of the nuts and bolts, rather than the completely assembled machine

So, while ROI can provide a rough picture of the value of a project, the relevance and accuracy of ROI is often suspect. For a murky concept such SOA, the math grows even fuzzier. The question Does SOA have an ROI? was posed asked in the latest edition of Datamation -- not to mention countless other articles, conference sessions, and podcasts.

Gartner analyst Randy Heffner says as much in a report quoted in the article: "Any attempt to assign a specific ROI to SOA should be viewed with heavy skepticism."

SOA needs to be viewed in a larger context, Heffner said: "Because you should not be selling SOA. You should be selling the solutions that you're building." An analogy would be building a car, then trying to calculate the ROI of the nuts and bolts of the car, rather than the completely assembled machine.

SOA is a set of best practices, a philosophy, and a drive toward business transformation. SOA, for the most part, is intangible, with long-term results to the business.

In many cases, SOA is a "strategic bet," Heffner says. But that's okay, because some oif the biggest business decisions made are more strategic bets than hard-dollar justifications. An example of such a strategic bet is Apple’s decision to invest in the iPod and iTunes. “There came a time when it was a strategic bet. Somebody could have all the data behind them, ‘We think this will sell this much or that.’ But at some point it’s just pure speculation. And they had to say, ‘Here you go – we’re going to do this.’”

Topic: Enterprise Software

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

5 comments
Log in or register to join the discussion
  • ROI is a buzzword from yesterday

    See my small cartoon:
    http://geekandpoke.typepad.com/geekandpoke/2007/03/roi_of_soa.html

    Bye,
    Oliver
    owidder
  • ROI is a necessary evil

    ROI is not going away, and yet I agree it's a hard test to make SOA pass.
    However, in a recent briefing with Jeff Stamen at Progress Software, he
    described working toward a best of ROI in SOA approach. And that is to
    define and prove ROI for SOA on a project basis, not on the holistic and
    longterm IT-strategy basis.

    So in a pilot project, or for projects driven at the departmental level, SOA
    can and should show financial hard and soft benefits over traditional brittle
    approaches for applications that need integration and easy extensibility
    (and which don't these days?).

    SOA can show ROI from the get-go on a project basis. Progress says they
    do it all the time. From that, more projects beget more SOA use and
    methodology adoption. Project by project, more work is therefore done to
    free up more data as a services layer. Same with more applications,
    components, and logic. Before you know it, SOA blossoms from tactical to
    strategic, perhaps paying for itself along the way and not as a "if we build
    it, they will come" bet.

    Like a Jackson Pollock painting, a progression of drips and streaks of SOA
    use in the enterprise begin to cover the entire canvas. As the resuse
    benefits kick-in, new infrastructure is designed with SOA in mind, the
    notion of applications shifts to a menagerie of WSDLs.

    The key is to show ROI on a tactical basis on the project level. This is an
    investment by the vendors and SIs, as well as the users. Smart and
    aggressive vendors will seed the market with a lot of successful projects,
    application by application. Failure is not an option.
    Dana Gardner
  • SOA is not a project that has an ROI, SOA is architecture.

    SOA is not a project that has an ROI, SOA is architecture. Asking the question what is the cost of SOA for a specific project makes sense or what is the ROI for migrating a set of business processes to SOA. SOA based projects have to justify themselves one at a time. To justify the overhead of an initial SOA project you have too consider a set of future projects, just like justifying installing a network. A single application does not pay for the network.

    http://blogs.ittoolbox.com/eai/business/archives/service-oriented-architecture-soa-roi-13541
    eroch
  • RE: Analyst: ROI doesn't apply to SOA

    IMHO the car example given with Nuts & Bolts has trivilized the impact of SOA. I think SOA is going to transform IT. More apt comparison would be whether for car's engine one should use the traditional Internal Combustion engine or Hydorgen cell. I guess ROI would be of paramount importance then.
    k_rajesh_n
  • RE: Analyst: ROI doesn't apply to SOA

    Related post

    <a href="http://it.toolbox.com/blogs/the-soa-blog/service-oriented-architecture-soa-roi-13541">SOA ROI</a>
    eroch