Show me the ROI

Money makes the world go round. Andthe SOA world is no exception.SOA's futurewill revolve around our ability to define and demonstrates its value in quantitative terms.

"No executive will sign off on any investment in new technology without a solid expectation for how it will deliver value to the business. When people understand an established technology and how it will provide value over time, calculating the return on investment (ROI) for an IT expenditure will often be a straightforward process," explains ZapThink's Ronald Schmelzer. "However, calculating ROI on projects involving new technologies or emerging IT approaches like SOA is frequently more of an art than a science."

This can be a vexing problem. "What makes calculating the ROI of SOA even more challenging is that architecture, by itself, doesn't offer specific features that companies can readily identify with some particular return," he adds. "After all, architecture is an investment that companies must make well in advance of any return, and must continue to make over the lifetime of their SOA implementations. How, then, can managers calculate the ROI of their SOA initiatives before those projects take place? What are the tangible benefits of SOA that can result in a quantifiable ROI for the implementers?"

Providing an excellent crash course on how to build value propositions for different types of SOA projects, Schmelzer begins with four categories of SOA benefits:

• reducing integration expense,
• increasing asset reuse,
• increasing business agility, and
• reduction of business risk.

Thesebenefits "actually offer return at many different levels and parts of the organization, depending on which set of business problems the company is applying SOA to," he says."ROI calculations for SOA projects can vary greatly from one project to another."

Schmelzer concludes bynotingthat "companies should take the same iterative, composite approach to ROI that they take for SOA implementation itself. For example, every time they define a Service as part of a companys Service model, they should also define a corresponding ROI objective for that Service. How much will they spend on this Service? What direct and indirect returns can they realize from this Services implementation, in terms of reduced integration costs, improved asset reuse, or greater business agility? Furthermore, as this particular Service is reused in the company, how will the composition of the Services into processes realize additional ROI for the business? "