Why SOA really, really matters in a cloud computing world

Back in early 2006, I published a piece on the impact of delivering SOA-ready services via online, on-demand venues such as online marketplaces. Here is an update on the piece, revised to meet today's cloud computing realities. Since I wrote the first piece, we have seen many of the principles coming to fruition.

So here is an updated version of why SOA means a lot more than integration or IT efficiencies:

SOA and cloud computing will help bring service consumers and publishers together; this could have enormous ramifications for the way we build systems and manage our organizations.

I am a passionate believer in the power of technology, as an enabler of entrepreneurship and organizational transformation. I have long advocated flattening the organizational hierarchy, and pushing decision-making down to the managers and employees who deal with customers and production on a day-to-day basis.

That’s why I am a big supporter of Web services and SOA, because these approaches open up new possibilities and opportunities for developing an entrepreneurial culture within organizations, as well as spurring new ideas for start-ups. More than anything, Web services and SOA are paving the way for the composite or loosely coupled company – which may be an entity that exists purely as an aggregation of third-party services, provided on an on-demand basis to meet customer demands. Most of these services will be passed through as Software as a Service, both from within the enterprise and from outside.

Is this entrepreneurial spirit something that larger enterprises, particularly the Global 1000, would be capable or willing to digest? After all, larger enterprises usually have their own humongous internal IT development shops. But, some observers point out that some of the largest and most progressive companies may, in fact, be the most enthusiastic embracers of the virtual, componentized way of doing business.

Mohan Sawhney, professor at Northwestern's Kellogg School of Management, for one, believes that the best-run companies are becoming “orchestrators” of networks of services, rather than actual producers. Sawhney quipped at a conference that some mobile phone companies provide a good example of this orchestrator role, in that "they don't do anything themselves, they just collect the money." Even Cisco comes close to this orchestrator model, he pointed out: “85 percent of Cisco's products are never touched by a Cisco employee.”

To achieve the orchestration Sawhney talks about, especially in terms of software-based services, companies may find their best option is to turn to third-party marketplaces that can provide the necessary software on demand. Cloud vendors offer online marketplaces in which enterprises can tap into services that they may or may not have the time or inclination to build. Why reinvent the wheel by having your staff spend time building service components, when you can quickly subscribe to a component, that's been tested and uptime certified, and pay for it on as-used basis?

So, I, as the software entrepreneur, could write my service, which could be a system that tracks the number and costs of Styrofoam cups used within corporate cafeterias. I would submit Joe’s Styrofoam Cup Accounting Service to a marketplace, which would validate the quality and uptime of my service, and make it accessible to enterprises and ISVs across the globe. An ISV such as SAP may pick up on it, and add it to their next enterprise release as an additional management feature. The corporate accounting department that installs the next SAP release, then, may see the value in keeping track of cup expenses (especially if it’s a real caffeine-driven work culture). They then turn on the feature that accesses the marketplace, and Joe’s Styrofoam Cup Accounting Service. Do I make my millions this way? No, more likely, I will make a few pennies per transaction. Still, these things can add up quickly.

Cloud computing is pushing some software vendors to change their models to component delivery, perhaps based on a micropayment business model as I alluded to above. This makes plenty of room not only for small start-ups, but also for development shops within traditional enterprises that have great ideas. We'll see the emergence of the corporation-as-service-orchestrator phenomena.

Bob Walsh, author of a book entitled MicroISV: From Vision to Reality, validates this thinking. In his book, he discusses how entrepreneurs and technologists can ride the new wave can the rise of smaller application providers that can put the components in place for a complete solution. He recently told me that “while most MicroISVs are focused on either the desktop or providing a stand-alone service, I think you will see more and more MicroISVs as ‘parts.’ You are already seeing micro-ISV's providing add-on services in shipping, transportation and logistics; more will follow.”

Just as businesses are evolving into orchestrator roles, so are the systems that support them. As Sawhney so aptly put it, "five years from now, the concept of an application will be obsolete. They will all be services, combined, mixed, matched and reused as needed.”