With the all chatter going on around measuring SOA (including posts from yours truly), I thought it would be helpful to re-surface a post from September 2007 that highlighted the advice given by Ed Kourany, at the time senior director with BEA, and currently SVP/managing director at IdeaIntegration, at one of the final BEAWorld events:
Calculating return on investment is something only a bean-counter can love; it’s a painstaking process, involving many inputs from the business and complex formulas. It’s no wonder, then, that few companies have ROI calculations available for SOA, especially since the return on SOA is still so fuzzy.One expert that has undertaken many such calculations for SOA projects for big clients, however, has this message for enterprises: ‘Don’t sweat the small stuff.’
To calculate SOA ROI, establish a baseline, and don’t sweat the small stuff
While at BEAWorld, I heard BEA’s Ed Kourany put it this way: That calculating the potential ROI of SOA doesn’t have to be exacting exercise down to the penny, but the calculation can be a “just-good-enough number.”
Arriving at ROI calculations is a complex undertaking. “Most organizations don;t need to undertake complex iterative projects for calculating ROI,” Kourany said.
Kourany said there are three drivers to SOA value: business optimization, business agility, and business innovation. Improving time to market is perhaps the greatest source of value that he has seen with his clients. For example, a European auto manufacturer was able to reduce its production cycle time by five percent thanks in part to the introduction of SOA methodologies, resulting in savings of $3.5 million a year. Another client, Prudential, instituted a customer service portal which reduced call center time to the tune of more than $20 million a year.
The key to measuring any future SOA value delivered is to first establish a baseline of the company’s current costs and status, Kourany pointed out. “Where am I at today?”
Part of this involves establishment of a performance model, which shows how well various aspects of the SOA effort are producing. With such granularization, decision makers can “adjust the dials” on parts of the program that may not be up to expectations. “A performance model looks at the lag metrics as well as lead metrics,” he said. And, with the model pinpointing how the effort is going, “‘just-good-enough’ calculations are all a company needs.”