SOA is not above ROI scrutiny, but...

ROI on SOA is an enterprise challenge, not an IT challenge

My latest post on SOA and ROI stirred up some interesting discussion. Should SOA -- which is not a specific technology or project, but an enterprise infrastructure -- be subject to the rigors of ROI?

ZDNet colleague Dana Gardner says yes, ROI must be applied to SOA activities, and is adamant on this point. Every new IT project -- including SOA-related projects -- needs to be justified with ROI. Period, end of statement. SOA does is not magically above the rigors of ROI that need to be applied to any business activity.

"I think we need to get real and recognize that ROI is not going away," Dana points out. "Yet I agree it's a hard test to make SOA pass." The way this is done is to define and prove ROI for SOA on a project-by-project basis, not on the holistic and long-term IT-strategy basis, as was suggested by Gartner's Randy Heffner, quoted in my recent post on the subject.

"SOA can show ROI from the get-go on a project basis", Dana points out. "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."

However, Todd Biske says that SOA is a difficult concept on which to pin ROI, and SOA, taken as a whole, is more than a collection of IT projects:

"SOA is not a project. An architecture is a set of constraints and principles that guide an approach to a particular problem, but it’s not the solution itself. Asking for ROI on SOA is similar to asking for ROI on Enterprise Architecture, and I haven’t seen much debate on that."

Todd also points out that the ROI proposition for SOA parallels that of IT itself. On one level, there's the promise of cost reduction -- which is where most SOA projects are delivering today.

Then, there's the harder-to-quantify promise of business agility. Only with business involvement can ROI be delivered here, Todd points out:

"So where will we get the best ROI? We’ll get the best ROI by picking projects with the best business ROI. If you choose a project that simply rebuilds an existing system using service technologies, all you’ve done is incurred cost unless those services now create the potential for new revenue sources (a business problem, not a technology problem), or cost consolidation.... If you’re shooting for revenue gain, however, the burden falls not to IT, but to the business. IT can only control the IT component of the project cost and we should always be striving to reduce that through reuse and improved tooling. Ultimately, however, the return is the responsibility of the business. If the effort doesn’t produce the revenue gain due to inaccurate market analysis, poor timing, or anything else, that’s not the fault of SOA."

Thus, we have the conundrum that the true ROI of SOA-based projects is actually beyond the reach of IT managers and professionals. As we argue repeatedly in this blogsite, SOA itself is an effort that needs to be owned by the business at large, and not confined to the IT silo.  

Here's what we do know about ROI so far, and what to expect as SOA efforts mature:

  • Immediate ROI: A fairly quick return on the costs of integration, especially for large organizations with complex distributed environments, and a need for better integration will see benefits from simpler.  Easy to measure — calculate the money spent on consulting fees for tying two applications together.
  • ROI a little bit later in the process: A savings in development time and planning because of the reusability of services across the enterprise.  A little more difficult to measure, but the savings will be evident in that much more can be done without having to hire new developers, or bring in extra consultants.
  • Long-term ROI:  Greater agility for the business, since processes can be quickly broken down and rebuilt as business needs change.  However, this is difficult if not impossible to measure.

The bottom line is that ROI on SOA is an enterprise challenge, not an IT challenge. Ultimately, it may even be difficult to determine how much SOA is contributing to business success. SOA may be part of an orchestra making beautiful music, but it may be hard to pick out what parts of the music are a result of the SOA.